The entire auto industry knew August sales weren't going to stack up well compared to last year: after all, the Cash for Clunkers program in August, 2009 lured an astonishing number of even recession-addled consumers into what had been gloomy showrooms for ten months out of the year.
So when General Motors Co. was one of the first major automakers to announce August sales results today, GM's decline of 25 percent set the pace for how most other makers are expected to proceed.
Even booming Hyundai Motor America wore the collar of an 11-percent sales slide in August, as its record-setting retail market share (5.3 percent) and year-to-date sales increase of 17 percent couldn't overcome volume comparison with last August. Similarly, Ford, another Cash for Clunkers beneficiary, had 11 percent lower sales.
U.S. auto sales have entered a period where treading water is the best the industry can hope for as American consumers deal with sobering economic realities and grim expectations.
August sales results underscored that trend, coming in at a seasonally adjusted annual rate of 11.5 million units, solidly within the narrow range of the last few months - and consistent with previous expectations for the rest of the year and 2010 as a whole.
By and large, automakers are sticking to their guns by keeping inventories and incentives in check, and their discipline may be leading to a standoff with consumers who appear to be awaiting awesome deals like those of the past.
Edmunds.com estimates the average automotive incentive in August declined from July, as is the historic pattern. They were up from last August, however, that's an almost useless comparison due to the anomaly in sales and incentives caused by the government's Cash for Clunkers program being in full swing.
Edmunds.com estimates the average incentive was $2,681 per vehicle sold in August, down $84, or 3.0 percent, from July, but up $225, or 9.2 percent, from last August.
At the same time, vehicle inventories remain low. Edmunds.com's calculations show it now takes only about 50 days to sell the average vehicle after it arrives at a dealership; last year at thist time, it took more than 70 days to turn a vehicle.
The result is expected to be August sales posted by automakers today holding steady from July at a Seasonally Adjusted Annual Rate (SAAR) of 11.8 million vehicles, according to Edmunds.com's forecast. The Cash for Clunkers-fueled SAAR of last August was 14.1 million vehicles.
Commercials that aired during Sunday night's Emmy awards and starred the cast of NBC's comedy series Community riding in an Infiniti QX56 boosted shopping consideration for the recently revamped full-size SUV, according to Edmunds.com.
Shopping consideration for the QX56 rose 51 percent after the airing of the commercials to its highest daily level in three months, according to Edmunds.com's calculations.
he future for the species known as the midsize pickup is getting darker with the news this week that the Volkswagen Group isn't interesting in entering the market and Ford Motor Co. seemingly is unmoved by recent overtures asking the company to reconsider the scheduled closure of its Ranger assembly plant in Minnesota.
Edmunds.com's Inside Line reported yesterday that VW officials closed the door on longstanding speculation the company was eying the U.S. market for introduction of the Amorak, a midsize pickup that essentially could be seen as VW's interpretation of the Ford Explorer Sport Trac. In Brazil, one of the prime markets for the Amorak, media relations manager Gilberto dos Santos told Inside Line, "Volkswagen is not planning currently to market the Amarok in the U.S.
"It is destined for South America, Europe, Russia, Australia, South Africa and New Zealand," The VW public-relations official continued. "Capacity of the General Pacheco manufacturing plant in Argentina is 100,000 units yearly, and the planned demand will be fully met. Other markets such as the U.S. and Asia are not in the company's plans."
Auto-industry executives keep talking about how they've trimmed down in order to bulk up profits, but that's only partially true. Many indeed are profitable at today's sharply reduced global sales rates - but they've still got some work to do in cutting the fat from their manufacturing empires.
The latest data from Oliver Wyman's prestigious Harbour Report that tracks the auto industry's manufacturing trends shows that there remains an enormous amount of excess assembly-plant capacity in the U.S. and Europe, despite the fact major automakers such as General Motors Co. Ford Motor Co. and Chrysler Group LLC have shuttered more than two dozen plants in North America alone since 2000.
Regardless of that seemingly major downsizing, the report indicates that in the northern U.S. and Canada, automakers still are tied to the capacity to manufacture more than 3.5 million more vehicles than they currently need - or another 14 more assembly plants of unnecessary capacity.
Three years after the recession that started in December, 2007, and according to various economic indicators, one year into an economic rebound that began around July of last year, the strength of the recovery remains open to debate.
But using these dates as a baseline and comparing current auto sales numbers to recession/recovery patterns of the past confirms what many already know: this time it's different.
To now, there's been a consistent and now-predictable pattern in auto sales demonstrated in the past recession/recovery cycles. As one might expect, during a recession car sales decline, during a recovery they grow. But what might not be as obvious are the historically consistent proportions of this decline/growth pattern over the course of the previous five recessions, dating back to 1970.
Edmunds.com analyzed these recession/recovery sales trends and confirmed a direct correlation between the level of decline and the subsequent level of growth. Put simply, the greater the drop-off in auto sales during a recession, the stronger the rebound in sales during the first 12 months of recovery.
No one can agree if it's coming or not. Instead, maybe its opposite will show up. And in any event, the auto industry has been feeling its influence for several years.
The subject of this economic riddle?
Deflation.
It's rearing its ugly head, now menacing the economy at large, and already has a strong hold on major sectors such as housing. But a tangible broad-scale appearance of deflation in the U.S. economy could prove a mixed blessing for the American automotive industry.
If vehicle sales continue at the current pace, August sales will total approximately 1.03 million units for a Seasonally Adjusted Annual Rate of about 11.8 million units, Edmunds.com reports.
This analysis assumes that fleet sales are relatively steady as a percentage of total vehicle sales compared to last month.
"It looks like bargain hunters are getting serious about taking advantage of the model year-end deals," wrote Edmunds.com CEO Jeremy Anwyl in his Just to Clarify blog. "But this is a bargain-driven market, so as the deals dry up, sales will likely trend down from here."
With the required papers now filed, General Motors' management will kick off a road show to convince potential investors to buy the automaker's stock in its Initial Public Offering. Their challenges are many, according to analysts and investment bankers interviewed by AutoObserver.com.
Topping the list of concerns about the GM IPO are timing and management. Does the timing of GM's IPO have more to do with politics than good business judgment? And after the constant churn of CEOS and other executives in the past year or so, is the current management team the one to lead GM into the future?
Longstanding partners General Motors Co. and China's SAIC Motor Corp. Ltd. established a venture this week to develop a new 4-cylinder engine family and a dual-clutch automated-manual transmission.
The timing of the announcement may be unintentional accidental, but leaves industry watchers wondering if SAIC, which already has deep ties with GM in a 13-year relationship, may be looking to invest in the company now that GM officially filed this afternoon the paperwork to begin the process for its initial public offering of stock and the company's return to public ownership.
It might not be coincidence, either, that this latest GM-SAIC tie-up comes as GM's filing the S-1 document for the IPO confirms the company will issue preferred shares alongside the common shares that will make up the bulk of the offering. Some have speculated the issuance of preferred shares will facilitate and even incentivize purchase by interests other than financial institutions and other "conventional" investors.
Demonstrating again that it is a major engine in the economy, the auto industry garnered credited for pushing U.S. industrial production higher in July.
The Federal Reserve reported Tuesday that U.S. industrial production climbed 1 percent in July after dropping 0.1 percent in June. Manufacturing output increased, by 1.1 percent, after dropping 0.5 percent in June.
The approximately 10 percent increase in vehicle production accounted for the growth, the government report said. Over the past year, the output of motor vehicles and parts rose by 32.6 percent.
Despite the increase in factory output, automakers generally have low inventories of vehicles.
General Motors Co. detailed its second consecutive quarter of profitability after exiting bankruptcy last July. That is a good thing for GM and everything and everybody connected.
But with the economy plodding and U.S. auto sales in lockstep, GM's best days - at least for this year - may already be behind it. In a conference call with reporters and analysts Thursday, CFO Chris Liddell acknowledged it.
"The second half (of this year) will be lower than the first half. You'll see some moderation," in GM's performance, Liddell said.
Daimler AG, parent company of Mercedes-Benz and smart among others, is poised to reverse this year's vehicle sales rally, according to a new analysts' report out of Europe, cited by Bloomberg News.
Reports from analysts at the Royal Bank of Scotland Group note concern with production overcapacity in Europe and lackluster consumer demand due to pressure on disposable incomes come and fragile household balance sheets.
Tesla Motors shares may jump as much as 30 percent by the end of next year as the electric -vehicle maker will likely attract investors because of its relatively inexpensive lithium-ion battery packs and plans to launch its Model S sedan, as well as more stringent environmental regulations from the government that will boost demand for electric vehicles, two analysts wrote in a 38-page report to clients and reported on by Edmunds' Green Car Advisor.
Pickup-truck sales gained more traction last month, and industry executives are starting to believe that their biggest and most profitable vehicles can be counted on to haul an even larger share of the fledgling recovery for the rest of the year and beyond.
Large trucks garnered a 12.4 percent share of overall U.S. auto sales in July, the biggest monthly chunk in nine months and larger than the segment's annualized market share for each of the last three years, according to Edmunds.com analysis.
For the year as a whole, Edmunds.com expects pickup trucks to assume an 11.4-percent share of the overall market, which would represent the largest annual share since 12.2 percent in 2008 - before the Great Recession cratered segment sales.
Toyota sold more Corollas than Honda did its Civics. In fact, Toyota sold more Corollas this July than last, whereas Honda sold less this year than last. The Hyundai Elantra, due for replacement in the coming months, came on strong in July. The current Ford Focus is winding down to pave the way for the new one. Similarly, the Chevrolet Cobalt is making way for the all-important Chevrolet Cruze. The Nissan Sentra helped the division achieve across-the-board increases this July.
The U.S. auto market has entered something of a twilight zone with the release of July's numbers, which showed an overall sales increase of about 5 percent compared with July 2009.
"Dealers told us that they saw buying customers, not tire-kickers," said Albert "Al" Castignetti, vice president and general manager of the Nissan Division of Nissan USA, which saw a 15-percent gain for July. "They needed a car, and they were credit-worthy.
Toyota's recall woes that extended to Lexus combined with new models from BMW -- the 5 Series -- and Mercedes-Benz -- the E-Class -- are creating an interesting horse race for luxury car leadership.
"As Lexus hit a speed bump, plenty of other cars are able to swoop in and take market share," said Jessica Caldwell, Edmunds.com senior analyst. "It's a very close three-horse race."
Model year-end clearance sales that kicked off earlier this year than last drove vehicle sales to their highest level since last summer's Cash for Clunkers frenzy, according to Edmunds.com
The average incentive was $2,753 per vehicle sold in July, up $63, or 2.3 percent, from June 2010, and up $67, or 2.5 percent, from July 2009, according to Edmunds' analysis.
Edmunds July sales forecast calls for the U.S. industry to have its best month since last summer when the government's Cash for Clunkers program was in full swing -- it kicked off at the end of July, reached a fever pitch in early to mid-August and ended Aug. 31. Edmunds predicts July sales, being reported today, will hit a Seasonally Adjusted Annualized Rate (SAAR) of 11.8 million vehicles.
"This year, seasonal incentives started earlier than in year's past, which really helped boost incentives and picked up sales this month," said Jessica Caldwell, Edmunds' director of Industry Analysis for Edmunds.com. "Typically, August is when manufacturers really start to push previous year models off dealership lots."
The auto industry is swimming against poor economic tides and will end up with a healthy July sales rate that is the best since the halcyon days of last summer's Cash-For-Clunkers program. Analysts at Edmunds.com project July's Seasonally Adjusted Annualized Rate (SAAR) to be 11.8 million.
July sales are expected to total about 1,064,000 units - an 8.4-percent jump compared with July of last year and an 8.9-percent improvement over June's troubling 983,000 sales that translated to an 11.1-million SAAR.
Equally important is a projected improvement in retail sales. A large portion of the industry's aggregate volume gains so far this year have been driven by outsized sales to fleet customers, not individual households.
"July sales numbers should be the highest we've seen since last August's 'Cash for Clunkers' frenzy," reported Edmunds.com Senior Analyst Ray Zhou. "Retail demand for new cars this month has been the strongest of the year, even more than in March when Toyota launched an aggressive incentive campaign and other automakers followed suit."
Pickup-truck sales have strengthened a bit so far this year, and there's a nascent confidence in Detroit - which makes nearly all of the pickups sold in North America - that the segment's recovery from a deep trough will acquire still more steam through the end of 2010.
General Motors, for instance, is calling for trucks to grab 0.3 percent more of the overall U.S. market by the end of the year than in the first half.
"Our dealers still remain very optimistic, particularly on pickups, for the next six months of the year; they're a big part of our media spend and our promotional focus," said Brian Sweeney, general manager of GM's GMC truck brand. "In some of our big pickup markets, the economy is bouncing back, so we're very positive about the next six months with Sierra sales."
George Rogers, head of Ford's Team Detroit advertising agency, believes that "there is still a tremendous amount of pent-up demand in the [pickup] market that isn't reflected in current figures."
When June figures showed total industry vehicle sales dropped 10 percent from May and were up just 14 percent compared with a feeble June of last year, it became more or less official: the auto sector recovery - you know, the one that was supposed to be well underway by now - isn't too well underway at all.
Analysis of first-half 2010 sales shows the industry isn't without winners and positive trends, but a sustainable upward sales trajectory now seems clearly stalled by a horde of indicators raising concerns about the fragile national economic recovery and the possibility of the dreaded double-dip recession.
Early July sales are selling at a rate close to 12 million vehicles on a Seasonally Adjusted Annual Rate, but Edmunds.com warns that should not be read as a sign of a full recovery for the industry.
"July and August sales may suggest a rebound but the underlying trends haven't changed," said Edmunds.com CEO Jeremy Anwyl.
The market mostly consists of deal-seekers today, and July and August are historically among the best months for picking up bargains due to model year close-outs, he noted.
"The cloud behind the silver lining is that September, October and November will probably be soft, since the old model inventory is largely gone by then, and so are the deals - or so car-shoppers have become conditioned to expect," Anwyl said.
A new annual award from Edmunds.com provides the auto industry and consumers with a detailed measure of how well newly launched vehicles perform in the market. The first winner of the Edmunds.com Launch Breakthrough Award is General Motors Corp.'s Chevrolet Camaro.
The Launch Breakthrough Award measures and analyzes 18 variables to derive a single score for each of the 54 eligible vehicles, which had to be launched during the 2009 calendar year. Each vehicle had to be totally new or redesigned and must sell at least 100 units per month.
Auto executives across the country were trying to avoid saying so on Thursday, but clearly there is new fear afoot in the industry that the happy "moderate" recovery in the American market may be deteriorating into something much less cheery - like a potential second-half stagnation or even slide.
U.S. auto sales in June totaled about 983,000 units, a 15-percent increase over June 2009 sales. That translated into a Seasonally Adjusted Annualized Rate( SAAR) of sales of just 11.1 million light vehicles, ahead of June 2009's lowly 10.6 million.
Despite expected weak sales in June and signs of a slowing economic recovery, automakers are remaining vigilant in keeping inventories low so they don't require expensive incentives to move the metal.
Edmunds.com data shows another dip in incentive spending in June. The average incentive was $2,661 per vehicle sold in June 2010, Edmunds.com estimates. That's down $36, or 1.3 percent, from May and down $196, or 6.9 percent, from June 2009.
Automakers report sales Wednesday, which are expected to by up from the dismal levels of last June but down from weak May of this year. A year ago, incentives were high because inventories were high and sales were particularly depressed as consumers awaited details of the governments Cash for Clunkers program.
As expected, June car sales, being reported by automakers Thursday, are coming in ahead of sales a year-ago June. But that isn't saying much. Last June was dismal as consumers awaited details of the government's Cash for Clunkers program, General Motors was in bankruptcy, and Chrysler had just emerged from bankruptcy.
And June sales are coming in weaker than May sales, which weren't strong by any stretch.
At midday Thursday, Edmunds.com estimated the industry would sell about 983,000 vehicles for the month. That's about 15 percent ahead of June 2009, but about 10 percent below May.
The Seasonally Adjusted Annualized Rate (SAAR) of sales looks to be about 11.1 million. Of that total, retail sales looked to be in the mid 8 million territory, according to automakers.
A year ago as General Motors was sprinting through bankruptcy proceedings and its future appeared iffy, shoppers were scouring dealership lots for bargains. The conventional wisdom suggsted great deals were to be had from the automaker's new and used vehicle inventories.
Turns out, conventional wisdom was wrong: there were no great bargains in either used- or new- GM vehicles.
In fact, Edmunds.com's newest analysis shows that the industry, in general, has seen the highest year-over-year used-car prices since at least 2004 and some of the most dramatic examples of those price hikes can be found in the GM stable.
The law of supply and demand is working overtime in the used-car market. Used-car prices have risen to levels not seen since at least 2004 largely due to the tight supply of used cars, Edmunds.com's analysis shows.
The average price of a three-year old car is 11.1 percent higher than it was last year - the highest year-over-year increase since Edmunds began keeping records in 2004.
Used cars of all ages are about 5.5 percent more expensive than they were last year.
Typically, the year-over-year increase is less than 3.5 percent.
"It is fashionable to cut corners, essentially, and a used-car purchase looks and feels thriftier," noted Edmunds.com Senior Analyst Jessica Caldwell.
On Thursday, automakers will report how many vehicles they sold in June and how many they sold in the first half of 2010. Edmunds.com's senior analysts Karl Brauer, Jessica Caldwell and Michelle Krebs share their thoughts - and concerns - about the year so far.
June car sales will show the auto industry still has not hit high gear due a continued hesitance by consumers to make a long-term commitment to a heft purchase like that of a new vehicle.
Edmunds.com forecasts June's Seasonally Adjusted Annualized Rate (SAAR) will be 11.2 million, down from 11.6 million in May, which was a weak month. June sales will total 992,500 vehicles, a 16.6-percent increase from June 2009 but a 9.5 percent decrease from May.
"The industry is still recovering from the pull-ahead sales generated in March and over Memorial Day weekend, when automakers - led by Toyota - offered unseasonably high incentives and drew out a lot of bargain-hunters who may otherwise have waited to buy their cars during the summer," said Jessica Caldwell, Edmunds.com's director of Industry Analysis for Edmunds.com.
Toyota's highly publicized safety recall of 2.2 million cars in February seemed to precipitate a run of recent safety recalls by other automakers including General Motors, Chrysler, Honda and Hyundai. And 2010 overall is on pace for what could be the highest number of total recalled vehicles in this country since 2005.
But new analysis by Edmunds.com also demonstrates that the number of vehicles affected by industry safety recalls these days has declined dramatically compared with the record levels of a decade ago.
When General Motors filed for bankruptcy protection in June 2009, the headlines were appropriately dramatic. "End of an Era", posted CNN.com, while the Wall Street Journal read, "GM Collapses into Government's Arms." Edmunds' own AutoObserver.com remarked it was "History in the Making."
The tone was funereal -- and rightly so, as the move would cut four entire divisions, thousands of dealerships and of course even more jobs. Still, a few saw something of a silver lining in the news: the potential to get some great deals.
But a funny thing happened on the way to the estate sale: the bargains didn't show up -- not right away, at least.
By the time Ed Whitacre took on the title of CEO at General Motors Co. last December, the draconian bankruptcy-and-bailout process had radically shrunk America's most iconic manufacturer.
To give GM another shot at long-term viability, the new chief decided that his most important task was to transform the culture of one of the most ossified large corporations in America.
The former AT&T CEO already has made a big impact on how his new company operates. Whitacre has shaken up the ranks of top management more than once. He has streamlined decision-making with a few bold strokes. He has set high goals and has frowned on excuse-making. And when it comes to GM's crucial product-development and manufacturing operations, Whitacre has left well enough basically alone.
But that is only a start toward a goal made more urgent because of how successful the other auto-industry outsider, Alan Mulally, has become in turning around GM's crosstown archrival, Ford Motor Co.
"GM is at a precipice where it still can go in either direction, and the direction they go is going to be based 100 percent upon the leadership that they have," said Dennis Zeleny, who has headed human resources for a number of Fortune 500 companies, currently Sunoco Oil. "They need to be change-oriented, have courage and make better decisions."
Although sales for smart's tiny 2-seater started out like gangbusters in the U.S., the popularity has quickly waned, and now the alternative-car experts over at Edmunds Green Car Advisor are wondering what the brand's extended U.S. sales slump means for its impending launch of battery-powered variants of the smart forTwo.
Data from Edmunds.com indicates buyer consideration for smart is at an all-time low, a situation abetted, no doubt, by continued low gasoline prices. In April, only three in 1,000 consumers seriously shopping for a new vehicle at Edmunds.com indicated consideration of the smart.
Since last August, monthly smart sales have averaged just 633 units, with sales as low as 278 in January.
It's about time that the U.S. auto market followed script for a change, and May was that month: There was a modest increase in sales compared with last May, befitting the annual gain of 10 percent or more that the industry has forecast for the year as a whole. Steady as it goes was the byword.
For the month, automakers sold 1,099,000 vehicles in the U.S., 19 percent higher than the nadir of May, 2009, and an improvement from about 982,000 this April. More important, the pace of sales in May was about 11.6 million units on a seasonally adjusted annualized rate (SAAR) basis, a significant uptick from the 11.2-million rate posted in the previous month and right in line with the industry consensus that full-year sales will end up between 11.5 million and 12 million units compared with 10.4 million for 2009.
"This supports the thesis for the moderate recovery we've been forecasting," said George Pipas, head of U.S. industry analysis for Ford.
General Motors, the first automaker to report May sales Wednesday, posted a nearly 17-percent increase in sales from a year ago as Edmunds.com predicts the industry's selling rate will come in at 11.4 million vehicles.
In total, GM sold 223,822 vehicles, up 16.6 percent from year-ago May sales. All but about 1,500 of those sales came from the GM's remaining four brands -- Chevrolet, Buick, GMC and Cadillac.
Those four brands combined had a sales rise of 32 percent from last May.
The rich incentives once offered by automakers are waning as they are no longer needed due to lower inventories of vehicles, Edmunds.com reports.
The average automaker incentive in May was $2,603 for every vehicle sold in May, Edmunds.com estimates as automakers prepared Wednesday to post sales figures for the month. That average automaker incentive is down $28, or 1.1 percent, from April and down $340, or 11.6 percent, from May 2009, according to Edmunds.com estimates.
"Inventory levels are relatively low, so many automakers have cut back on incentives," said Jessica Caldwell, director of Industry Analysis for Edmunds.com. "Bargain-hunters planning to hold out for traditional late summer deals would be wise to start shopping now, since there is a less dramatic need for old model year clearance sales this year and the 2010 inventory is already slim pickings."
It took 101 years for the "old" General Motors Corp. to run itself out of gas, officially going out of business on this day one year ago. It won't take that long to determine if GM 2.0 is structured to hold up for another century.
Today's General Motors Co., formed when the remnants of the original company emerged from bankruptcy July 10, 2009, closes in on completing its first year of existence in better shape than even optimists thought possible. This is the company whose former CEO, among others, insisted bankruptcy would destroy it.
So GM lives. The "new" GM looks -- and is -- healthier. But can it last? It is a vastly different company now, for better and worse. And bankruptcy didn't fix everything.
Like most truck-based utility vehicles, the Infiniti QX56 has been in the midst of a long-term
decline in sales. But executives of the Nissan luxury division are counting on an even swankier yet more fuel-efficient 2011 version of the QX56 to recapture some of the brand's wandering customers and sell closer to peak rates marked soon after the original vehicle's introduction in 2004.
"We will have months when we sell 800 to 900 of these," Ben Poore, Infiniti's vice president in charge of sales and marketing, told Edmunds.com.
The Bill Visnic story, which went viral and hinged on the automaker's recent decision to postpone the next-generation Honda Civic, drew more than five times the usual readers and generated a tremendous amount of conversation.
The general consensus of feedback comments on AutoObserver,Facebook and other Web sites is that Honda, as the post indicated, has lost its way. Readers noted new models like the Honda Accord Crosstour missed the mark as had styling of recent Honda and Acura models. As a company, Honda, readers noted, missed opportunities to move the brand forward in sales.
After a report from Japanese publication Best Car said Toyota Motor Corp. is delaying the launch of its FT-86 sport coupe by two years, to 2013, the internet was alive with speculation about Toyota's ultimate dedication to the coupe jointly developed with Fuji Heavy Industries Ltd.'s Subaru.
First reports of the project emerged in 2008 and at last October's Tokyo motor show, Toyota let loose with a concept car to confirm the program indeed was underway.
But all along the way, there have been reports of various delays, conflicting development goals and other hiccups, including speculation about Toyota's acceptance of the Subaru-derived drivetrain - and even whether the car would be rear-wheel drive, one of the most attractive promised attributes.
Like most Americans, the auto industry is eagerly looking forward to the Memorial Day weekend. Automakers hope history repeats itself with brisk end-of-month sales.
"So far, this month hasn't been particularly good for the car business so far, but we anticipate that the holiday weekend will more than make up for it," said Jessica Caldwell, director of Industry Analysis for Edmunds.com.
If that is true, Edmunds.com forecasts May industry sales will total 1,080,200 vehicles for a nearly 18-percent increase from May 2009 and a nearly 11-percent increase from April. That would put May's Seasonally Adjusted Annualized Rate (SAAR) at 11.4 million vehicles, up from 11.2 million in April. The SAAR in May 2009 was 9.9 million.
It's unusual for Honda Motor Co. Ltd. to deviate from its rigid model-replacement schedule, particularly for its bread-and-butter volume models such as the Civic. But that's just what the company is doing with the planned Civic replacement, pushing back the car's introduction from this fall until sometime next year.
The next-generation Civic apparently was not on competitive target -- and Honda sent it back to the garage for tinkering. Although some analysts and industry insiders think Honda's choice to rejigger the Civic is a positive signal, the fact the Civic has to go back to the drawing board at such a late stage speaks plenty about how far Honda has drifted from its once-indomitable methods.
To say the atmosphere at Chrysler's Jefferson North plant in downtown Detroit last week was euphoric is no overstatement.
Indeed, Chrysler-Fiat CEO Sergio Marchionne's unveiling of the revamped 2011 Jeep Grand Cherokee and his accompanying announcement of 1,000 new hires to build the SUV is worthy of celebration.
There's no denying Chrysler has come a long way since filing for and emerging from bankruptcy a year ago. The fact that Chrysler is still around at all when most thought it wouldn't be is significant.
However, the Jeep Grand Cherokee is by no means the savior of Chrysler. Despite the massive improvements in the iconic granddaddy of SUVs, the 2011 edition is mostly a new frock on last season's fashion and largely placeholder until Chrysler can expand its portfolio with Fiat-based offerings.
Emerging trends in the auto industry and government investigations of possible vehicle defects captured the interest of AutoObserver readers this past week.
The National Highway Traffic SafetyAdministration's (NHTSA) investigation into Ford and General Motors vehicles was the most read post on AutoObserver by a wide margin last week. NHTSA is investigating complaints on the Ford Windstar for have rear axles that can potentially break. NHTSA is investigating the Chevrolet Corvette for complaints over leaky gas tanks.
Early May car sales indicate sales for Toyota Motor are down 15 percent for the same period last month despite aggressive incentives, according to an analysis by Edmunds.com, which also noted General Motors and Nissan sales up from a month earlier.
"Toyota's incentive program is falling on deaf ears. Most people who were open to getting deals from Toyota already made their purchases," said Edmunds.com Senior Analyst Jessica Caldwell. "Toyota has not yet recovered from recent image problems."
The average new-vehicle incentive is down about $200 so far this month, according to data from Edmunds.com, and perhaps resultantly, industry sales - so far - are down from April's pace. But evidence suggests buyers may be hanging back and waiting for Memorial Day deals.
May's Seasonally Adjusted Annual Rate so far is tracking below that of April's 11.2-million SAAR, but sales over the Memorial Day holiday weekend could close the gap.
"Given the bargain-hunting behavior we've witnessed throughout the recession, I'm guessing that demand is building for anticipated Memorial Day sales events," said Edmunds.com CEO Jeremy Anwyl.
Despite some highly publicized incentives, new cars were less affordable in the first quarter this year than they had been, according to Comerica Bank's Auto Affordability Index.
"Affordability deteriorated slightly in the first quarter, mostly due to the rise in interest rates on car loans," said Comerica Chief Economist Dana Johnson.
"With the ongoing improvement in the economy, consumers were willing to pay a bit more for new vehicles, allowing the car companies to offer less generous discounts and financing terms," he said, adding auto affordability in the first quarter was the lowest in nine quarters.
Ford President and CEO Alan Mulally is big beneficiary of the stock market's rally -- and the automaker's turnaround -- because a hefty chunk of his compensation is in stock that was issued low and now is trading high.
In March 2009, Ford granted 5 million stock options to Mulally, the Associated Press noted in a story Monday on executive compensation. Using a complex formula, Ford assigned the options an estimated value of $5 million. At the time, Ford's shares were trading at $1.96. Since then, the stock has jumped nearly sixfold, and Mulally's options have a value on paper of about $48 million.
Mulally is also ahead on his 2008 options, which were valued at $9 million when they were granted two years ago. Now, they're worth close to $21 million.
For the first time in the history of the 10-year-old study that looks at the relationship between automakers and their suppliers, a U.S. automaker -- Ford -- ranked in the top three. It was third, with Honda and Toyota in 1st and 2nd place, respectively.
The annual North American OEM-Supplier Working Relations study, done by Birmingham, Mich.-based Planning Perspectives, closely follows supplier perceptions of their working relations with the top three U.S. and top three Japanese automakers across 14 commodity purchasing areas. About 45 percent of automotive suppliers in Planning Perspectives' database participated in the study.
"When the U.S. automakers were in bankruptcy, or in Ford's case near bankruptcy, they knew they could not come back alone," John W. Henke Jr., president of the management consulting firm, told AutoObserver in an interview. "Alan Mulally (Ford president and CEO), a big proponent of good supplier relations since his days at Boeing, has been taking a more active role in getting top management to strive for strong supplier relations."
With savvy muscle car aficionados clearly holding back in anticipation of the showroom appearance of the heavily revised 2011 Ford Mustang, its chief rival Chevrolet Camaro is pulling ahead in the sales competition between Detroit's new-generation muscle cars.
And while sales for the high-powered Detroit muscle cars remain comparatively healthy, sales of almost all other sports cars remain troublingly depressed - including for the Camaro's big brother and Chevrolet-brand halo, the Corvette.
It's not the sexiest segment around, and speculation has long held that various new vehicle configurations, namely crossovers, would cause serious erosion of the midsize sedan market. But as the broad economic and auto-industry recoveries proceed almost in lockstep, it looks as if cautious buyers re-entering the market are gravitating to the safe play: sales of midsize sedans are more than a little robust.
Although most companies had trouble logging April sales that surpassed those of the incentive-fueled March, midsize sedans certainly weren't the problem. April and year-to-date sales show the segment on its way to perhaps some of its best results in a long while.
The segment's growth isn't coming from only the usual suspects, either: There's a hot new player stoking fresh interest in the four-door family car. And higher incentives, two words the industry is reluctantly latching onto as its recovery comes with one step forward and two steps back, also a playing a role in the midsize-sedan renaissance.
American Honda, which includes the Honda and Acura brands, spent more money on incentives in April than it had ever spent in a month, and its investment paid off with the highest Honda sales since last August, according to Edmunds.com's analysis.
Still, Honda's April sales were up only 13 percent from a year ago, far below the industry average of 20 percent.
In a sign of modest progress for the American car market, sales in April were up 20 percent from a year ago, though they declined by 8 percent from March. Still, auto company executives and outside analysts pronounced the industry's modest recovery remains on track - and, in fact, is expected to strengthen - as the year goes on.
Industrywide sales of 981,659 vehicles compared with 817,096 sold last April. But last spring marked the depths of the Great Recession, and so a better comparison for the current market actually was March 2010. Sales in April eased to a Seasonally Adjusted Annual Rate of about 11.2 million from 11.8 million in March, but higher than last April's 9.2 million.
While some automakers carried over their rather hefty incentive programs from March into April, including popular zero-percent financing and discounted leases, their effectiveness appears to be waning, according to estimates by Edmunds.com.
"The automakers that need extra marketing support will have to pull out a new trick for May," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Industrywide, manufacturer incentives dropped in April from last April and March. Sales, being reported by automakers Monday, are forecasted to be well ahead of last April but slightly down from March.
Honda may prove the exception. Its incentives hit a record high in April and its sales may be up.
Saab fans were hoping it wouldn't happen, but it has: the all-new Saab company (now owned by Spyker Cars NV), last week said it was pricing its first all-new car, the 2010 Saab 9-5 Aero, at a preposterously ambitious $49,990, with destination.
It's not as if Saab built a lot of brand equity in the past half decade, as former owner General Motors Co. lost all interest, cut off investment and let the products plod along totally in excess of humane replacement cycles. Then Saab twisted in the wind for a year, along with other now-discarded GM brands, as GM, the Swedish government and Saab itself scrambled to find a buyer to keep the marque alive.
It couldn't have been a much better first-quarter result for Ford Motor Co.: earnings of $2.1 billion that doubled the consensus forecast. A healthy profit on automaking operations and a healthy profit in North America. A rather remarkable rebound of more than a quarter-million more sales compared with first-quarter 2009.
The company's reward for all this solid work: a smackdown from Wall Street.
Ford stock was down nearly 10 percent today at its lowest point and hovered around a still-hefty 5-percent decline into the afternoon, finishing down a full 6 percent. This, admittedly, in a broad market that saw the Dow Jones Industrial Average finish almost 2 percent down and all other indices slide markedly.
Joe Phillippi, principal of AutoTrends consulting in Short Hills, New Jersey, attributed the market's reaction to Ford's exceptional first quarter to two factors: investor mentality and worries about Ford's ability to continue the pace of its rebound.
Automakers spent less on incentives in April than they did in March. As a result, sales dipped from March to April, though industry sales still are running well ahead -- by 21 percent -- of last April, according to Edmunds.com's forecast.
"In March [2010], incentives really helped boost car sales," observed Jessica Caldwell, Edmunds.com's director of Industry Analysis. She noted Toyota led the industry with unprecedented incentives in March that included zero-percent financing and discounted leases.
"In April, incentives averaged nearly $200 less per vehicle industry-wide," noted Caldwell. "And sales fell along with incentives."
Although the economy appears to be stabilizing and the auto industry enjoyed guardedly improved sales in March, a lineup of remarkably large spiffs detailed by Edmunds.com in its "deals of the month" listing for April demonstrates incentives continue to play a major role in moving the metal in the U.S. market.
Leading the pack are uncharacteristically wide-ranging incentives from American Honda Motor Co. Inc. in April. Honda has incentives for many of its core models - Accord, Civic, CR-V - in a range of lease, dealer cash and low-finance deals. Honda also is offering a subvented lease on the Ridgeline midsize pickup, "the first national truck lease we've seen in ages," according to Jessica Caldwell, Edmunds.com's director of pricing and industry analysis.
The 2011 Hyundai Sonata retained its ownership of the top spot among vehicles most considered by shoppers on Edmunds.com for the fifth consecutive week.
In the past two weeks, the Hyundai Sonata widened the margin between it and other most considered vehicles, specifically the Honda Accord and Honda Civic.
Edmunds.com is sticking with its long-held 2010 sales forecast of 11.5 million vehicles as other forecasters up theirs some.
Ford executives this week expressed growing optimism based on improved economic metrics and higher March sales, which were boosted by incentives, including low interest and even zero-interest financing led by Toyota. Ford has been saying sales would be between 11.5 million and 12.5 million (including heavy and medium-duty trucks).
Despite considering a boost, Edmunds.com is staying with 11.5 million (light vehicles only) for now.
The average automobile finance rate dropped to 4.4 percent in March, its lowest since 2002 when Edmunds.com began to track finance records. The fall was due hefty incentives offered in March that included zero-percent financing and were led by Toyota.
By comparison, the average interest rate for the industry was 5.8 percent in March 2009.
Indeed, of all brands, Toyota had the lowest average finance rate at 1.9 percent in March. In an effort to regain lost sales from January and February and renew consumer confidence in its products, Toyota offered the biggest incentives in its history in the U.S., according to Edmunds.com's Total Cost of Incentives (TCI) analysis for March.
Brazil may pass Germany this year to become the world's fourth-largest auto market, Bloomberg News reports.
Wider access to credit in South America's biggest economy expanded the pool of potential buyers by more than 50 percent, Guido Vildozo, an IHS Global Insight Inc. analyst told Bloomberg. IHS and J.D. Power & Associates both forecast Brazil eclipsing Germany in 2010.
Don't look now, but the U.S. auto market is changing - sort of just like we'd been told it would.
Call it environmental awareness, call it regulatory pressure, call it old-fashioned economics. But by and large, call it inevitable: that most American of inventions - the V8 - is quickly being supplanted by smaller, more peppery engines as the auto industry marches to the latest beat of "downsizing."
Ford announced today that it will produce three new engines using its Ecoboost concept of combining direct fuel injection with turbocharging and variable camshaft timing to boost the specific output of smaller-displacement engines. Ecoboost engines will be deployed for two vehicles that long represented the heart of the V8 market: the F-150 pickup and the 2011 Explorer.
Audi moved closer to achieving its goal of becoming the world's largest premium vehicle seller by 2015 by speeding past Mercedes-Benz in sales for the first time ever in the 2010 first quarter.
Audi reported it sold 264,100 vehicles in the quarter to Mercedes' 248,500 vehicles.
Audi achieved the feat with its sales market leadership in China and the new-generation Audi A8 being launched in Europe and making its way to the U.S.
Ford may be among the companies to drive the first back-to-back quarterly profit gains among U.S. companies since 2007, reports Bloomberg News.
Earnings for Standard & Poor's 500 Index, which includes Ford, probably rose 30 percent in the three months through March after more than doubling in last year's final quarter, according to analysts' estimates compiled by Bloomberg.
Analysts' estimates put Ford's first-quarter profit at 30 cents per share after a year-earlier loss of about 75 cents a share. Ford, which has not given a date for announcing first-quarter results, said in January that market-share gains and better pricing for its cars will help the bottom line and should help produce a full- year profit.
American consumers returned to showrooms in force during March, driving overall sales to their best levels since last summer's peak around Cash for Clunkers. But there already were signals that the springtime spurt of sales momentum may not amount to much for the long term.
Automakers sold a total of 1,065,555 vehicles in the United States last month, the highest absolute number of sales since the federal government's massive buyback of late-model used cars sent sales skyrocketing last August. Last month's number also was 25 percent ahead of March, 2009.
Toyota, seeking to come back from recalls, quality issues and negitave publicity, set new heights for its incentives as it offered zero-percent financing and discounted leases throughout March, accourding to Edmunds.com's estimates.
The average automaker incentive in March was $2,742 per vehicle, up $100, or 3.8 percent, from February 2010, but down $423, or 13.4 percent, from March 2009.
Those hefty incentives offered by Toyota and other automakers who followed suit are expected to lift March car sales to their highest levels since last summer's Cash for Clunkers program, Edmunds.com Senior Analyst Jessica Caldwell predicted.
As automakers put the finishing touches on their March car sales numbers that will be announced on Thursday, it appears that the month came in like a lion but went out like a lamb, according to Edmunds.com's ongoing tracking of actual sales transaction data.
The month started off strong as Toyota launched aggressive incentives, which included zero-percent financing and attractively discounted lease prices, and other automakers followed suit. But the great deals look as if they fizzled by month's end. That raises the question -- even if automakers continue heavy incentives through April, will they be effective?
Toyota's troubles, which have rubbed off on Honda in terms of sales, have opened the door even wider for up-and-coming Hyundai.
An analysis by AutoObserver.com shows that three Hyundai models - the redesigned Hyundai Sonata, revamped Hyundai Tucson and still relatively new Hyundai Genesis sedan - have, in short order, have charged into the Top 10 of Most Shopped vehicles on Edmunds.com.
The first quarter of 2010 marked the first time ever that a Hyundai model captured the No. 1 spot on the Most Shopped list since Edmunds.com began tracking shopping consideration data in 2007.
And two Hyundai models scored that accomplishment multiple times during the quarter. The new Hyundai Sonata, just arriving in showrooms in volume, has been the No. 1 Most Shopped vehicle on Edmunds.com for two weeks running in March. The Hyundai Tucson was No. 1 for two weeks in the 2010 first quarter. The Hyundai Genesis eked into the Top 10, making Hyundai the only other automaker besides Honda to have three vehicles among the Top 10 Most Shopped.
The post discussed how the gas-price spike of 2008 followed by the economic disaster of 2009 have prompted baby boomers to re-evaluate their vehicle choices. Luxury vehicles, once thought to be their obvious choice, is no longer the automatic selection. The post was an excerpt from a speech delivered by Michelle Krebs, Edmunds.com senior analyst and editor at large, to the Seventh Annual What's Next Boomer Business Summit in Chicago, discussed .
Hefty incentives, spurred by Toyota with others following, are forecasted to send the Seasonally Adjusted Annual Rate of vehicle sales to 12.4 million this month from February's 10.3 million, according to Edmunds.com.
Toyota will get a big bang for its incentives bucks with sales up 80 percent from February, Edmunds.com forecasts. And Ford is expected to outsell GM again in March as it did in February.
"Although this SAAR sounds promising, it's too early to wave the flag and say that the economy has turned the corner," Edmunds.com CEO Jeremy Anwyl said. "Incentives drove sales this month, but those incentives were defensive moves by Toyota and its competitors, and are unlikely to last because inventories are simply not high enough to justify them."
The staff at Edmunds is a diverse group with hundreds of different perspectives on the auto industry and the world at large.Here's a look at what we're reading and thinking about this week...
Everyone has known about checklists but this book takes it to a new level. The author backs up his points with evidence from working in the medical industry.
Edmunds staffer says: This book is an entertaining account of a simple tool for getting things done. If checklists save lives, they can also help you get things done in your life. -- Phil Reed, Sr. Consumer Advice Editor, Edmunds.com
A mid-month look at March auto sales indicates a Seasonally Adjusted Annual Rate that is flirting with 13.2 million vehicles, thanks largely to intense incentive competition, according to Edmunds.com.
"The industry has been recharged by incentives offers from Toyota and other automakers who responded in kind," said Edmunds.com Senior Analyst Jessica Caldwell. "There is a lot of money in the marketplace right now, and people are responding."
It's definitely not what a battered auto industry wants to hear after months of scrabbling for the start of a rebound, but analysts at Edmunds.com project, through the new True Market Value Predicted Price Trends metric -- that average transaction prices, even for plenty of usually strong-selling models, will fall in April.
Common sense might suggest with improving weather and the coming of spring that auto sales would tend to start increasing in April, but historically, such is not the case. Analysts at Edmunds.com note that in just the past eight years, sales have declined in April from March in seven of those years. Hand-in-hand with a decline in sales volume comes a typical reduction in average transaction prices during April.
April also is a poor springboard for auto sales because there are no long holiday weekends and the month holds, for many, the ominous prospect of filing tax returns.
Used car prices are up about 2 percent from last month, but the prices of used Toyotas affected by the recalls are down about 2.5 percent, according to Edmunds.com.
"Many used car buyers are turned off by the negative publicity surrounding the Toyota recall, so prices of those vehicles are pacing at about 4.5 percent below the market," said Edmunds.com Analyst Joe Spina.
The auto sector's ongoing malaise has battered even the healthiest of automakers, models and market segments. But probably no segment has endured a deeper or more protracted decay than midsize pickup trucks.
It started long prior to the nation's late-2008 economic collapse: the midsize pickup segment has been slipping precipitously for more than a decade - and now the industry's sales collapse has brought the midsize pickup market to the brink.
If that sounds a little dramatic, know that combined sales of the segment's seven major players - Dodge Dakota, Ford Ranger, Chevrolet Colorado/GMC Canyon, Honda Ridgeline, Nissan Frontier and Toyota Motor Corp.'s Tacoma - were 763,553 in the year 2000. Last year, those same seven players combined for 265,513 sales. Two-thirds of the segment's volume blown away in a decade.
AutoObserver's lead item posted on Wednesday that chronicled Honda Odyssey transmission problems and owners' inconsistent response as discussed on Edmunds.com's forums was the best-read item on the site this week.
And, not surprisingly, items related to Toyota's continued recall and quality woes ranked among AutoObserver's best-read features this week.
Hefty incentives offered by Toyota to rejuvenate sales and market share -- and copied by some competitors - sent U.S. industry sales soaring in the early going of March, according to Edmunds.com's forecast.
In the first eight days of March, the Seasonally Adjusted Annual Rate (SAAR) of U.S. sales climbed to 12.5 million units, the highest level since September 2008, excluding August 2009 when Cash for Clunkers was at fever pitch.
"Generous incentives from Toyota and General Motors have stimulated this boom," Edmunds.com Senior Analyst Ray Zhou, PhD. "But we anticipate that it will cool off, and that the month will end closer to 11 million or so."
And the Oscar for the best advertising performance during the Academy Awards show goes to -- Hyundai.
But barely.
Indeed, Hyundai brand and, specifically, the Hyundai Sonata got the most lift from Sunday night's Academy Awards presentation, based on an analysis of shopping consideration by consumers visiting Edmunds.com.
However, though the viewing audience for the show was the biggest in five years, advertising on the Oscars proved not much of a win for automotive marketers.
In general, Edmunds.com saw little significant impact on shopping consideration from any of the automotive ads that aired on the Academy Awards. In fact, auto advertising performance on the show was pathetic compared with the Super Bowl.
Toyota's zero-percent financing and special lease deals generated nearly a 40-percent spike in purchase intent by visitors to Edmunds.com.
In January, Toyota's purchase intent averaged just over 13 percent and then fell to a 9.7-percent low as a result of the recall announcements.
On March 1, Toyota purchase intent had recovered to 13 percent. A day later, when the incentives program was announced, Toyota purchase intent soared to 18 percent -- a 14-month high.
The composting-saves-the-world neighbors won't be able to sneer (as much) at the gas-sucking muscle car in the driveway after Ford Motor Co. crowed today that a Mustang sporting the nameplate's new 3.7-liter dual-cam V6 churns out 305 horsepower - yet was just certified by the Environmental Protection Agency as earning a highway fuel-economy rating of 31 miles per gallon.
Ford says the car is history's first example of a production model that exceeds 300 hp yet also tops 30 mpg.
The number actually beat Ford's earlier expectations for 30 mpg from the V6 Mustang, the number the company was proudly promoting in January at the Detroit auto show.
The story that Ford Motor Co. outsold General Motors Co. (by 471 units) for the first month since August, 1998, has made the rounds.
But February's sales charts served up some other noteworthy numbers. Here is a selection:
Ford and GM's totals were No.1 and No. 2 in the market, and figures for the "Big 7" automakers were rounded out, in descending order, by Toyota Motor Sales USA at 100,027; Chrysler Group LLC at 84,449; Honda Motor America at 80,671; Nissan Motor Co. Ltd. at 70,189 and the Hyundai Group (Hyundai and Kia brands combined) at 58,056.
There aren't that many true concept vehicles slated for the Geneva motor show this week. The few that are unveiled are bookended by a heavy presence in two sectors: small cars and luxury models.
Most of the attention in Geneva is concentrated on the small-car sector, thanks to continuing environmental pressure on both sides of the Atlantic. Europe continues to press with carbon-dioxide reduction measures, while financially battered U.S. customers evidence a downsizing mindset and the nation glides inexorably closer to a 2016 deadline for all automaker fleets to average 35 miles per gallon.
So while the Geneva show is mostly about what makes sense for an auto sector evolving toward less dependence on fossil fuels, the makers of luxury performance cars continue to respond with their own individual visions of how that future will be addressed. In many senses, it's becoming evident the makers of premium vehicles may in fact have more of an opportunity to capitalize -- as customers able to spend but unwilling to compromise may represent the best market to accept pricey new fuel-saving innovations.
The possibilities for synergy between the environmental movement and the luxury auto market may be almost limitless: even Ferrari, after all, is showing a hybrid-electric concept at this week's Geneva show.
Despite all the questions asked during Congressional hearings on Toyota's recalls this week, the nagging question that won't -- and maybe can't -- be answered is: are today's cars safe, at least from accelerating of their own volition?
Toyota happened to be the company at the witness table for vehicles that -- for one reason or another, identified or not -- have the possibility of unintended acceleration, potentially endangering not only Toyota drivers but drivers, passengers and pedestrians around them.
Yet, while Toyota is under the microscope and, in fact, has more reported complaints than its competitors, unintended acceleration is an industry-wide problem that requires industry and government attention.
"The current emphasis in the hearings seems to be about who learned about what/when and they are skirting the core issue of what's really causing unintended acceleration in the first place. With this being an industry issue, what's called for is an unprecedented, cross-company and government safety agency collaboration to pool data and resources, getting to the bottom of the problem once and for all," said Edmunds.com CEO Jeremy Anwyl.
At Congressional hearings this week, federal administrators responsible for automotive safety will be on the hot seat as much as Toyota executives will be.
Amid accusations of foot dragging and influence pedalingregarding the National Highway Traffic Safety Administration (NHTSA), Toyota and their handling of consumer complaints and recalls, safety administrators likely will be grilled about what is standard operating procedure in dealing with consumers' complaints. The overriding question at the hearings will be was NHTSA lax in holding Toyota's feet to the fire on vehicle problems. Edmunds.com's analysis of NHTSA databases reveals little consistency in dealing with consumer complaints. The analysis shows no clear pattern in terms of the number of consumer complaints that trigger an agency investigation. The length of time it takes from an investigation to a recall being issued varies widely.
Whether NHTSA's process works properly and quickly enough and whether it is transparent enough is highly questionable. Ultimately, this week's Congressional hearings may be as revealing in uncovering defects at NHTSA as defects in Toyotas.
U.S. light-vehicle sales will reach just short of 12 million units in 2010 as credit becomes more available and consumer confidence improves with rising employment, said Paul Taylor, chief economist for the National Automobile Dealers Association.
"Industry sales will increase to 11.9 million light vehicles for 2010," Taylor said at the association's convention in Orlando this weekend.
Recalls, stop-sales orders and the accompanying bad press have put downward pressure on prices of new and used Toyota vehicles, but the hit is not as huge as might be expected, according to an analysis by Edmunds.com.
New vehicles specifically covered by Toyota recalls are selling for an average of 0.5 percent - or $150 per vehicle - less than earlier this year, according to the most recent adjustments made to Edmunds.com's True Market Value pricing.
Used Toyota vehicles covered by recalls are selling for about 3 percent less than earlier this year, according to Edmunds.com. However, dealers --- either being cautious or opportunistic -- are paying about 6 percent less for Toyota trade-ins than they did before the recalls were announced.
Toyota's mounting product quality and public image woes have prompted Edmunds.com to revamp its sales forecast for 2010, lowering Toyota's share and raising the share of other automakers.
Edmunds.com's most current forecast of 11.5 million vehicle sales for 2010 has Toyota losing market share that will be picked up by Ford, General Motors and Honda.
Ford's sales gain, in fact, likely will push the American automaker to the No. 2 sales spot in the United States, ahead of Toyota, Edmunds.com predicts. Toyota took the No. 2 position from Ford in 2007 and has held it ever since.
"It now seems clear that Ford will overtake Toyota to reclaim its position as the second biggest automaker in the U.S. market," Edmunds.com Senior Analyst Jessica Caldwell said at the Chicago auto show.
No automaker should gloat over Toyota's quality woes because no automaker is free and clear on the issue of customer complaints.
In fact, an analysis by Edmunds.com of the National Highway Traffic Safety Administration (NHTSA) complaint database shows Toyota ranks 17th among automakers in the number of complaints per vehicle sold over roughly the past decade.
According to the database, which is comprised of input from individuals and is not checked for accuracy by NHTSA, Toyota was the subject of 9.1 percent of the complaints from 2001 through 2010. During this period, the company sold 13.5 percent of all new cars in the United States.
Land Rover ranks first among automakers, with 0.6 percent of the complaints compared to only 0.1 percent market share from 2001 through 2010.
The following chart sets forth the results for all automakers in this research:
Commercials during the Super Bowl are the Gucci handbags of the advertising world: everyone knows they're expensive -- but do you even remotely get your money's worth?
A couple of automakers just might have.
Although Edmunds.com, parent of AutoObserver.com, can't answer for other industries, Edmunds data indicate the big-dollar Super Bowl commercials by Hyundai Motor America Inc. and Audi of America Inc. seem to have connected. Both companies enjoyed outsized spikes in consideration on Sunday after their ads appeared during what is called the most-watched single sporting event on the planet.
If sales in the United Kingdom are anything to judge by (and we're not saying they necessarily are), it's a good thing General Motors Co. hung on to its Opel and Vauxhall European brands.
The U.K.'s top sellers for 2009 recently were presented by the country's Car auto-enthusiasts magazine, and Opel's Corsa was the country's No. 3 seller (84,478 units) and the Opel Astra followed at No. 4 with 67,729 sales. The Opel Insignia pulled in to be the U.K.'s ninth best-selling car, with 36,040 finding customers.
The U.S. auto market in January continued its recent strengthening trend, with overall sales just shy of 700,000 vehicles (698,456 vehicles) for the month rising by nearly 7 percent compared with 654,757 vehicles in a very weak January 2009. The seasonally adjusted light-vehicle sales rate ticked up to about 10.76 million units versus last year's 9.59 million - and roughly in line with the firming picture of recent months.
Toyota was clearly the biggest loser in January due to its recalls and stop-sales order on eight of its bestsellers. Yet, January's results varied widely for its top competitors that may have tried to take advantage of Toyota's problems with special incentives meant to lure disaffected Toyota customers in particular.
Since announcing the fix for its sticky pedals Monday, Toyota already is experiencing a dramatic rise in purchase intent among shoppers on Edmunds.com's Web site.
"Toyota purchase intent fell from 13.9 percent of Edmunds.com car shoppers to 9.7 percent during the height of the recall frenzy," said Edmunds.com Senior Analyst David Tompkins, PhD. "Toyota purchase intent is back to 11.8 percent and seems to be climbing steadily."
Incentives paid by manufacturers in January dipped below year-ago and December levels despite last-minute promotions by Toyota's competitors to capitalize on the automaker's recall woes.
The average incentive was $2,382 per vehicle sold in January 2010, down $160, or 6.3 percent, from December 2009, and down $326, or 12.0 percent, from January 2009, Edmunds.com estimates.
"January incentives were not particularly generous or compelling - until some automakers began trying to conquest unsettled Toyota owners and shoppers late in the month," stated Jessica Caldwell, director of Industry Analysis for Edmunds.com. "January sales numbers are up from a year ago largely because of fleet sales."
Toyota-brand sales will drop 75 percent during the sales suspension of its eight best-selling models and some potential Lexus and Scion sales will be collateral damage.
"As long as sales of recalled Toyota models are suspended, Toyota will suffer about a 75 percent hit in sales," said Edmunds.com Senior Analyst Ray Zhou, PhD.
Even though no Lexus of Scion models are covered under the sticky gas pedal recall and sales suspension, their sales may be down as well.
"During this period, Scion may be down about 20 percent and Lexus may be down about 10 percent because of damage to the Toyota corporate brand," added Zhou.
Toyota's market share in January is expected to plummet to lows not seen since 2006, because the automaker issued a stop-selling order on eight models representing more than half of the automaker's U.S. sales this week.
Toyota's share is likely to drop to 14.7 percent of U.S. sales in January, Edmunds.com forecasts; the last time it was that low was March 2006 when its share was 14.2 percent.
In contrast, Ford is expected to have its best month for market share since May 2006. Edmunds.com forecasts Ford's share at 18.0 percent in January. The last time it was that high was in May 2006 at 18.4 percent.
In total, U.S. sales in January, buoyed by hefty hikes in fleet sales and offset by lower retail sales, will total of 701,000 vehicles, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annualized Rate (SAAR) of car sales at 10.7 million vehicles, down from 11.2 million December but up from 9.6 million in January 2009.
The best-read post on AutoObserver this week - by a long shot - was an item on Chevrolet Corvette sales plummeting to a 50-year low in 2009.
As sports car sales in general nosedived, Chevrolet sold only 13,934 Corvettes, the worst sales for the nameplate since 1961 when the car was still in its first generation.
General Motors announced an attractive price on its 2011 Buick Regal, which is generating a lot of positive buzz. But the automaker likely will lose money or at least not make much on every one it sells in the early going.
The Regal, which begins arriving in dealerships in spring, will start at just under $27,000. But pricing the Regal was tricky business.
The new Regal is based on the German-made Opel Insignia, and the earliest versions to be sold in the U.S. will be made in Europe. That means the dollar-euro exchange rate is highly unfavorable. The situation changes in the first quarter of 2011 when Regal production shifts from Russelsheim, Germany, to GM's plant in Oshawa, Ontario, Canada.
With only 11 days to go in the month, January car sales are coming in low, as expected, after December's brisk pace due to holiday specials.
Edmunds.com estimates January sales, so far, are at a Seasonally Adjusted Annual Rate (SAAR) of about 10.5 million vehicles. That's significantly better than the 9.1 million rate of sales in the early months of 2009 and 2009 full-year sales of 10.4 million vehicles. But some industry observers may find sales disappointing after December's 11.2-million pace.
But Edmunds.com predicted a weaker January because January typically is weak for sales and this year, in particular, December deals caused some pull-head of sales. Nevertheless, Edmunds.com forecasts 2010 sales remain on track to hit 11.5 million units.
Strong sales of the newest generation of the Mercedes-Benz E-Class in the fourth quarter last year will boost Daimler's earnings for the quarter and signal an earnings recovery for the German automaker, an analyst in Europe predicts.
"The sales improvement at the Mercedes-Benz brand throughout last year was attributable to a rapidly improving model momentum, reflecting the roll-out of the new E-Class family," Creative Global Investments analyst Sabine Blumel told Just-Auto in Europe.
The North American International Auto Show in Detroit just opened its doors to the public on Saturday, but already some vehicles introduced during the previous week's press preview have been generating substantial buzz on Edmunds.com.
Vehicles driving the biggest increases in Edmunds.com's site traffic are: Audi A8; Buick Regal GS concept; Ford Focus; Ford Transit Connect; and Honda CR-Z.
The 2010 North American International Auto Show is one of the most restrained editions of the Detroit confab many can remember.
But the show's comparative scarcity of high-impact concept and production vehicles didn't stem the avalanche of opinion on the most notable vehicles.
After scores of media outlets have weighed in, AutoObserver cuts through the clutter to give the real score on the 10 most significant - for better or worse - vehicles of the 2010 Detroit auto show.
When automakers revealed 2009 full-year sales on January 4, data analysts from Edmunds.com unearthed a remarkable fact: sales of General Motor Co.'s seminal Chevrolet Corvette sports car fell to a low not seen in almost 50 years.
The Corvette's 13,934 sales were the worst for the nameplate since 1961, when Chevrolet sold 10,939 models - and the car was still in its first generation.
As recently as 2006, Chevrolet sold more than two-and-a-half times as many Corvettes -- 36,518 -- as it did last year, as sales for almost all premium sports cars were pummeled.
AutoObserver readers continue to closely monitor the auto industry's sales and incentives trends as illustrated by the most-read posts on AO this week. Those types of posts were also reader favorites for all of 2009.
AutoObserver's report on December car sales, which showed some optimism, topped the chart of most-read posts this week by readers by a long shot.
U.S. auto sales in December accelerated to their best pace of the year outside last summer's Cash for Clunkers bonanza, providing a hopeful punctuation mark to the industry's worst year in decades.
Sales in December totaled 1,010,003, up 1.9 percent from December 2008, when automakers and American consumers were newly stunned by the economic debacle unfolding on several levels around them.
The Ford Mustang, thanks to a December sprint to the finish, won the pony car sales race over the Chevrolet Camaro.
And it wasn't as close as anticipated.
Ford Mustang sales came in at 66,623 vehicles; General Motors sold 61,648 Chevrolet Camaros. The Camaro went on sale in March so did not have a full year of sales.
Some day, automakers hope to look back on 2009 as the year that both sales and corporate fortunes finally bottomed out. It's far too early to tell if history will treat last year that way, but for now, at least, the industry is taking heart from a definite surge of sales momentum as the decade closed.
Automakers sold about 10.4 million units last year, a disastrous tally that comprised the lowest total of light-vehicle sales in this country since 1970.
The winner of the sales race between the Chevrolet Camaro and Ford Mustang will be revealed when the auto industry reports sales Tuesday. And the finish will be a close one.
General Motors already is hailing a victory, announcing the Camaro will win. And, based on Edmunds.com estimates, it's possible even though at the end of November Mustang was ahead.
"It looks feasible that the Camaro could outsell Mustang," said Edmunds.com Analyst Ivan Drury. "The two will be only a thousand or two thousand units apart when final sales are reported."
Still, through the end of the November, the Mustang was ahead.
Despite the year-end incentives blitz and holiday marketing campaigns, automakers actually spent less on incentives in December than they did a year ago or even in November.
Edmunds.com estimates the average automotive manufacturer incentive was $2,542 per vehicle sold in December, down $167, or 6.2 percent, from November, and down $320, or 11.2 percent, from December 2008.
"In December, only about a quarter of new cars sold were leftover 2009 models. That sent the average incentive expenditure lower compared to November and last December when the old model-year vehicles made up closer to half of the new car sales," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
Car sales during the last 10 days of December were relatively strong, but it is premature to say that the economy has turned around, according to Edmunds.com.
The Seasonally Adjusted Annual Rate (SAAR) has been used for decades to measure economic trends, and it is likely that December's automotive SAAR will be celebrated. Based on Edmunds.com Web site activity, the SAAR could hit 11.7 million in December, the highest for any non-Cash for Clunker month this year.
However, Edmunds.com has found that SAAR is an unreliable metric during periods of economic recession. Recession-era buyer psychology shifts behavior in a way that reduces the accuracy of the U.S. Bureau of Economic Analysis' established seasonal adjustments upon which SAAR is based.
Latest behavioral trend for automakers to fret about: For the second consecutive year, Americans are driving less.
Miles traveled in 2009 by passenger and commercial vehicles on U.S. roads dropped to 2.93 trillion from 2.94 trillion in the same period in 2008, the Federal Highway Administration said. The measured period for 2009 was the 12 months that ended in October, and travel through the rest of calendar 2009 was unlikely to reverse the trend.
Ballooning fuel prices in 2008 and the national economic meltdown in the fourth quarter of that year led to an expected decrease in U.S. driving, the first in a quarter century.
But when the bottom dropped out of fuel prices in 2009, it was expected driving would exceed the 2008 figure -- but rising unemployment and continued pressure on household budgets and commercial activity led to a second consecutive cutback in miles driven.
Car shopping on Edmunds.com surged in the waning days of December, prompting the Web site to suggest sales for the month may come in higher than previously expected -- and could be the highest non Cash for Clunker month of the year.
"The industry potentially could reach a seasonal sales rate of 11.7 million vehicles in December, given the current site traffic trend," noted Edmunds.com Senior Analyst Jessica Caldwell.
"Our Web site activity is through the roof," added Caldwell. "That makes sense as there are so many bargain-hunters scrambling to get year-end deals and cash in on the sales tax deduction opportunity that expires on December 31st."
An improving economy likely has helped as well. Edmunds.com Web activity in late December is 60 percent higher than the historical pattern for the period. Brands enjoying particularly strong activity are BMW, Ford, Honda and General Motors' Chevrolet, Pontiac and Saturn brands.
Reinvigorating the housing sector and boosting confidence are considered key components to revitalizing the economy and auto sales, economists say.
To that end, the monthly survey by the Conference Board showed consumer confidence picked up slightly in December after rising in November, but still remains weak, largely due to the job picture.
The Standard & Poor's/Case-Shiller home-price index, which tracks sales in 20 major metropolitan areas, showed that prices of single-family homes were largely flat in October compared with September, another factor that undermines consumer confidence.
A little more than a month after Chrysler Group LLC outlined a new five-year plan to restructure and reinvigorate the company as it combines operations with Italy's Fiat S.p.A., the market isn't helping Chrysler's plan look any less overreaching: sales plunged again last month; the company is cutting production and layering on incentives; and the new-product pipeline is scanty as ever.
Chrysler's limping finish to 2009 and dim prospects to start the new year are underscored by this simple fact: when full-year results are tallied, the company will sell less than 1 million units in the U.S. for the first time since 1962.
General Motors' convoluted $7,000-incentive offer to dealers to put remaining Pontiac and Saturn vehicles into their fleets and then sell them as used vehicles was described by the media as a fire sale. But Edmunds.com's analysis shows the so-called fire sale is no hotter than the prices currently being offered.
GM already has been offering incentives valued at up to $6,500 on Saturns and Pontiacs, including the always attractive zero-percent financing for up to 72 months, according to Edmunds.com calculations. In addition, consumers are allowed to write-off the sales tax on their new vehicle purchase now.
"The newest program is more hype than substance," said Edmunds.com Senior Analyst Jessica Caldwell.
Not only is 2009, one of the single most tumultuous years for the auto industry, drawing to a close, but so is the first decade of a new century.
As the year winds down, data analysts at Edmunds.com are cranking away at numbers that are certain not only to entertain but also demonstrate how cataclysmic 2009 turned out to be, particularly viewed through the prism of a closing decade's worth of sales-performance trends: market share destroyed, market share gained. Years of growth turned upside down. Surprising sales-volume gains, foreboding losses.
The ever-present import-versus-domestic battle in almost startling perspective.
In what will go down in history as the auto industry's most tumultuous year in recent memory, AutoObserver readers couldn't get enough information about what was happening in the industry and how automakers and the government reacted.
High on that list were posts about how automakers reacted in terms of closing plants, shuttering brands, particularly General Motors' Saturn and Pontiac, terminating dealers and setting vehicle prices and incentives.
Five new models displayed at the recently wrapped-up Los Angeles auto show are generating tremendous buzz on Edmunds.com. The five most talked-about vehicles are the Buick Regal, Ford Fiesta, Hyundai Sonata, Toyota Sienna and Cadillac CTS coupe.
Great deals on new cars and the simple economic principle of supply and demand is at work with a number of new cars costing less than their equivalent of its one-year-old used version, according to an analysis by Edmunds.com.
The deals on some new cars are so generous that they actually make the new car less expensive than the one-year old used version of the same model. Some of the vehicles on Edmunds.com's list of new costing less than used this month include the 2009 Audi Q7, 2009 Buick Enclave, 2009 Mazda B-Series Truck, 2009 Volvo C30 T5, and 2009 Toyota Highlander Hybrid.
In addition to great deals on new models, used car prices generally are climbing due to low supply, said Edmunds.com Analyst Joe Spina.
At last fall's Frankfurt auto show and at the Miami auto show shortly after, Saab's flagship 9- 5, completely redesigned and ready for launch in 2010, made its debut.
Saab executives billed the launch of the 9-5 as the kick-off of a new era for the Swedish brand. Over the next 16 months, Saab said it would introduce four new models - the redesigned Sweden-built 9-5 sedan and SportCombi wagon along with the the all-wheel-drive 9-3X and the compact 9-4X luxury crossover.
Instead, on Friday, General Motors announced that plans to sell Saab to a new owner had failed, and it would wind-down the brand.
But could those new Saab models show up elsewhere? It's possible, a GM executive said.
The former AT&T CEO held his first media roundtable since adding the CEO title two weeks after the ouster of Fritz Henderson.
At the press briefing, Whitacre said GM's priorities are paying back $6.7 billion in government loans by June and selling more cars and generating more revenue. He also called GM's sale of Saab to Dutch sports car maker Spyker is "possible" by year-end, but, if not, Saab would be eliminated.
Vehicle sales are trending higher as 2009, one of the most tumultuous years for the industry, draws to a close.
New vehicle sales, including retail as well as fleet sales, are expected to total 1,010,000 units, a 13.3-percent increase from December 2008 and a 35.7-percent increase from November, Edmunds.com forecasts. That would put the month's Seasonally Adjusted Annualized Rate (SAAR) at 11.11 million vehicles, up from 10.89 in November.
And that would put full-year annual sales at just over 10 million, a decrease of almost three million vehicles, or 21.3 percent, from 2008. That would make it the worst year for car sales since 1970 when the industry sold 10.2 million and the U.S. population was far less than it is today.
With the doors closed last weekend on the 2009 Los Angeles auto show, the vehicles that premiered there will soon be arriving in dealer showrooms. What ones will sell in the marketplace?
To answer that question, AutoObserver watched the behavior of Edmunds.com visitors who came to the car-shopping Web site for vehicle information and turned to Edmunds.comstaffers who covered the show.
Edmunds.com visitors appeared most interested in the Buick Regal, Chevrolet Cruze, Ford Fiesta, Hyundai Sonata, Mazda 2 and Toyota Sienna, with those vehicles seeing the biggest rise in shopping consideration.
General Motors Co.'s crucial Chevrolet division has a new general manager as yet another long-serving executive is leaving GM.
The company announced late Wednesday that Brent Dewar, 31-year GM veteran and vice president, global Chevrolet, will retire effective April 1, 2010. Taking over immediately as Chevrolet general manager is 45-year-old James M. Campbell, who had been in charge of GM's Fleet and Commercial Operations.
Since GM emerged from bankruptcy in mid-July, chairman Ed Whitacre has emphasized GM is striving for younger faces and fresher thinking -- not to mention fresh blood from outside -- to reinvigorate GM's hidebound executive culture.
Chevrolet's new general manager is appropriately young, perhaps, but is no newbie at GM, having been with the company since 1988.
U.S. auto sales clocked in about flat in November compared with a year ago -- and in line with widespread expectations that the market will only gradually creep upward for at least the next year. But industry executives and analysts mostly chose to interpret the American auto market as a glass half-full.
November sales were 746,544 vehicles compared with 743,605 in November, 2008. On an absolute basis, that number of units represented a 0.4-percent year-to-year monthly sales increase -- or call it flat. But taking into account the fact that the industry enjoyed two fewer "selling days" this year compared with last November, sales actually increased by 9.1 percent last month on an apples-to-apples basis.
If you thought you missed out on best-of-the-year car deals on Black Friday, forget about it. If last year is any indication, December is the best time to get a great deal.
Neither Fridays nor November are the best times to get the biggest discounts on cars and trucks, according to Edmunds.com's analysis of the past four years of sales transaction data.
Rather car shoppers can look for some of the best deals in December and January.
Forward-thinking Larry Ellison, CEO of Oracle Corp., recently told financial analysts he is taking a page from history past in creating a new business model for the high-tech company. Oracle is going vertical.
And Ellison is not alone in turning back to the century-old vertical integration strategy whereby a company controls materials, manufacturing and distribution, according to a story on the trend in Monday's Wall Street Journal.
Other companies, including General Motors and Boeing from which Ford CEO Alan Mulally came, are as well.
The conclusion by trackers of overly-hyped Black Friday holiday shopping revealed a trend seen in the auto industry all year: shoppers are looking but in the end, spending less and buying only when they find a bargain.
Automakers monitor shopping patterns as consumer spending makes up 70 percent of the U.S. economy and plays a large role in how quickly the country can recover from a recession that began in December 2007.
Lending by U.S. banks - the lifeblood of the auto industry -- fell 2.8 percent in the third quarter, the largest drop since at least 1984 and the fifth consecutive quarter in which banks have reduced lending, according to a Federal Deposit Insurance Corp. issued Tuesday and reported on by the Washington Post.
The paper said the decline in lending is emerging as a serious impediment to economic recovery.
General Motors last week began sending out 1.8 million pieces of direct mail to what the automaker calls its "free-agent customers" -- customers orphaned by the wind-down of Pontiac and Saturn and the proposed sell-off of Hummer and Saab.
In this first of promised multiple mailings, GM is offering discounts of up to $2,000 on certain models to the nearly 1 million customers of closed GM dealerships, if they go to the next closest dealer by January 4. The automaker also is giving customers of closed dealerships a vehicle inspection and tire rotation at remaining dealerships through May.
"The challenge for us is to grab those customers by the hand and make sure they know where to go," Susan Docherty, GM's vice president of U.S. sales, said in a media conference call last week.
But GM's competitors also are eyeing those up-for-grabs customers.
After all but abandoning leasing for the past year, Ford Motor Co., General Motors Co. and Chrysler Group LLC each have reported either a re-entry or expansion in the leasing business. And other manufacturers who never got out of the game are in a position to increase their lease penetration.
Through the remainder of the year, Edmunds.com expects a modest increase in non-luxury leasing commensurate with the announcements by the domestics, as well as a slight increase with at least one import brand: Toyota Motor Corp. has room to grow its lease portfolio.
After the sales plunge in the auto market began in earnest in the fall of 2008, automakers scrambled to reduce production schedules, sell off swollen inventories and otherwise deal with a drastically contracting U.S. market.
Now, after months of production cutbacks orchestrated by many automakers and the summer's outsized demand from the $3 billion Cash for Clunkers rebate program, bloated inventories are a thing of the past. Now, data researchers at Edmunds.com say the coming months may be a tug of war between still-cautious buyers and right-sized-but-cash-strapped automakers anxious to hold the line on pricing.
It could be a battle that sees winners and losers on both sides as uncommon market and industry forces collide in what will be an unpredictable sales environment.
It's early, admit General Motors prognosticators, but November could hit a Seasonally Adjusted Annual Rate of 11 million vehicle sales, making it the highest level this year outside of the Cash for Clunker months of July and August.
GM's top analyst Mike DiGiovanni told media in a conference call Thursday that the automaker is encouraged by positive economic signs and the automaker may turn in its fourth consecutive month of market share gain.
Edmunds.com's forecast, issued early Thursday, is less rosy, putting the predicted SAAR at about 10.34 million vehicles sold in November, which in the best of times is the worst month for vehicle sales except for January.
November is living up to its reputation as one of the worst months of the year for car sales, prompting automakers to launch holiday promotions in an effort to end one of the worst years for sales on a slightly higher note.
November sales in the U.S., both retail and fleet, are expected to total 710,000 vehicles, a 4.5 percent decline from November 2008 and a 15.0-percent decrease from October, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annual Rate (SAAR) at 10.34 million vehicles, down from 10.43 million in October. Except for January, sales in November typically are the lowest of the year.
"Everyone is hopeful that Thanksgiving weekend will boost the sales numbers," said Edmunds.com Senior Analyst Jessica Caldwell. "But automakers have already launched holiday season incentives in order to pick up the pace, and that sense of desperation suggests that bigger discounts - but smaller selection - may be available for those who wait to buy."
But the patient's long-term prognosis, admitted CEO Fritz Henderson, isn't exactly a clean bill of health just yet.
"When you come away from it, we lost money (in the period from July 10 to Sept. 30)" said Henderson, calling the situation "not satisfactory."
And while GM's operating cash flow figure for the period was a healthy-enough $3.3 billion, one recurring malady has popped up on GM's first-ever post-bankruptcy report: North American operations didn't get the job done.
General Motors, which reported its first financial results Monday since emerging from bankruptcy July 10, has boosted market share and hiked vehicle prices since its bankruptcy, but its typical profit per vehicle remains essentially flat, according to Edmunds.com.
GM's U.S. market share of 21.1 percent matched its high point for the year in October. Sticker prices are at their highest point of the year as well. However, higher share and higher prices aren't translating into higher profits per vehicle because, while consumers are willing to pay more for new GM models, they are unwilling to do so for the carryover ones.
Criticism of its unconventional looks nothwithstanding, Honda Motor Co. Ltd.'s new Crosstour 4-door hatchback seems to be causing a stir in the marketplace as consumers try to determine just what the Crosstour is - and how to categorize it versus other types of vehicles.
Cross-shopping data from Edmunds.com indicates prospective Crosstour buyers are all over the map in terms of vehicles they are considering in addition to the Crosstour. Early indication shows most seem to view the Crosstour as either a wagon or a crossover. Through September, apart from the more conventional 2- and 4-door variants of the Accord, the vehicle most cross-shopped against the Crosstour was Toyota's Venza.
But one question Honda may find itself asking is whether the Crosstour will generate incremental sales - or if it is simply giving its own customers another alternative: three of the top four vehicles cross-shopped against the Crosstour are other Hondas.
One thing seems certain: shoppers seem to think domestic automakers have much of an analogue to the Crosstour. Of the 25 vehicles most cross-shopped against the Crosstour, only two were domestic nameplates, the Chevrolet Equinox crossover and the Cadillac CTS (most likely the new CTS Sport Wagon).
U.S. auto sales in October turned in a performance reminiscent of what can now be called the good old days before last year's market collapse, about even with October 2008 but up 13 percent from September.
October saw the first year-to-year sales increase -- excluding the Cash for Clunkers months this summer -- in two years. Sales of 837,800 vehicles during the month translated into a Seasonally Adjusted Annual Sales rate of 10.43 million units - about the same number that the consensus of industry watchers is still predicting for total actual sales volume for all of calendar 2008. (The SAAR last October was 10.78 million.)
So after recovering from record doldrums in the first half of the year, and stabilizing in the wake of the Cash for Clunkers blip over the summer followed by the sales-drought "payback" in September, the October sales numbers reflected a U.S. auto market that is recovering slowly and -- automakers hope -- surely.
Incentives paid by automakers dipped in October from September and a year ago as they launch new 2010 models, which don't need them yet, and wind down 2009 models, Edmunds.com reports.
The average automotive manufacturer incentive in the U.S. was $2,468 per vehicle sold in October 2009, according to Edmunds.com analysis of Total Cost of Incentives (TCI). That's down $329, or 11.8 percent, from September, and down $209, or 7.8 percent, from October 2008.
"Incentives declined because fewer old model-year vehicles were sold in October, and the newer vehicles are not discounted nearly as heavily," explained Jessica Caldwell, director of industry analysis for Edmunds.com. "Over 55 percent of vehicles sold in October were 2010 model year, compared with about 36 percent in September."
Automakers report October sales on Tuesday and those reports are likely to show some signs of life.
Edmunds.com forecasts the Seasonally Adjusted Annualized Rate (SAAR) of car sales will come in at 10.3 milllion to 10.4 million, the year's highest level aside from the summer's Cash for Clunkers months of July and August.
Toyota's Bob Carter told reporters in Detroit Monday that he expects the SAAR to come at between 10.3 to 10.5 million units. "Toyota will be up single digits on a daily selling rate basis versus September and down slightly - single digits - versus a year ago," Carter said. Edmunds.com forecasts Toyota sales will be off 9.6 percent from a year ago.
Don't look now, but gasoline prices have crept up to their highest level of 2009. Typically that means trouble for the auto business, but if gas prices stay high, this time the outcome may be different.
Demand for fuel-efficient vehicles seems to be, drastically more challenging nationwide fuel-economy standards are looming and most automakers are drastically retooling the model lines to answer.
October car sales are expected to come in at the highest level of the year except for during the summer's frenzied Cash for Clunker months, Edmunds.com forecasts.
Industry sales, being reported on Tuesday, are expected to total 830,000 vehicles, almost even with a year ago and up 11.4 percent from September. That would push October's Seasonally Adjusted Annualized Rate (SAAR) to 10.35 million, up from 9.19 in September.
""There are clear signs that the automotive industry is finally starting to recover from the painful lows experienced earlier this year,"said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
General Motors predicts the Seansonally Adjusted Annualized Rate (SAAR) of car sales in October will come in at 10.7 million total vehicles, including heavy- and medium-duty trucks. On a light vehicle basis, GM forecasts at 10.5 million SAAR.
GM's top analyst Mike DiGiovanni told reporters Wednesday morning that October may be the first month since January 2008 that GM will report a year-over-year increase in sales and market share. The automaker expects its third consecutive month of market share increase for a total market share of 20 to 21 percent and 19 to 20 percent in retail market share.
"We're not here to declare victory," said Susan Docherty, GM's new vice president in charge of U.S. sales, during the "Straight Talk" conference call. "We're here to report progress."
This summer's so-called Cash for Clunkers program cost taxpayers $24,000 per vehicle sold, according to an analysis by Edmunds.com.
Nearly 690,000 vehicles were sold during the Cash for Clunkers program, officially known as the Car Allowance Rebate System (CARS), but Edmunds.com analysts indicate that only 125,000 of the sales were incremental. The rest of the sales would have happened anyway.
Analysts divided three billion dollars by 125,000 vehicles to arrive at the average $24,000 per vehicle sold. The average transaction price in August was $26,915 minus an average cash rebate of $1,667.
Ford Motor Co. secured its position as the only Detroit automaker with world-class reliability, according to Consumer Reports magazine's 2009 Annual Car Reliability Survey.
Of 51 Ford, Mercury, and Lincoln models, 46 had average or better reliability, the magazine said in an announcement made Tuesday at the Automotive Press Association in Detroit.
"Ford's sustained production of vehicles that are as dependable -- or better than -- some of the industry's best dispels the notion that only Japanese manufacturers make reliable cars," the magazine said.
Ford could run short of Ford Edge and Ford Flex models due to a labor dispute at a supplier plant in India that has forced the automaker to close its Oakville, Ontario, assembly plant.
Ford closed the Canadian plant, which makes the Edge and Flex as well as the Lincoln MKX and newly-launched Flex-based MKT, due to a shortage of transmissions, the result of a labor dispute a supplier plant, Rico Auto Industries, in India. The strike turned violent Sunday night after a plant employee died during a protest.
With another week gone by, October sales look to be on track for Seasonally Adjusted Annualized Rate (SAAR) in the low 10 million range, according to the latest data from Edmunds.com, which issues a more detailed forecast later this week.
General Motors' market share, which in the early going of the month stood at 22.4 percent, has slipped slightly to 21.7 percent in the latest Edmunds.com analysis.
In terms of sales by segments, the market appears to be returning to a pre-Cash for Clunkers equilibrium between large SUVs and trucks compared with small cars.
The industry's best deals right now are in luxury cars, sports cars and convertibles as well as leftover 2009 models, according to Edmunds.com.
As for brands, Lincoln, Saab and Volvo are offering great deals, as are Pontiac and Saturn, which are being discountinued completely by General Motors.
"Dealers should be open to any decent offer since they know that these vehicles, which often sell to a fashion-conscious crowd, will drop in value once the 2010 model year vehicles roll in. There will be nothing harder to sell than a 2009 convertible in winter with 2010 fast approaching," said Edmunds.com Senior Analyst Jessica Caldwell. And there is ample inventory of 2009 models, she added
After dismal September car sales due to the hangover from the government's Cash for Clunkers program, auto manufacturers have ramped up incentives in October as they have ramped up production to refill the inventory pipeline, according to Edmunds.com.
The incentives show manufacturers are extremely eager to sell off 2009 models left in inventory. But automakers are also offering incentives on newly launched 2010 models.
"This year has been a wild ride for automakers, and it's not over yet," said Edmunds.com Senior Analyst Jessica Caldwell. "No segment is unaffected by the current round of incentives, though luxury models and trucks are being discounted particularly heavily."
Low-interest financing, including zero-interest financing, and cash rebates dominate the landscape, but subsidized lease programs, almost non-existent in the past years, are proliferating as well.
Henry Ford, famous for saying buyers could buy any color of Model T as long as it was black, must be smiling. Black is the No. 1 color choice for buyers of vehicles so far this year, according to Edmunds.com's analysis of sales transaction data.
Black has accounted for 20.3 percent of new vehicles sold so far this year.
Edmunds.com's results are in contrast to other recently released color reports that put silver first. Indeed, in Edmunds.com's analysis, if silver and gray are combined, they shoot to the top of the chart at 30.1 percent of sales.
General Motors is regaining some ground it lost in terms of market share this month, according to Edmunds.com.
If the early October trend continues, GM's market share should rise to 22.4 percent this month, a boost from the third-quarter average of 19.1 percent. Based on early October numbers, the Seasonally Adjusted Annual Rate (SAAR) of industry sales will come in at just above 10 million vehicles.
Launches of new models combined with a substantial hike in ad spending this month are helping.
Indeed, GM needs good news on the market-share front since its business plan is based on maintaining a market share of at least 19 percent with half the brands and fewer models, one of its board directors said Thursday.
When Ford product planners began to contemplate a possible new generation Taurus, they decided they should either move the next Taurus upmarket so it wouldn't be positioned right on top of the popular Ford Fusion as the previous one was - or forget about being in the segment altogether.
The automaker moved forward with a more upscale Taurus, introduced this summer as a 2010 model, and it appears to be doing what product planners intended, according to Edmunds.com's analysis of Taurus shoppers and what else they are considering.
The analysis shows: - the new Taurus is being cross-shopped less with other Ford models than the old one, and the Ford models it is being cross-shopped against are more upscale ones; - the new Taurus' most cross-shopped list shows more upscale competitors in the mix, including some luxury brands and hot imports that weren't on the old Taurus' cross-shop list; - off the top 10 list are more downmarket competitors.
Consumers are paying 2 percent more this year for new cars and trucks than they were a year ago, according to Edmunds.com.
That's good news for automakers eager to turn profits on fewer sales, but bad news for consumers.
The average price of a car or truck sold in the United States was $28,492 for the first nine months of the year, compared with $27,945 last year, according to Edmunds.com. The average transaction estimate doesn't include manufacturer rebates.
A few years back, it was the first appearance of a Chinese automaker at the Detroit auto show that seemed to start the serious speculation about when the Chinese would crack into the U.S. market. Assessing the functional but rudimentary models on display, some predicted 2015 or 2020.
Instead, how about next year?
OK, it won't be with their own China-built models. But there are three pending brand-takeover deals -- General Motors Co.'s Saab and Hummer and Ford's Volvo Cars -- in which a Chinese automaker has a leading or secondary role. If any of the three purchases make it to completion -- and it's probable at least two will -- Chinese automakers will in effect be selling vehicles in the U.S.
The day in July when General Motors emerged from Chapter 11 bankruptcy, CEO Fritz Henderson declared the new GM would focus on three things -- customers, cars and culture.
On Wednesday morning, Henderson is scheduled to give a 90-day progress report on how GM is doing.
So how is GM really doing in those three categories?
As for customers, GM, despite trying new ways to lure them, has found too few. As for cars, GM's new offerings are promising. As for culture, the jury's still out. And disappointments -- there have been a few.
Low gas prices and even lower demand in the luxury market have conspired to short-circuit sales of premium hybrid-electric vehicles. Now, as the fourth quarter begins to wind down a fairly lousy year for auto sales - and new 2010 models are shouldering their way onto dealer lots - automakers are piling on some fantastic incentives in the hope of clearing out leftover big-money hybrids.
Toyota Motor Corp.'s Lexus premium division, owner of the market's most-expensive hybrid in its LS 600h L, rang in October with a bulging $10,000 dealer-cash incentive on the '09 model of the flagship hybrid. The company also is offered a bounty of $1,000 to any sales associate selling an '09 LS 600h L, which starts at $106,035.
Toyota doesn't break out sales of the hybrid LS in its monthly sales reports, but sales of the entire LS line are down 53.7 percent through September as sales in almost all luxury segments continue to fade.
U.S. auto sales in September dipped to predicted lows because the Cash for Clunkers program ended in August and there weren't many buyers left, car company executives reported Thursday. They're just hoping that the market's massive "payback" via September's sales drought isn't extended into the fourth quarter.
Americans bought just 745,516 vehicles in September, a 23-percent drop from a year ago. That represents an abysmal Seasonally Adjusted Annual Rate (SAAR) of sales of just 9.2 million units - the lowest since February and roughly the laconic pace at which economically shell-shocked consumers purchased cars during the first half of the year.
And it was far below -- 41 percent, to be exact -- the relatively breathtaking sales rate of 14.1 million units that prevailed for August, when most buyers took advantage of a total of $3.5 billion in rebates under the federal government's clunkers program and purchased more fuel-efficient vehicles. September's sales volume plunged by more than a half-million units compared with August.
After five straight months of decline, incentives are on the rise again, according to Edmunds.com.
The average manufacturer incentive totaled $2,557 per vehicle sold in September, up $83 or 3.4 percent from August, Edmunds.com estimates. That was down $344, or 11.9 percent from September 2008.
This summer's Cash for Clunkers program substituted as a manufacturer incentive but with the program over and vehicle inventories being replenished, consumers aren't buying, as will be seen when automakers report September sales Thursday. Edmunds.com forecasts sales for the month will come in at only about a 9.3 million Seasonally Adjusted Annual Rate (SAAR).
General Motors will end its listing of cars online through eBay this week because it didn't generate sales, a newspaper report says.
The program had been set to end September 8 but was extended through the end of the month. GM had been optimistic that it would be successful and would be rolled out nationwide. But it has not generated sales, the Wall Street Journal reported, citing sales figures and dealer comments.
As a result, GM will not extend the eBay venture beyond September, the newspaper reported. A GM spokesman did not confirm the report.
Automakers will have their resolve to scaleback incentive spending tested in the coming months as their assembly plants ramp up production to beef up inventory and sales continue to be soft.
Incentives on General Motors, Ford and Chrysler vehicles plummeted by 26 percent to $3,278 per vehicle in August from a March peak, according to Edmunds.com, parent of AutoObserver.com. Industrywide incentives fell 22 percent to $2,474 per vehicle.
"Automakers have to pull the lever and increase production in an unknown market," Edmunds.com Senior Analyst Jessica Caldwell told Bloomberg News. "They could find there are no buyers out there and have to raise incentives again. It's a vicious circle."
General Motors launched its latest marketing campaign, "May the Best Car Win," a couple of weeks ago. It includes a 60-day money-back guarantee to buyers of its Buick, Chevrolet, Cadillac and GMC models through Nov. 30, which could be extended, a GM execuctive said Friday.
September's hangover from August's Cash for Clunkers program appears to be easing.
New vehicle sales for the month are expected to total 742,000 units, off 22.9 percent from September 2008 and down 41.1 percent from August when Cash for Clunkers was in full swing, according to Edmunds.com's forecast. That would put the Seasonally Adjusted Annual Rate (SAAR) of sales at 9.34 million vehicles. Automakers report U.S. sales on Oct. 1.
"The aftereffects of Cash for Clunkers are still being felt: a significant number of September sales were pulled ahead into August, and many September shoppers left showrooms empty-handed after finding low inventories and high prices," said Edmunds.com CEO Jeremy Anwyl. "However, the industry's sales rebound is gaining momentum, so there is room for a small upside surprise on sales announcement day."
Ford is forecasting an increase in sales through the end of this year and a further rise in the next two years.
Ford CEO Alan Mulally told reporters in New Delhi, India, where Ford was launching a new small car, that U.S. car sales will hit 11 million this year then rise to 12.5 million in 2010 and 14.5 million in 2011, the year Ford vows it will break-even.
"That's pretty optimistic for 2009," said Jessica Caldwell, Edmunds.com senior analyst. "The industry would have to average 1 million sales for the next four months to achieve Ford's predicted 11 million."
It's been just over a week now since GM announced its new 60-day money-back guarantee. The good news is that car shoppers in Edmunds.com's CarSpace forums are talking a lot about it. The bad news, though, is that they don't have a lot of nice things to say.
Almost everyone agrees that the promise sounds great. But, like most savvy shoppers, they're wary of the fine print. Specifically, they want to know exactly how much dough they're getting back if it turns out they don't like that new Chevy Malibu after all.
General Motors Co. is counting on the 2010 Buick LaCrosse to be one of the company's first post- bankruptcy models to prove the company is serious about its professed new focus on developing only outstanding new products.
The LaCrosse may in fact be the most competitive and progressive Buick of the last 20 years. But whether the car can help change the perception of the brand and turn the heads of the luxury-car customers Buick is targeting is something that remains to be seen, according to data from Edmunds.com.
Buick officials have said they think the LaCrosse's blend of style, content and value will put the car on the consideration list of intenders for import entry-luxury sedans such as the Lexus ES 350 and Acura TL.
Edmunds.com has completed its final tally of the most popular vehicle purchases and most frequent trade-ins under the Cash for Clunkers. The Ford Focus held its No. 1 spot as the favorite buy; the Ford Explorer remained the No. 1 trade-in.
Indeed, the top 10 lists in both categories wound up little changed from the early scoring on Edmunds.com's lists.
And, in fact, many of the top clunker buys are the industry's bestsellers in non-clunker times. Eight of the 10 vehicles on the top 10 clunker buy list are also in the top 10 for the year so far in total; only the order is changed.
The precipitous drop-off in car sales after the conclusion of Cash for Clunkers is pushing transaction prices lower and squeezing dealer profit margins, Edmunds.com data shows.
In early August, Edmunds.com analysts reported that Cash for Clunkers shoppers were paying higher prices for their cars, perhaps neglecting to negotiate distracted by the government rebate. Limited supply and high demand drove prices up for everyone else as well.
Since the Car Allowance Rebate System (CARS) program ended on Aug. 25, car sales have dropped to their lowest rate of the year, and consumer discounts are increasing even as the average vehicle purchased is more expensive.
Suffering from a Cash for Clunkers hangover after August's party, September is on track to be the year's lowest rate of car sales, Edmunds.com forecasts.
"The best month of the year for car sales is being quickly followed by what could be the worst month of the year," said Edmunds.com CEO Jeremy Anwyl. "Cash for Clunkers was supposed to prime the pump, but that is a physics concept, and economics is quite different. Demand has dropped off significantly since the program ended."
Edmunds.com forecasts the Seasonally Adjusted Annual Rate (SAAR) of sales in September will plummet to 8.8 million for the year's lowest rate following the year's highest rate of 14.1 million in August.
New government data shows Cash for Clunkers had a significant impact on the U.S. economy and caused average vehicle prices in total to drop in August.
Cash for Clunkers triggered a 1.3-percent decline in the new vehicle price index - part of the monthly Consumer Price Index, the U.S. Labor Department reported Wednesday. The decline was the steepest in nearly four decades.
Behind the government numbers, data from Edmunds.com shows just why vehicle prices were pushed lower, an event not evolving into a trend.
General Motors 60-day moneyback guarantee is generating increased interest in Buick, Cadillac, Chevrolet and GMC vehicles, according to Edmunds.com.
Shopping consideration for GM vehicles on Edmunds.com's Web site -- which can suggest future sales -- has trended upward in the last three days, in the range of a 15 to 17 percent.
Chevrolet and GMC are getting the biggest consideration lifts from the ad campaign, according to Edmunds.com's data. Specific models getting more shopper attention than before are: the new Chevrolet Camaro sports car; the near-twin GMC Yukon and Chevrolet Tahoe SUVs; the new GMC Acadia crossover; and the GMC Sierra pickup.
Hangovers are hell, and in Europe as in the U.S., automakers fear with Cash for Clunkers programs ended or winding down, they are in for a big one.
In Europe, automakers are pushing their governments to continue Cash for Clunkers-like plans - known as scrappage programs -- for fear the bottom will fall out of car sales.
In the U.S., automakers aren't pressing for Cash for Clunkers 2.0, but they are worried about sales this month and through year-end.
General Motors' just-launched marketing program that provides the consumer with a 60-day moneyback guarantee on the purchase of a Buick, Cadillac, Chevrolet or GMC vehicle is generating interest in the early going, according to Edmunds.com and GM data.
Shopping consideration for GM vehicles on Edmunds.com's Web site -- which suggests future sales -- shows a 10 percent increase in the first couple of days since GM's "May the Best Car Win" campaign and the accompanying advertisements, featuring government-appointed chairman Ed Whitacre, hitting the airwaves on Sunday.
"What we'll be watching if GM's consideration stays at those levels or whether it rises or drops," said David Tompkins, Ph.D., Edmunds.com's executive director of Business Analytics. If it stays at 10 percent, he noted, that could result in a market share hike of 2 percent.
But it is too early to know which way GM consideration will go, he added.
Two of the three partners in the Global Engine Manufacturing Alliance are bowing out, leaving Chrysler Group LLC with a four-cylinder global engine family and lots of engine production capacity at a highly efficient plant in Dundee, Michigan
Hyundai Motor Co. and Mitsubishi Motors Corp. cut their ties with the GEMA venture last month, selling their shares to Chrysler for an undisclosed amount. The Dundee site began producing the jointly developed engines in October 2005. While two plants in Asia also produced the engines for Mitsubishi and Hyundai, the plan was for the two companies to also take engines supplied by the Dundee GEMA plant for vehicles Hyundai and Mitsubishi built in North America.
The closely watched Seasonally Adjusted Annual Rate of sales for September to date is approximately 8.9 million vehicles, according to Edmunds.com calculations. Of the vehicles sold so far this month, 3.6 percent are "holdover" Cash for Clunkers orders that are being delivered.
The August SAAR at 14.1 million, was the highest of the year due to the government's Car Allowance Rebate System (CARS) program, known as Cash for Clunkers. Much concern has been expressed about how long and severe the Cash for Clunkers hangover would be.
"The industry is still experiencing a depressed level of sales, but we're seeing modest improvement from week to week," said Edmunds.com CEO Jeremy Anwyl. "Soon we should surpass the level that the industry was at before Cash for Clunkers launched."
The first two weeks of September will see an annualized sales rate of 8.4 million, as the industry suffers a hangover from the Cash for Clunkers summer party, pulling the rate for the entire month to under 9 million, Edmunds.com forecasts.
But the hangover should subside near month's end. "If September plays out like the last two weeks did, we're looking at a Seasonally Adjusted Annualized Rate (SAAR) of sales of 8.4 million," said Edmunds.com Senior Analyst David Tompkins, Ph.D. "But the most likely scenario is that the pace of improvement will pick up through the month."
The government's Cash for Clunkers program made August an extraordinarily difficult month to predict. Analysts' forecasts for the month's annualized sales rate spanned an unprecedented 4 million range -- from a low of about 12 million to a high of 16 million. Edmunds.com's forecast proved too low at about 13.2 million.
Maybe America's love affair with pickup trucks isn't over. It's just getting smaller.
In both size and volume.
The recently ended federal Cash for Clunkers incentive was a giant boost for fuel-efficient cars. They dominated the top 10 list of new vehicles purchased by those trading clunkers. But if August sales reports are any indicator, more than a few of those Cash for Clunkers vouchers were used to buy midsize (formerly "compact") pickups.
General Motors and eBay Motors announced Tuesday they were extending their promotion that allows consumers to shop and start the buying process for Chevrolet, Buick, GMC and Pontiac vehicles voluntarily listed by the automaker's California dealers. The promotion, launched Aug. 11, was to expire Sept. 8 but has been extended through Sept. 30. It could eventually be rolled out nationally.
Meantime, Edmunds.com, parent of AutoObserver.com, has analyzed pricing of GM vehicles on eBay and is advising consumers to avoid the "Buy It Now" pricing option. Instead, consumers should choose the "Make an Offer" option. Otherwise, they are apt to pay too much.
The U.S. government's Cash for Clunkers program finished its job in August, boosting industry-wide U.S. sales to 1,261,799 vehicles, a 1.3-percent increase from a year earlier and a 26.7-percent boost from July, as American consumers rushed dealerships to turn in their well-used vehicles for more fuel-efficient new ones.
Automakers revisited long-abandoned, almost heady levels of sales, with the August results translating into a Seasonally Adjusted Annual Rate of 14.1 million units - equivalent to a yearly pace about five million units faster than the sales rate for the first half of this year, and much higher than the 10.5-million to 11-million-vehicle pace that industry executives still expect to prevail for the rest of 2009.
With American taxpayers footing the bill for Cash for Clunkers, automakers were able to lower their spending on incentives in August. And, in fact, automakers may still have paid more than they needed to in incentives.
The average automotive manufacturer incentive was $2,475 per vehicle for every vehicle sold in August, Edmunds.com estimates. That's down $231, or 8.5 percent, from July and down $327, or 11.7 percent, from August 2008, continuing a downward trend of several months.
"The industry spent a record $3,165 per vehicle in March, but ever since then, incentives have continuously fallen," said Jessica Caldwell, Edmunds.com's director of Industry Analysis.
However, the story may change in the coming months, she added, with the Cash for Clunkers program over, vehicle inventories low due to production cutbacks and brisk clunker sales. But now, factories are ramping up production to fill up the pipeline again -- production that may come into a market that isn't in the mood for buying.
Thanks to the government's Cash-For-Clunkers program, new-vehicle sales bounced around throughout the month of August, one of the most volatile periods in automotive history. Edmunds.com predicts the annualized sales rate could land at just more than 13 million for the month.
"Cash for Clunkers sent the sales rate on a wild roller coaster ride," said Edmunds.com Senior Analyst Jessica Caldwell. She said the Seasonally Adjusted Annualized Rate (SAAR) of sales exceeded 19 million in late July - the peak of Cash-For-Clunkers selling - and fluctuated around the 15-million mark in early August. But the SAAR has plunged to an 8-million rate in the post-Clunkers final days of the month.
"Ending August on such a low note does not bode well for September," Caldwell warned.
Prior to the Cash-For-Clunkers sales explosion, the last thing automakers would have considered was increasing production in their North American factories.
In answer to the worst industry sales slide in more than a generation, most had for more than a year being doing just the opposite - slashing production schedules - in an attempt to reduce bloated inventories suddenly and catastrophically out of line with consumer demand.
But Cash-For-Clunkers changed all that: in just four weeks, the federal incentive program squeezed more than a half-million buyers into showrooms. So much for that troublesome inventory.
Now the auto industry has to deal with the wholly unpredicted consequence of Cash-For-Clunkers' success: almost overnight, nobody has enough new vehicles to sell. And the equally ironic solution: raise production.
Watch out for a world of sales pain now that the federal Cash for Clunkers rebate program is over, as data from Edmunds.com projects a serious decline in industry sales for the coming weeks.
Edmunds.com's proprietary tracking of purchase intent from visitors to its Web site -- which has proven to be a reliable leading indicator of actual near-term industry sales -- has plunged some 50 percent from its peak during the Cash for Clunkers program.
It is an effect analysts had warned was likely.
"Cash for Clunkers distorted the market in a way that benefited the industry for four weeks -- now the payback begins," said Edmunds.com CEO Jeremy Anwyl.
With the news-dominating Cash for Clunkers program now officially finished, the auto industry can get back to normal: battling U.S. and global recessions and trying to figure out who's going to own half of the former divisions of General Motors Co.
The last month's news was devoted almost exclusively to Cash for Clunkers, so anybody could be forgiven for not being caught up on what's been happening with the sales of GM's Hummer, Saturn, Saab Automobiles and Adam Opel AG divisions. Here's the updated scorecard:
Opel
Suddenly, Opel is GM's problem child.
The company's board last week slapped down the bid from a consortium led by Canadian mega-supplier Magna International Inc., a deal that was favored by GM's management and had the vital blessing of the German government, which was to provide billions in assistance in exchange for Magna's vow to minimize job losses.
The much-examined Cash for Clunkers new-vehicle rebate program ends August 24 and the armchair quarterbacking has already started. Most evaluations of the program will focus on the government's inability to quickly process applications and reimburse dealers for the $3,500 or $4,500 rebates given to buyers.
The backlog of payments certainly affected dealer cashflow, particularly for smaller operations.
But according to new data from Edmunds.com, dealers (and automakers, ultimately) did enjoy more than a few offsetting perks: Besides hiking sales volumes, the Cash for Clunkers program, along with the resulting accelerated reduction of new-vehicle inventories, was responsible for immediately jacking up average transaction prices, margins -- and dealer profit.
No auto dealer is complaining about the extra customer traffic the Cash for Clunkers program has generated in the past weeks. But although the federal program has been a solid lifeline in what surely would have been a dead summer for sales, the Car Allowance Rebate System (CARS) is amounting to the ultimate in profitless prosperity for too many dealers.
Complicating the situation, data from Edmunds.com indicates that with the program nearing its conclusion - just announced to be Monday, Aug. 24 - Cash for Clunkers transactions are slowing markedly from highs of 40 percent or more of all new-vehicle sales to less than one in five new-car deals.
Despite the CARS program's undeniable invigoration of previously tomblike showrooms, angry and dispirited dealers across the nation said they had no choice but to give up on Cash for Clunkers participation. The government was so slow in repaying the $3,500 or $4,500 rebates they literally couldn't afford to keep selling new vehicles.
The government foot-dragging was so endangering the final days of the CARS program that General Motors Co., Toyota Motor Corp., Honda Motor Co. Ltd. and others stepped in today to say they will provide cash advances on Cash for Clunkers transactions so dealers don't have to wait for the feds to pay up.
Barely a week after showing it and many other pending new models and concept vehicles to the media and a select group of the public, General Motors Co. is pulling the plug on a Buick variant of the Chevrolet Equinox/GMC Terrain compact crossover the company only first confirmed weeks ago it would build.
The company announced the new Buick crossover just last month during a high-profile industry conference at which the recently-emerged-from-bankruptcy GM seemingly sought to generate some positive news. So the company said Buick -- the brand's minders still flush with the comparative success of the Enclave full-size crossover -- would try again to catch lightning in a bottle with its own model based on GM's global compact crossover architecture.
Better still, Buick would launch a plug-in hybrid variant in 2011, allowing GM to get some green mileage from the investment it made in the plug-in technology originally intended for the Saturn Vue version of this crossover family.
All that was before the media and GM's hand-picked "civilian" viewers got a look at the still-unnamed Buick, though.
General Motors Co. and Honda Motor Co. Ltd. are the latest automakers to spool up U.S. vehicle production to answer inventories depleted by the ongoing "Cash for Clunkers" new-vehicle rebate program.
GM will add one day shift at the Orion Township, Michigan, plant that assembles the Chevrolet Malibu midsize sedan; the plant currently is on a four-day work week. Also ramping up with the addition of a two-shift day will be the automaker's plant in Lordstown, Ohio, that produces the Chevrolet Cobalt compact cars, Dow Jones reported.
GM is expected to announce more production increases as it adjusts a third-quarter output that had been drastically reduced from year-ago levels. In extending the Car Allowance Rebate System, the official name of Cash for Clunkers, from the original $1 billion in funding to a total of $3 billion, the program has put unanticipated pressure on the stock of many of the most popular vehicles purchased by those trading clunkers.
Ford vehicles topped the most recent list of clunkers traded in and models bought to replace those clunkers as the Cash for Clunker frenzy slowed some from its end-of-July peak, Edmunds.com finds.
The Seasonally Adjusted Annualized Rate (SAAR) of vehicle sales dipped to a still high of 16 million for the first week of August. By comparison, the SAAR for the peak week of the government's Car Allowance Rebate System (CARS) -- the last week of July -- was 19.6 million.
From the CARS July 24 launch to August 7, the Ford Explorer SUV and Ford F-150 pickup truck were the No. 1 and No. 2 vehicles, respectively, traded in as official clunkers, according to Edmunds.com's calculations.
The Ford Escape and Ford Focus ranked No. 1 and No. 2, respectively, for vehicles purchased to replace those clunkers, according to Edmunds.com.
Interest in the Cash for Clunkers program is slowing, and, if the current trend continues, vehicle sales could be back to pre-Cash for Clunkers levels by August 20, Edmunds.com calculates.
Edmunds.com's analysis of purchase intent on the car-shopping Web site shows sales activity tied to the government's Car Allowance Rebate System (CARS) remains well above the period leading up to its July 27 public launch.
However, activity is 15 percent below the peak of the Cash for Clunkers frenzy, which occurred the last week of July and specifically on July 29. Barring any intervention such as a major incentive program or a significant uptick in the economy, sales will be back to pre-clunker levels by next week.
The case of the maybe-we're-making-it-or-maybe-we're-not Toyota-Subaru joint-venture sport
coupe was solved by new Toyota Motor Corp. president Akio Toyoda when he told reporters this week he was prioritizing development of the rear-drive car.
Although the coupe's development program was known, its status as a "live" project has been the topic of speculation. Toyoda's comment confirmed the company is committed to the project.
As the new president of the company, Toyoda, seemingly to underscore his dedication to addressing the conservative corporate culture that is perceived as holding Toyota back, said this week of the sport coupe, "I am very excited about it and I plan to put it on the fast track."
Cash for Clunkers definitely grabbed the attention of the American car buy.
Edmunds.com calculates that the Seasonally Adjusted Annualized Rate (SAAR) of sales in the last week of July hit a whopping 19.6 million. The SAAR for the month was pulled up to 12.5 million -- its highest level in a about a year, thanks to the end-of-month sales surge.
"There is no question that the program has generated results. The shopping activity we've witnessed has generated a SAAR of 19.6 million, remarkable compared with the industry's sales record of 17.4 million set in 2000," noted Edmunds.com Senior Analyst Jessica Caldwell. "Of course, this level of activity will not continue, as it reflects the behavior of those anxious and able to participate in the program -- and that is a limited set of people."
In the months just before Cash for Clunkers launched, 39 percent of new car sales involved a trade-in. Since then, 51 percent do. Prior to the program, nearly 9 percent of trade-ins were vehicles that would have qualified as "clunkers." Since the launch, 39 percent of trade-ins qualify.
Armed with more detailed 2010 model-year data regarding hybrid-electric vehicle pricing,
incentives and equipment levels that affects payback times, data analysts at Edmunds.com
are issuing revised payback times recently listed for several hybrid models.
Most notably, the battle between Toyota Motor Corp.'s new Prius and the equally new 2010 Insight from Honda Motor Co. Ltd. draws considerably closer than Edmunds.com's analysis originally reported.
Should the federal government fund a Cash for Clunkers extension, and is it worth the added
$2 billion cost as an economic and environmental stimulus?
Those are the questions the Senate considered this week as it debated the extension the House already passed. Data based on real Cash for Clunker transactions by Edmunds.com shows clearly vehicles turned in as clunkers -- mostly gas-guzzling trucks and SUVs -- would have been traded in at some point even without the program.
However, those vehicles were traded for vehicles that were more likely to be cars than trucks or SUVS and vehicles that deliver better fuel economy with the $3,500 to $4,500 government vouchers provided under the Car Allowance Rebate System (CARS).
Further, the clunker plan appears to have had a rub-off effect. The program created a feeding frenzy, with the last week of July generating a seasonally adjusted selling rate of a stunning 19.6 million vehicles. And those consumers buying vehicles regardless of trade-ins opted for smaller, more fuel-efficient cars during the Cash for Clunker program at a higher than usual rate.
Pressing U.S. Senators to pass a $2-billion extension to the Car Allowance Rebate System
(CARS) -- the riotously accepted "Cash For Clunkers" program projected to run through its original $1 billion backing in little more than a week - the Obama administration is citing the program's impact on reducing fuel consumption.
A note from the administration reportedly being distributed to lawmakers says the average fuel-economy gain between traded-in clunkers and the new vehicles purchased to replace them is 9.6 miles per gallon -- a 61 percent improvement. Purchased vehicles that improve fuel economy by at least 4 mpg net the clunker owner $3,500. New vehicles that achieve 10 mpg or better than the clunker they replace win the owner a $4,500 CARS rebate.
The crescendo of activity in American auto showrooms around the Cash for Clunkers program late last week produced a correspondingly huge surge in U.S. auto sales, and consumers kept scrounging through the weekend for fuel-efficient vehicles to buy under the generous government rebates.
Consequently, sales for all of July for the industry came up only 12 percent short of their level a year ago - when $4-a-gallon gasoline also was goosing shopper interest in fuel-efficient vehicles.
The race is on for which will run out first: government funding for Cash for Clunkers or the cars
popular for purchase by clunker traders.
The U.S. House handily passed a Cash for Clunkers extension that provides an added $2 billion to the program, bringing the total to $3 billion. The Senate takes up the matter this week where it faces more challenge by Democrats, who want higher fuel-economy requirements for the new vehicle bought with the clunker trade, and Republicans, who oppose more spending.
At the same time, consumers who are ditching their clunkers for the $3,500 or $4,500 credit toward the purchase of a new, more fuel-efficient vehicle face a dwindling selection and supply of the more popular vehicles.
Dozens of vehicles that are popular as clunker trades had under the ideal 60-day supply at the beginning of the month, Edmunds.com's analysis of inventory numbers showed. And those inventory levels are based on June sales -- before the Car Allowance Retail System (CARS) program kicked in July 24. More up-to-date inventory numbers won't be available until July sales are reported by manufacturers Monday.
Car buyers took advantage of incentives in July, but they came from the government through the Cash for Clunkers program more than from auto manufacturers, which actually lowered incentive spending from June, Edmunds.com estimates.
The average automotive manufacturer incentive was $2,735 per vehicle in July, down $134, or 4.7 percent, from June, and up $90, or 3.4 percent, from July 2008. Historically, incentives spending increased between June and July.
"Comparing June with July, incentives usually increase between $50 and $200 per car sold, but this year they are down $134 per car," said Jessica Caldwell, Edmunds.com's manager of Pricing and Industry Analysis. "The Cash for Clunkers frenzy has given automakers the opportunity to reduce their own investment in creating sales momentum, and to maximize profitability in the process."
Chrysler Group LLC said Friday it will continue production of the PT Cruiser compact wagon, although the company announced more than 18 months ago the car would be discontinued.
Chrysler restarted production in mid-June at the Toluca, Mexico, assembly plant that builds the PT Cruiser and the Dodge Journey crossover. It was one of seven Chrysler plants to resume production after an extended temporary shutdown as Chrysler dealt with ongoing inventory difficulties and its eventual bankruptcy and change in ownership.
Cash for Clunkers is generating new-car sales and showroom traffic for dealers but is also
creating confusion and drawing complaints withconsumers and dealers.
As of early Wednesday afternoon, the Department of Transportation had processed 16,351 transactions under the officially called Car Allowance Rebate System (CARS) for for a total of $68.9 million worth of deals through 22,300 dealers registered to participate. Congress has appropriated $1 billion for the program, which runs through November 1 or when the money runs out and includes costs to administer the program.
As of Thursday morning, the CARS site showed $858 million remaining to fund the clunker plan.
With gasoline and diesel fuel prices staying low -- and uncharacteristically consistent -- as
the summer progresses, data analysts at Edmunds.com
, parent of AutoObserver
, did a recent crunch of the often-discussed payback times for the nation's two competing fuel-saving drivetrains: hybrid-electric and diesel-engine vehicles.
The latest round goes to diesel.
There are two factors currently working in diesel's favor. First, diesel fuel prices have dropped precipitously since last summer's explosion to $4 per gallon (and beyond) and normalized to pricing quite near regular unleaded gasoline.
Much has been written - both pro and con - about the so-called Cash for Clunkers program
that officially launched Monday.
Complexity, limited eligibility and minimal funding are common criticisms, but a chief filing of the program, according to Edmunds.com CEO Jeremy Anwyl is the cost to taxpayers. Even if Cash for Clunkers reaches its budgeted cap of $1 billion, the program will only help drive about 50,000 incremental new car sales, each of which will cost taxpayers a whopping $20,000, according to Edmunds.com's research.
Hyundai Motor America said its early statistics on Cash for Clunker trades show an average 59 percent fuel economy gain between the clunker and the new vehicle purchased.
Hyundai became the first automaker to honor the government's Cash for Clunkers program- officially called Car Allowance Rebate System (CARS) -even though program rules were just released on Friday morning. At that same time, dealers began to sign up to administer the vouchers, which range from $3,500 to $4,500. Processing for the vouchers begins Monday.
The Cash for Clunkers program that's just kicking into gear and summer sell-down events offered by manufacturers could push July's selling rate over the long-hoped-for 10-million rate, Edmunds.com forecasts.
July vehicle sales, both retail and fleet, are expected to be about 950,000 units, for a nearly 10.5 million Seasonally Adjusted Annualized Rate (SAAR), according to Edmunds.com's forecast.
July sales, to be reported by automakers Aug. 4, would be down 16 percent from last July, but up nearly 11 percent from June, according to Edmunds.com's forecast.
DEARBORN, Michigan -- Here we go again. In a repeat of not-too-successful experiments of the past, automakers are once again going to see if luxury-car buyers will go for four-cylinder engines.
General Motors Corp.'s Buick will offer a base version of its new 2010 LaCrosse upper-midsize sedan later this year with a four-cylinder under the hood. GM execs have also said the Cadillac division won't rule it out.
The Lexus HS 250h goes on sale next month, and although attention will focus on the fact that it's a hybrid, the HS 250h still is working with a four-cylinder engine -- a first for Toyota Motor Corp.'s premium division.
Some of the newest vehicles introduced in the first half of 2009 are quickly becoming extremely important to their brands, according to an analysis by Edmunds.com
.
The crossover Audi Q5 has soared to become the No. 2 bestseller for the Audi brand behind the A4 upon which it is based. Though its sales numbers sound low at 5,670 sold in the first half, the Q5 now represents a whopping 17 percent of Audi's total sales.
SANTA MONICA, Calif. -- More than 100,000 car shoppers have been preparing to buy a car,
but haven't yet made the purchase and as a result July vehicle sales are likely to be on par with June sales.
"There has been a recent surge of purchase intent on the Edmunds.com shopping site that has not translated into sales," Edmunds.com Senior Analyst David Tompkins, PhD told AutoObserver.com.
"Given that this volume represents about 10 percent of the current market, automakers and dealers should find a way to capitalize on the opportunity and entice these folks to make a deal," Tompkins added.
On the FastLane blog
at General Motors Co.'s Web site, vice chairman Bob Lutz now concedes the company can't make a business case for rebadging the suddenly lamented Pontiac G8 sport sedan, the car that caused a first-week-on-the-job train wreck between Lutz's vision of GM's product-strategy future and that of CEO Fritz Henderson.
Days before and barely hours into his return to GM's salaried-exec payroll, Lutz said GM was going to rebadge the underappreciated, Australia-sourced Pontiac G8 as a Chevrolet, calling it a car "too good to waste."
The pronouncement flew directly against an earlier thumbs-down verdict about the G8 from Henderson, who said he does not favor rebadging and insists every model in GM's line "pay its own rent."
The annualized rate of car sales failed to hit the magical, hoped-for number of 10 million in June, but a couple of positive signs have come emerged in June, according to an analysis of June sales by Edmunds.com.
The time it takes for new vehicles to sell dropped from May to June as did the incentive spending needed to move the metal.
When General Motors Corp. announced 14 plant closings or standby shutdowns as part of its bankruptcy restructuring, the news hit hard - particularly for the thousands of workers tied to those facilities.
GM, which emerged from bankruptcy last Friday, has acknowledged its manufacturing empire must be smaller, leaner and meaner to match its emaciated market share as well as its profitable rivals' costs. While 14 facilities sounds like a lot, the move may not go far enough for the consolidation required to align production with the demands of a company with only four divisions.
General Motors and Chrysler will be challenged by weak future product plans while Ford
stands to gain market share with a relatively strongfuture product plan, a new report says.
Called Car Wars, the annual competitive analysis is produced by Banc of America Securities-Merrill Lynch and reported on by the Detroit Free Press Thursday, predicts:
- GM's market share losses will be greater than the automaker expects because of its skimpy future product plan;
- Chrysler's weak product pipeline is "an ominous sign"
- Ford's relatively strong future product plan could help it gain market share.
Like Sally Fieldwhen accepting her Best Actress Oscar, consumers seemed to be saying of
their new and redesigned vehicles "You like me ... you really like me."
Indeed, J. D. Power and Associates 2009 APEAL study, released Thursday, consumer satisfaction with their new and redesigned models at a three-year high. Report highlights include:
- Porsche ranked highest among nameplates for a fifth consecutive year; - Volkswagen captured four segment-level awards--more than any other vehicle nameplate in 2009; - new and redesigned models scored higher than last year's new and redesigned models and higher than this year's carryover models. - seven new and redesigned models ranked highest in their respective segments: Dodge Challenger; Ford F-150; Ford Flex; Hyundai Genesis; Nissan Maxima; Volkswagen CC and Volkswagen Tiguan.
U.S. industrial production is being dragged down by the lowest auto and auto parts
manufacturing in more than a decade, but it could get a boost from vehicle output as plantscrank up production in the coming months.
The government reported Wednesday that U.S. industrial production fell again in
June for the 17th consecutive month to its lowest level since July 1998.
But good news was the drop was smaller than experts had forecasted and it was the smallest decline in more than a year, suggesting manufacturing is stabilizing.
The automotive sector continued to drag down all factory output because of extended General Motors and Chrysler factory shutdowns during their bankruptcies. However, a major bump in vehicle production is expected this quarter.
The first six months of this year - one of the worst periods in recent history for vehicle sales - is over, so it's time to look at the leader board.
And as in golf, the automakers with the lowest scores win. Every automaker selling vehicles in the U.S. posted a sales decline, with the total industry recorded a 35.1-percent drop in sales for the first six months compared with the year-ago half, according to Edmunds.com's analysis.
The "winners" were those that lost the least.
So in this era when flat is the new up, Subaru was the ultimate winner. On the strength of its newly redesigned, award-winning Forester, Subaru recorded a scant 0.8 percent year-to-year sales decline.
Hyundai, buoyed by the Genesis and the brand's value proposition,was the winner in gaining the most market share for the first half of 2009
compared with the first six months of 2008, according to Edmunds.com's
analysis.
Kia, Subaru, Ford and Volkswagen were also gainers in the first six months.
The biggest loser was the Chrysler brand, followed closely by its sibling Dodge brand. Also big losers in market share were General Motors' Chevrolet and Saturn divisions. Toyota also lost.
The Russian connection is becoming a complicated one for General Motors Corp.
GM, emerging from Chapter 11 bankruptcy in the U.S. while simultaneously working to offload its Adam Opel AG division and operations in Europe, looked to have sealed the Opel deal with a consortium including Canada's Magna International Inc. and Russian automaker GAZ.
But last week, it appeared the presence of GAZ was a fly in the ointment, as GM (and perhaps other interests) reputedly balked at GAZ gaining access to certain GM technologies via the Opel purchase.
With several industry consultants and analysts predicting U.S. auto sales
would exceed a 10-million-unit Seasonally Adjusted Annualized Rate in June -- a much-anticipated watershed many believed would signal slumping auto sales are beginning a consistent recovery -- the real numbers didn't quite match the optimistic projections.
Instead, June's SAAR not only failed to hit the 10-million mark, the 9.66-million final tally even regressed from May's figure, according to data analysts at Edmunds.com.
One likely (but unintentional) culprit: the new "Cash for Clunkers" legislation signed by President Obama on June 24.
Automakers expressed more optimism about the U.S. car market despite the fact that overall sales in June fell by 28 percent compared with a year ago, to 859,420 vehicles. That represents only a slight improvement in year-ago comparisons over results for the first five months of this year.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, characterized the month cautiously. "It means, if nothing else, that things are not getting any worse, although things are not getting that much better, either. There was a lot of volatility, but there were signs of life."
Toprak added that June was "probably the best retail-demand month of the year."
Automakers selling vehicles in the U.S. report their June sales Wednesday, and the results are expected to show some stabilization in the business or at least a slowing of the decline.
The Seasonally Adjusted Annualized Rate (SAAR) is expected to come in at its highest level so far this year and could touch 10 million vehicles, according to a forecast by Edmunds.com, parent of AutoObserver.com.
SANTA MONICA, Calif. -- Automakers spent more in June on incentives than any June on record, Edmunds.com reports.
The average automaker incentive was $2,930 per vehicle sold in June up $489 -- or 20 percent, from a year ago, Edmunds.com estimates. Incentives were down a scant $22, or 0.8 percent, from May.
"June incentives have never been higher, but we anticipate that the tide is about to turn," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "The effects of recent production cuts are starting to be felt, and as supply dwindles, incentives will fall."
General Motors's Chapter 11 bankruptcy is winding its way toward completion -- perhaps even quicker than the lickety-split Chrysler bankruptcy restructuring. And everybody knows the plan, as it was with Chrysler, is to leverage the now-famous section 363 of the bankruptcy code to create a "good" GM that sallies forth with all of the company's best assets.
In addition to the numerous hard parts -- assembly plants, stamping facilities, powertrain- and other major component-making operations -- the "good" GM will comprise four major marketing divisions: Chevrolet, Cadillac, GMC and Buick.
Chevy need make no excuses: it is the domestic counterpart of Toyota, a sales channel for unapologetically mainstream cars and trucks that remains one of the most effective brands on the planet.
But Buick, Cadillac and GMC? Be careful, "new" GM and Obama Administration Auto Industry Task Force: recent sales and market-share data compiled by Edmunds.com shows these brands may not be the rock-solid foundation for the leaner, meaner GM they've led the company's new taxpayer-owners to believe is coming.
DETROIT -- General Motors will close its assembly plant and stamping operations in Shreveport, Louisiana, by 2012. The plant currently makes the midsize Chevrolet Colorado and GMC Canyon pickup trucks and Hummer H3 and H3T models.
It looked like only a few weeks ago that the Louisiana plant had dodged the plant-closing bullet when GM announced the sale of its Hummer brand to a Chinese company.
GM said then that if the sale goes through as planned during the third quarter, the Louisiana plant would be making Hummers for the new owner through "at least" 2010. Now the future of the H3, H3T -- as well as GM's small trucks -- is questionable.
SANTA MONICA, Calif. - June vehicle sales will hit their highest level of 2009 with a
Seasonally Adjusted Annualized Rate of 10.1 million when manufacturers report them Wednesday, Edmunds.com
forecasts.
"The SAAR is finally back in double-digits," observed Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "We're still a long way from 16 million unit sales, but things are moving in the right direction.
General Motors and Chrysler, which both were in Chapter 11 bankruptcy during the month, are expected to post market share gains in June compared with May, proving yet-again -- contrary to conventional wisdom -- that consumers will, indeed, buy cars from a bankrupt manufacturer, at least in these current tumultuous times.
Honda and Hyundai also are forecasted to show May-to-June market share gains. The gains come at the expense of share declines for Ford, Nissan and Toyota. Despite Ford's dip, the share for Detroit automakers is estimated to come in at 47.0 percent in June, up from 46.6 percent in June 2008 and from 46.5 percent in May.
Vehicles sold by General Motors and Chrysler, both of which filed for Chapter 11 bankruptcy
in recent months, dominated a list of the 15 slowest sellers in May, according to an analysis by Edmunds.com
, parent of AutoObserver.com
.
Of the 15 slowest-selling vehicles, 12 were made by American automakers. GM and Chrysler dominated the list. Ford had one vehicle on the list - the Mustang.
"It's really a reflection of a misstep of the American automakers," Edmunds.com analyst Jessica Caldwell.
Models from Korean brands, Kia and Hyundai, rounded out the list of 15 slow sellers.
DETROIT -- The financial turbulence of the global auto industry has not hurt vehicle quality. Quite the opposite, according to new data released Monday by J.D. Power and Associates.
"Vehicle quality is better than it has ever been," Dave Sargent, J.D. Power's vice president of automotive research, told the Automotive Press Association here as he announced the results of the 2009 Initial Quality Study. The study measures defects reported by buyers in the first 90 days of ownership.
"There's a positive disconnect. There's no correlation between the financial side of the business and the production side," said Sargent. "Despite the turbulence on the business side and concern for the future of their own jobs, the people who design and build vehicles are getting on with their jobs and keeping their eye on the ball. That's remarkable."
When gasoline prices plunged early this year, sales of hybrid-electric vehicles went South, too.
Quickly.
The timing may be unfortunate, but major hybrid players Toyota Motor Corp. and Honda Motor Co. Ltd. launched new hybrids this spring -- and both seem determined to grub out a larger portion of the yo-yoing hybrid market. That battle, the latest summertime jump for gasoline prices and the U.S. auto market's continuing gyrations are once again cranking up the attention on hybrids.
The so-called Cash for Clunkers legislation is up for a vote in the U.S. House of Representatives Tuesday with a Senate vote to follow shortly. If passed, the measure should be in effect sometime between July and September.
The legislation, which allows consumers to receive vouchers worth up to $4,500 on their trade-ins of clunkers for more fuel-efficient vehicles, may generate added sales of about 500,000 new vehicles this year, said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
In a throwback to a simpler era, the new Ford F-150's drop-down tailgate step has become an entertaining flashpoint in the marketing war between heavyweights in the pickup-truck segment.
In a current TV ad for the Silverado, Chevrolet's celebrity pitchster, Howie Long, tweaks the addition of the "man step" to the F-150 as an embarrassment -- because it only helps make up for the unreasonably long reach required to get over the tailgate to the bed of the F-150.
But Ford executives assert that Chevy's gambit actually highlights an appealing innovation for potential truck buyers -- and makes them more likely to choose an F-150.
"Our steps have done very well, because they're selling at about 30 percent of the mix of our F-150s," said Doug Scott, Ford's truck marketing manager. "So I hope GM keeps running the ad [in which] they're panning it."
SANTA MONICA, Calif. -- Edmunds.com has announced the winners of the Edmunds.com Consumers' Top Rated vehicle awards for 2009.
The winners were chosen through Edmunds.com's Consumer Ratings and Reviews feature, which allows owners to evaluate their new or used vehicles in eight different categories: performance, comfort, fuel economy, driving impressions, interior design, exterior design, build quality and reliability.
By Bill Visnic and Michelle Krebs
DETROIT -- Admitting the industry and economic downturn has taken a hard toll on luxury-car sales and possibly altered, at least for awhile, customers' thinking about their "wants" versus their needs, the sales boss for Toyota Motor Sales USA's Lexus luxury division says the worst may have passed.
Mark Templin, Lexus group vice president and general manager, says luxury has been beaten down -- maybe even disproportionately in relation to the battered overall auto market -- but he believes customers will come back to luxury cars, despite enduring a once-in-a-generation recession.
DETROIT - It's far too premature to break out the champagne and even too early to finally call the absolute bottom of one of the worst auto sales slumps in decades. But May sales reports from auto manufacturers in the U.S. hinted the worst just may be over.
"We saw glimmers of hope in May sales reports," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com.
SANTA MONICA -- Proof that the U.S. car market is in chaos: two automakers in bankruptcy are generating huge interest from car shoppers; Japanese automakers are spending record amounts on incentives, and luxury-maker Mercedes-Benz was the highest incentive spender of all brands in May.
"The industry is chaotic right now and every automaker is struggling to find something that works," stated Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "Many of the bankrupt brands are drawing an impressive amount of attention from bargain-hunters, but the rest of the automakers have their work cut out for them."
As auto company sales reports poured in Tuesday, Edmunds.com estimated the average automotive manufacturer incentive in the U.S. was $2,946 per vehicle sold in May, down $111, or 3.6 percent, from April, and up $622, or 26.8 percent, from May 2008.
SANTA MONICA, Calif. -- May car sales, due to be reported by auto manufacturer Tuesday, remain off by double-digits from last year, but the sales increase from April to May is in line with typical April-May seasonal bumps and the drop from a year ago is largely due to lower fleet sales, according to Edmunds.com's forecast.
For May, manufacturers are expected to report new vehicle sales -- retail and fleet -- of 890,000 units, a 36.1 percent decrease from the 1.4 million sold in May 2008 but an 8.9 percent increase from the 817,000 sold in April. A typical seasonal increase between April and May is a 9 percent rise. When adjusted for this difference in the number of selling days in May versus a year ago, sales decreased 33.6 percent.
That would put the Seasonally Adjusted Annualized Rate at about 9.5 million vehicles, up from 9.3 million in April.
The end is in sight for the recession, the worst in U.S. history since World War II that is now in its 17th month, but the recovery will be modest, a new poll indicates.
The survey of 45 professional forecasters released by the National Association of Business Economists (NABE) Wednesday showed about three-quarters expected the economic downturn to end by the third quarter of this year. The other quarter said the upturn would be in the fourth quarter this year or early 2010. None believed it would go beyond the first quarter of 2010.
However, of those who saw an upcoming recovery, they predicted a more moderate one compared with those after previous downturns because of continued job losses and plummeting home prices.
The survey comes on the heels of U.S. consumer confidence, still at historically depressed levels, surged to its highest level this month since last September.
The price of diesel fuel dipped to less than the price of a gallon of regular unleaded gasoline earlier this month, according to the Energy Information Administration (EIA).
The price inversion followed what the EIA said is a "traditional" spring transition for the price of the two fuels. But it also ends extensive auto-industry hand-wringing about the price of diesel, which for some time has not followed historic patterns and many blame for derailing ambitious plans to launch diesel-powered light vehicles in the U.S. market.
Consumer confidence, a key factor in car buying, rose in May by the most in six years and
at a level not seen since last September.
What must be music to automakers' ears is the fact that the Conference Board's report showed that Americans planning to buy a car in the next six months rose to the highest level since April 2008.
The Conference Board's index came in significantly higher than expected at 54.9. The Conference Board cited as reasons for the rise as more optimism about the future job market, climbing stock prices, falling mortgage rates and speculation that the recession's end is in sight.
The Obama administration's "Kennedy moment" of announcing high-minded new Corporate Average Fuel Economy (CAFE) standards of 39 miles per gallon for passenger cars and 30 mpg for light trucks by 2016 drew kudos across the nation this week -- even from the automakers.
The new CAFE numbers sound great. But judging by the popularity of the vehicles on sale right now that comply with the ambitious new targets, car buyers might not stampede to get their hands on the future high-mileage wunderkars.
To be blunt, many of today's vehicles that can comply with the new CAFE numbers -- mostly compact or subcompact cars, hybrid-electric vehicles or four-cylinder crossovers or pickups -- are not exactly sales overachievers. For example, of the 100 most purchased vehicles in the U.S., only 17 could comply with the new fuel economy standards.
SANTA MONICA, California -- Chrysler dealerships, whose franchise agreements have been terminated by the automaker effective June 9, are making significantly less profit on each vehicle sale, in large part, because they are offering the best deals to customers, Edmunds.com's analysis shows.
Profit margins for ill-fated Dodge dealerships are currently earning about $825 less per car, while closing Jeep dealerships are earning approximately $1,200 less per car.
One fully expected those gathered Wednesday in the White House rose garden -- environmentalists, captains of the global auto industry and government officials -- to break out into a rousing chorus of Kumbaya.
Everybody, including dueling parties normally at odds, expressed their delight with President Obama's announcement of the more stringent and earlier-than-planned fuel-economy and emissions standards that would be applied from sea to shining sea.
However, as in all things involving politics, the new fuel-economy standards aren't what they seem.
"Turns out that there are loopholes almost big enough to drive an SUV through," quipped Edmunds.com CEO Jeremy Anwyl.
DETROIT -- By now, everyone knows the raw sales numbers are bloody red: the full-size pickup market was one of the first to be savaged by last summer's high gasoline prices and by the end of 2008, pffft -- five points of market share and some three-quarters of a million units were gone.
Maybe never to return. At least to the segment's former glories.
But there may be a sliver of a silver lining in the pickup sales plunge. At least one automaker -- Ford Motor Co. -- says those still buying pickups are splurging. Since its launch late last year, the "mix" of Ford's new '09 F-Series has been unexpectedly rich, slanted toward more expensive and heavily optioned models and trim levels.
The best example: the F-Series' ultra-plush Platinum -- the new top-of-the-line trim level -- has run at 8 percent of the total F-Series mix. Ford predicted a 3 percent take rate.
SANTA MONICA, Calif. -- A Cash for Clunkers program edging its way through Congress could create a desperately needed sales boom for automakers and their dealers if Congress moves quickly, according to Edmunds.com's analysis.
However, if legislation lingers in Congress too long, new-car sales could stall as consumers wait for the final program to be passed.
"Congress needs to pull the trigger," says Edmunds.com CEO Jeremy Anwyl. "The more the publicity on Cash for Clunkers, the more likely sales will drop off as people wait."
SANTA MONICA, Calif. -- Despite General Motors and Chrysler executives insisting for months that the spigot for sales and shoppers would shut off with a bankruptcy filing, quite the opposite has occurred with Chrysler of late, according to data collected by Edmunds.com
, parent of AutoObserver.com
.
On Thursday, Chrysler filed for Chapter 11 reorganization in bankruptcy court. Since then, the visitors on Edmunds.com's Web site who are shopping for Chrysler models shot up 15 percent. By comparison, GM's shopping consideration dropped 6 percent since Thursday and Ford's was up 7 percent.
"Maybe It's the Obama bounce," suggests Edmunds.com CEO Jeremy Anwyl.
DETROIT -- Chrysler has launched a major advertising campaign, to be coupled with a cash and dealer incentives, in its effort to convincenew buyers to purchase Chrysler, Dodge and Jeep vehicles and keep current owners in the fold.
But even before it officially filed for Chapter 11 bankruptcy last Thursday, Chrysler was struggling to maintain its once-loyal buyers. In the months leading up to Chrysler's bankruptcy filing -- and despite some of the highest incentives ever in the U.S. auto industry doled out by Chrysler -- the automaker's customer loyalty has dropped on the news of its financial duress. Customer loyalty fell below 50 percent in April, according to Edmunds.com's data. That is, less than half of Chrysler owners who traded in their vehicle did so for another Chrysler, Dodge or Jeep vehicle.
Around mid-February when General Motors placed Saturn on the chopping block, number-crunchers at Edmunds.com
were shocked to discover how badly the brand had eroded -- already more than a year ago.
Edmunds.com figures showed that way back in January 2008, Saturn customers were demonstrating the least loyalty of any in the entire U.S. auto industry: Fewer than 5 percent of those who traded in a Saturn purchased another one.
That paltry showing contrasted with a loyalty factor for all of 2008 of more than 51 percent for Subaru, nearly 49 percent for Hyundai, and more than 47 percent even for Saturn's sibling brand, Chevrolet.
"Saturn's numbers even back then were horrendous," said Jessica Caldwell, industry analyst for Santa Monica, California-based Edmunds. "They had lost their message along the way. Saturn wasn't sporty, wasn't utility-oriented, wasn't even necessarily value-oriented. It had just become a one-off of other GM products."
SANTA MONICA, Calif. - Sky-high incentives spending is reaching a point of diminishing returns and actually may be hurting some automakers more than helping.
"For some automakers, March's high incentives diluted brand image and hurt residual values while delivering only a negligible lift in sales," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "The April sales reports may prove that there is a point of diminishing returns for incentives spending."
April's auto sales numbers looked pretty much like those from March, and February, and January - abysmal. Industrywide sales plunged by 34 percent last month compared with a year earlier, continuing the first-quarter trend of dreadful comparisons tied to a moribund economy.
But in those April results, carmaker executives and analysts on Friday also thought they saw more than just the latest in a long string of awful comparisons with 2008. Almost to a person, they interpreted April's performance and other economic data as painting at least a near bottom of the dreadful U.S. car market - and as the harbinger of an eventual recovery.
"We won't truly be able to call the bottom until summer when we can look back at three consecutive months of increase in the annualized rate of sales," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "We had expected April would be the start of that. And April's annualized sales rate, while lower than March, still didn't dip to February level."
SANTA MONICA, Calif. -- April vehicle sales are looking like they will come in at a Seasonally Adjusted Annualized Rate of 10 million. That's certainly nothing to brag about in normal times and compared with the last decade. Still, April looks to be the best month in several and up from 9.1 million in February.
"The industry is slowly picking up much-needed momentum; a 'cash for clunkers program' could help while an automaker bankruptcy could hurt, depending on how consumer confidence is affected," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Ford Motor Co. reports its first-quarter financial results on Friday and is expected to lose
$3.2 billion for its largest first-quarter loss in 17 years, according to the average of analysts by four analysts surveyed by Bloomberg News
.
Still, Bloomberg reported, Ford is likely to be able to steer clear of loans from the U.S. government, like those as General Motors and Chrysler have required. Loan-free Ford is expected to benefit from loan-laden GM and Chrysler, who still may be forced into bankruptcy. Analysts believe Ford has made enough cost reductions to maintain sufficient liquidity to 2010.
Goldman Sachs has increased its forecast for 2009 new vehicle sales from 10 million to 11 million.
Goldman analyst Patrick Archambault said his optimism comes from the likelihood that Congress will pass a cash-for-clunkers bill, one that could add 750,000 to 1 million vehicle sales this year as consumers turn in their old cars for new new ones for a government rebate. Archambault also sees improvement in consumer confidence.
DETROIT - General Motors plans to extend its usual summer shutdown from two weeks to as much as two months for many of its North American assembly plants as it attempts to reduce its record-high inventories of unsold vehicles.
GM's inventories, among the highest in the industry, are the highest since Edmunds.com began keeping records. Sales, and in turn revenues, have not picked up as GM had hoped as the slow sales months of the summer approach.
The move clearly is anticipation as well of a possible Chapter 11 filing that, GM has long argued, would shut off the sales tap even further as customers steered clear of a bankrupt company.
SANTA MONICA, Calif. -- The 2010 Toyota Prius beat the 2010 Honda Insight in a
comparison test conducted by Inside Line
, Edmunds.com's
online enthusiast car magazine.
"The 2010 Toyota Prius is quicker, it stops shorter and, with its smoother ride quality and quieter cabin, it's the one you want to be in when commuting," says Erin Riches, Edmunds' Inside Line senior editor.
In the comparison test, the 2010 Honda Insight was praised for its steering and for the responsiveness of its continuously variable transmission (CVT).
DETROIT -- Reports have heated up of late that General Motors will file for Chapter 11
bankruptcy in late spring or early summer, emerging as a smaller but viable company in as little as two weeks or two to four months at most in a so-called "quick rinse" bankruptcy.
Both of these scenarios are exceedingly optimistic, say bankruptcy experts at the Detroit-based law firm of Plunkett Cooney. And done too quickly, a GM bankruptcy may become a 'rinse and repeat' bankruptcy," said Doug Bernstein, head of Plunkett Cooney's Banking, Bankruptcy and Creditors' Rights practice group.
With a May 1 deadline to make a deal with stakeholders -- a prerequisite of subsequently partnering with Fiat S.p.A. -- bearing down on Chrysler LLC lest the Obama administration's Auto Task Force take Chrysler into some form of bankruptcy, the posturing is heating up, particularly from Fiat Chief Executive Office Sergio Marchionne.
First, Marchionne threatened Fiat will deep-six its offer to tie up with Chrysler if the company cannot wrest further wage concessions from its U.S. and Canadian labor unions, concessions presumably to bring wages to parity with non-unionized Japanese transplant automakers in the U.S.
The unsubtle warning failed to immediately produce the desired result from either the United Auto Workers or the Canadian auto workers unions.
A new study brings a glimmer of positive news for the embattled U.S. manufacturing sector,
saying U.S. producers are making headway in reducing structural costs.
The Manufacturing Institute and the Manufacturers Alliance/MAPI says U.S. manufacturers have reduced five primary structural-cost measures compared with foreign manufacturers that make a comparable product, according to a commentary in the Pittsburgh Post-Gazette.
The study, aided by the accounting firm of Deloitte and reported by Deloitte employee Dmitri D. Shiry to the Post-Gazette, says the structural-cost "gap" between U.S. manufacturers and foreign producers making a similar product was cut to 17.6 percent in 2007 versus 31.7 percent in 2006. The 2006 disadvantage of 31.7 percent was a markedly worse figure than 2004's structural-cost gap of 22.4 percent.
Headlines declared the auto industry achieved a showroom mini-victory in March by markedly improving sales over a dismal February. But the improved numbers were something like lipstick on a pig as March's boost nonetheless concealed some ugly realities.
One of the most foreboding trends to continue despite the March uptick: the still-accelerating plunge of the full-size pickup truck market. If segment sales do not stabilize this year, revenue-ravaged automakers may have to take drastic measures.
SANTA MONICA, Calif. -- Inside Line, Edmunds.com's online car magazine and sister site
of AutoObserver.com
, announced Wednesday that the 2010 Chevrolet Camaro SS took first place in its latest comparison test of iconic muscle cars.
"Car enthusiasts can rejoice that all three of these legendary pony cars have made a comeback," says Jay Kavanagh, Edmunds' Inside Line Engineering Editor. "But the 2010 Chevrolet Camaro SS leads the pack with its combination of power, speed and attitude."
WASHINGTON -- Turns out, auto engineers have been right all along: size matters and you
can't defy physics in crashes.
The latest report from the Insurance Institute for Highway Safety (IIHS) shows that even the best small cars do poorly in head-on collisions even with only somewhat bigger midsize sedans from the same manufacturer.
"Minicars as a group do a comparatively poor job of protecting people in crashes, simply because they're smaller and lighter," Adrian Lund, president of the insurance industry-funded group, said in a statement. "In collisions with bigger vehicles, the forces acting on the smaller ones are higher."
The IIHS notes that frontal crashes are the most dangerous traffic accidents, causing about 15,000 out of roughly 40,000 U.S. traffic deaths annually.
BMW and Toyota were the only two auto companies to make the list of 99 of the world's most ethical companies in the Ethisphere Institute's third annual rankings announced Monday.
"The mission of our group is to improve corporate behavior," said Alex Brigham, executive director of the international think-tank based in New York dedicated to the advancement of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability.
Saturn dealerships are closing at a steady rate despite pleas from General Motors
executives to hold on, trade journal Automotive News
reports.
On January 1, Saturn had 420 stores in the United States. That dropped to 405 on February 15 and 384 on April 6. Last week, three dealerships in the Kansas City area and one in Springfield, Missouri, closed.
Saturn and its dealers are looking for an alternative ownership situation, one that may allow for the distribution of non-Saturn and non-GM products, including those from emerging markets like China and India.
NEW YORK -- Yet another newspaper report claims General Motors is preparing to file for
bankruptcy at the urging of the Obama administration.
This time, it is The New York Times reporting in Sunday's edition that the U.S. Treasury Department is directing the automaker to lay the groundwork for a bankruptcy filing by June 1.
Citing unnamed sources supposedly briefed on the GM's plans, the Times reports the goal is to prepare for a fast "surgical" bankruptcy if the automaker can't reach agreement with bondholders and the United Automobile Workers union for a debt-for-equity swap.
LONDON -- It's not all doom and gloom if General Motors and Chrysler go bankrupt, a new report says. In fact, some automakers will benefit from their bankruptcy.
GM and Chrysler competitors could gain pre-tax profit of more than $24 billion if the companies are forced to dramatically downsize after some kind of bankruptcy, says a report from Bernstein Research in London and reported on by the Detroit News.
In the U.S., Ford would benefit most with GM and Chrysler customers deflecting to its brand. Ford would be followed by the Japanese automakers and Germany's Volkswagen.
Two new studies released by pubic-interest organizations are putting up the orange cones on the growing trend toward privatization of public roadways.
The Pittsburgh Post-Gazette reports this week that the wide-ranging U.S. Public Interest Research Group warns of "big potential downsides for the public" in road privatization schemes.
The Post-Gazette also quoted the PIRG-developed "Private Roads, Public Costs" report as saying, "Road privatization offers a hard-to-resist 'quick fix' for state budget and transportation challenges. But there are hidden costs to privatization."
Europe is now experiencing the same counterintuitive phenomenon that was recently noted in the States: that some new cars are selling for less than their used counterparts.
The Financial Times in London points out in a story published Thursday that aggressive discounts on new vehicles and a shortage of high-quality, late-model used cars that has pushed up used car prices is resulting in new cars selling for less than used cars.
Earlier this month, an analysis by Edmunds.com, parent of AutoObserver.com, showed the same situation in the U.S.
SANTA MONICA, Calif. -- Ford's choice and ability to avoid taking loans from U.S.
governmentis paying dividends inincreased shopping by consumers.
An analysis of shopping on its Web site by Edmunds.com, parent of AutoObserver.com, shows the number of visitors who shopped for Ford vehicles in the first three months of this year rose 12 percent compared with the same period a year ago.
At the same time, the number of shoppers considering vehicles from General Motors and Chrysler, both of which have taken loans from the U.S. government, declined 19 percent and 15 percent respectively during the same period.
Withfewer than 30 days nowto cement a partnership with Italy's Fiat S.p.A. or else, Chrysler LLC's prospects for survival -- at least in something resembling its current form -- are slimmer than the lapels on Fiat President Luca Cordero di Montezemolo's suit.
Thirty days to structure a complex, transcontinental and cross-cultural manufacturing and product-development alliance when both companies are in financial distress, auto markets on their home continents are dangerously depressed -- and their respective top management as recently as last week wasn't even on the same
page regarding the most basic elements of the deal?
Auto-industry alliances often do not turn out well -- and can be assumed not to begin any better when devised under the condition that one party has a date in bankruptcy court if the plan doesn't happen.
A late-month uptick caused March car and truck sales to surpass forecasters' expectations, providing a glimmer of hope to the U.S. auto industry that the long and ugly drought is nearing an end.
"We started to see some signs of life in the March numbers," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver.com. His remark echoed similar comments made by auto company executives and analysts as they delivered their March sales results Wednesday.
Particularly encouraging to everyone was the rise in the annualized rate and the above-average hike in sales from February to March.
SANTA MONICA, Calif. -- Automaker incentives set a new all-time high in March, even though it appears they didn't helpsales much, according to Edmunds.com
.
The average automotive manufacturer incentive was $3,169 per vehicle sold in March, the highest industry average on record.
"Automakers are pulling every lever in their effort to attract buyers, as evidenced by the new programs from Ford and General Motors," stated Jesse Toprak, Edmunds' executive director of Industry Analysis. "The typical incentive programs simply do not resonate in today's economy."
SANTA MONICA, Calif. -- March car sales to be reported April 1 by manufacturers look a lot like February car sales, and that's not a good thing since March traditionally marks the kick off of the busy spring selling season.
"If sales continue at this pace all year, we're looking at a Seasonally Adjusted Annual Rate of only 8.9 million vehicles sold, which is slightly more than half of 2007 sales," said Edmunds.com CEO Jeremy Anwyl.
AUBURN HILLS, Mich. -- In the weeks leading up to March 31, the day President Obama's auto industry task force gives some directionabout whether the government will continue to invest billions to keep General Motors and Chrysler afloat, Chrysler executives have spoken in terms that seem to indicate a festering anxiety at the company's headquarters here.
In some cases, executives have issued threats. Some have deeply contradicted one another. Always-provocative CEO Bob Nardelli has contradicted himself.
And last Thursday, Chrysler Chief Financial Officer Ron Kolka violated the spirit of "we're all in this together" with probably the most inflammatory -- and reckless -- remark yet; Bloomberg News reported Kolka as saying Chrysler could be considered more deserving than GM of receiving continued government assistance.
DETROIT -- And here comes yet another survey showing that Americans oppose government loans to General Motors and Chrysler, just as the two face a March 31 deadline to convince the government they have made progress, deserve to keep the money they've received and should get more.
This survey comes from Detroit-based R.L. Polk & Co., released on Monday. It shows 61 percent of Americans oppose the loans.
Even the seemingly strong and mighty need help in this dismal economic environment as was proven over the weekend when Germany's Daimler AG, parent of Mercedes-Benz, sold nearly $3 billion worth of shares to an Abu Dhabi investment firm. Thestock sales will generate much-needed cash for the automaker and give Daimler a single large shareholder toward off any potential takeover by an outsider.
The two companies announced Sunday night that Aabar Investments PJSC would buy 96.4 million of new Daimler shares for $2.7 billion. Aabar, with a 9.1 percent stake in Daimler, now becomes Daimler's largest shareholder.
SANTA MONICA, Calif. - The deals on some new cars are so generous that they actually
make the new car less expensive than the one-year old used version of the same model, according to a pricing analysis by Edmunds.com
, parent of AutoObserver.com
.
"Compared with new vehicles sales - which are at lows unseen in decades - the used car market is doing well," observed Edmunds.com CEO Jeremy Anwyl. "Desirable used vehicles are becoming harder to find, pushing up their prices, while today's new cars are heavily discounted. This is creating an unusual economic event: It can actually be less expensive to purchase a new car than a used car."
WESTLAKE VILLAGE, Calif. - Buick and Jaguar ranked highest in vehicle dependability, in a tie for first place in the J.D. Power and Associates 2009 Vehicle Dependability Study released Thursday morning.
Buick climbed to the top this year from sixth place in the 2008 rankings; Jaguar moved up from 10th place. Both surpassed Toyota and its luxury division Lexus, though Toyota and Lexus immediately followed in the No. 3 and 4 spots while also nabbing the most individual categories for vehicle dependability.
"Buick has ranked among the top 10 nameplates each year since the study was last redesigned in 2003, while Jaguar has moved rapidly up the rankings," David Sargent, vice president of automotive research at J.D. Power and Associates, said in a statement.
"Lexus remains a very strong competitor in long-term quality. In particular, the Lexus LS 430 sets the industry standard for dependability, with fewer problems reported than any other model in the study," Sargent added.
With industry sales continuing to grenade and analysts continuing to revise downward their 2009 full-year forecasts, the watchword in the market is "incentives" -- even for many new and relatively new models.
The need to put money immediately on the hood must be painful for automakers seeking to improve their cash flow positions, but ongoing credit pressure and flagging consumer confidence seemingly have left few options, even for models that in a normal environment likely would have been considered incentive-proof (at least for awhile).
Nissan just announced that it plans to stay away from the North American International Auto Show in Detroit next year, as the company did this year. It also plans to skip other major U.S. shows and dozens of smaller ones scattered across the country, as well as the Frankfurt exhibition this September.
But as auto company executives, suppliers and the global news media gathered in Geneva last week for one of the most prestigious regular shows, Nissan appears to be alone in its strategy of making draconian cuts in its annual exhibition budget to help get costs under control in this severe sales environment.
In fact, most other automakers -- even badly damaged Chrysler -- so far are making it a point to stick with their expensive investments in auto-show participation.
With industry trade journal Automotive News this week quoting a spokesman from General Motors Corp.'s Saturn division as saying there are prospective buyers for the perpetually underachieving division, it occurred to AutoObserver that the auto-industry conventional wisdom on this subject is dead wrong: the global economic disintegration hasn't dissuaded anyone from considering investment in a money-bleeding car brand.
When February sales were tallied this week, Ford Motor Co. reported aggregate sales for its Ford, Lincoln and Mercury brands of 96,044. It was the first time in Edmunds.com
sales data reaching back to 1991 that Ford monthly sales dipped below the 100,000-unit mark.
Even adding the 3,356 units sold last month by Ford-owned Volvo Cars couldn't buoy Ford above the 100,000-unit threshold.
DETROIT - Americans, unemployed or fearing they will be, hunkered down last month, cutting their household budgets, squirreling away money and avoiding dealer showrooms as February car sales sunk to their lowest level of any February in more than four decades.
Automakers sold 691,073 vehicles in February, down 40.9 percent from the 1,168,729 they sold in February a year ago. That marked the lowest level of car sales for any February since 1967, according to General Motors' record books. That fact is even more eye-popping when population is considered: in 1967, the U.S. had 103 million registered drivers; today the nation has nearly twice that many.
And it put the closely-monitored Seasonally Adjusted Annualized Rate (SAAR) at 9.1 million vehicles, the lowest SAAR since 1982.
Not coincidentally, consumer confidence, a key indicator for how vehicle sales will fare, sunk to record lows in February, according to at least two measurements. And much of that has to do with dimming employment picture as well as dwindling household worth.
Shares in General Motors Corp. got on board for another broad U.S. stock market plunge Monday as a new study from researchers at uber-egghead Carnegie Mellon University sayselectricity-intensive hybridssuch as GM's Chevrolet Volt "extended-range" electric vehicle won't be the ultimate environmental answer GM touts.
The Carnegie Mellon study, reported on by Edmunds Green Car Advisor Friday, is another setback for battered GM, whose stock price last week briefly visited a low -- $1.52 -- not seen since just after the Great Depression and today was again struggling to stay above the $2 mark as the Dow Jones Industrial Average slid to its own new lows. GM last week also reported an annual loss for 2008 of $30.9 billion, an amount exceeded in GM corporate history only by the $38 billion GM lost in 2007.
The restructuring plan Chrysler LLC submitted February 17 to the U.S. Department of Treasury maps three potential outcomes -- and all will be expensive.
Short of the most-drastic scenario -- liquidation -- Chrysler's other two options, if they are to lead to the company's long-term viability, are dependent on a number of questionable assumptions and one indisputable fact: If auto sales in the U.S. do not increase quickly and markedly, nothing Chrysler does is likely to pull it from its death spiral.
With another month of dismal sales predicted for February, three forecasts released this week revise U.S. car sales for 2009 downward.
- Edmunds.com has cut its forecast by more than a million units to 10.1 million vehicle sales for 2009.
- J.D. Power and Associates has shaved its forecast by a million vehicles as well. The company puts 2009 sales at 10.4 million vehicles, down from the previous forecast of 11.4 million.
- Even Ford Motor Co., which had one of the rosier forecasts, reported in government documents that it had reduced its downside outlook for the year to 10.5 million vehicles, the same amount GM said it had conservatively estimated.
A survey conducted by theUSA Today newspaper and Gallup poll this week found only 25 percent of Americans believe the government should continue lending money to Detroit automakers.
"That's a huge, and fast, change of heart," said USA Today's Jim Healey, who added that in December, before the government approved emergency auto loans, 61 percent favored federal help for the automakers.
With the United Auto Workers (UAW) submitting to its rank and file a proposed Ford Motor Co. amendment to the 2007 labor contract that asks the UAW to accept half of Ford's obligation to the union's Voluntary Employee Benefit Association trust, UAW leadership appears to be choosing the lesser of potential evils.
If any of the Detroit Three automakers that owe payments to the VEBA -- an amount totaling nearly $60 billion -- declare or are otherwise forced into bankruptcy, the trust that was established to fund health-care costs for UAW retirees could be shattered, says one bankruptcy expert.
Car owners, as suspected, are hanging onto their current vehicles longer -- and longer and longer.
The average age of trade-ins has been edging higher every year since 2004, according to recent data compiled by Edmunds.com, parent of AutoObserver.com. Today, the average age of a trade-in is nearly six years old, more than a year older than its counterpart five years ago.
In 2004, the average trade-in was 4.32 years old. For 2008, the average trade-in was 5.3 years old. In the first two months of this year, the age jumped to 5.95 years old.
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
February car sales, to be posted by automakers Tuesday, are expected to be down about 40 percent from a year ago to 685,000 vehicles sold for the month, according to Edmunds.com, parent of AutoObserver.com.
That puts the closely watched Seasonally Adjusted Annual Rate (SAAR) for the month at 9.3 million vehicles, down from 9.6 million the previous month.
"The fluctuation in car sales and the instability of the stock market are just two examples of the volatility in the marketplace, which is wreaking havoc on consumer confidence and hampering any economic recovery," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
SANTA MONICA, Calif. -- Hyundai and Audi delivered a one-two punch with their Super Bowl commercials and now their ads on Sunday night's Academy Awards program.
For both events, both automakers scored a significant boost in Edmunds.com's car-shopping Web site, according to analysis of the ads' impact by the Santa Monica, California, company.
"This is proof that when you have a powerful message, television advertising still works," noted Jeremy Anwyl, CEO of Edmunds.com, parent of AutoObserver.com.
Details in the hundred pages-plus of General Motors Corp.'s 2009-2014 restructuring plan submitted to the U.S. Dept. of Treasury last week show the General to be confident and optimistic on several matters regarding its survival and planned revival. Perhaps exceedingly so.
And GM offers more than a few intriguing strategic and business-plan revelations that are worthy at least of a raised eyebrow.
SANTA MONICA, Calif. -- At a time when automakers are desperate for every sale that they
can make, a significant number of shoppers are drifting out of the new-car market and purchasing a used car instead.
Edmunds.com has determined that approximately 510,800 used cars sold in the past three months would have been new-car sales in a different economy. In manufacturing terms, that amounts to about two assembly plants of new-car production.
Projecting ahead, this could represent a seasonally adjusted annual rate (SAAR) of more than 2 million vehicles, which equates to more than 15 percent of total new-car sales.
DETROIT -- Today is V-Day -- Viability Day -- for General Motors and Chrysler.
As part of their acceptance of $17.4 billion in government loans to stay afloat, the two must submit reports on their progress regarding how they are becoming economically viable.
Increasingly experts believe one or both ultimately will file for Chapter 11 reorganization under U.S. bankruptcy laws, particularly because auto sales have continued their plummet.
"If I were betting, I'd say it (Chapter 11 filing) will happen," said Douglas Bernstein, a lawyer specializing in bankruptcy and a managing partner with the Detroit law firm of Plunkett Cooney.
DETROIT -- Chrysler and Nissan have put on hold their proposed arrangement to build vehicles for each other as they each evaluate their deteriorating financial situations in a worsening global economy and historically dismal car market.
The two companies had announced last spring that Chrysler would build a Dodge Ram-based replacement for the Nissan Titan
while Nissan would provide Chrysler withNissan-based small cars, one of which would be sold as the Dodge Hornet.
The on-hold project raises questions about Chrysler's ability to move forward with a partner and Nissan's product plans for North America.
Chrysler has been socked by two lawsuits in as many days, prompting at least one expert to wonder if more lawsuits can be expected and force Chrysler into official bankruptcy proceedings.
French-based Faurecia has sued Chrysler, claiming the automaker owes the supplier $110 million for engineering and research costs as well as handing its research over to the Chinese.
Another lawsuit filed in Delaware charges Chrysler is automatically denying workers' compensation claims over a spinal-cord treatment for employees injured on the job. The suit seeks class-action status.
Meantime, a bankruptcy lawyer in Detroit suggests a flurry of lawsuits is often a reason for companies to file for bankruptcy.
DETROIT -- U.S. vehicle sales are expected to drop another 19 percent this year to to 10.7
million vehicles, according to the latest forecast from Detroit-based automotive research firm R.L. Polk & Co.
Polk estimates the 2009 sales split will be 8.5 million retail sales and 2.2 million fleet sales. The firm further predictsU.S. vehicle sales won't stabilize to the 16 million units annually seen in2007 for a few more years at least.
"With the inability to use rising home prices to generate liquidity and tighter lending rules, the U.S. market stabilizing around 16 million units will occur within three to five years, depending on the efficiency of the government stimulus package, said Lionel Yron, Polk's director of Consulting & Analytics.
Global vehicle sales are expected to slow to 56.8 million vehicles in 2009, a 13 percent decline from 2008, according Polk. Vehicle sales in Western Europe will shrink to 13.5 million units this year, a 12 percent drop. Asia sales will fall to 12.4 million compared with 13.3 million last year, Polk says.
DALLAS -- The affordability of motor vehicles -- and the wallets of consumers buying them -- took a hit in the fourth quarter of 2008 from the sharp rise in the average interest rate on car loans, the Dallas-based Comerica Bank reported Tuesday.
"The underlying data show quite clearly that car buyers are facing stringent financing conditions," said Comerica's Chief Economist Dana Johnson. "In the latest quarter, car buyers had to put down bigger down payments, pay higher interest rates, and limit the maturity of their loans."
The Conference Board's latest measurement of job losses shows a further fall in January, indicating a rapid pace of job losses and persistence in those job losses for several more months.
"The Employment Trends Index has recently been declining faster than at any time since the 1974 recession," said Gad Levanon, senior economist at The Conference Board, in a statement.
Joining the list of auto companies denying they are interested in purchases of or alliances with other auto companies is China's Geely Automobile Holdings Ltd. -- one of the more prominent of the nation's numerous automakers -- which is denying talks with Ford Motor Co. about acquiring its Volvo Cars operation.
The Wall Street Journal
reported this week that Geely president Li Shufu said, "there are no such talks," and Ford, which has said it is shopping Volvo, would not comment.
Two huge drags on the U.S. auto market - an utter lack of consumer confidence, and a paucity of credit -- persisted in January and were joined by a new one: at least a temporary evaporation of the fleet market.
Industry-wide sales in January cratered from a year earlier, falling by 36.9 percent, to about 677,000 units from 1.06 million vehicles sold in January 2008. The seasonally adjusted annual sales rate fell to fewer than 10 million units for the first time in more than 26 years. And the American auto business sold fewer cars than for any month since the depths of a recession in December 1981.
SANTA MONICA, Calif. - The business goal of a car dealer and the health of a financial institution may have more to do with the price a consumer pays for a car or the credit terms a consumer receives on a car loan than anything about the consumer personally.
An analysis by Edmunds.com, parent of AutoObserver.com, of vehicle prices paid by consumers and finance rates on their car loans shows an unusually wide range depending on where the consumer does business.
"The car business has been pummeled by the economic downturn, and individual dealerships are dealing with tough times in different ways," explained Edmunds.com CEO Jeremy Anwyl. "Some are offering substantial price cuts in order to close as many deals as possible, while others are striving to earn the highest possible profit on each sale."
SANTA MONICA, Calif. - Automakers, in an effort to clear out old inventory and pare rising stockpiles of unsold cars, boosted incentive spending dramatically from a year ago, according to estimates calculated by Edmunds.com
, parent of AutoObserver.com
.
"Automakers need to clear out leftover inventory from the 2008 model year, and that effort is boosting the average incentive cost for the industry," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Last month, 27 percent of all new vehicles sold were from the 2008 model year while during January 2008, only 12 percent of new vehicle sales were from the previous model year's inventory."
Search high and low through statistics about U.S. auto sales and you'll find practically nothing to brag about these days. But one silver lining does emerge: sales of "certified pre-owned" vehicles.
Even through the industry's darkest days, sales of certified pre-owned units for most automakers selling in the American market have been ahead of a year ago while, of course, new- car and general used-car sales have been declining at ferocious double-digit rates.
Not even a negative fourth quarter of 2008 could prevent a robust performance by CPO sales for the entire year: Sales for the segment actually rose by 1 percent last year over 2007, according to Edmunds.com.
Used vehicles typically gain on new-car sales when times are tough because consumers scale back their expectations, and more of them settle for less expensive "pre-owned" products.
But these times are so tough that consumers are even discouraged from buying used vehicles. Even though they're considered classically to be less cyclical than new-car sales or even countercyclical to the new-car trend, this may be the worst year in two decades for used-car sales overall.
SANTA MONICA, Calif. -- U.S. car and truck sales in January are expected to come in at a weak 730,000 units when automakers report them Tuesday.
January sales are expected to be down 18.1 percent from very weak sales in December, Edmunds.com estimates, largely due to significantly lower rental-car and corporate fleet sales. Retail sales will be about flat with December's.
"Our research indicates that retail sales are pretty much flat compared with December," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "However, automakers' decision to cut fleet sales and make other production cuts will cause a large sales decline to be recorded on the books."
DETROIT -- In Washington, the talk is of what cars automakers will produce in 2011, 2016 and 2020, but the auto industry faces an immediate demand: sell cars today.
Dealers, particularly, face a challenging dilemma as to just how to do that. The auto manufacturers, notably General Motors and Chrysler, are pressuring them to order more 2009 models so that factories can remain open and the automakers can book revenue.
Yet, dealers are buried with bulging stockpiles of old models, becoming increasingly expensive to keep and eating into their bottom-line. Yet, even hefty incentives aren't attracting buyers.
Still digesting the possibilities and likelihood of the proposed alliance between Chrysler LLC and Fiat S.p.A? Add French automaker PSA Peugeot-Citroen to the mix.
The potential for a triumvirate comprised of Chrysler, Fiat and PSA either makes the situation more intriguing -- or more preposterous.
Reports from Europe saying suddenly hookup-hungry Fiat is building a war chest to fund a potential takeover of or, more likely, a merger with PSA were denied on Thursday, the same day Fiat's ability to sling money into any deal came under pressure as it revealed in its own shattered financials, including its heavy cash burn and a deeply cut profit forecast for 2009.
If the Chrysler-Fiat alliance makes it out of the crib, the
combination could provide each company with some potent new assets in the U.S. and global marketplace.
Chrysler could badge fuel-efficient, Fiat-based or -built small cars under its Chrysler brand and fill out the American industry's weakest car lineup as well as gain access to Fiat's
global retail network. Broader distribution of Chrysler's iconic Jeep brand -- into Asia, for instance -- would be one possibility.
DETROIT -- Expect another month of dismal sales in January, a General Motors forecaster says.
"Don't be surprised to see a SAAR [seasonally adjusted selling rate] under 10 million vehicles," warned Mike DiGiovanni, GM's top sales analyst, said in a conference call with media and analysts Tuesday.
That's even lower than the SAAR of the previous three months, which ran at a rate of about 10.5 million each month.
Fiat S.p.A.'s acquisition of 35 percent of Chrysler has all the good-sounding trappings of an auto-industry alliance that, under normal circumstances, would indicate another industry tie-up that might bear fruit.
But in the supercharged atmosphere currently surrounding the auto sector -- and particularly the at-risk U.S. domestic automakers -- the deal is being considered by some as the salvation of Chrysler.
The prolongation of Chrysler's likely dissolution is the more viable assessment of Tuesday's announced Fiat-Chrysler deal because it includes no cash infusion to Chrysler.
Nearly 3 million U.S. auto sales evaporated in 2008, and plenty of that blood was lost by the Detroit Three: General Motors Corp. sales were down 23 percent, Ford Motor Co. sales slid by 20 percent and Chrysler LLC sales dropped by 30 percent.
Total U.S. sales plunged from 16.1 million units in 2007 to 13.2 million for 2008. Equally interesting -- and troubling, for Detroit -- was that not only did the pie get painfully smaller, the domestic automakers' portion, market share, once again lost ground.
According to data from Edmunds.com, the Detroit Three lost a collective total of 3.7 points of market share in 2008. Chrysler led the group, ceding 1.9 points of share (from 12.9 percent of the market in 2007 to 11 percent in 2008). GM lost 1.4 percent (from 23.8 percent in 2007 to 22.4 percent). Ford gave back 0.4 points of share (from 15.5 percent to 15.1 percent for 2008).
The promise made by Hyundai of America's new advertising is so unusual that the Korea-based automaker already is planning a second TV spot to reassure skeptical consumers that "Hyundai Assurance" isn't a joke.
Over the weekend, Hyundai announced with its ad that it would take back a buyer's new vehicle in the event of job loss or income. Hyundai meant the gambit as a dramatic and unique way to shake up the moribund marketplace by appealing directly to consumers' lack of confidence in their own financial future.
Striking every attitude from empathy to ambivalence to something resembling snarkiness, automakers have been using new TV-advertising campaigns to try to jolt consumers off their couches and into dealer showrooms.
The headwinds are daunting, but automakers have been launching a greater variety of messages than at any time in recent memory - attempting to find something, anything that punches effectively through the pervasive gloom in American households and reignites their desire and confidence to make a major purchase.
Automakers are trying things they've never tried before -- apologies, thanks, guarantees against job loss -- to get Americans to consider buying cars again. But none of these prods will work very well until the market has reestablished itself on a bedrock of consumer confidence.
"Of all the factors you look at, [confidence] is the No. 1 driver of the new-vehicle business," said Mark LaNeve, vice president of North American sales for General Motors, as the company launched a new zero-percent-financing program a few days ago.
U.S. auto sales continued their precipitous tumble in December, closing the books on the industry's worst year since 1992.
Five of the Big Six automakers -- General Motors, Ford, Toyota, Nissan and Honda -- saw sales slide another 30 percent each in December; Chrysler's plummeted 53 percent. No automaker showed higher sales December to December. The lucky ones saw mere single-digit dips.
For the full year of 2008, all of the Big Six automakers reported sales declines. In total, the industry sold 13.2 million vehicles for an 18 percent drop from 2007's 16.1 million.
"It was an unbelievable year -- not one I want to repeat," said Mark LaNeve, GM's head of sales and marketing in a conference call with reporters. "Hopefully, 2009 will improve from December's low point rather than deteriorate as 2008 did."
SANTA MONICA, Calif. -- Automaker incentives set a new record in December, Edmunds.com estimates, and, surprisingly, leasing showed a remarkable jump despite reports of its demise.
"Never before has the December average incentive been this high," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Automakers have been pulling out all the stops to keep motivating shoppers during these tough times."
Slowing sales have struck virtually every automaker and every market segment. U.S. auto industry sales for December and the full-year of 2008 are being reported Monday. December sales are expected to look a lot like the dismal levels of October and November -- and down from in the neighborhood of 30 percent or more from December 2007. Full-year sales are likely to be the worst since 1992.
SANTA MONICA, California -- For the automotive industry, 2008 will be a year not to be forgotten,
though those in the auto industry, indeed, would like to forget it and move on.
The overhwhelming theme of the year came near the end with the collapse of the financial industry, which, in turn, prompted car sales to plummet to levels not seen since the early 1990s, when the country's population was 50 million people fewer. That led Detroit automakers to head to Washington for financial help.
Though largely overshadowed by the credit crisis, the deteriorating economy and bailout mania, other trends emerged in 2008, as an analysis by Edmunds.com, parent of AutoObserver, shows:
President George W. Bush finally released the crucial billions needed to keep General Motors Corp. and Chrysler LLC around to see the new year, but with the real work just beginning, the wrenching save-Detroit soap opera seems to be grinding towards just one certainty: Chrysler LLC isn't going to make it.
If the maneuverings of the past several weeks haven't twisted the automotive Rubik's Cube enough for everyone to see the inevitable outcome, the reality is telegraphed loud and clear in the White House's "bailout" numbers: GM will bask in the holiday glow of $4 billion on Dec. 29, another $5.4 billion barely two weeks later and an additional $4 billion in February, for a total of $13.4 billion.
SANTA MONICA, Calif. -- The deteriorating economy, the precarious employment situation and the lack of available credit will push the annual sales rate in December for U.S. car sales to their lowest level of the year below 10 million units, Edmunds.com forecasts.
December sales (retail and fleet) are expected to total 852,000 units, a 38.4 percent decrease from December 2007 but a 14.6 percent increase from November, Edmunds.com predicts. Typically, December sales are about 18 percent higher than November's.
With the year closing on a low note, U.S. vehicle sales for all of 2008 will total just over 13 million, a decrease of almost 3 million vehicles, or 18 percent, from 2007. Automakers report December and 2008 sales figures January 5, 2009.
The president's expected short-term bailout of the Detroit Three automakers will leave the industry with lots of short- and long-term issues. One of the biggest is who will lead them.
As they pulled the plug on their own rescue deliberations last week, some in Congress seemed to believe they could run the Detroit Three automakers better than the CEOs do. President-Elect Barack Obama also has suggested that some top auto executives have a "head-in-the-sand approach" and should lose their jobs. And the American public, at least as measured by polls, don't seem to want to give a break to the automakers' current leadership either.
Could others actually perform better as CEOs of General Motors, Ford or Chrysler than Rick Wagoner, Alan Mulally or Robert Nardelli have -- and will? If so, where would these executive savants come from? And will we ever see any of this new blood in Detroit?
Toyota Motor Corp. said Monday it is delaying plans to open its newest U.S. plant in
Mississippi, which was to have built the next-generation Prius hybrid.
Citing the steep decline in the auto market, Toyota said it would complete construction of the building but would hold off on installing equipment, delaying the start of production that was slated for 2010.
The delay of the Mississippi plant is part of a massive cost cutting the Japanese automaker has undertaken. Next week, Toyota is expected to slash its 2009 sales forecast by at least 1 million vehicles and outline plans to cut costs at its year-end news conference December 22, Reuters news service reports.
The U.S. Treasury said it is willing to provide financing to Detroit automakers after the Senate Thursday night failed to approve $14 billion in loans to General Motors and Chrysler.
"Because Congress failed to act, we will stand ready to prevent an imminent failure until Congress reconvenes and acts to address the long-term viability of the industry," Treasury spokeswoman Brookly McLaughlin said in an e-mailed statement.
In their bailout blueprints presented to Congress last week, automakers presented forward-revenue assumptions based on forecasts for 2009 auto sales. In General Motors Corp.'s case, for example, it projected "downside," "baseline" and "upside" sales forecasts for the U.S. market, correlating how much funding the company believes it will need based on each sales scenario.
If a new survey of the nation's economists has any relevance, the beleaguered automakers had better strap in for a bumpy ride that may make a reality of those "downside" assumptions.
Bloomberg News' December survey of economists released this week paints a bleak outlook for 2009. The prominent economists comprising the survey sample predict consumer spending will plunge by a rate not seen since the 1940s, with household spending retreating by 1 percent, which also hasn't happened since World War II.
Results released from a survey conducted by CNBC and Portfolio.com confirmed what the heads of Detroit's auto companies testified to in Congressional hearings the last months: Consumers are reluctant to buy a car from an automaker in bankruptcy.
A bankruptcy filing by General Motors and Chrysler would cost U.S. taxpayers four times more than the amount of federal bridge loans being considered this week by Congress, a new study finds.
A bankruptcy, or even a prepackaged restructuring outside of bankruptcy court, cannot control a wild card unique to automakers -- the car-buying consumer -- noted a joint study by international consulting firm BBK and Michigan-based Anderson Economic Group.
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists. Here are seven myths about the companies and their vehicles, and the reality in each case.
This column by Detroit Free Press auto critic Mark Phelan originally was published on November 17 and was updated last Friday to debunk the myths as Congress was about to fashion an automotive rescue package.
As he testifies before Congress today and tomorrow, Richard Wagoner will be doing more than attempting to seal the deal for some $12 billion in government loans and a $6-billion line of credit that he has requested to rescue his employer, General Motors.
GM's chairman and CEO also may be auditioning to keep his job.
Wagoner certainly looks to be in better shape to hold on to GM's top post this week than he did a couple of weeks ago, after his singularly uninspiring first round of bailout testimony on Capitol Hill. He has done all the right things since then, inside the company and for external audiences.
General Motors Corp. Tuesday released the plan submitted to Congress in application for federal bridge loans to carry the company through 2009, when it expects a host of structural improvements and general downsizing to create "a new General Motors, one that is lean, profitable, self-sustaining and fully competitive."
What GM wants: up to $18 billion -- up to $12 billion in direct federal term loans and another $6 billion committed line of credit to guarantee the company can weather an auto-sales environment even worse than GM's projected 12-million-unit sales rate for 2009.
In case members of Congress needed any more reminding why the domestic automakers are hat-in-hand before them this week, the 37 percent drop in November sales has provided them with the latest bleak snapshot of a moribund U.S. vehicle market.
As the Detroit Three were presenting their restructuring plans in Washington, D.C., on Tuesday, the sales data rolling in from them and all other OEMs gave further dimension to the vast pall that has come over the nation's automotive market and quantified the paralyzing dread that is felt by American consumers.
SANTA MONICA, Calif. -- Domestic automakers eased off the incentive gas in November while import automakers revved up incentives, according to Edmunds.com.
"All three domestic automakers lowered their incentive spending this month, seeking to preserve cash during these incredibly tough times," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis. "Meanwhile, the imports have poured more money into incentives, attempting to seize the opportunity to gain market share. Toyota's monthly incentives spend hit a new record high in November, and the company's market share might follow suit."
The plans the Detroit Three automakers are developing to submit on December 2 to Congress in justification for their entreated $25-billion federal loan probably are being more closely guarded than the manuscript for Sarah Palin's first book, but we can guess one aspect that seems certain to feature in the bailout blueprint of both Ford Motor Co. and General Motors Corp.: ditching some brands that have long dogged their ever-more-fragile bottom lines.
For at least a decade, critics have shouted down both GM and Ford for refusing to do what it now appears must be done -- stop supporting underperforming divisions.
Rumors howling in Detroit's November winds point to brand-burning as one of the primary ways the companies plan to demonstrate to Congress they will be able to sustain their operations in a U.S. auto market that is expected to be decidedly unkind for all of 2009 and possibly well into 2010.
Maybe dreams do come true, after all. Americans who have long yearned for Honda to develop a production-car V8 engine may finally be getting their wish -- if recent comments made by Honda president Takeo Fukui are any guide.
In a recent media interview, Fukui was quoted as saying that Honda was now planning to strengthen the Acura brand with a production V8.
Why? Because the 3.7-liter V6 currently installed in the newly face-lifted RL, the range-topper for Honda's upscale Acura sales channel -- wasn't "sufficient" to compete with other premium brands, he said.
Just don't take it to mean a Honda V8 is around the corner.
SANTA MONICA, Calif. -- November car sales improved over October's historic lows thanks to lower gas prices and high incentives.
November new vehicle sales, including fleet and retail sales, are expected to be 850,000 units, a 27.6 percent decrease from November 2007 but showing a 1.9- percent increase from last month, according to Edmunds.com's forecast.
Still, the Seasonally Adjusted Annual Rate (SAAR) for the month is expected to be only about 11.5 million units.
The odds of General Motors and Chrysler filing bankruptcy in early 2009 soars to 75 percent without a government rescue package, predicts forecasting firm IHS Global Insight. With federal loans, the odds drop to 25 percent.
"Without a loan package, the probability of both GM and Chrysler going bankrupt in early 2009 is about 75 percent -- almost a certain probability," George Magliano, IHS Global Insight's director of North America, said in a Webcast on the economy and auto industry Thursday morning.
LOS ANGELES -- With its exhibit set in its own small wing of the Los Angeles Convention Center away from other automakers, its mix of new blindingly fast models with its classic roadsters, its trays of hors d'oeuvres for visitors and a visit from comedian and noted enthusiast Jerry Seinfeld, Porsche would appear to be the last carmaker to show the effects of a slumping auto industry at the Los Angeles auto show.
Don't be fooled, says the company's head of U.S. operations. The slowdown is not lost on him.
"I would be very happy if I could say this doesn't affect us or affects us differently from every other car manufacturers, but we all have the same problem," said Detlev von Platen, chief executive officer of Porsche Cars North America, Wednesday. "At the moment, we cannot count on the confidence of the consumers."
On a day when U.S. senators couldn't agree on whether or how to extend $25 billion worth of loans to help General Motors, Ford and Chrysler survive, the overriding mood during the first day of the Los Angeles auto show's exhibits for members of the press was one of restraint.
Chief executives from each of the Detroit Three automakers couldn't
have come to Tuesday's session of the U.S. Senate Banking, Housing and Urban Affairs Committee at a less-receptive time. Seeking $25 billion in emergency loans to keep their ailing operations afloat, they might as well have been kids who've gorged on all their Halloween candy and now are whining for more.
Although the committee is chaired by a receptive persona in Senator Chris Todd (D-CT), Republicans are largely presenting an icy posture regarding Detroit's plight - and senators on both sides of the aisle grilled Ford's Alan Mulally, GM's Rick Wagoner and Chrysler's Bob Nardelli with varying degrees of understanding and acidity. The three are scheduled for a House committee hearing Wednesday morning.
If Ford were to cease operations, 25 states could lose 3,000 or more Ford-related jobs,
according to an internal document obtained by the Wall Street Journal
.
The document detailed state-by-state the number of workers directly employed by Ford, the number of auto parts suppliers who work with the company and the amount they spend to support their business.
The International Energy Agency has issued a warning that failure to invest globally in trillions for new-energy exploration in the next 20 years could lead to a fresh global energy crisis.
The IEA says that despite worldwide efforts to reduce energy usage, consumption of crude oil, for example, is forecast to climb from today's 85 million barrels per day by more than 20 percent to 106 million barrels per day by 2023. The agency urged energy giants - and the Organization of the Petroleum Exporting Countries (OPEC) - not reduce expenditures in oil exploration and production in the face of plunging crude-oil prices.
For autoworkers, this is shaping up to be a winter of discontent and joblessness as manufacturers around the globe slashproduction to match supplies of vehiclesto plummeting demand.
Automakers are offering buyouts to shed jobs permanently, laying off workers temporarily, not rehiring temp workers who had expected to return and extending holiday shutdowns to keep vehicle inventories in check.
Virtually no automaker is immune. Even manufacturers of hot-selling models like Mini, Audi and Renault's Dacia Logan are trimming production and laying off workers to meet lower demand - or taking action just in case sales fall further south. Nor is any region exempt. The fast-pace growth of China and Brazil has slowed, prompting automakers in those emerging markets to slow or halt production lines as well.
As autoworkers in the U.S. and around the globe lose their jobs in this economic downturn, a new study from the U.K. is worth noting: three years after the collapse of MG Rover, 90 percent of workers who lost their jobs have found new ones, but most have taken significant pay cuts.
Auto affordability, which has become better and better for consumers in the past couple years, worsened in the third quarter, according to the Auto Affordability Index compiled by Dallas-based Comerica Bank.
The index showed a confluence of factors: family income barely increased in the third quarter, the total cost of buying an average-priced vehicle increased and the credit crunch is taking its toll on affordability.
Even those predicting a retreat from this summer's $4-per-gallon fuel prices didn't call for prices to plunge so far, so fast.
Regular unleaded gasoline in some parts of the country once again begin with a "1." The Energy Information Administration (EIA) said last week's national average for regular unleaded was $2.40, but even that number reflected a drop of some 61 cents from a year ago and a crash of 25 cents in just a week.
DETROIT -- Ford Motor Co.'s Lincoln premium division can't seem to catch a break.
The historic brand has struggled for years to justify its continuing existence within its own family while Ford went shopping overseas for more "relevant" premium brands such as Jaguar, Land Rover and Volvo. Jaguar and Land Rover are sold, but Volvo and home brand Lincoln continue to struggle against economic and industry currents that appear to be particularly battering to luxury brands.
With operating revenue becoming an increasingly scarce commodity in Detroit, General Motors Corp.'s and Ford Motor Co.'s luxury of maintaining their premium-brand but low-performing Swedish automaking units is likely to earn deeper scrutiny in the coming months.
Skepticism regarding the wisdom of retaining Saab Cars has been around at parent General Motors Corp. almost since the day GM purchased 50 percent of Saab's automaking unit (actually underbidding future GM partner Fiat Group) in late 1989 for the paltry sum of $500 million. GM acquired the rest of the company
in 2000, and at that time, Saab was losing money and it has been widely believed Saab has never returned a profit under full GM ownership.
But rumors and innuendo about GM cutting Saab adrift have reached a higher pitch in the past weeks as GM, openly seeking cash injections, has shopped its Hummer brand and storied AC Delco aftermarket-parts division, and recently dealt with a crumbled plan to offload its commercial-truck business to Navistar International. The potential for a government cash injection -- never mind the complication of a proposed merger with Chrysler LLC - now seems GM's best near-term option.
As many as 3 million jobs and hundreds of billions of dollars will be lost from the U.S. economy if General Motors, Ford and Chryslercease operations, a new report shows.
The report by the Center for Automotive Research (CAR) details the job losses and economic impact of two scenarios: if all three Detroit automakers cease operations next year; and if Detroit automakers contract by half, likely involving two automakers going out of business.
"Either of these scenarios is possible, and indeed probable, within the next 12 months," the study says.
In both scenarios, the impact is devastating for jobs, income, the nation's tax base and consumer spending that could pull the U.S. economy out of recession.
Other automakers doing business in the U.S., including Toyota and Honda, also would be hit as would Canada and Mexico.
There were almost no words on Monday to describe how abysmal U.S. auto sales were in the woe-begotten month of October.
Bled by battered consumer confidence, by more expensive and harder-to-obtain loans, by financial-market disasters and Election Day anxieties, October sales limped in at only about 852,000 vehicles nationwide, a 32 percent plunge from a year ago.
"This level of sales is not sustainable for anyone in the industry," said Michael DiGiovanni, head of global market analysis for General Motors. "It doesn't matter how deep their pockets are. Everyone is pulling in their reins to one degree or another, but everyone is affected by this."
GM's sales slumped by a horrific 45 percent, the worst showing among the Big Six automakers selling in the United States. Chrysler's declined by 35 percent, Nissan's by 33 percent, Ford's by 29 percent, Honda's by 25 percent and Toyota's by 23 percent.
The industry total comprised its lowest sales volume for any month since 1992. And adjusting for population growth -- that is, on a per capita basis -- October auto sales were the industry's worst since World War II.
SANTA MONICA, Calif. -- While October sales are expected to plummet double-digits, auto manufacturer incentive spending is up double-digits from a year ago, Edmunds.com's analysis shows.
"Automakers have to do what they can to stimulate sales while still being fiscally responsible during these shaky economic times," stated Jesse Toprak, Edmunds' executive director. "The industry is still far below the record average incentive of $3,146, which was reached in September 2004."
A merger between General Motors and Chrysler, which appears imminent, is not optimal but may be the best alternative for both automakers in the current environment, says a report by a restructuring company.
"Chrysler, as we know, it will cease to exist very soon," said Kimberly Rodriguez, principal of Grant Thornton's automotive practice, which issued Thursday a report on the state of Chrysler and an analysis of a combined Chrysler and GM. "At this point, there are very few options available to either company."
Rodriquez believes it's in both companies' best interest to announce a decision that a merger will go forward by Election Day, with specifics to be hammered out later.
As automakers dig for the bottom of the industry's dire situation, they're trying to answer a fundamental question: Is this increasingly steep nosedive in sales mainly the result of consumers' lack of confidence in the economy and in their own financial future? Or is the squeeze on credit availability -- by defeating willing auto buyers -- largely to blame?
An Edmunds.com analysis has arrived at the answer: The crushed economic expectations and heightened financial fears of most Americans are causing the preponderance of the damage. And it's only going to get worse, judging by the announcement Tuesday that a leading measure of U.S. consumer sentiment, the Conference Board's consumer confidence index, plunged to 38 in October, its lowest level on record -- a 41-year record.
October wound up being two months in one, with the latter part of the month showing a promising pickup in consumer interest in car buying.
In addition, the frenzied shopping for fuel-efficient small and midsize cars as well as hybrids that occurred through the spring and summer months, when gas was $3.50 a gallon, has abated. Shopping for large cars, sporty cars and trucks has rebounded somewhat.
Lender executives insist that every auto-loan deal is as individual as we are, so there remain lots of variables in the market. But here's how the auto-lending environment has changed for each of three broad tiers of American consumers:
Observing the reactions by other automotive lenders to today's mess -- ranging from extreme cutbacks to mere caution -- the nation's credit unions have a dual opportunity. They can take on a leadership role in maintaining the flow of credit through the U.S. car industry and pick up a significant chunk of market share to boot.
That's certainly the aim of Tom Shafar, loan manager for the TAPCO Credit Union, in Tacoma, Washington. "We haven't changed our rates or fees or standards in months, and we're still underwriting just as we did before," he said. In fact, Shafar added, the institution for city and county workers actually granted a few more car loans to its members in September than a year earlier. Only demand for TAPCO loans by non-members, Shafar said, were down slightly.
The belt-tightening in the global auto industry is beginning to make itself shown in new-product plans in practically every region. Replacement models are being delayed, proposed new models are being canceled or reconsidered, and new-product investment, in general, begins to suffer the results of sagging sales and ever-tightening access to credit.
It seems to be getting more difficult for General Motors Corp., for one, to disguise the fact minimum comfortable levels of operating income have been reached. The company is enacting its first white-collar layoffs in decades and is seems increasingly desperate to find a ready cash stream.
Two things are for sure about the humorous ongoing Volkswagen of America advertising campaign, "Das Auto": It polarizes many viewers into groups who love it or hate it; and it's one of the few examples of an automaker relying on comedy as the fulcrum of its marketing strategy these days.
One ad depicts "Max," an ancient VW Beetle, as a talk-show host poking fun at the global credentials of actor David Hasselhoff -- with the hoary celebrity playing along -- as it points out that Volkswagen is adored worldwide, especially in Europe.
DETROIT - Consumer Reports magazine delivered more bad news to Chrysler Thursday, noting the automaker's vehicle reliability has dropped since Cerberus Capital Management took over the company just over a year ago.
In contrast, Ford's reliability is now approaching that of Toyota and Honda with almost all of its vehicles achieving above-average reliability in the magazine's annual survey. General Motors' results were mixed.
"There has been a systematic, structural change within Ford,'' said David Champion, director of the magazine's auto test center, said. Champion revealed the magazine's survey results Thursday at the Automotive Press Association meeting in Detroit.
SANTA MONICA, Calif. - October auto sales are turning out to be every bit as bad as
forecasters predicted early in the month.
Edmunds.com forecasts October new vehicle sales, including fleet and retail, will again fall below the 1-million mark to 872,000 vehicles sold - about 30 percent below October 2007. October 2008 will mark the U.S. auto industry's lowest sales level since January 1992.
And the industry should brace itself for a terrible November, typically one of the lowest sales months of the year.
Talk of possible mergers between General Motors and Chrysler or Nissan-Renault and Chrysler are reaching a frenzied pitch. Word is a deal could happen at least by Election Day, Nov. 4.
So what automaker would benefit most from a partnership with Chrysler, or which would benefit most if ailing Chrysler simply went away? To which automaker would Chrysler buyers turn for their future purchases?
An analysis of consumer shopping trends by Edmunds.com, parent of AutoObserver.com, shows Chrysler buyers would likely go to GM vehicles if Chrysler simply went away, as GM vehicles are high on the shopping lists of Chrysler, Dodge and Jeep shoppers.
Yet that also means if GM and Chrysler merge, the combined company would have the most model overlap. That undoubtedly would result in the massive slashing of duplicate vehicles, closure of plants that make those vehicles, elimination of the jobs of people who work in those operations and demise of dealers that sell them.
PARIS - At the recent 2008 Paris Auto Show, Renault unveiled its new C-segment Mégane hatchback and coupe. Sized and priced to compete withEurope's best-selling vehicle, the Volkswagen Golf,the Renault Mégane is vital to the French automaker's financial health that has been in decline in recent months.
SANTA MONICA, Calif. -- October automotive sales continue to be in freefall from September with zero percent financing offered by auto manufacturers providing little, if any, incentive for people to buy cars, according to the latest data from Edmunds.com, parent of AutoObserver.com.
"The automotive market slowdown has entered a new phase," said Edmunds.com Chief Executive Officer Jeremy Anwyl. "Barraged by bad economic news, consumers, instead of hoping for the best, now are preparing for the worst, and that includes postponing even the thought of buying a car."
For automakers, the old tricks don't work. Even attractive promotions like the numerous zero percent financing programs, including the unprecedented Toyota deal of 11 models for zero percent, are ignored by consumers, who are not in car-buying mode.
It's the toughest of times all around the auto sector, and plunging sales for entire companies, much less individual models and nameplates, currently are the rule, not the exception.
But when a staggering giant of a nameplate comes to our attention thanks to the number crunchers at Edmunds.com, cratering sales become an item that can't be ignored.
Exhibit No. 1: Ford Motor Co.'s Explorer midsize SUV. The model that epitomized the mass-market SUV at the zenith of the genre's popularity now has dissipated to barely a blip on the sales charts.
Global Insight revised downward its U.S. auto sales forecast for 2008 yet again. It now predicts U.S. car and light truck sales will come in at about 13.6 million units this year.
"We are seeing sales rates we haven't seen since the late 1980s and early 1990s," said George Magliano, director of Global Insight's North American auto group.
The Big Three U.S. automakers have been trying to get rid of their weakest dealers for years, but the weeding-out process has gone far, far more slowly than car company executives have wanted.
Now, this year's double-whammy of economic shocks - explosive gasoline prices that scared consumers away from large vehicles, followed by the current financial crisis that is constricting credit at every level - has already begun culling out U.S. car dealerships at a rate far faster than General Motors, Ford and Chrysler brain trusts could even dream was possible by their methods.
The Chapter 11 bankruptcy filing last week by Bill Heard Enterprises, the nation's largest chain of Chevrolet outlets, was only an inkling of the trouble that has begun overwhelming America's car-distribution network.
Edmunds.com research shows that as many as 30 percent of U.S. dealers faced dramatically worse profitability from new-vehicle sales last summer compared with 2007, and 70 percent of U.S. dealers faced at least some deterioration.
And so now, new projections are emerging almost daily of a market-rationalizing Armageddon for auto dealers during the fourth quarter.
Edmunds.com has revised downward its vehicle sales forecast for 2008 and 2009.
Jesse Toprak, Edmunds' executive director of industry analysis, now projects the U.S. auto industry will sell 13.9 million vehicles in 2008. For 2009, Toprak forecasts 13.7 million vehicles being sold.
The forecasting firm Global Insight has lowered its forecast for auto sales for this year and and the next few years after this past week's financial events and September's car sales reports.
Global Insight Analyst Rebecca Lindland confirmed Thursday that the firm had lowered its forecast for 2008 auto sales to 13.8 million vehicles, a forecast that likely will be lowered even further to 13.6 million.
What's worse, while the firm didn't predict a recovery next year, it had expected sales to hold steady or be a tad better than 2008. But now it has lowered its 2009 forecast below 2008's. And even 2010, previously thought to be the first year of recovery, doesn't look that good at 14.5 million units. For 2011, Global Insight forecasts annual sales of 15.5 million units.
SANTA MONICA, Calif. -- The average automotive manufacturer incentive in the U.S. was $2,801 per vehicle sold in September 2008, down $1, or 0.04 percent, from August 2008, and up $444, or 18.8 percent, from September 2007, Edmunds.com estimates.
"Although up overall from last year, incentive levels remained flat from August to September despite worsening economic conditions and weak auto sales," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "The high incentive costs of heavily discounted 2008 models are being offset by the low incentive costs of the 2009 models entering the marketplace."
Wheezing U.S. auto sales in September fell by 26 percent, coming in below one million units for the first time for any month in more than 15 years and prompting epochal comparisons to the dismal fall of 2001, when American consumers were frozen by the shock of the 9/11 terrorist attacks.
Overall sales for the month were only about 965,671 vehicles, compared with some 1.3 million vehicles sold in September 2007. In September, the seasonally adjusted selling rate -- the industry's most important interpreter of the sales picture -- fell to an abysmal 12.8 million units compared with a rate of 16.5 million last year.
No one is happy about the U.S. House of Representatives' rejection of the $700-billion federal bailout of the financial services sector and subsequent stock market crash - least of all automakers.
In the short term, auto stock prices for almost every global automaker and their suppliers tumbled on the news Monday - some plummeted to record lows. No bailout means no end to the credit crunch that is keeping belt-tightening customers from even bothering to go to a showroom as September sales to be reported Wednesday will show.
Longer term - and maybe not all that long term - even more belt-cinching by automakers will likely result in deepening production cuts and job losses.
DEARBORN, Mich. -- Automakers are likely to close 2008 selling only 14 million new vehicles sold for the year and 2009 will not be much better, according to the latest predictions from forecasting firm Global Insight.
The firm predicts the industry will sell 14.1 million new vehicles in 2009. "Anything above 14.1 million next year is a bonus. There's no recovery next year so plan for that," Rebecca Lindland, Global Insight's director of The Americas, advised officials from auto companies, auto suppliers and auto-dependent businesses crammed into a hotel ballroom here for the firm's annual economic outlook conference this week.
SANTA MONICA, Calif. - September vehicle sales to be reported by automakers on Wednesday are expected to drop to their lowest monthly level since 1993, Edmunds.com forecasts.
September new vehicle sales, including both retail and fleet sales, are expected to be 1.05 million units, a 19.7 percent decrease from September 2007 and a 15.7 percent decrease from August 2008, Edmunds.com predicts.
"February 1993 was the last time that fewer than one million new vehicles were sold in a month, and we're coming remarkably close to that volume again," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "Traditionally, October sales are even worse than they are in September, so we don't likely have much to look forward to next month."
The federal government's unprecedented intervention on Wall Street last week may have saved the credit markets from an epochal collapse, but it didn't salvage one of the most important economic activities on Main Street: buying a car.
U.S. auto sales are likely to continue and even intensify their slide in coming weeks as American consumers react to this latest blow to their underlying confidence in the economic future, and as hyper-sensitive credit markets make it more difficult for willing customers to complete a vehicle purchase.
The bloody purge of the U.S. financial industry and its millions of shaky real-estate loans already have forced most automakers to cut way back on lease deals for their customers, an unavoidable blow given the importance of credit to the new-vehicle market.
But auto-company executives aren't giving up on the practice for the long term, believing that today's shakeout will help set the stage for a healthier leasing market in the future. Some of them actually are moving preemptively to ramp up leasing even in the short term instead of cut back.
Meantime, enormous pain is being inflicted on the many automakers that have grown dependent on leasing, the other part of a whopping double whammy that also includes the overall sales slide in the U.S. market.
Sales of automotive luxury brands are struggling just like the overall U.S. market is.
Collectively, so far this year, upscale marques have only managed to hold on to their 11 percent share of the market from 2007. And some of the loftiest brands in the American auto business have been demonstrating some of the least resiliency.
Lexus, for example, is off 15 percent in 2008 sales through the end of August, and BMW brand has suffered a decline of 7 percent. Among domestic luxury makes, Cadillac has plunged 13 percent for the year, while Lincoln has eased by 19 percent.
PARIS -- No one at Tata Motors will admit it, but hiking the globally ballyhooed $2,500 price of the Nano city car could be exactly what the Indian auto company needs during its current crisis.
Two weeks ago, AutoObserver detailed the mounting challenges facing the Nano as it nears production. Those problems have now officially gone from bad to worse.
On Tuesday, Tata Motors announced that it has suspended all work at the brand-new $350 million dollar factory scheduled to build the Nano.Protestors have surrounded the plant, located in the eastern town of Singur, demanding Tata hand back 400 acres to local farmers. They believe many farmers were forced from their land, or given paltry payments far below market prices.
A Tata Motors spokesperson said, "The situation around the Nano plant continues to be hostile and intimidating. There is no way this plant could operate efficiently unless the environment became congenial and supportive of the project."
Automakers are moving forcefully into the online-marketing arena using a number of innovations in which their industry, arguably, has become the leader.
In Wednesday's part two of this three-part series on Internet marketing,Edmunds.com's AutoObserver
featured six ways that automakers are succeeding online. Here are the remaining six:
U.S. auto sales fell by about 15 percent in August compared with a year ago, to approximately 1.25 million units from around 1.5 million units -remaining in their summer-long trough. And a chorus of OEM executives agreed on Wednesday that their forecast for the rest of 2008 looks just about as dismal.
But something else also appeared amid Wednesday's sales reports: reasons to hope that the U.S. market already has flattened out.
"It appears we may have hit the bottom in terms of consumer demand in July," said Jesse Toprak, executive director of industry analysis for Edmunds.com. "Because of factors like lower gas prices and generous incentive spending, we started seeing some improvement in August."
The U.S. automotive market has yet to reverse 2008's serious downward lurch, and automakers continue to pile on incentives to induce customers to purchase a new vehicle. Edmunds.com estimates August incentives were down a scant $3 from the 2008 high point set in July - and increased substantially when compared to the same period last year.
Edmunds.com estimates the average automotive manufacturer incentive in the U.S. was $2,642 per vehicle sold in August 2008, down $3, or 0.1 percent, from July, but up $173, or 7 percent, from August 2007.
Once again, domestic automakers shelled out the most. Combined incentives spending for domestic manufacturers averaged $3,832 per vehicle sold in August 2008, up from $3,762 in July 2008. In aggregate, the domestics spent $387 more per vehicle in August compared with July, which had set the year's record.
Over the last year or so, automakers have moved closer to the forefront of big-brand marketing online as they dramatically increase their expenditures on Internet advertising.
In doing so, OEMs are drawing on a dozen methods. Here are six of them. Look for the other six on Thursday in part three of this series on Edmunds.com's AutoObserver
:
Among the many curveballs being thrown at automakers by this summer's downturn are wrenching decisions about how much to spend on marketing and where to spend it. And car marketers are choosing to take more and more of their swings on the Internet.
In a three-part series beginning today, Edmunds.com's AutoObserver tracks this phenomenon and explains exactly how automakers are creating it.
Last month, observers marveled that Nissan was the only one of the Big 6 automakers to post an overall sales increase in July, an increase that helped it garner record high market share.
So how did Nissan do that when the U.S. in such a slump that even industry darling Honda, previously bucking the trend, went down with the market as well?
Simply put, Nissan's sales increase and higher market share were bought and paid for, according to Edmunds.com's analysis of incentive spending for July.
It may be tough sledding these days in the heart of the market, with deep incentives on just about everything with an internal-combustion engine, but the sharply downturning U.S. market hasn't affected one of the industry's oldest niches: convertibles.
Times may be bad, but as the summer winds down, many convertibles are more than holding their own in the showroom, led by a few new names but supported by some old stalwarts.
The numbers are comparatively tiny - convertibles are a fairly extreme niche, remember - but data from Edmunds.com shows many droptops definitely are bucking the strong overall industry sales downturn.
SANTA MONICA, Calif. - Despite a slight improvement in sales from July to August, no significant upturn is on the horizon for this year, according to Edmunds.com's latest forecast.
New vehicle sales for August, to be reported by manufacturers on Wednesday, are expected to total 1.26 million units, a 14.4-percent decrease from August 2007 but an 11.4-percent increase from July 2008. "We saw a slight improvement in July, but don't expect to see a major recovery for the remainder of the year," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
Signaling fuel-economy concerns are making an impact in the luxury market, General Motors
Corp.'s Cadillac division let it be known last week - in the midst of the snobby Pebble Beach Concours d' Elegance, no less - that Cadillac will be using four-cylinder power for its upcoming new entry-level model.
The use of four-cylinder engines is something of a line in the sand in the luxury market, an option consumers in the past have embraced with mixed results. And believing four-cylinder engines imply a frugality and dearth of "power" inconsistent with the nature of the beast, many luxury marques - in recent years of low U.S. fuel prices, at least - have steadfastly refused to cross the line into small-engine territory.
Full-size pickup trucks from Japan's largest
manufacturers - Toyota and Nissan -set new records in July for incentives as well as the time it takes to sell them, according to analysis by Edmunds.com
.
Nissan paid its highest amount ever for incentives in July. The Total Cost of Incentives (TCI) on the Nissan Titan hit a record $5,286 for every one sold. Toyota also set a new record for incentives on the Tundra, surpassing the $5,000 mark for the first time, at $5,213 TCI.
SANTA MONICA, Calif. -- As industry vehicles sales have sagged, it's well known that that
automakers' incentive spending has edged higher in their effort to move the metal. Now Edmunds.com's
analysis of incentive spending shows a record number of models have reached the lofty level of $10,000 per vehicle in incentives.
A record 10 vehicles in July recorded a Total Cost of Incentive (TCI) of more than $10,000. (TCI is Edmunds.com's proprietary calculation of all incentives on a volume-weighted basis.) Two were BMW models; the rest were General Motors vehicles wearing Cadillac, Saab or Hummer nameplates.
A record two models - BMW's flagship 7-Series sedan and Saab's 9-7X SUV - have averaged a $10,000 plus incentive for the entire year so far. In fact, the 7-Series is approaching the $20,000 mark.
MIAMI - Despite plummeting sales of new SUVs and trucks, demand on the secondary market for SUV leases is strong as bargain hunters see a good deal in taking over someone's SUV lease, according to LeaseTrader.com.
U.S. automakers next Tuesday are expected to report big sales declines in August sales despite increased incentives but show an improvement from July, according to J. D. Power's forecast.
The research firm said General Motors' 100th anniversary employee pricing promotion likely will help sales in the closing days of the month.
Nearly everything about the Tata Nano is on a smaller scale than other cars. From its tiny exterior dimensions to its ultra-low $2,500 base price, the Nano is the reigning champ of automotive frugality even before it goes on sale in October.
Stretching only 122 inches in length, the Nano is almost two feet shorter than a Mini Cooper. And with a curb weight of roughly 1,200 pounds, the Nano makes a lithe sports car like the Mazda MX-5 Miata suddenly seem like a candidate for Jenny Craig. The two-seat Japanese convertible weighs a whopping 1,200 lbs. more than the four-passenger Nano hatchback.
While the Nano's proportions are small, the Spartan city-car is causing full-size headaches for the folks at Tata Motors as production looms close. In fact, those problems are so large they could force Tata to postpone the introduction of the tiny Nano.
MOSCOW - Except for China because of the Olympics, no country has drawn the world's attention more than Russia has of late over its battle with Georgia. The skirmish has triggered oil prices to spike again, drawn the wrath of the Western world and re-ignited threats of a returning Cold War.
Russia already has captured the attention of global automakers, who have been making a mad dash to import their vehicles into the country, forge partnerships with local auto companies and establish manufacturing bases to feed the vehicle-hungry consumers who are generating wealth from the world commodity boom.
Against that tense political backdrop, the Moscow motor show opens, holding its press day Aug. 26, Like China's shows of late, the Moscow show is gaining increased importance on the world stage with automakers holding significant reveals there, opens next week.
As they rapidly switch to smaller vehicles, American consumers are streaming into two camps: those who want to hold onto their automotive accoutrements -- and those who are just looking for a cheaper ride.
"There are two trends out there," said Mark Perry, director of product planning for Nissan North America. "Some consumers are giving up some size but want to hang onto amenities they got used to. Others are just looking for very basic, maybe no-frills transportation that is fuel-efficient. These are competing consumer behaviors, and I'm not sure which will outweigh the other."
How the two trade-down trends ultimately reconcile will affect everything in the industry from product planning to pricing to marketing. Some suggest this is a major sign that the U.S. market is quickly evolving into something similar to Europe, where highly contented though small cars reign.
DETROIT -- Chrysler announced Wednesday its new 2009 Dodge Ram 1500 that goes on sale this fall will have a starting price of $22,170, about $900 less than the list price of the least expensive 2008 Dodge Ram 1500.
Still, the new Ram faces stiff competition from the old Ram, Edmunds.com's analysis shows.
The 2008 Dodge Ram 1500, the least expensive of which lists for $23,050 including the $900 destination fee, is selling well below that amount and taking a long time to sell even at the lower-than-list prices.
When gas prices were shooting past $4 a gallon during the second quarter, American car buyers quickly and overwhelmingly elevated fuel efficiency to their top priority, and their massive shift toward small vehicles shook the U.S. auto industry to its core.
But could it actually be -- with gas prices now sliding back toward a national average of just $3.88 a gallon and possibly going much lower - that car buyers already are rethinking their new obsession with high-mileage little cars?
Edmunds.com research suggests it is so. When gas prices began dropping in July, truck owners dramatically reduced the extent to which they cross-shopped in the other major vehicle segments - cars, crossovers and hybrids -- compared with June. SUV owners did the same thing but to a lesser extent, Edmunds.com research has indicated.
The U.S. market is headed away from large pickups and SUVs, turning a trend towards largeness that lasted well more than a decade. The new course is taking consumers straight into the arms of the so-called "second tier" Asian automakers selling in the U.S. - Japan's Subaru and Suzuki and South Korea's Hyundai and Kia.
The now well-documented - and still ongoing - shift in U.S. consumer taste is beginning to show tangible benefits for these automakers, whose product ranges remain dominated by compact cars and crossovers now in strong demand.
In June, Subaru, Suzuki, Hyundai and Kia all achieved record U.S. market share, according to data from Edmunds.com. In most cases, the bulk of each company's rapid market-share gains have come in the last year, in lockstep with record hikes in gasoline prices:
Alert to the American medical community: new evidence proves severe lack of corporate operating capital causes dull and even impaired judgment.
How did I arrive at this breakthrough mental-health discovery? Reading early this week that General Motors Corp. and Ford Motor Co. reputedly are considering co-development of engines.
TOKYO -- Debate over which SUV was the granddaddy of all SUVs that turned the workhorse utilities into popular people-and-their-stuff haulers inevitably includes familiar names -- the Jeep Wrangler and Grand Cherokee, the Ford Bronco and the later Ford Explorer, which became America's best-seller. Then came the smaller Toyota RAV4 and today's best-selling SUV, the Honda CR-V.
But before the Toyota and Honda SUVs were even a gleam in product planners' eyes, Suzuki had virtually invented the compact soft-roader market with the 1988 debut of the Escudo in Japan and launched a year later in the U.S. as the Sidekick.
Today, Suzuki is right there with the best of them, reinventing the now disdained genre to meet the new reality of soaring gas prices. To that end, the Escudo/Grand Vitara for the 2009 model year are set to become leaner and greener.
DETROIT -- One would have to dig into the history books back to 1992 to find a worse month for car and truck sales in the U.S. than July.
The Seasonally Adjusted Annual Rate (SAAR) fell under 13 million vehicles -- 12.55 million to be exact -- the lowest rate since the recession of the early 1990's. Of the Big Six automakers, only Nissan reported an increase in sales. Even Honda, which analysts had predicted would see an uptick, reported lower July sales. Detroit's Three slumped to their lowest combined market share -- 43.4 percent -- in history.
SANTA MONICA, Calif. -- With automakers expected to report Friday that car and truck sales plunged to near-historic lows in July, it's no surprise that manufacturer incentives have reached all-time highs for the year.
Edmunds.com's estimates put July at the industry's highest level of incentive spending for the year so far and the highest level this year for not only for the domestic automakers but also the Japanese and European manufacturers.
It's official, at least as quantified by a reputable new study: all the good American jobs have gone to China.
A study released this week by the Economic Policy Institute links the ever-ballooning trade deficit with China as costing 2.3 million U.S. jobs from 2001 to 2007. China entered the World Trade Organization in 2001.
The new world order of global auto giants is being shuffled. If first-half sales trends continue through the rest of the year, the new order of automakers, based on vehicle sales, will be: 1) Toyota, 2) General Motors, 3) Volkswagen and 4) Ford.
One doesn't need to be a fortuneteller gazing into a crystal ball to figure out that July vehicle sales, to be reported by automakers on Friday, continue to be in the tank. All one has to do is read recent headlines of downgraded 2008 sales forecasts, more production cuts and boosted incentives.
Edmunds.com released its July forecast Tuesday, predicting monthly sales will drop 10.7 percent from last July, adjusted for the difference in the number of selling days. The decrease is estimated at 3.3 percent on an unadjusted basis. Despite some last-ditch incentive efforts to save the month, all of the Big Six auto manufacturers, with the exception of Honda, are expected to report sales declines from a year ago. Similarly, sales of small compact vehicles continued to boom.
Although German powerhouses BMW AG, Daimler AG's Mercedes-Benz and perhaps most importantly, mainstream maker Volkswagen AG, all are ready to launch in the U.S. a new generation of diesel-engine vehicles, the once seemingly assured "breakout" of new-age diesel technology in North America now is clouded, thanks largely to the persistently high price of diesel fuel.
But there's another factor: comparatively unremarkable "official" fuel economy figures that may not be the game-changer some advocates had hoped. Fuel economy - the diesel engine's traditional trump card - may be taking a hit because of technical changes required to make the new-age diesels complaint with nationwide emissions regulations.
With the books closed on first-half U.S. vehicle sales and a July that mirrors June's weakness, industry experts are revising their full-year forecasts downward. They warn 2009, once expected to be a turnaround year for many automakers, may look similar to 2008 in terms of vehicle sales.
The latest downgraded forecasts came Wednesday from Germany's Deutsche bank and U.S. market research firm, J.D. Power and Associates. Deutsche Bank said yesterday that auto sales in the U.S. may drop to 14 million cars this year, down from a previous estimate of 14.5 million, the lowest st in 15 years. J.D. Power lowered its prediction for 2008 sales to 14.2 million vehicles from its previous forecast of 14.95 million, the lowest level since 1993.
Toyota widened its lead over General Motors in global sales during the second quarter, increasing the odds that 2008 will mark the end of GM's 77-year-reign as global sales king.
GM reported Wednesday it had sold 2.28 million vehicles in the second quarter that ended June 30 for a decline of 5 percent from the year-ago quarter. Toyota, meantime, reported its sales rose 1.8 percent in the three-month period to about 2.41 million vehicles.
That put the halftime sales score at Toyota's 4.8 million vehicles to GM's 4.5 million.
Despite dismal vehicle sales in the U.S., the world is on track to set yet-another record for vehicle sales in 2008, according to General Motors' forecast.
In total, automakers sold 18.5 million vehicles in the second quarter, up 1.6 percent from 2007, according to GM's tally. The automaker forecasts that total global auto sales will come in at 72 million vehicles for 2008, up 2.5 percent and the seventh-consecutive record. That is, unless the U.S. downturn spills over into global markets.
But global vehicle sales are uneven: up for emerging markets and down for mature developed ones.
The Global Engine Manufacturing Alliance engine plant in Dundee, Mich., currently is one of the auto-manufacturing sector's more intriguing stories. Currently making three variants of the 4-cylinder "World Engine" for one-third owner Chrysler LLC, GEMA also happens to be North America's most productive powertrain plant, according to the industry-benchmark Harbour Report.
But despite its Harbour-topping performance, some inconvenient circumstances have conspired to make GEMA barely half-utilized - and foreign auto companies sniffing for North American engine-making capacity are taking notice. Sources say several automakers may have toured the GEMA facility - including one name that keeps popping up: BMW.
Regardless of who's interested in GEMA, one thing is certain: its vast amount of unused capacity, combined with industry-leading productivity, has made GEMA an extremely tempting prize in a country that - thanks to the ever-dwindling value of the dollar - has emerged as a low-cost manufacturing region.
PARIS - It isn't even on sale yet, but the Tata Nano appears to be a runaway hit, at least in terms of generating buzz amongst AutoObserver's
readership.
For a jellybean-shaped car with no frills and a tiny two-cylinder engine, the Indian-built hatchback is generating the kind of enthusiasm normally reserved for the world's supercar elite.
Until now, scissor-doors, bulging fenders and horsepower figures that look like the GDP of a Third World nation have been the quickest way to grab car buyers attention. But given the current gloomy global economy, green is now in, excess is out, and bigger is no longer synonymous with better - just ask any Hummer H2 owner who now fills up with $4-per gallon gas.
DETROIT - It's not like the domestic automakers need more worry, but another of their sacred cash cows, the diesel-powered medium-duty pickup, is being slaughtered.
The Detroit Three's "heavy duty," commercially oriented three-quarter ton and one-ton pickups have long been outsized profit centers, largely because their buyers are famously wedded to diesel engines, an expensive option loaded with profit margin.
The industry's overall pickup business already is enduring a well-publicized battering - but now, inflated diesel fuel prices have the historically diesel-favoring heavy-duty customer - those who are still buying, that is - fleeing for the comparative comfort of engines that use $4 gasoline instead of $5-plus diesel.
SANTA MONICA, Calif. -- High gas prices have prompted consumers to quickly make lifestyle changes, particularly in terms of their driving habits and car-shopping preferences, according to a survey by Edmunds.com, the parent of AutoObserver.
"This is a fascinating insight into how quickly consumer behavior is changing in response to high gas prices," said Philip Reed, Edmunds.com senior consumer advice editor. "Based on the results of the survey it appears we are moving into a very different era both on the highways and in the showrooms."
The 2008 ranking of the 100 most prestigious global brands says no automaker has earned a spot in the list's top ten. In 2007, Toyota Motor Corp. was recognized as the globe's No. 10 brand.
There are several competing "top brand" lists, each using different methodology, but the Brandz Top 100 Most Powerful Brands, this year conducted with Britain's Financial Times newspaper and market research and consulting firm Milward Brown, seems to be the most recognized. This year's list is topped by Google and is dominated by multinational powerhouse corporations, of course, but Toyota has dropped out of the Brandz top ten - falling two places to No. 12 overall.
The business world enjoys some leftover fireworks to start the week following a Wall Street
Journal report that General Motors Corp. likely will cut into its white-collar ranks and may be ready to take a tougher stance on the always controversial subject of paring its brand portfolio.
Discussion about GM's strategies and financial health has intensified recently, coming to a head last week with a downgrade from a major financial institution and revival of talk that GM could be facing conditions leading to bankruptcy. The Wall Street Journal
last week also ran a story questioning the effectiveness of leader Rick Wagoner's 8-year tenure as CEO and the industry has begun to buzz about whether Wagoner can or should remain at his post in light of GM's seemingly degenerating financial and competitive situation.
Zero-percent financing deals aren't anything new to the industry, but General Motors Corp.'s latest riff on that old tune appears so far to have generated some success, even in these most desperate of times for auto sales.
According to exclusive data from Edmunds.com, sales of select GM vehicles -- mostly trucks -- may have enjoyed a shot in the arm from the zero-percent-for-up-to-72-months spiff, which originally was supposed to run only for the final week of June, but GM not unexpectedly extended through the July 4 holiday weekend.
American car buyers became very discouraged in June. Beaten down by high gas prices and other contributors to growing household financial stress, they bought 8 percent fewer vehicles than a year earlier.
And supply constraints actually depressed sales even further, because those who were in the market wanted more small cars than could be built by the industry as it tries to catch up with consumers' desire to downsize.
June sales for the U.S. auto industry were 1.19 million units compared with 1.46 million vehicles during June 2007. (The 8-percent decline is stated on a daily-sales-rate basis because this June, with three fewer selling days, provided significantly less sales opportunity than a year earlier.) On an unadjusted basis, industry sales came in 18 percent lower than a year ago.
SANTA MONICA, Calif. - Locked in a battle for No. 1 sales in America in June, General Motors and Toyota were the only automakers to hike incentives in June this year compared with last year, according to estimates by Edmunds.com.
"Toyota incentives reached a record high," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com, parent of AutoObserver. "General Motors' last minute 72-hour sales campaign , which is giving buyers no-interest financing for 72 months on most models, helped increase its incentive spending for the month, and Toyota needed some additional dollars to move its large SUVs and trucks from dealer lots."
In total, the average automotive manufacturer incentive in the U.S. was $2,356 per vehicle sold in June, down $22, or 0.9 percent, from June 2007, but up $32, or 1.4 percent, from May.
Still incentives unlikely had little impact as the auto industry is expected to post its worst sales since the 1990s when reports come in on Tuesday. Edmunds.com forecasts a double-digit decline in industry sales. Some analysts predict Toyota may outsell GM for the first time in history when June sales are tallied.
Just when U.S. auto consumers are drastically downsizing, it would be more than a trifle disconnected to pull your entry-level car from the market. But that's what German sources recently reported Volkwswagen AG had in mind for the next-generation Rabbit - sold as a premium car in Europe (as the iconic Golf), but to now the tiniest of blips on the sales charts here.
Not so, say VW sources on this side of the Atlantic.
"We are currently in the process of planning the launch of the Golf VI, scheduled for fall 2009," says Steve Keyes, a spokesman for Volkswagen of America Inc. "The volumes are already included in our 2009 financials."
Just about everyone's already exhausted from the daily political finger-pointing about who's responsible for the cost of gasoline.
But the interplay of politics and gas prices achieves a new and comical aspect today with The HuffingtonPost's sarcastic replay of a conversation earlier this week between Republican presidential nominee John McCain and a reporter from California's Orange County Register. In that interview, reports Huffington, McCain admitted he had no idea how much a gallon of gas currently costs.
WESTLAKE VILLAGE, Calif. - Thanks to soaring gas prices, Americans aren't as thrilled with the new cars and trucks they buy as they used to be, according the J. D. Power and Associates 2008 Automotive Performance, Execution and Layout (APEAL) Study released Thursday morning.
Despite the general decline with customer "delight," big winners were Honda, Porsche, Toyota and Volkswagen.
SANTA MONICA, Calif. - June car and truck sales will show another drop from year-ago levels and even from dismal May sales, according to a forecast issued Thursday by Edmunds.com, parent of AutoObserver.
"There is still uncertainty in the marketplace, and we have no reason to believe gas prices will decrease in the short term," said Jesse Toprak, Edmunds' executive director of Industry Analysis. "Due to these conditions, we've lowered our 2008 sales forecast from 15.5 million units to 14.9 million units."
SANTA MONICA, Calif. -- High gas prices, the housing crisis and general economic
uncertainty are motivating consumers to look for the least expensive cars to own and operate. But a new study by Edmunds.com
shows that many compact and subcompact vehicles are actually better choices than hybrids for consumers looking to save money.
The Chevrolet Aveo topped the list of best values based on Edmunds' True Cost to Own data, which accounts for total vehicle costs over a five-year period. No hybrids made the top 10 list.
"When consumers think about cars that will save them money, hybrids are typically top of mind because of their fuel efficiency," said Jesse Toprak, Edmunds.com executive director of Industry Analysis. "But when you take a look at the real-world costs of car ownership, you realize that many subcompact and compact cars are actually a much better value proposition."
With fuel prices rising, the dollar falling, the economy flagging and fuel prices zooming, industry sales volumes are drooping. One seemingly counterintuitive answer: raise prices.
Despite an Economics 101 guidance that would dictate the opposite, many automakers are responding to currently lousy market conditions by actually hiking sticker prices and -- taking a cue from many other sectors -- bumping fees, most notably, the ubiquitous "destination and delivery" charge.
General Motors confirmed it is postponing the redesign of its full-size pickup trucks and large SUVsas part of areview of its entire product line in light of higher gas prices and the weak economy that are pushing consumers toward cheaper fuel-sippers. More stringent fuel-economy standards are another factor in GM's decision.
Trucks like the Chevrolet Silverado and GMC Sierra and SUVs, including the Chevrolet Tahoe, Cadillac Escalade and GMC Yukon, were scheduled for redesigne around 2012. GM isn't saying how long it will extend their lives in the current form. GM said it would focus, instead, on supplying the U.S. market with more fuel- efficient cars.
Chrysler is touting the fact that it has priced its 2009 Dodge Durango Hemi Hybrid and 2009 Chrysler Aspen Hemi Hybrid below similar ones offered by General Motors and that it is moving up their introduction to August.
Hold your horses -- or kilowatts -- Chrysler.
Chrysler is very late to the hybrid party. In fact, it is dead last among the Big Six automakers selling vehicles in the U.S. And even these hybrids are later than Chrysler had promised.
Plus a price discount compared with GM models is consistent with the current price ladder; Chrysler's non-hybrid versions of its SUVs are priced less than its competitors.
More evidence of the global seismic shift in consumer preference
for small cars versus big trucks and SUVs, the result of a weak economy and soaring gas prices, came this week as automakers announced changes in their production plans.
Toyota is cutting production for the second time -- this round includes employee dismissals -- at its new San Antonio, Texas, plant that builds the less than 18-month-old Tundra pickup truck. Toyota also is slowing the line at its Princeton, Indiana, plant, where it makes the newly redesigned Sequoia SUV and Tundra. Ford is significantly extending summer vacations at its Kentucky Super-Duty pickup truck plant and its Michigan Truck Plant that assembles the Ford Expedition and Lincoln Navigator.
Meantime, General Motors is speeding up the addition of a third shift at its Lordstown, Ohio, plant to meet strong demand for its compact Chevrolet Cobalt. Daimler AG announced it has selected low-cost Hungary for its new assembly plant to expand its range of Mercedes-Benz compacts to four models from two. One of the new models may be a small SUV to rival the upcoming BMW 1X. Daimler also said it will upgrade its Rastatt, Germany plant, which assembles A- and B-Class compacts.
Consumers' quick, massive shift toward smaller vehicles has bludgeoned the auto industry. But Americans have only begun to show automakers how anxious they are to make transitions to more fuel-efficient transportation.
A desperation to downsize is taking hold across the land, fed not only by skyrocketing fuel costs but also by the rise in general economic pressures, most notably the mortgage mess. And this surge is likely only to intensify, even if gasoline prices somehow moderate.
"Consumers want to abandon their less-fuel-efficient vehicles for smaller cars, and that's illustrated by all sorts of trends," said David Tompkins, executive director of industry solutions for Edmunds.com, parent of AutoObserver. "But what's really coming into play is the urgency they feel to do so sooner rather than later. This is becoming a huge wild card for the industry."
TOKYO -- Surging gas prices, global warming and the need to go green make this absolutely the most perfect time for Honda to roll out an all-new, cutting-edge gas-electric hybrid. Honda's eagerly awaited, long overdue rival for the Toyota Prius is set to land in American driveways in the first half of 2009.
Smaller than a Civic and with a unique five-door hatchback style, Honda's "New Dedicated Hybrid Vehicle" may well revive the Insight name when it goes on sale. Strong rumors in Tokyo also suggest that this "new Insight" will adapt and repackage the Civic Hybrid's IMA (Integrated Motor Assist) front-drive powertrain and first appear in public in concept form at this October's Paris Auto Salon, ahead of its full official launch at the Detroit auto show in January.
In a move that was not entirely unexpected, Ford Motor Co. reportedly is studying a plan to implement a hasty and wide-ranging retooling of many of its North American assembly plants, shifting them from production of large pickup trucks and SUVs to smaller, lighter and more fuel-efficient vehicles.
The Detroit News
reports manufacturing executives and local labor leaders will meet in Dearborn on Friday to discuss the plan, which reportedly centers on retooling several plants from production of traditional body-on-frame pickups and SUVs to models and vehicle architectures currently being used in Europe.
It is a strategy many industry analysts have said must be undertaken by all the truck-reliant Detroit automakers. The only surprise, perhaps, is the haste with which Ford is reacting -- a lightning stroke relative to past Detroit responses to major macroeconomic and consumer-preference shifts.
CASCAIS, Portugal -- Nissan Motor Co. Ltd. last month imported journalists from all over the world to drive and familiarize themselves with the company's entire global model range -- nearly half a hundred Nissan and Infiniti models and their derivatives, not to mention almost a dozen light-commercial vehicles, some of which Nissan plans to soon introduce to the U.S. market.
After driving or just seeing a number of Japan- and European-market Nissan vehicles in the "Nissan 360" event, it's apparent the company, like most of its Japanese rivals, is intrinsically better positioned to deal with drastically changing demand from U.S. customers for smaller, more-efficient vehicles. Better positioned in what way? By using the refined (for the most part) and interestingly packaged European- and Japan-market models as the basis for an expanded portfolio of compact and subcompact U.S. offerings.
The company already is reacting to a U.S. vehicle market universally expected to continue a freefall rush to downsize.
Nissan earlier this week announced a major shift in U.S. manufacturing, cutting a shift of Titan pickup and Armada SUV production at its Canton, Mississippi, assembly plant and earmarking the production for an increase in assembly of the Altima midsize sedan.
In effect, if the U.S. auto environment is going to start looking a lot more like Europe, as many analysts and industry observers suggest, then judging by the production models at the Nissan 360 program here, the company seems to have a firm foundation on which to quickly build.
Gasoline prices keep going up. And Chrysler executives keep trying to pump life -- and hype -- into their gas-price protection incentive, which they extended through July 7. But Let's Refuel America hasn't generated as much steam as sizzle, and now it's difficult to call the program anything but a failure.
For one thing, Chrysler's May sales fell by 25 percent despite the incentive, the second-worst performance by a major automaker in the month, exceeded only by a 30-percent decline for General Motors, which was severely hampered by a major supplier strike.
Second, Chrysler buyers' take rate in May for a Let's Refuel America gas card turned out to be only 5 percent to 10 percent -- meaning that more than 90 percent of the company's customers opted for a conventional cash rebate or low-interest financing instead of three-year protection against gas prices above $2.99 a gallon, offered on most of Chrysler's vehicle lineup.
And third, even in the arena of marketing buzz, where Chrysler executives insisted that Let's Refuel America was proving its value, the concept has turned into a bust.
Hummer has always appealed to in-your-face consumers. Get out of the way of a tanklike, wide-stanced Hummer or suffer the consequences. And, oh do those hefty models absolutely devour gasoline? Whatever.
That unapologetic approach worked for most of the decade General Motors has owned the Hummer brand. But now that GM's leadership has decided to about-face away from their long reliance on sales of large, heavy, gas-hogging vehicles, the company announced this week that it is re-evaluating Hummer's future.
GM CEO Rick Wagoner can't just wish away the Hummer dilemma. He has four main options: Sell Hummer, as Ford recently sold a Land Rover-Jaguar group that had become an albatross; discontinue Hummer as GM did Oldsmobile a few years ago; revamp the division and its lineup with some sort of greener cast; or basically stick with a bully-on-the-block persona that, until very recently, had made Hummer a vital and growing niche brand.
For months, somebody on Wall Street has been convinced something's going on at Rochester Hills, Michigan's, Energy Conversion Devices, parent company of the Cobasys LLC joint venture that develops and produces nickel-metal hydride batteries for all manner of consumer devices, including some of General Motors Corp.'s hybrid-electric vehicles.
Despite the fact ECD stock has no earnings, pays no dividend and the company's operations have not had positive cash flow for the past five years, the stock price has tripled since January and gained almost another 10 percent yesterday with reported news GM may be trying to acquire Cobasys.
The quality of vehicles built for American consumers has improved virtually across the board, according to J. D. Power and Associate's just-released 2008 Initial Quality Study, which measures quality in the first 90 days of ownership. In turn, initial quality is a good predictor of long-term durability. The study, released Wednesday, showed substantial initial quality gains made by three-quarters of the 36 ranked nameplates.
Individual winners were: · Porsche took first place among all 36 nameplates in initial quality for the third consecutive year. Its 911 had the fewest quality problems in the industry. · Honda captured three segment awards - more than any other nameplate in the study -- for the Civic, CR-V and Fit. · Chevrolet (Malibu and Silverado LD), Infiniti (EX- and M-Series), Lexus (LS and RX) and Mercedes-Benz (CLK- and E-Class) took two segment awards each. · Other segment award winners were the Ford E-Series, Lincoln Navigator, Mazda MX-5 Miata, Pontiac Grand Prix sedan and Toyota Sequoia.
By Dale Buss and Michelle Krebs
Only a few months into the Slump of 2008, at least two things are painfully clear in what has become a topsy-turvy U.S. auto market.
The bigger the carmaker, the harder the ride these days -- even Toyota. General Motors' sales declined the most in May compared with a year ago, by 30 percent; Chrysler's fell by 25 percent; Ford, by 16 percent; and Toyota, by 8 percent. The Detroit Three's domestic market share in May, 45.5 percent, was a record low for any month.
And the larger the vehicle, the faster its sales are teetering into the abyss. Sales of pickup trucks and traditional SUVs plunged across the board in May. So, GM said it is permanently shuttering some truck and SUV plants, adding some car-making capacity, and considering ditching Hummer.
But newly popular small cars are popping up like life preservers on the industry's troubled ocean. Honda's Civic was the top seller for the month, at more than 53,000 units.
Ford Tuesday launched what could be seen as a desperate attempt to jump start sales of its F-Series pickup line by offering "employee pricing" to consumers for the rest of June. This is believed to be the first time since 2005 that any OEM has allowed consumers to pay only as much as its employees pay for a vehicle.
"This is a big deal for us," said Jim Farley, Ford's executive vice president for marketing and communications. "F-Series has spent 31 years running as the leading vehicle in the segment ... We think it's a really important merchandising tool that customers can buy an F-Series for the same price as a Ford employee."
SANTA MONICA, Calif. - As vehicle sales have slowed, incentives have been edging higher.
Edmunds.com estimates the average automotive manufacturer incentive in the U.S. was $2,483 per vehicle sold in May 2008, up $132, or 5.6 percent, from April, and up $117, or 5 percent, from May 2007.
"Manufacturers are trying to avoid increasing incentives," said Jesse Toprak, executive director of industry analysis for Edmunds.com, parent company of AutoObserver.com. "But we predict that incentives will continue to rise throughout the summer months to help boost vehicle sales."
Other highlights of GM's latest restructuring plan include: new small cars for Chevrolet; a new high-efficiency engine for the U.S.; funding for the Chevrolet Volt extended-range vehicle; and the addition of third shifts at two U.S. plants to boost production of popular Chevrolet Malibu and Cobalt as well as the Pontiac G6.
Wagoner said GM's moves were prompted by soaring gasoline prices that are rapidly changing consumer behavior and significantly affecting the U.S. auto industry's sales mix. The shift, he noted, is a structural shift, not a cyclical blip.
Some analysts predict General Motors may see its share of the U.S. vehicle market slipl below 20 percent on Tuesday when the auto industry reports May vehicle sales.
However, a forecast by Edmunds.com, parent of AutoObserver, predicts GM will stay above the 20-percent mark, coming in at 20.9 percent market share for the month. GM's market share slumped to 20.8 percent in April, according to Edmunds.com's calculations.
General Motors is among almost three dozen of the biggest U.S. companies with dividends in jeopardy because annual payouts exceed cash flow, Bloomberg News reported Monday.
GM, which holds its annual meeting Tuesday in Wilmington, Del., produced 33 cents a share in so-called free cash flow last year while maintaining a $1 dividend, Bloomberg said.
At General Motors Corp.'s annual meeting Tuesday, the stickiest questions may not be about the actual dollars and cents of GM's business. Instead, the major issue may be whether - and how - GM can deal with the shocking plunge in demand for full-size pickups and SUVs, the profit machines that have kept the wandering giant afloat for the better part of two decades.
Punishing fuel prices and increasing environmental awareness have all but crushed the "supersize me" mentality of the American auto customer, and now GM and its Detroit-based rivals Ford Motor Co. and Chrysler LLC, with their manufacturing empires witheringly overweighted to address full-size segments, have little to offer the new age of economy-minded consumers.
Equally troubling, the domestics have scant prospect of reversing the situation any time soon - and the heat may be on Detroit executives to begin explaining yet another instance of their collective inability to identify and adjust to emerging auto-market and macroeconomic trends.
SANTA MONICA, Calif. -- April 2008 was a terrible month for vehicle sales in the U.S., but it looks like May, though worse than the year-ago May, might be a tad brighter than April and especially for some vehicles and some makes, Edmunds.com forecasts.
Toyota looks to be a winner with a projected record market share. Honda likely had a good month as well. The Big Three, however, are predicted to show a near-record low combined market share.
And the trend of buyers selected smaller, more fuel-efficient vehicles instead of larger ones likely accelerated in May, according to Edmunds.com's forecast.
Automakers scrambling for quick fixes to polish up vehicle economy numbers in the eyes of fuel-price-fatigued U.S. customers are reaping real results from their -- and the supplier community's -- investments in the new generation of six-speed automatic transmissions.
The powertrain sector's shift to six-speed automatics has been coming since as early as 2001, but $4-per-gallon gasoline and $5 diesel fuel has turned up the heat on vehicle engineers to deliver more or less immediate efficiency enhancements for existing vehicles.
American car buyers have been flocking to small cars, crossovers and hybrids so massively -- and so quickly -- that they're threatening to tip the auto industry on its axis.
They're leaving behind trucks, large SUVs and, to a lesser extent, luxury vehicles of all kinds in favor of more fuel-efficient and less-expensive segments. An Edmunds.com analysis shows that this shift has precipitated dramatically over the last two months, both in terms of actual transactions as well as in shopping trends measured on the Edmunds.com site. Until March, this pattern of segment migration had been accelerating markedly but rather gradually.
But a 10 percent increase in U.S. gasoline prices in March and April alone, to the realm of nearly $4 a gallon, appears to have provided the catalyst for a shift that is bigger and faster than any ever tracked by Edmunds.com.
As any econ textbook will tell you, when the price of a good is perceived as too high, consumers will reduce consumption.
All well and good, then: fuel prices have gone through the roof, and motorists have responded in textbook fashion by cutting back on driving.
But that markedly curtailed fuel consumption is producing an unintended consequence as many states report declining fuel-tax revenues. And the majority of revenue from state fuel taxes typically is earmarked for road improvements and other infrastructure investments.
So the bottom line: If motorists drive less to save fuel, the roads they use are more likely to fall into disrepair.
As the arrival of Memorial Day weekend unofficially kicks off summer in America, huge and discouraging obstacles stand in the way of motorists: all the signs on street corners reading "Gasoline, $4.00 a gallon."
But gamely, the industry is trying to get U.S. consumers to look past the truly shocking ascension of gas prices, or at least to get maximum leverage out of fuel economy concerns when they do draw potential buyers to dealer showrooms.
PARIS -- India's Tata Nano
single-handedly created a new automotive segment, the ultra-low-cost car, when it was unveiled at the New Delhi Auto Expo in January. With a starting price of only $2,500, the Indian-built hatchback is the cheapest car in the world and touted by many as being the car that will bring four-wheeled motoring to the Third World.
But this field of only one could soon become crowded, at least if other auto manufacturers rushing to develop similar low-cost city cars have anything to say about it. Before the Nano even goes on sale in October of this year, its first challenger has already arrived on the scene.
As oil hovered around the record mark of $127 a barrel, the page one lead story in London's Financial Times' Tuesday featured this bold headline: "U.S. begins to break foreign oil 'addiction.'"
Based on a Department of Energy report, the article claims the U.S. is starting to break its addiction to foreign oil as more efficient cars proliferate and the use of ethanol expands, cutting the share of U.S. oil imports for the first time since 1977.
Chrysler is extending its $2.99-a-gallon gas-price guarantee program through July 7 due to
its overwhelming success in driving traffic to showrooms and increasing sales, the automaker said.
"We are pleased that Let's Refuel America seems to resonate with many Americans during this time of gas price volatility," Chrysler President and Vice Chairman Jim Press said in a company statement.
DEARBORN, MI -- Ford Motor Co. planners are certain the global market for compact B-segment cars is going to grow. And in the U.S., skyrocketing fuel prices make the migration from pickups and SUVs to small cars no longer a forecast, but a certainty.
It seems like perfect timing: Ford's preparing an all-new Fiesta B-car for the U.S. -- based on the swoopy Verve concept car -- and nobody's disputing there will be a deluge of demand from a fuel-price-weary consumer, even though the U.S. won't see the car until 2010 (it launches in Europe later this year). Enthusiasts for Ford's larger Focus already have registered the Internet domain name fiestafanatics.com in anticipation of the new B-class Fiesta, Sam De La Graza, Focus marketing manager, told AutoObserver.
That's how a former Toyota executive described the Toyota Prius.
And, today, as the Prius hit a hugely significant milestone -- 1 million plus sales since going on sale in 1997 -- that title seems all the more appropriate.
Toyota said Thursday it had sold 1,028,000 Prius cars worldwide -- it is sold in 40 countries -- as of the end of April.
Like the Model T, the Prius has become a brand on its own. Yet, Toyota is looking for even bigger things from the little car -- 1 million sales annually and the introduction of the next-generation model next year reportedly arriving in a number of variations.
More than a week after Chrysler announced its Let's Refuel America incentive program, no other major OEM has imitated Chrysler with its own program to price-protect consumers against gasoline over $2.99 a gallon. But Chrysler executives say they don't mind going it alone -- because many of their customers are going with them.
Early indications are that the announcement of the incentive program, and significant resulting publicity, have boosted purchase consideration of Chrysler's brands very little. Edmunds.com reported a two percent increase for the best-performing of its brands, the Chrysler marque, based on visits to the New Vehicle Detail Pages (NVDP) for the company's products on Edmunds.com. However, a handful of specific vehicles fared considerably better.
"Overall," said David Tompkins, executive director of industry solutions for Santa Monica, Calif.-based Edmunds.com, "it's not doing much for them."
DEARBORN, Mich. -- To paraphrase Jim Morrison and The Doors, Ford's been down so long that it looks like up to them.
But within the cloud that has been Ford's long-declining market share - and its shared pain with the other domestic automakers who drank too long at the well of fullsize pickups and SUVs - there's a portion of silver lining: Ford is quietly making moves in some important and competitive market segments. In some cases, with product that ain't exactly new.
Chrysler executives feared that their new gas-price rebate program would nick the company's already shaky green credentials. But they also hoped that the "Let's Refuel America" price-protection plan would create a buzz among consumers -- and maybe even an uptick in Chrysler's dismal sales.
Just days since the incentive's unveiling, it's become clear that their fears were well-founded: Environmentalists are inflamed by Chrysler's decision to offer to indemnify buyers of most of its vehicles against gas prices above $2.99 for the next three years. They're flaying Chrysler as a technologically backward cadre of ecologically callous opportunists.
But just as quickly, signs have emerged that Chrysler's hopes might have been well-founded, too.
As gasoline prices go higher, many hybrid-electric vehicles currently on sale are proving to be even wiser investments, says new data from Edmunds.com.
Considerable past discussion about hybrids has focused on "payback" time, or the period required for savings from a hybrid's enhanced fuel economy to recoup the initial higher purchase price a hybrid commands. Detractors often claimed that, from a strictly fiscal view of hybrids, most vehicle purchasers would never save enough in gasoline costs to recover their investment in expensive hybrid technology.
But with every increase in gas prices, the hybrid payback time becomes consequently shorter - to the point where some popularly priced hybrid models can pay back their owners' investment in as little as 18 months, according to the new Edmunds.com study.
Chrysler’s advertising campaign for its new Dodge Journey crossover has greatly boosted initial online interest in the vehicle, according to an analysis by Edmunds.com. But the new omnibus marketing effort launched by Ford recently, Drive One, isn’t packing nearly the same punch.
Those are the conclusions of research by David Tompkins, executive director of business solutions for Edmunds.com, based in Santa Monica, Calif., using consumer visits to the New Vehicle Detail Pages (NVDPs) of the site in April, in the immediate wake of the launches of the two advertising campaigns.
Americans rushed to swap their thirsty trucks and SUVs for fuel-efficient cars in April, making the month a turning point for the industry’s biggest segment shift in memory.
The stampede to cars left in the dust a Detroit Three that simply weren’t ready for its magnitude because of their reliance on truck-based vehicles, while it lifted Japanese automakers whose traditional strength has remained in small cars.
As U.S. consumers definitively reacted to $3.50-a-gallon gasoline, passenger cars outsold truck-based vehicles for the first time in at least 20 years. The move comprised a shift of six percentage points for the industry compared with last April, to 54 percent car sales.
SANTA MONICA, Calif. — As gas prices rise this summer, automakers may well turn to marketing programs that include free gasoline instead of or in addition to cash rebates and low-interest financing, Edmunds.com predicts.
“Gas prices are having a profound effect on the psychology of car-buyers, so we expect that automaker and dealer marketing tactics may include free gasoline programs this summer,” stated Jesse Toprak, executive director of Industry Analysis for Edmunds.com. "As indicated in Edmunds’ True Market Value Predictive Alerts, transaction prices of gas-guzzling large SUVs and trucks will likely continue to fall.”
Meantime, Edmunds.com estimated Thursday that the average automotive manufacturer incentive in the U.S. was $2,449 per vehicle sold in April 2008, up $13, or 0.5 percent, from March 2008, and up $39, or 1.6 percent, from April 2007.
Chevrolet Malibu is helping put Detroit back on the map in the mid-size sedan segment. Even the three-year-old Pontiac G6 and Ford Fusion are helping out on that front as well.
Of course, the real Big Three of the so-called “C†segment of the market remain solidly entrenched atop it: Honda Accord, Toyota Camry and Nissan Altima. Accord was the nation’s hottest-selling vehicle during the first quarter, according to Edmunds.com data, overcoming a sluggish start since the new model’s debut last fall to move 88,000 units from January through March. Camry, at 84,000 units, and Altima, with 76,000 sales, were right behind.
But domestic automakers nevertheless are encouraged by recent glimmers of hope in a crucial segment in which they haven’t been competitive for several years -- even though mid-size sedans used to be the Big Three’s bread and butter. At least the progress lately is a place to start.
It was puzzling and surprising when Rick Suzuki announced in late March that he would
step down as chairman of American Suzuki due to the company’s poor performance.
After all, American Suzuki sales haven’t appeared that bad on the surface. In fact, Suzuki sales have nearly doubled since 2003. In March this year, Suzuki sold 10,510 vehicles, its highest amount since June 2007 in an extremely tough sales environment when the industry as a whole and most automakers reported a sales decline.
But a closer look by Edmunds.com shows those sales came at a cost that led to the operating losses to which Rick Suzuki referred in his March letter to employees.
Yet another sign consumer interest is turning from horsepower to fuel economy: the hybrid-electric version of the Toyota Camry, one of the nation’s best-selling cars, is outselling V6-powered Camrys by a solid margin.
For March, Edmunds.com data indicate sales of the Camry Hybrid set a new record: 6,930 units, or a considerable 22 percent of Camry’s 31,310 sales last month. Camry Hybrid monthly sales eclipsed 6,000 units only once since the car’s launch, in May 2007, when the 6,853 sold represented slightly more than 17 percent of total Camry sales.
Will a car instead of a truck be America's best-selling vehicle again in April?
In March, the Honda Accord was not only the best-selling car in America it was also the best-selling vehicle. A car has ranked as the best-selling vehicle in monthly sales only five times in the last six years, according to Edmunds.com's analysis. Four of those times, the Accord was tops; the Toyota Corolla ranked No. 1 once, in May 2007.
But with pickup truck sales plummeting and consumers turning to more fuel-efficient cars, a car could take the top spot again for April when automakers post sales reports on Thursday.
Chrysler is spending more on incentives for the Dodge Ram than any manufacturer outside of the luxury market, according to Edmunds.com’s analysis.
The Total Cost of Incentives, Edmunds.com’s proprietary formula for measuring incentives, on the Dodge Ram was an average of $8,260 for every truck Chrysler sold. The average transaction pice on a Ram is $31,900, according to Edmunds.com's calculations.
SANTA MONICA, Calif. – As gas prices skyrocket, the biggest growth in April vehicle sales
are expected to be in small cars and small SUVS. In total, April vehicle sales likely will show a decline from April of last year but increase from this past March, according to a forecast by Edmunds.com.
Automakers are expected to report new vehicles sales, including fleet sales, of 1.3 million units for April, a 2.2 percent decrease from April 2007 and a 3.7 percent increase from March 2008, Edmunds.com predicts. April 2008 had 26 selling days, two more than last April 2007. When adjusted for this difference, sales decreased 9.7 percent from April 2007.
“It’s clear that gas prices are weighing heavily on car-buyers’ minds," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “We predict that this month, the segments with the most year-over-year growth will be compact SUVs and compact cars at 52 percent and eight percent, respectively.â€
German-brand cars zoomed off dealer lots nearly as fast as they arrived while Suzuki- and Korean-brand models limped out of showrooms, according to Edmunds.com’s days-to-turn analysis for March.
The just-introduced smart fortwo had the lowest days to turn. BMW and Mercedes-Benz were low as well. In contrast, Suzuki, Hyundai and Kia had the highest days to turn.
While most eyes are on the global sales and production race between Toyota and General Motors, another interesting contest is developing in the U.S. – between the Ford and Toyota brands.
For the past two months, the Ford brand has outsold the Toyota brand. Ford’s recent gains narrowed the gap for the first quarter to less than 3,000 vehicles between it and Toyota. In 2007, Toyota closed the books 127,606 vehicle sales ahead of Ford. Throughout 2007, Toyota led Ford by about 10,000 plus vehicles a month.
General Motors Corp. says its first-quarter 2008 global sales reached 2.25 million vehicles, a drop of less than one percent despite the drag of lagging North American sales.
GM sales of 947,000 units in North America was a roughly 10 percent drop compared with 2007’s first quarter. GM executive director of global market and industry analysis Mike DiGiovanni said the number “exceeded our internal forecasts,†but also says, counter to some industry analysts, GM does not expect U.S. sales to shore up in the second quarter. DiGiovanni said the company does not anticipate a firming U.S. market until at least the second half of the year.
As Earth Day comes around once more, there are a few different scoreboards for tracking the relative progress of automakers in their attempt to win the green derby.
According to Toronto, Canada-based consumer-research firm BrandIntel’s recent survey of online discussion, for example, Toyota, Honda, Mercedes and Volkswagen have the most “green credibility†due to their hybrid and diesel vehicles. General Motors and Chrysler have been stuck among the least-credible because of their large fleets of trucks and SUVs and weaker lineups of hybrids and diesel options. Ford sits in the middle.
But several automakers are forging strategies for changing such scoreboards in their green credentials. A look at a few:
BEIJING – No more models dressed in cheesy mermaid costumes. Not a pink fur-covered Hello Kitty car in sight. Beijing’s auto show, like China’s auto industry and the country itself, has grown up and gained sophistication rivaling other global entities –almost.
And it has happened fast, as life does in China – life lived in fast-forward, as one expatriate auto company executive described it.
The Beijing auto show is an analogy to the China auto industry – and Chinese economy generally: spectacular progress and phenomenal growth in the blink of an eye, but still a tad off in the final bit of refinement necessary to be considered world-class – a level assured to be achieved at some point.
After a brief respite last year, concern is again mounting about the financial health of hundreds – if not thousands – of component and services suppliers squeezed between falling orders from their carmaker customers, high raw material prices and tightening credit conditions, the Financial Times reported Wednesday.
J.P. Mortgan cut earnings estimates this week of several of the world's biggest Tier One automotive suppliers. They include American Axle -– against which workers have been striking for seven weeks now -- Lear, Magna International, TRW, Visteon and Tenneco. Lehman Brothers singles out American Axle, Lear and Tenneco as most vulnerable among General Motors' Tier One suppliers.
TOKYO — Japan is buzzing with news that Toyota plans to raise its stake in Fuji Heavy Industries, Subaru's parent company, from 8.7 percent up to around 17 percent.
The story was broken by the Nikkei, Japan's well-connected business newspaper, has since been picked up by other media, not denied
by either Toyota or Subaru.
Indeed, a spokesman from one of the companies admitted privately "the Nikkei got a scoop." All of which seems to back up the Nikkei's claim that Toyota will pick up 64.25 million shares in FHI for around ¥30 billion (some $306 million).
Ever since Toyota became the leading shareholder in Fuji Heavy Industries in October 2005 in the wake of the company’s hasty divorce from General Motors, many in Japan believed it was simply a matter of time before Toyota upped its stake.
So why now? Because up to a point, both companies need each other.
When the last of the No. 1 seeds take the floor for the NCAA Men’s Basketball Championship game in San Antonio on Monday night, the contest will represent the zenith of one of the most successfully symbiotic sponsorships in television sports.
Pontiac has been the exclusive domestic-brand automotive sponsor of the final weekend of March Madness for four years now. It is one of only three “corporate championship partners†with the tournament, along with AT&T and Coca-Cola. Last year, the televised tournament attracted more than 132 million people to CBS, roughly 46% of all American viewers. That includes not only youthful potential car buyers but millions of college alumni.
So, according to both brand executives and Edmunds.com analysis, the relationship is boosting consumer consideration of Pontiac and its vehicles – especially the new G8 – making rival other strong TV-marketing properties for automakers.
Battery talk has become favorite dinnertime discussion throughout the industry.
It’s been that way at least since General Motors Corp. started pumping up the volume about its Chevy Volt — a so-called “extended-range electric vehicle†concept car everyone wants to see come to production. But it won’t unless battery developers now working feverishly to perfect lithium-ion chemistry can whip up the right formula to allow the car to run for 35 or 40 miles purely on battery power.
The number of consumers who fell behind on payments for their car, credit cards and home-equity loans rose to their highest level in 15 years during the fourth quarter, according to an American Bankers Association survey, which tracks payments at least 30 days past due across eight loan categories.
The overall increase was driven by late payments for car loans, which make up two-thirds of all closed-end consumer installment loans, the Washington, D.C., trade group reported. Auto-loan delinquencies rose to 1.9 percent from 1.81 percent.•
MUMBAI, India — Numbers never lie, but they can sometimes bend the truth. Fresh from the media frenzy created by its introduction of the $2,500 Nano and its purchase of Jaguar and Land Rover from Ford Motor Co., Tata Motors reported a 5.9 percent jump in March sales compared with the same month the previous year.
Seems like the end of the story, and "job well done, Tata Motors." However, once you peel apart the numbers, this optimistic announcement becomes a mixed bag of good and bad news for the Indian automobile manufacturer.
The bump in overall sales comes solely from Tata’s booming commercial-vehicle business. The company's domestic sales of commercial vehicles in March 2008 totaled 35,993 units, a significant increase of 17 percent over the 30,720 vehicles sold in March last year.
Porsche’s stock fell by as much as 5 percent in German trading after the company reported its U.S. sales dropped 24 percent in March, Bloomberg News
reported Wednesday. The value of Porsche’s stock is down 17 percent for the year so far.
Automakers in March finally experienced the full brunt of two huge economic problems that had been nibbling at their market for months: rising gasoline prices, and American consumers’ falling economic expectations.
Sales for the industry dropped 11.9 percent in March, to 1,351,838 units, the worst performance for the month since 1993. Even more significant, the results accelerated a market deterioration that saw overall U.S. auto sales fall by 7.8 percent to 3,565,828 units for the first quarter. Annual sales rates, seasonally adjusted, slipped to near 15 million units.
A wicked combination of $3.50-a-gallon gasoline, higher prices for food and other necessities, mortgage woes and a shaky stock market left many American consumers more nervous and dispirited than anyone had expected them to be just a few months ago.
“We’re seeing new-car sales decline, not because people can’t afford them, but because there’s a lack of trust in the stability of the economy,” said Jesse Toprak, chief industry analyst for Edmunds.com. “There’s been a real erosion of wealth, and consumers are not in the mood to shop for a car. This is more of a psychological impact more than the inability to purchase a new vehicle.”
SANTA MONICA, Calif. — The average automaker incentive was largely unchanged in March compared with February, but incentives generally are likely to rise for the next several months as automakers try to break the sales slump, Edmunds.com predicts.
"Incentives are likely to rise through the spring and summer," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “We anticipate that this will be especially true for the European automakers, as long as the euro remains strong.”
MONTE CARLO, Monaco — A hydrogen economy might still be a decade or more into the future but that hasn’t stopped BMW from continuing its real-world hydrogen trial run, courtesy of some surreal clientele. Prince Albert II of Monaco was handed the keys to a BMW Hydrogen 7 sedan at this week’s EVER Monaco ecological car show.
He joins an elite list of roughly 100 celebrities and VIPs who have been loaned one of BMW’s Hydrogen 7s. The average loan extends from six to eight weeks. A BMW spokesman at the EVER Monaco ecological car show confirmed Prince Albert would have a Hydrogen 7 for a two-month trial.
SANTA MONICA, Calif. — Despite an abundance of rich incentive deals, March
vehicle sales for the industry are expected to be lower than March 2007 and even lower than February when automakers report results Tuesday, Edmunds.com
has forecast.
March new-vehicle sales, including fleet sales, are expected to total 1.33 million, a 13.2 percent decrease from March 2007 and a 13.9 percent increase from February 2008, according to Edmunds’ forecast on sales figures not adjusted for the difference in selling days.
The forecast is less dreary when adjusted for the difference in selling days. This March had 26 selling days, two fewer than last March 2007. When adjusted for this difference, sales decreased 6.5 percent from March 2007.
The long-awaited deal that hands British brands Jaguar and Land Rover over to India’s Tata Motors from Ford is finally done.
So what does Tata get from Ford, at least in the U.S.?
Edmunds.com’s analysis of sales, market share and manufacturer incentives shows Tata has one nearly dead brand with Jaguar; Land Rover appears in recovery but with the cost of its meds climbing.
Analysts and industry-metrics powerhouse J.D. Power and Associates already are predicting a heavy downturn in auto sales for March, based on sales figures from the first half of the month. Now, analysis from Edmunds.com is providing perspective on how bad not just March, but first-quarter sales are likely to be when announced next week.
Based on average sales for the first two months of 2008 compared with last year, the Detroit Three automakers have virtually insurmountable deficits to recover to match first-quarter sales from last year. But longstanding sales juggernaut Toyota Motor Corp. — and several other Japanese automakers — won't be likely to fare much better in what is shaping up to be the brutal retail-sales environment many had predicted.
Indeed, everyone predicted 2008 car sales would be worse than those in 2007; the analysis shows just how much worse in the early going. Some forecasts predict an uptick in the second half; others do not.
Many lawmakers and auto executives have long advocated a higher gas tax to get Americans to drive smaller more fuel-efficient and thus lower-emissions cars. But all acknowledged to push a higher gas tax is political suicide.
A new survey proves it. The survey also illustrates Americans talk about their concern for the environment but aren’t willing to pay more taxes to fix it.
Not surprisingly, major automakers saw retail sales drop in the first half of March compared with the same period a year ago, according to a report by research firm J.D. Power and Associates. The firm predicts total March sales will hit an annual selling rate of 15 million, dramatically lower than the 16.2 million rate of a year ago.
J.D. Power said in a report to its clients cited by Dow Jones that March saw year-over-year double-digit declines in retail car sales at General Motors, Ford and Chrysler. Toyota's sales also were off in the early weeks of the month.
J.D. Power recently reduced its 2008 car sales forecast to below 15 million, which would be the lowest level since 1994.
Automotive ads aired during the February 24 telecast of the 80th annual
Academy Awards were relatively lame in their impact — just like the Oscars show itself.
The movie-industry extravaganza failed to generate anywhere near the lift in vehicle consideration by online shoppers that was spurred by the Super Bowl broadcast three weeks earlier, according to an analysis by Edmunds.com.
As the New York International Auto Show opens this week, automakers may be interested to know their investments in the Chicago Auto Show last month paid strong dividends in online activity by car shoppers, according to a new Edmunds.com analysis.
New-vehicle launches at the Chicago show produced an average lift in shopping consideration of 25 percent in the metropolitan area during the first week of the show, compared with the rest of the country, measured by consumer traffic on the models’ new-vehicle detail pages (NVDPs) on Edmunds.com. The new 2008 Dodge Challenger SRT8 ranked highest among all vehicles with a 39percent lift in traffic.
Such results underscore the growing relevance of auto shows as marketing devices for OEMs, said Dr. David Tompkins, executive director of business solutions for Santa Monica, Calif.,–based Edmunds.com.
Edmunds.com’s new Car Stock Exchange already is exhibiting some “natural resonance†with online automotive enthusiasts, which “suggests that it may catch on†for the long term, said CEO Jeremy Anwyl.
Less than two weeks after its official launch, the Car Stock Exchange — where consumers invest virtually in the sales performance of their favorite vehicles — “is running ahead of what we thought,†said Anwyl.
“There’s already a lot of buzz building that we didn’t necessarily anticipate right away. There are some small but rabidly loyal audiences (of car enthusiasts) that are already chattering about this thing quite a bit.â€
The Volkswagen Group sold a lot of vehicles in 2007, a record number at just less than 6.2 million.
That’s good for fourth in the world. Yet in the U.S., typically viewed as the world’s most important — if not prestigious — market, Volkswagen Group of America Inc. stumbled through another miserable year to ring up 230,572 sales.
SANTA MONICA, Calif. — Manufacturer incentives in the U.S. continued inching higher in February, nearing the levels before automakers instituted reduced-sticker-price "value pricing" over incentives.
The higher incentives reflect lower industry sales, forecast by Edmunds.com to come in 2.3 percent below February 2007. Manufacturers post February 2008 sales reports on Monday.
Hyundai has been cutting production at its nearly new assembly plant in Montgomery, Ala., and greatly beefing up incentives to keep the plant humming.
Hyundai cut daily production at its sole U.S. assembly plant by about 20 percent late last year, AutoObserver has learned, and has been turning to monster sales incentives to try to keep the three-year-old plant producing Sonata sedans and Santa Fe SUVs at the current lower rate. Hyundai also has used hefty incentives to clear out 2008-model Sonatas to make room for the 2009 model it's just begun building in Alabama.
SANTA MONICA, Calif. — February car sales likely will be off some from year-ago levels but improved from dismal January when automakers report them Monday, according to a forecast by Edmunds.com.
February’s new-vehicle sales are expected to be 1.22 million units, a 2.3 percent decrease from February 2007 but a 16.8 percent increase from last month.
"The month is proving better than some industry watchers may have expected," observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis. “This month should exceed the typical 10 to 15 percent boost in sales from January, historically the slowest car-sales month of the year.”
America’s 16-year-olds seem less eager to hit the roads than their counterparts of previous generations.
In the last decade, the proportion of 16-year-olds nationwide who hold driver’s licenses has dropped from nearly half to less than one-third, according to statistics from the Federal Highway Administration reported by Monday’s New York Times.
DETROIT — Consumers who are buying cars are reacting to the difficult economic environment by spending less on a new car and extending their loan payments, according to a new study.
New-car buyers, whose ranks look to be the lowest this year of any since the turn of the century, are spending on average $300 less for their cars, according to the Auto Affordability Index compiled by Comerica Bank in Detroit, which overall showed vehicles more affordable than the last quarter or a year ago. In addition, they are extending the average term of a car loon by two months to 63 months.
The study showed the average-priced light vehicle was $28,715 in the fourth quarter.
New labor contracts negotiated between Detroit’s automakers and the United Auto Workers union last fall, combined with upcoming buyouts and retirements of aging baby boomers, may lead to a healthy hiring spree of engineers and hourly workers by auto companies nationwide, according to a new study.
The overall employment level for workers at auto companies in 2016 will be about the same as in 2007 — about 355,000 people — well off this decade’s peak of nearly 500,000, says a study on automotive hiring trends released this week from the Center for Automotive Research in Ann Arbor, Mich.
Maybe, more than six years after 9/11 and nearly five years after the start of the war in Iraq, consumers are tired of patriotic pitches. Maybe the unmitigated globalization of auto production makes it just too hard. It might be that “green” marketing doesn’t leave room for the red, white and blue. Or perhaps the idea is just in a lull.
But whatever the reasons, the use of “Made in America” themes in car marketing seems to be at a generational low these days.
Car buyers in India will be able to get a spanking-new car for $2,500 when the Tata Nano goes on sale in India later this year. So what kind of vehicle can American car buyers purchase for $2,500?
Edmunds.com’s data department researched what used vehicles were out on the market that cost between $2,000 and $2,500. The list turned out to be long ― long-gone nameplates; vehicles from gone-extinct brands; European classics; cheap sports cars; old standbys; and haulers of all sorts.
NEW DELHI, India -- Tata Motors created automotive history at the New Delhi Auto Show in January when the $2,500 Nano hatchback rolled onto the stage. Ratan Tata, the soft-spoken chairman of Tata Group and Tata Motors, said the Nano’s first mission is to move India’s scooter owners into the safer, cleaner and more comfortable world of four-wheeled motoring.
But even more incredible than the car’s rock-bottom price is the fact that, underneath the Nano’s cute jellybean shape, there are no hidden tricks or bizarre cost-cutting measures.
How exactly has Tata kept the Nano’s price so low? The answer isn’t nearly as complex (or draconian) as many automotive experts predicted.
Back in the good old days, when an engine was still an engine and not some fuel-sipping mockery of locomotion, Chrysler dusted off its Hemi tradition, gussied up a powerful new V8 and wrote a great chapter in sub-branding history by promoting its robustness. Consumers went nuts from 2002 through 2006 selecting the 5.7-liter option and turning "That thing got a Hemi?" into a cultural touchstone.
What a difference two years and $3-a-gallon gasoline can make. Nowadays, Chrysler still touts the Hemi. But it is repositioning the iconic engine brand into a platform for powertrain diversity that notably includes a version that boosts fuel economy by shutting down half of its cylinders at cruising speeds.
The evidence is mounting. Big engines and huge horsepower no longer are the keys to the car-buyer’s heart. In fact, it quickly may become the opposite.
Installation rates for V8 engines -- the bread-and-butter powerplant for the horsepower wars that have dominated the U.S. market for more than a decade -- are dropping. And data from Edmunds.com extrapolating the purchase intentions of consumers actively shopping for a new vehicle show those potential customers are markedly less interested in V8 power.
Certainly, it’s a time of deep but swift transition for the U.S. light-vehicle market. At the recent Detroit auto show, there were numerous examples of high-horsepower wares, but they most decidedly were presented in modest tones, taking a back seat to whatever fuel-efficient and eco-friendly model or technology was available. The chest-thumping days of explosive, twin-Hemi concept SUVs are done.
TOKYO - Acura's redesigned 2009 TSX sports sedan has broken cover, weeks ahead of its official intro at the New York International Auto Show.
In what's shaping up to be a busy year for Acura, Honda's premium brand, this new TSX announcement comes just days after the revised 2009 Acura RL flagship was unveiled at last week's Chicago Auto Show. Acura has also said it will debut an all-new TL performance luxury sedan later year as Acura's model lineup gets a substantial revamp.
Indeed, John Mendel, executive vice president of automobile operations for American Honda Motor Co., had promised last summer that 2008 would be the year of laying out Acura's new direction.
The boom in crossovers is the biggest product story in the U.S. auto market these days. Sales increased to more than 2.8 million last year, extending a seven-year surge, and now more than 50 separate models of utility vehicles are offered on car-based platforms.
A couple more joined the fray at the Chicago Auto Show this week when General Motors unveiled the Chevrolet Traverse and Ford showcased a spiffed-up Ford Edge Sport.
Funny thing is, the more new crossovers that emerge, the more they look and feel essentially the same. One after another they’re being launched by automakers up and down the price scale, but more often than not they pretty much end up looking like some model year of the Lexus RX.
It could be easy to dismiss the Transit Connect unveiled by Ford at the Chicago auto show Feb. 6 as just a commercial vehicle for delivering flowers, toting the Maytag repairman’s tools and hauling a local rock band’s instruments.
However, there’s big significance behind Ford’s boxy little truck/van. The Transit Connect is tangible evidence of Ford executives delivering on their vow to leverage global products. It is already a proven player in Europe’s commercial fleets and has similar potential in North America. And its prospects beyond commercial use in these days of boxy Scion xBs and Honda Elements abound.
General Motors Corp.’s announcement this week of a large investment to produce a new variant of its largest diesel engine, one that complies with
emissions standards in all 50 states, likely foretells GM’s plan to use the engine for the Chevrolet Suburban SUV, in addition to other large SUVs, pickups and vans already using the current 6.6-liter Duramax diesel V8.
Currently, even the largest versions of the Suburban have made do with GM’s gasoline 6-liter V8. The gasoline-engine Suburban 2500’s 12 mpg city and 17 mpg highway fuel-economy ratings appear to be an increasing liability, however — a liability diesel power could help to alleviate.
But there’s a new complication: Current federal Tier II emissions standards created a new category of vehicles — Medium Duty Passenger Vehicles, which, beginning in 2009, must meet the same emissions standards as every other passenger vehicle on the road.
There’s been a lot of turmoil in the car market over the past year, and you can see it in the first decline in overall sales in the U.S. in more than a decade.
It leaves us with a new set of winners and losers, evidence of a shift in consumer attitudes.
This is reflected in the unexpected success of Mazda, which expanded its sales 10 percent this year, more than any other nameplate in the U.S.
Higher sales in North America, as well as Europe and emerging markets, led Mazda Motor Corp. in Hiroshima on Wednesday to report profit growth in the third quarter and forecast double-digit increases in the current fourth quarter and for the year when Mazda closes the books on fiscal year 2007 on March 31.
Toyota Motor Corp. may report the smallest profit growth in four quarters because of the rising yen and slowing U.S. demand, Bloomberg News reported Monday. Toyota announces its quarterly earnings Tuesday.
Hyundai executives view their new Genesis sedan –- featured at the recent Detroit auto show -– as a velvet ramrod that will help them shatter the glass ceiling over their brand and move it decisively upscale.
The problem: The upscale ceiling over Hyundai may prove too resistant to the budget brand’s ambitious attempt to smash it and grab a piece of the luxury market.
Hyundai Motor America executives certainly haven’t lacked for expressed confidence in Genesis, their first rear-wheel-drive sedan and one that offers a new V8 engine. They made the car the star of their pricey commercials during Sunday's Super Bowl.
Ethanol derived from cellulosic “waste†sources –- rather than the corn-based stock that produces almost all of the ethanol used today –- takes a big step this week, as the nation’s first cellulosic ethanol plant begins production.
The cellulosic ethanol plant, engineered and operated by KL Process Design Group of Rapid City, S.D., is located near Upton, Wyo. The plant processes soft waste wood into ethanol and is the result of a 6-year cooperation between KL and the South Dakota School of Mines and Technology. Cellulose is the primary structural component in all green plants.
A General Motors analysis shows Americans will quickly spend a big chunk of the rebate checks they receive under the economic-stimulus package proposed by the federal government and expected to be passed soon by Congress.
And they may well spend some of it on cars.
Mike DiGiovanni, GM’s executive director of global market and industry analysis, said during a Friday conference call with analysts and media regarding January car sales that GM’s analysis shows Americans will spend about 40 percent of their rebate checks within the first four months of receiving them. Rebates are expected to range from $300 to $1,500, depending on income.
SANTA MONICA, Calif. – The average auto manufacturer incentive in the U.S. was $2,401 per vehicle sold in January, up $167, or 7.5 percent from January 2007, and down $56, 2.3 percent, from December 2007, Edmunds.com estimated Friday.
“In January, automakers decided to be more generous in their incentives spending in hopes of counteracting the slowdown in demand,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
“We do not foresee a dramatic turnaround in market conditions for at least the next several months, and yet the race for increased market share is in full force,” added Toprak. “This will provide a test of the automakers’ discipline about incentives, especially that the of the domestics who have been employing a ‘value pricing’ strategy quite successfully recently."
Where would Buick be without Tiger Woods? General Motors executives can’t decide if they really want to find out. They believe the golfing phenom and global celebrity (leading in this weekend's Dubai Desert Classic) is so popular he -- rather than Buick vehicles -- became central to the brand over the years.
But now that the Enclave has rescued Buick from the sales doldrums, a new advertising campaign shows division executives are unafraid to put a renascent Woods front and center with the stylish crossover vehicle.
“These spots are very significant because they represent both Buick and Tiger moving to another stage in our life cycle,†Maria Rohrer, Buick’s marketing director, told AutoObserver. “We’ve used him in testimonial before, but we’ve never used him in this kind of emotional way. It’s wonderful when the stars align like this.â€
If the next-generation Pilot that Honda actually produces looks pretty much like the prototype the company displayed at the recent Detroit auto show, the new version may not do much to address the model’s sinking popularity.
The reason: In a styling-conscious market where sleek crossovers rank as some of the hottest vehicles, the blocky 2009 Pilot might fit like a square peg into a round hole.
If you’re one of those cynical types who think people are buying hybrid-electric vehicles mainly to demonstrate their environmental hipness, results of a new fuel-price study by Edmunds.com indicate hybrid buyers may not be nearly so superficial:
They’re buying hybrids to save gas.
Edmunds analyzes the number of visits for every vehicle in the market to that model’s Vehicle Details page at Edmunds.com. It correlated those visits to extrapolate what would happen if the price of gasoline rose from its $3.01 price in December to a theoretical $4 per gallon.
Bottom line: Online vehicle shoppers flock to hybrids. And flee traditional midsize SUVs.
Tell the people at Chrysler, whose employer is now private-equity firm Cerberus Capital Management, this one: Private-equity firms aren’t the big job killers people have thought they were.
Private-equity deals don’t kill as many jobs as previously thought but they don’t create any either, according to, what The New York Times, called “perhaps the most extensive study” on whether the company buyouts by private-equity firms create jobs or result in more layoffs.
The stock price of Harley-Davidson Inc. slid like a greased pig this week to near 5-year low, as even this longstanding media and financial-community darling of
transportation-sector companies appears to have yielded under many of the same economic factors stifling the auto industry.
Harley’s stock price has dropped nearly 50 percent over the past year, and last week influential Citigroup downgraded Harley stock to a “sell†rating, predicting fourth-quarter sales that could be 12-14 percent lower than last year, and the company recorded a heavy sales and profit decline.
By attempting to spread the design and sales impact of the highly successful Enclave crossover throughout the rest of the Buick vehicle lineup, General Motors executives are trying to borrow a page from the old Walt Disney Co. playbook.
And the future of Buick likely depends on whether they succeed.
Disney executives used to talk about “pixie dust†– metaphorically collected from the colossal success of their theme parks – as the company’s particular brand of Midas touch that graced practically everything they did from the Eighties through the Nineties.
Buick hopes that “Enclave design and quality cues†provide comparable contagious magic for them.
Five months after Cerberus Capital Management was handed the company (for
nothing, in effect) by Chrysler's former parent, Daimler, there are growing fears that the acquisitive private-equity group may have bitten off more than it can chew, The Economist
magazine writes in this week’s edition.
The British publication notes three main problems facing Chrysler’s new management team with little or not time to solve them:
Fortune
magazine suggests there’s reason to be optimistic about General Motors’ future in an article written by auto veteran and long-time GM watcher Alex Taylor and entitled “Gentleman, star your turnaround.” The subtitle is “Rick Wagoner’s overhaul of GM is producing cooler cars and a glimmer of hope.”
GM CEO Rick Wagoner tells Fortune what he’s been saying often in recent weeks is that 2008 will be another tough year for the automaker. He cites the same headwinds as his counterparts at other companies cite: weaker economy, high commodity, steel prices and energy prices. "Frankly, more headwinds, especially from the first two, than I would have hoped. We're going to be in soupy water for a while," Wagoner told Fortune.
Still, he added, he feels good about GM’s progress.
NEW DELHI, India -- Like three playground bullies fighting over control of the sandbox, German luxury makes Mercedes-Benz, BMW and Audi are going head to head in the Indian market.
The strange thing is, even with double-digit percentage growth in luxury vehicles, annual luxury car sales for the entire Indian market will barely surpass 4,000 units for 2008.
Why battle over such a small market?
Based on interviews with the executives who run the German luxury marques' operations in India here at the New Delhi Auto Expo, the answer has a lot more to do with strategy than it does stubborn pride – though don’t discount the latter completely.
Moody’s Investors Service confirms what many observers have thought: India’s Tata, the maker of inexpensive cars, may not a good fit with luxury marques Land Rover and Jaguar being sold by Ford and wanted by Tata.
Moody’s has placed Tata Motors’ current rating on review for a possible downgrade, according to AFX International Focus, a European financial news service. It sees Tata's swallowing up of Jaguar and Land Rover as creating digestive problems.
Withering vehicle demand and a dollar battered on world currency markets means 2008 will see many automakers beginning a high-stakes dance to make more efficient use of production capacity in North America.
The efforts are most critical for Detroit’s Big Three automakers – General Motors Corp., Ford Motor Co. and Chrysler LLC. Each is struggling to rationalize fading market share with a 2008 vehicle-sales forecast projected to be the U.S.’s lowest in a decade or more.
Underutilized plant capacity is an immense black eye for the bottom line in the best of economic environments, much less a 2008 expected to flirt with full-blown recession and what some believe is a dangerously weak currency.
Each of the Big Three recently won momentous labor-cost concessions from the United Auto Workers union, but that won’t change the fact each still must markedly downsize their manufacturing footprints.
The year 2007 was historic for motor vehicle sales in the U.S. on a number of fronts.
Overall, the U.S. auto industry, which reported December and full-year 2007 sales on Thursday, saw sales drop to their lowest level in a decade.
For the first time since 1931, Ford Motor Co. was not the No. 2 automaker in the U.S.; Toyota was, even though Toyota suffered sales declines in some months for the first time in years.
Depending on what you count in the numbers, Toyota Division could be considered the best-selling brand in the U.S. Chevrolet objects, claiming Toyota shouldn't add into its totals Scion-branded vehicles in order to steal Chevrolet’s long-held sales crown.
And in 2007, for the first time in history, domestic automaker’s share of their home market fell below 50% in July, though for the year, they stayed above the 50% mark. Consider it was only in the mid-1980s that they owned 75% of the U.S. market.
Chrysler held onto its position as No. 1 in sales of minivans, the segment the
automaker invented.
It had looked like the Dodge Caravan might be overtaken by the Honda Odyssey, but in the end, Chrysler held on.
However, its lead is shrinking. The Caravan outsold the Odyssey by a mere 3,104 units, according to Edmunds.com's analysis. In 2006, the Caravan outsold the Odyssey by 33,221 units.
Toyota Motor Corp. overtook Ford Motor Co. to become the No. 2 automaker based on U.S. sales for 2007. Ford held the No. 2 spot behind General Motors for 75 years.
The battle for brand leadership between Toyota and Chevrolet is muddied -- but close and intense.
If sales from Scion, sold through Toyota Division showrooms, are included in 2007 sales totals, Toyota wins over Chevrolet for the first time as the top-selling brand in the U.S.
Take out Scion, however, and Chevy holds onto the top spot, but by a narrow margin -- one that has been narrowing in recent years.
The average automotive manufacturer incentive in the U.S. is estimated to have been $2,472 per vehicle sold in December 2007, up $197, or 8.7 percent, from November 2007, and up $157, or 6.8 percent, from December 2006, according to calculations by Edmunds.com.
Domestic automakers as well as European, Japanese and Korean ones raised incentives in December in an attempt to end the year on a high note.
However, sales reports, being released on Thursday, indicate that note was not so high. Industry sales for the year are expected to come in at 16.1 million, the lowest level since 1998.
Often a particularly challenging year is sent passing into the history books with a collective “good riddance” and sigh of relief. And while automakers selling vehicles in the U.S. surely are glad the tough 2007 is over, they are bracing for rather than embracing the arrival of 2008.
On Thursday, automakers report December and full-year 2007 vehicle sales. 2007 is likely to see the lowest sales since 1998.
Forecasters predict 2008 sales will be even lower. But 2009 could be a turnaround year.
Honda and Toyota models dominate the list of vehicles most researched by the
13 million people who visited Edmunds.com
every month last year.
The Honda Civic and Honda Accord ranked No. 1 and 2, respectively, on Edmunds.com's 2007 list of most researched cars.
Interestingly, despite the many recent new product introductions, most of the vehicles on Edmunds.com's most-researched lists were also among the most researched in 2006.
After issuing a statement just before the holidays saying recent media characterizations of the financial situation at Chrysler LLC “painted an inaccurate picture” of the company’s fiscal health, media and analyst tongues are wagging with suspicion that the company’s hedge-fund owner, Cerberus Capital Management L.P., is scrambling to salvage its car-company investment.
Cerberus, which owns 80.1 percent of Chrysler and typically is closed-mouthed in its dealings with the media, hastened to back up Chairman and CEO Bob Nardelli when The Wall Street Journal reported Nardelli recently told some Chrysler employees the company was “operationally” bankrupt.
It’s being hailed as the turnaround story of the year, but put the champagne back in the cellar. Celebrations about a Fiat revival are premature.
I was a judge on one of those auto industry Man of the Year award panels last
year. Sergio Marchionne, the 55-year-old Italian-Canadian who has done so much to stop the rot at the Fiat group, emerged as the clear-cut winner.
My nomination for someone else stood little chance in the face of overwhelming voting for the “saviour†of Fiat. Still, I have reservations about whether Marchionne deserved the award – because we’ve been here before.
Anyone who’s studied Fiat long enough knows it’s a boom-or-bust group. It is Europe’s equivalent of Chrysler, one year a glamorous master of the automotive universe, another a down-and-out bum.
TV advertising is spiced with year-end incentives for auto buyers. Mercedes-Benz shows Santa’s elves tinkering in his workshop on E- and C-class sedans for its Winter Event program. It’s Happy Honda Days! General Motors is revisiting its now-annual Red Tag clearance sale for 2007 models.
Lexus has renewed its iconic incentive program that tries to lure consumers into putting big red Christmas bows on new vehicles and parking them in the driveway for their loved ones. And Lincoln is running a copycat campaign.
But don’t be fooled by airwaves full of incentive advertisements: as enticing as they seem, these offers only amount to a holiday treat. That’s because money-back and cut-rate-interest programs aren’t what they used to be in the auto industry.
Chrysler and Renault-Nissan reportedly are in talks to do some sharing –- sharing of technology, engines and vehicles, specifically small cars and large trucks.
Nissan sources in Japan confirmed to AutoObserver that the talks of a global deal are ongoing and that some sort of announcement could come “fairly soon,” though there’s no guarantee a deal will ultimately be finalized.
The discussions center around Nissan’s desire for a large U.S.-made truck and Chrysler’s desperate need for small cars –- Nissan Sentra size and smaller, sources told AutoObserver.
The U.S. House of Representatives finally approved a massive energy bill whose cornerstone is the long-debated increase of fuel economy standards to a 35 miles per gallon average for both passenger cars and light trucks by 2020.
Trouble is, just when auto companies, politicians and environmental interests seem able to agree the public insists on something resembling “action” regarding auto fuel economy, the bill faces an almost certain roadblock in the Senate –- not to mention a threatened veto from President Bush –- because it retains a provision to reduce tax breaks for Big Oil and mandates large utilities produce at least 15 percent of their energy from renewable sources.
Both are measures eco-evasive Bush and Republican stalwarts say derail any prospects of the bill’s passage in the Senate.
SANTA MONICA, Calif. -- With 11 months of vehicle sales reported, the biggest losers and winners –- and those brands that are on the move to new sales rankings –- are being predicted by Edmunds.com’s analysts.
The biggest losers for 2007 look to be: Ford division; Isuzu; Buick; Hummer; Toyota’s Scion; and Jaguar.
The biggest winners for 2007 likely will be Mazda, Lincoln and Mitsubishi, all of which have surpassed total 2006 sales in just the first 11 months of the year.
DETROIT -- Oil prices were surging to near $100 a barrel. The housing downdraft was whacking economic optimism with each new report. General Motors’ sales were in the process of dropping by a double-digit percentage. And GM bean counters were putting the finishing touches on a quarterly statement that would yield an industry-record quarterly loss.
But still, it was a good November for Mark LaNeve, GM’s vice president of vehicle sales, service and marketing. That’s because he was seeing a bunch of other numbers, too -– the ones that showed significant and sustained upticks in the company’s market share, consumer purchase consideration of GM vehicles, product-quality scores and even the equity of GM’s brands.
And ever the salesman, LaNeve was touring the country, hitting 14 cities for meetings with 40 GM dealers and ladling out the Kool-Aid with the help of a 10-slide PowerPoint presentation that told the story of GM’s comeback and sounded a rallying cry as 2007 was nearing a close.
Okay, so Ford Motor Co. has a brand-new four-year agreement with the United Auto Workers union that markedly cuts the company’s labor liabilities.
November’s handshake with the UAW also brings the union’s blessing to pare Ford’s U.S. manufacturing footprint to just nine assembly plants; the company already has shuttered four major U.S. plants and will close another in 2009 as it right-sizes itself to a near-term market share projected to be around 15 percent. As recently as 2002, Ford share exceeded 20 percent.
But with Ford shedding costly and unproductive manufacturing capacity (and the associated workers, unfortunately), the next problem emerges: much of what’s being built in Ford’s remaining UAW-represented plants is yesterday’s news.
CEO Alan Mulally stresses that savings from the new labor agreement – along with vital new investment to install flexible-manufacturing tooling in all its plants – will enable Ford to accelerate new-product development. That acceleration needs to get started: the Mustang and the F-150 pickup line are the company’s only absolute winners, and even those perennial segment-dominating models are coming under pressure from a flagging U.S. market and ongoing concern about fuel prices.
An assessment of the plants that will take Ford through the pivotal next four years of its restructuring and the vehicles they produce, or are likely to be producing:
Ford doesn't have to look very far to see the dramatic shift in the
marketplace -- away from gas-hungry, larger SUVs to more fuel-efficient, car-based ones.
The automaker just has to long in its record books at the Explorer and the Escape to see the tale of two SUVs.
November car and truck sales weren't great, but, in light of current circumstances, they could have been worse, concluded Edmunds.com's analysis of November sales figures reported by automakers Monday.
Jesse Toprak, executive director of Industry Analysis for Edmunds.com, noted the retail market, despite the weakening economy, the fallout from the housing market and higher energy prices, remained relatively stable this November compared with the last one.
“We’re seeing modest gains though not robust ones,” he said. “We’re still doing fairly well considering the market and macroeconomic issues.
Remember when the Ford Explorer was king of the SUV mountain – the best-selling SUV in America?
The Explorer's reign is long over.
Without fanfare, the Honda CR-V quietly took over the No. 1 spot among SUVs and crossovers this past year. A number of other SUVs have also passed the Explorer by. In fact, the Explorer has been surpassed by the Ford Escape and Ford Edge.
The Toyota Prius has become a brand unto itself; the single hybrid car is outselling entire brands with
their full lines of models.
The Prius more than doubled sales in November compared with November 2006. Prius outsold the entire Acura, Saturn, Buick, Subaru and Mercury brands. It came close to outselling the Cadillac and Volkswagen brands.
That's to name only a few. (See chart below)
And November wasn't even Prius' best month. In November, Toyota sold 16,737 Prius hybrids; in May, Toyota sold more than 24,000.
TOKYO -- Like many Car of the Year contests, Japan’s COTY can throw up the occasional unexpected
result.
But not this year.
Going into this year’s showdown, many wise souls predicted that the new Honda Fit would win at a canter. And that in the end is exactly what happened.
SANTA MONICA, Calif. – Incentive spending by automakers remain roughly flat in November, as manufactured tried to stick their plans for less incentive spending to boost profit margins. Yet, the plan may prove to contribute to softer vehicle sales, being reported by manufacturers throughout Monday.
"Even with the year-end sell-down upon us, the domestic automakers have stayed committed to the value pricing strategy that limits their investment in incentives,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Whether you prefer a domestic vehicle or an import depends largely on your age, a new study finds. The younger you are, the more likely you are to buy an import and avoid a domestic.
That’s the primary finding of the J.D. Power and Associates 2007 Avoider Study released Thursday. The survey looks at why consumers don’t consider particular models when car shopping.
Other interesting tidbits suggest the domestic automakers have a lot more work to do in the perception of their vehicles.
SANTA MONICA -- This month's new vehicle sales (fleet and retail) are expected to be 1.2 million units, virtually unchanged from November 2006 and 2.5 percent below October 2007, according to Edmunds.com.
"Given the industry trends, we have adjusted our year-end forecast," stated Jesse Toprak, Edmunds’ executive director of Industry Analysis. “We now expect 2007 sales to total 16.13 million units, and predict that no more than 16 million cars and light trucks will be sold in 2008."
After nearly four months of earnest talk, surprise strikes at General Motors and Chrysler LLC and some creative wheeling and dealing, American carmakers finally have new labor agreements -- ones that almost wipe out the cost advantage enjoyed by Asian rivals operating in the U.S. without union contracts.
Sean McAlinden, vice president of research at the Center for Automotive Research (CAR) in Ann Arbor, Mich., said it will take U.S. carmakers two to four years to reap the benefits of all the changes embedded in their new contracts with the United Auto Workers.
But the cost savings are genuine and substantial, he said.
WESTLAKE VILLAGE, Calif. –- With the total auto industry showing record improvement, Lexus took the
No. 1 spot in J.D. Power’s annual scorecard on the satisfaction of customers buying a new vehicle.
J.D. Power and Associates said the industry achieved a record high for the second consecutive year in the 2007 Sales Satisfaction Index (SSI) Study released Wednesday morning. For a second consecutive year, the industry achieved a record high overall SSI score, improving by 5 points to 852 from the previous record of 847 set in 2006.
Lexus climbed four spots to rank the highest in satisfying buyers with the new-vehicle sales process, achieving an SSI score of 897 on a 1,000-point scale, and improving by 10 points from 2006.
Following closely behind Lexus in the rankings were, respectively: Hummer; Jaguar, which earned the top spot in the three previous surveys; Lincoln; and Mercedes-Benz.
NORTHVILLE, Mich. –- There is probably nothing less sexy than brakes. The gritty components that make up a typical disc-brake system are the antithesis of where most auto-industry suppliers want to be: brakes are low-tech, low-value commodity items. Hardly the stuff around which vaunted brands are built.
However, Brembo S.p.A., is the rock star of the brake business to the point that at one aftermarket trade show in France, we saw what amounted to a mini-riot among kids barely able to drive, when Brembo stopped handing out freebies and attempted to shut down its booth at the end of the day.
The fact the brake business even has a rock star is due entirely to Brembo’s existence. Almost since its inception in 1961, Brembo single-handedly has been responsible for making brakes cool (figuratively and literally).
TOKYO -- Last week Toyota posted record half-year earnings, including a blockbuster $7.9 billion in group net income. Japan’s most successful automaker also has a couple of other things to celebrate.
Toyota has long dominated its home market, but even by its standards the sales results for October were pretty remarkable. Last month, Japanese vehicle sales dipped again, down 1.3 percent, according to Japan Automobile Manufacturers Association (JAMA) figures. Yet Toyota beat the market with an aggressive sales surge of 7.9 percent.
What’s more, somewhat freakishly, eight out of the Top 10 bestsellers were Toyotas.
TOKYO -- In contrast to General Motors record loss, Toyota Motor Corp. posted its second-largest
quarterly profit ever, prompting the Japanese automaker to increase its full-year profit forecast.
For the quarter ending September 30, Toyota reported a net profit equivalent to $3.96 billion, up 11 percent form the same period a year ago. As a result of the strong quarter, Toyota said it was increasing its full-year profit forecast by 3 percent to 1.7 trillion yen. That would surpass last year’s record and mark the seventh consecutive year of record profits.
Toyota also raised its estimates for the number of vehicles it expects to sell globally –- 8.93 million, up from the earlier forecast of 8.89 million.
DETROIT -– Don’t insist on identifying a definitive winner and loser in the tentative labor contract hammered out this past weekend between Ford Motor Co. and the United Auto Workers (UAW) union. There wasn’t one.
In the agreement awaiting ratification by rank and file workers, the UAW got assurances from Ford there won’t be any additional plant shutterings beyond those already earmarked for closure -– despite the fact Ford’s sales suggest the company needs to shed more capacity. And there is some commitment from Ford regarding new models for several plants.
Barely a week after the United Auto Workers ratified a new four-year labor agreement with Chrysler LLC, its top executives let fly with the facts of life under new hedge-fund owner Cerberus Capital Management: assembly-plant shifts will be cut, several lame-selling models will be axed almost immediately -- and as a result, as many as 10,000 more hourly jobs will fall by the wayside in 2008.
This shoe drops after the already deep cuts announced in February's Recovery and Transformation Plan, pre-Cerberus, when Chrysler still was owned by Daimler AG. Chrysler confirms the discontinuance of four models, but there are almost assuredly more to follow, as the new management team and Cerberus begin to understand the product cupboard is shockingly bare.
Where does this leave the new Chrysler's North American manufacturing base, and the products -- current and future -- built by this company that is shedding assembly capacity and products at a pace unprecedented by "old Detroit" standards? Here's our analysis of Chrysler's 14 North American assembly plants and the prognosis for the products they either currently build or might be building in the future:
October car sales represented more of the same weakness seen in recent months.
Sales on a seasonally adjusted basis came in at 16.05 million vehicles, down from 16.35 million in October a year ago.
“There was nothing new this month, as we saw General Motors and foreign automakers continue to succeed,” said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. “Ford did better than expected because of its new products, mainly crossovers, and Ford has been able to hold on to its truck buyers, even with an aging product.
“We’re expecting that sales will continue to be sluggish for the rest of the year, and November has typically been a slow month for automakers,” he added.
October’s new vehicle sales are expected to be 1.24 million units, a 2.4 percent increase from October 2006 on an unadjusted basis, according to a forecast by Edmunds.com. Automakers will report October sales results on Thursday.
This October had 26 selling days, one more than October 2006. When adjusted for this difference, sales decreased 1.6 percent from October 2006. (The chart below sets forth other adjusted and unadjusted comparisons.)
"Sales are strong for vehicles at the far ends of the price spectrum, as consumers affected by the housing market bust seek bargains while luxury buyers are largely untouched," observed Jesse Toprak, Edmunds’ executive director of industry analysis. “Meanwhile, sales of midrange vehicles like large cars and minivans are suffering."
Every year when the vehicle-customization industry gathers at the Specialty Equipment Market Association (SEMA) show in Las Vegas, one group of attendees is always more engaged than the year before: auto company executives.
Tapping into the customization and specialization craze is boosting their top lines and beefing up their bottom lines more than ever before, producing juicy double-digit growth that normally isn’t part of the landscape in the highly mature U.S. automotive market.
At least 14 automakers were expected to exhibit at the SEMA show that began in the Las Vegas Convention Center on Tuesday. Understandably, each automaker is getting more and more serious about pursuing slices of what has become a $36.7-billion industry, according to figures compiled by Diamond Bar, California-based SEMA.
DETROIT -- After years of sterling reliability, Toyota is showing cracks in its armor, according to data
from Consumer Reports’
2007 Annual Car Reliability Survey revealed Tuesday before the Automotive Press Association in Detroit.
By contrast, Ford’s domestic brands have made considerable improvements. Consumer Reports said 93 percent of Ford, Lincoln, Mercury models in the survey scored average or better.
“Ford continues to improve,†said David Champion, senior director of Consumer Reports’ Auto Test Center. “The reliability of their cars has steadily improved over the years, and is showing consistency.â€
He added, “We believe Toyota is aware of its issues and is trying to fix problems quickly.â€
Despite the problems, Toyota (including Lexus and Scion) still ranks 3rd in reliability among all automakers, behind only Honda and Subaru.
With a fresh four-year labor agreement with the United Auto Workers (UAW) ratified last week, General Motors now can get on with the business of ensuring its UAW workers and U.S. assembly plants have desirable product to build.
During the negotiations, documents emerged detailing the commitments GM has made to the UAW for 16 U.S. plants. But while the question of who “won†and “lost†in the labor pact will be long debated, a more important concern for both entities’ long-term viability is how effectively those plants –- and, more vitally, the products they make –- can improve GM’s competitiveness versus fast-moving and still-leaner rivals.
The UAW’s goal is to keep jobs for its membership by keeping plants open, regardless of whether anybody’s buying what comes off the line. GM’s job is to make a profit by selling vehicles customers want to buy. Those goals are not mutually supportive: three decades of GM market-share decline has proven that keeping plants open to produce non-competitive products has not helped it, or the UAW, to thrive.
Based on the GM future-product information made public by the UAW, Auto Observer decided to grade each plant and its products on the potential to boost GM’s competitive outlook (UAW-represented labor figures as of April 30).
Not wanting a repeat of last fall’s situation, Chrysler is temporarily closing several plants beginning
next week and eliminating overtime at others in an effort to head off bloated inventories of several models.
Last year at this time, Chrysler’s inventories of unsold vehicles built to extremely high levels, contributing to the automaker’s $1.5 billion third-quarter loss, which, in turn, prompted parent company DaimlerChrysler (now Daimler AG) to put the U.S. automaker up for sale.
The temporary shutdowns and elimination of overtime at affected Chrysler plants, which combined employ more than 23,000 workers, came immediately after Chrysler reported a 5-percent decline in September sales. They also come on the eve of negotiations between Chrysler and the United Auto Workers on a new four-year contract and within only a couple months of new Chrysler owners, Cerberus Capital Management, taking over.
The sales drop and production cutbacks suggest Cerberus has a lot of work to do to turn Chrysler around.
Automakers reported weak September vehicle sales against a backdrop of continued
economic headwinds. Still, some automakers -- especially those with new models -- fared better than those without new wares.
General Motors, Nissan and Honda reported gains; Ford, Toyota and Chrysler saw declines. Total industry sales in September ran at a seasonally adjusted rate of 16.23 million units compared with 16.6 million in September last year.
"This month was pretty much in line with what we expected," said Jesse Toprak, executive director of Edmunds.com's industry analysis. "Auto manufacturers that saw the most gains had new or freshened models -- GM with the Cadillac CTS and new crossovers, Honda with the Accord, Nissan with the Altima."
The average automotive manufacturer incentive in the U.S. was $2,293 per vehicle sold in September 2007, down $176, or 7.1 percent, from August 2007, and down $267, or 10.4 percent, from September 2006, according to Edmunds.com's monthly True Cost of Incentives (TCI) report.
"Some may have thought that this soft market would inspire the automakers to increase their incentives to boost sales, but that isn’t happening," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. Edmunds’ report on incentives was released just before automakers began reporting September sales, expected to be soft compared with a year ago.
New vehicle sales in September are expected to be 1.29 million units (retail and fleet), a 4.5 percent decrease from September 2006, according to Edmunds.com’s forecast.
"This month, the automakers with the most momentum are faring well even given the constraints of the marketplace," observed Jesse Toprak, executive director of industry analysis for Edmunds.com. "Especially in a soft market like this, compelling new products and effective marketing campaigns are the keys to success."
Honda, which just launched the Accord accompanied by a significant advertising campaign, is the only one of the six major automakers predicted to show a sales increase, on both an unadjusted and adjusted basis. This September had 25 selling days, one less than September 2006. When adjusted for this difference, sales decreased 0.7 percent from September 2006.
Driving into General Motors’ massive test facility in Milford, Michigan,
outside of Detroit Tuesday, three workers carrying “On Strike” picket signs stood guard at the entrance as cars piloted by the automaker’s white-collar engineers streamed in as if it were any other day.
Deep inside the massive 4,000-acre grounds, GM was holding its “GM Collection†press event, scheduled long ago before there was even a hint of a strike by GM’s United Auto Workers union employees. This event and others like it held around the country are intended to build upon the traction GM has gained with some of its new models, like its Saturns and crossovers.
For now, however, the assembly lines producing Saturns, crossovers and all the other 2008 GM models are still, while plans for where future products will be built are being discussed and horse-traded by GM and UAW bargainers who were returning to the negotiating table Tuesday.
Negotiators for General Motors and the United Auto Workers union were headed back to the bargaining table while workers walked the picket line in a strike that started at 11 a.m. Monday.
UAW President Ron Gettelfinger told a press conference that GM has treated the negotiations as "a one-way street," with the automaker expecting everything from union members while giving nothing back.
"GM pushed us into a strike," Gettelfinger said. He added that it appeared to the union bargaining team that GM, as of last Thursday, didn't care if the union went on strike.
Gettelfinger said the main open issue is job security, particularly related to plants like those in Fairfax, Kansas; Spring Hill, Tennessee; and Lordstown, Ohio, that have no future product planned. He emphasized the strike had absolutely nothing to do with the establishment of the union-run trust fund for retiree health care benefits, something the UAW has offered GM in previous negotiations but GM turned down, Gettelfinger revealed.
An increasing percentage of car lease consumers are downsizing into smaller vehicles, according to recent customer data analyzed by LeaseTrader.com, the Miami-based company that helps people transfer car leases.
LeaseTrader.com’s analysis shows that roughly 15 percent of its customers transferring out of their car lease do so with the intention of getting into a smaller car.
When Honda renamed the former Arrowhead Pond entertainment and sports
venue in Anaheim, California, the Honda Center, the automaker did what it does with its car owners: it asked customers what they thought.
Specifically, Honda asked what patrons thought about the center’s name change. But, the company got more than what it asked for: it got comments like "now that Honda runs the center, the food will be better and the bathrooms will be cleaner."
“Holy s---,†John Mendel, who was promoted to executive vice president of automobile operations for American Honda Motor Co. this year, recalls thinking as he read the survey responses. “Now we’re being held responsible for hot dogs, beer, bathrooms and everything else.
“But,†he adds philosophically, “that’s the power of the Honda brand. You put the Honda name on something, and there’s a certain level of expectation.â€
In the summer of 2006, no one around the United Auto Workers (UAW) union would have been surprised if its president, Ron Gettelfinger, had decided to call it quits.
Rumors that Gettelfinger was tired of the union presidency floated through union halls for months prior to the UAW's constitutional convention in Las Vegas last year.
The 63-year-old Gettelfinger, however, said he never really considered retiring even though he is now caught in a tense struggle between the union's proud legacy and traditions and the forces of globalization, which have left American carmakers with only half of their home market.
Yet, in what is Gettlefinger’s swan song, a deal that both sides can live with appears imminent.
By Bill Visnic
Toyota Motor Corp. has endured some scoffing over the sometimes unseemly incentives of several thousand dollars consistently laid on the hood of its all-new Tundra full-size pickup. In July, Edmunds.com
estimated Tundra incentives reached a height of $4,625; Toyota execs say they now are at about $3,000.
But at a meeting last week for financial institutions and media, one Toyota executive says so many customers are upside-down, that without big cash incentives, the full-size truck segment is a “No Sale.â€
Jim Lentz, executive vice president, Toyota Motor Sales U.S.A. Inc., rattles off some interesting statistics about Tundra transactions:
NEW YORK –- During a presentation for the U.S. financial community and journalists this week, not one of Toyota Motor Corp.’s Japanese and U.S. executives uttered the phrase, “Global domination.â€
They didn’t have to. They mostly let the numbers –- and the promise of a host of proposed new processes -– do the talking.
Like the Golem-like robot in “The Day the Earth Stood Still,†it’s beginning to look like Toyota can simply raise its helmet visor and ray-beam any obstacle out of existence.
The biggest surprise to jump out of the August vehicle sales reports, issued Tuesday, was that General Motors sales were up, when they had been predicted to be down.
And, not as surprising, Toyota sales slipped for the second month.
Another surprise was the sales strength of crossovers and large trucks, especially crossovers like GM's Buick Enclave, as well as the surge of the Honda Accord.
With three-quarters of the year over, 2007 has proven to be far more difficult for automakers to sell cars than they had anticipated at the start of the year.
Worse, the rest of the year looks like more rough sailing.
Analysts and auto execs, commenting on August sales Tuesday, used the word “headwinds” frequently the headwinds of the housing market, the credit crunch and higher fuel prices, all of which lead to slumping consumer confidence.
September sales may improve, but don’t get your hopes up, warns Jesse Toprak, Edmunds.com’s executive director of industry analysis. Those market forces will still be with us through year-end.
The average automotive manufacturer incentive in the U.S. was $2,362 per vehicle sold in August 2007, down $159, or 6.3 percent, from July 2007, and up $51, or 2.2 percent, from August 2006, according to estimates issued by Edmunds.com Tuesday.
"It is unusual for incentives spending to fall from month to month this time of year, as manufacturers typically offer generous deals in order to clear old inventory," said Jesse Toprak, executive director of industry analysis for Edmunds.com.
"This year the domestic automakers are staying true to their value pricing strategy and carefully picking and choosing where to offer marketing support, rather than blanketing the whole lineup with incentives," he added.
The United Auto Workers union’s contract with General Motors, Ford and Chrysler expires in just over a week on September 14. While little has been reported publicly on the progress of negotiations, the towering cost of health care undoubtedly is the top issue in the talks.
How health care will be resolved has yet to be seen. And the recent turmoil in the financial markets makes one possible scenario more challenging.
Not surprisingly, based on the latest dreary economic news, August vehicle sales will be down, according to Edmunds.com’s forecast. Automakers report sales Tuesday.
Industry vehicle sales, including retail and fleet, are expected to be 1.42 million units, a 4.5 percent decrease from August 2006 and an 8.7 percent increase from July 2007. Big Three share is predicted to be below 50 percent for the second consecutive month.
"Early in August, sales were dismal," observed Jesse Toprak, Edmunds' executive directory of Industry Analysis.
"To generate showroom traffic, most automakers introduced incentives programs midway through the month," added Toprak. “That effort was relatively successful."
Still, noted Toprak, the uncertainty in the housing market is likely to continue suppressing consumer demand for new vehicles for some time.
General Motors, in an effort to stop its sales slide and give model year-end sales a boost, is giving dealers of some of its brands cash awards according to an internal GM memo obtained by Bloomberg News.
GM will pay dealers $250 for each vehicle sale made from August 23 through the end of the month, according to the memo from Jim Bunnell, general manager of GM's Buick, Pontiac and GMC divisions.
Summer sales, so far, have been lackluster industrywide, and August will show no recovery, according to Edmunds.com, which releases its forecast for August sales on Thursday.
"After some of the worst June and July sales in the recent history, it does not look like we will see much of a recovery in August for new vehicle sales," said Jesse Toprak, Edmunds.com analyst. "Despite the production cuts, domestic automakers are starting to experience inventory build-up issues on slow-selling models.
"Although not ideal," Tropak added, "high incentives spending becomes the only way to get rid of this excess inventory as we go into fall clearance time. We expect incentives to increase incrementally for the rest of the year for the current model-year vehicles."
The housing slump is lousy for the auto business. And the housing market is worsening.
Some statistics that have got to be scary to automakers and automotive lenders came out of the National Association of Realtors’ monthly report on home sales Monday: · sales of previously owned homes fell to a five-year low in July; · the glut of unsold properties climbed to their highest level since 1991; · delinquencies on loans to subprime borrowers (people with poor credit) hit a five-year high in the first quarter; · the median price of an existing home dropped 0.6 percent in July from a year ago to $228,900; · new home starts in July hit their lowest level in a decade.
Bad credit has replaced terrorism as the gravest immediate risk threatening the economy, the National Association of Business Economics reported Monday to the Associated Press.
Borrowers' declining ability to pay their bills and the subsequent fallout in the credit markets this summer topped the list of short-term risks on peoples' minds, according to a survey of 258 members conducted by the Washington-based association. The survey showed 32 percent of its members cited loan defaults and excessive debt as their biggest near-term concern.
Only 20 percent of members cited defense and terrorism as their biggest immediate worry, down from 35 percent when the survey was last conducted in March. Credit risk also topped gas prices, inflation and government spending.
The greatest long-term risk facing the economy is still health care costs and the medical needs of an aging population, surveyed NABE members said.
It’s two steps forward and one step back for Mercedes-Benz USA, one of the primary players eager to promote new-generation diesel engines to U.S. customers: In a quirky interplay between automakers and regulators, the rollout of ’08 Mercedes models earlier this month forced the company to temporarily suspend diesel-vehicle sales in three states: Pennsylvania, Connecticut and Rhode Island.
Why? Beginning with ’08 models, these states officially adopt California’s emissions regulations, which currently are tougher on diesels than are federal emissions regulations. California’s emissions regulations already had been adopted by four other states, meaning Mercedes –- and Jeep, the only other brand selling a diesel-powered light vehicle for the ’07 model year -– had been selling diesel vehicles in just 45 states.
Ask anyone at General Motors how important the upcoming 2008 Chevrolet
Malibu is and you’ll likely get a rather reserved response.
Like the one Chevrolet General Manager Ed Peper (PEEP-er) gave AutoObserver in an interview Monday: “It’s a very important vehicle for us.â€
That’s an understatement.
Still somewhat restrained especially for him, GM Vice Chairman Bob Lutz goes a tad further. In his GM FastLane blog, in which he wrote about his recent "weekend with a Bu," he called its introduction “one of the most important passenger car launches in recent General Motors history.†He added: “We’ve put a lot of blood, sweat and tears into this vehicle.â€
GM executives’ caution is understandable and wise, since the automaker has oft been accused of over promising and under delivering. But the launch of the 2008 Chevrolet Malibu is beyond “very important.â€
Small cars are on track for a record sales year this year and third
consecutive year of growth, according to an analysis by Ford.
Last year, small car sales totaled almost 2.7 million, a record for the segment, according to the analysis done by George Pipas, Ford's U.S. sales analysis manager. In the first seven months of 2007, segment sales are up 3.5 percent, while the overall market for cars and trucks is down 4 percent.
Further, small cars, the largest vehicle segment for years until 2004, are on track for three straight years of growth. In addition, getting them while they're young is why foreign automakers, which by Ford's calculation, capture 76 percent of small car sales.
Ironically, Ford's only entry in the growing segment is the Focus, which is revised for the 2008 model year.
As the U.S. auto-buying public resigns itself to handing over $3 for a gallon of gasoline or more, automakers are hitting high gear to firm up alternative-power strategies that certainly seemed much fuzzier at this time last year.
It’s come time to decide how to best save fuel, and for the next several years, the battle will be between hybrid-electric vehicles (HEVs) and sophisticated new diesel engines.
Over at Edmunds.com’sInside Line, they’re in a lather about the
sizzling performance of BMW’s all-new M3,
which marks the first time the company’s famed Motorsports Division-tuned 3 Series has used V8 power.
But down deep in the specs for the 2008 M3’s new 420-horsepower, quad-cam 4-liter V8 is a nod to environmental awareness that portends of a coming trend: an innovative energy-management system that enables BMW to subtly eke out a little extra fuel economy without looking like an eco-weenie in front of the autobahn performance gods.
BMW calls the system Brake Energy Regeneration. And although this sounds a lot like the “regenerative braking†we’re always hearing about with “full†hybrid-electric vehicles, such as the Toyota Prius, the Bavarians’ BER system is much more a variation of the “mild†hybrid theme we’re going to be hearing more about in the coming months.
AutoObserver is told several automakers and major suppliers plan to unveil a host of similar new mild-hybrid components and systems at September’s Frankfurt Motor Show. Fuel-efficiency and reduction of carbon-dioxide emissions (cutting CO2 is Europe’s persistent bugaboo) are expected to be headline themes at the Frankfurt confab. These new innovations are geared toward delivering hybridlike benefits at a more palatable cost.
Edmunds.com has revised its True Cost of Incentives (TCI) for the Toyota and specifically the Toyota Tundra.
The Tundra’s TCI was reported to be $6,861 per vehicle sold in July. The correct number is $4,625. The original data suggested that the Tundra had the highest TCI of the large truck segment during July 2007; the corrected data puts the Tundra third in TCI.
After announcing Thursday that it had signed a contract with a little-known
Massachusetts company to develop lithium-ion batteries, General Motors hosted a dinner to introduce the growing team of engineers working on the electric-powered Chevrolet Volt and the newly signed-on battery makers.
David Cole, Ph.D., chairman for the Center of Automotive Research, which hosted the conference at which GM made its announcement, sat next to me. As the discussions with the engineers and, in particular, the battery developers grew deeper throughout the evening, Cole, a retired professor of mechanical engineering at the University of Michigan, could not stop saying: “Wow.â€
By evening’s end, Cole, who’s privy to lots of inside information at all the auto companies and has served on boards of technical companies, said he was now very optimistic about the future prospects for the Volt and subsequent GM electrified vehicles. “This is the game changer†unlike anything he’d seen in his long automotive career, he said.
Indeed, if GM succeeds with electrified vehicles like the Volt, the automaker may well turn the auto industry and nearly every business model within it on its ear –- from the kinds of cars we drive (electric versus gasoline) to the way consumers buy cars.
Cole sees the biggest risk to GM’s venture as something seemingly simple: cheap gas.
The purchase of an average-priced new vehicle took 24.6 weeks of median family income in the second quarter, according to the Auto Affordability Index compiled by Comerica Bank in Detroit.
The latest reading is down 0.1 week from the first quarter, and is also down 1.1 weeks compared to a year ago.
Including finance charges, the total cost of buying an average-priced light vehicle was $28,479 in the second quarter, essentially unchanged from the prior quarter or from a year earlier. The median family income is estimated to have increased 4.2 percent from a year ago.
Just recently I was up in Hokkaido, Japan’s scenic northern isle, driving the new Nissan Skyline Coupe -- Japan’s version of the highly rated new Infiniti G37 Coupe. Through the twists and turns of Nissan’s Hokkaido proving grounds, in bright summer sunshine, the V6 Skyline coupe was a total blast, and looked that way, too.
Then, at dinner, came the wake-up call. "Please write great things about car," urged one of the Nissan marketing execs, "and about cars in general, if the Japanese car market is going to survive into the future." Or words to that effect.
Que? This wasn’t the usual rosy, end-of-drive send-off for the press but something very different. Clearly some kind of warning and a pretty serious one at that.
Alarm bells, in fact, are now ringing throughout the Japanese car industry, because car sales at home continue to decline and the long-term future of the domestic industry is suddenly looking not a little uncertain. Yes, really.
The profit-per-vehicle gap between the American Big Three and the Japanese Big Three automakers soared 32 percent between 2005 and 2006 to $3,814, according to a new report.
The results of the report, done by financial firm Stout Risius Ross and its managing director, Laurie Harbour-Felax, were revealed at the Center for Automotive Research Management Briefing Seminars being held this week in Traverse City, Michigan.
Reasons for the widening cap are a lack of commonizing parts and platforms as well as lower sales and market share of the domestic brands. Of the Big Three, GM made the most improvement.
July wasn’t kind to any automaker with Toyota registering its first sales decline in almost three years. But Detroit automakers made history: their combined market share of the U.S. vehicle market fell below 50 percent for the first time ever.
The combined market share for Chrysler, Ford and General Motors stood at 49.7 percent in July, according to Edmunds.com’s calculations. It was only the mid-1980s that their combined share was nearly 75 percent.
"It's probably a turning point for people who look at the record books. Domestics on their home turf are being beaten by the foreign automakers in terms of their market share," said Jesse Toprak, Edmunds.com's executive director of Industry Analysis.
General Motors announced in mid-July that it wants to acquire from Penske Corp. a 50-percent stake in Italian diesel-engine maker VM Motori S.p.A.
Lost in the fine print is the fact that, as of this moment, that 50 percent isn’t Penske’s to sell.
Before GM can get its hands on its share of VM Motori, Penske must acquire the 49 percent of Cento, Italy-based VM that currently is held by GM rival DaimlerChrysler AG. Penske and DaimlerChrysler assumed joint ownership of VM Motori in 2003.
A Penske source tells AutoObserver a deal has been under way for DaimlerChrysler to sell Penske its 49-percent stake in VM and is awaiting approval from European regulators. The Penske source says that approval is expected imminently.
The “breakup†of Daimler-Benz and the Chrysler Group is nearly complete, with Chrysler’s new owner, Cerberus Capital Management, due to ink the deal any day now. But like a married couple that’s amicably split, the two companies will continue to “get along†-- continuing with many technical, manufacturing
and development ventures neither company is seeking to put asunder.
For one, Chrysler will stay connected in an under-the-hood venture with Daimler and other entities because of the capital-intensive nature of developing new powertrain technologies for global use. Chrysler said recently will spend upward of $3 billion on new, efficiency-enhancing powertrain initiatives over the next several years.
One other reason Chrysler and Daimler will maintain amicable post-breakup relations: the oft-overlooked detail that Daimler will hold a 19.9-percent equity interest in the new Cerberus-owned Chrysler, legally known as Chrysler Holding LLC.
Summer 2007 is turning out to be rather unusual compared to summers of the recent past, and it is showing up in sales.
This summer, no big blowout, model-year-end incentives are being offered -- yet -- to consumers to clean up leftover inventories. In recent years, General Motors has led the parade with big campaigns that have forced others to follow, But throughout this year, GM has tempered its incentives.
As a result, in part, July new vehicle sales, to be announced next week, are expected to be down for the industry, according to Edmunds.com's forecast.
General Motors isn’t being shy about the pricing of its dramatically restyled 2008 Cadillac CTS
.
The base MSRP on the CTS, arriving in showrooms in late August, will be $32,990, including the $745 delivery fee.
That is $540 less than the base price of an outgoing 2007 CTS equipped with the same 3.6-liter V6 engine; the 2007 CTS started at $33,530.
Still, according to Edmunds.com’s analysis, only two of the CTS’s main competitors -– the Acura TL and Mercedes-Benz C280, have higher base prices. Those models are near the end of their product lifecycles so dealers are heavily discounting them, noted Michael Lumunsad, Edmunds.com product development manager.
Toyota announced it has dropped the price of its 2008 Camry Hybrid by $1,000
to $25,860, apparently to boost sales in an intensifying midsize car market with a growing number of hybrids in the category.
Toyota’s move on the Camry Hybrid echoes a similar one on the Prius in April. But there's a big difference between the two.
Toyota achieved the Camry Hybrid markdown through removing standard equipment from the base model to lower the base MSRP; it accomplished the Prius’ price reduction by lowering option prices, not dropping equipment, noted Alex Rosten, Edmunds.com’s manager of pricing and market analysis.
Oh, how my old colleagues in the U.S. liked to tease if the topic of the decline of the U.K. auto industry arose.
The derision was deserved. The U.K. automotive industry was second in scale only to that of the U.S. in the 1950s. It was the world’s leading car exporter, putting bread on hundreds of thousands of tables across the country.
Today, the U.K.’s indigenous manufacturers have either vanished or been taken over by foreign competitors. No other country has so nonchalantly kissed good-bye so much potential wealth-creation in so short a time.
But events in the U.S. auto industry, where the Big Three's share is nearing less than 50 percent, parallel those in the U.K. a couple of decades ago.
Whisper it, but Detroit is now on that same road to oblivion.
A showdown gets under way in Detroit today as domestic carmakers open contract negotiations with the United Auto Workers (UAW) union, contract talks that are more critical for both sides than any in recent memory with not only jobs but also the very survival of the automakers at stake.
Negotiations for a new contract to replace the one that expires in September begin today at Chrysler with the ceremonial handshake; talks at General Motors and Ford officially start on Monday.
The UAW enters negotiations with its influence greatly reduced. And GM, Ford and Chrysler are in a weakened condition. The Big Three can ill-afford the sort of winner-take-all confrontations that could produce the sweeping changes some analysts think are necessary to reshape Detroit's creaky business model.
"Everybody's scared," said one veteran UAW representative. "Nobody really knows what's going to happen.â€
Acura topped a consumer satisfaction survey intended to measure how well U.S. car shoppers thought they were treated in dealer showrooms and whether they bought a vehicle on their first visit.
The first-ever study, released Monday by the Pacific Grove, California-based sales consultancy Pied Piper, showed Acura in 1st place, followed by Land Rover, Saturn, Volkswagen, Nissan, Saab, Audi and BMW.
It’s still the best part of two years away. Nevertheless, the world is already
watching and waiting on the next Toyota Prius
.
Behind firmly closed doors in Toyota City, Japan, Toyota engineers and designers are now working on exactly this vehicle. What will it look like? How will it be engineered? How will it move the sector to enable Toyota to reach its goal of selling 1 million hybrids per year by the early 2010s?
Toyota’s reported vision is for: · a new, third-generation Prius, slightly bigger than today’s model for debut in 2009; · a trio of versions, including one smaller than the Corolla and one larger than the current Prius that resembles the Hybrid X concept shown at March’s Geneva Auto Salon; · traditional nickel-metal hydride batteries, not lithium-ion ones; · further progress in the Prius becoming leaner, meaner, greener and cheaper.
One thing is for sure: The current Prius is a standard setter and global superstar. Its successor in will have a lot to live up to.
As consumers become more realistic about the fuel-efficiency capabilities of hybrids, the percentage of new-vehicle shoppers considering a hybrid has declined, according to the J.D. Power and Associates 2007 Alternative Powertrain Study released today.
The study finds that 50 percent of new-vehicle shoppers are considering a hybrid -- down from 57 percent in 2006, the first year of the study.
“In the 2006 study, we found consumers often overestimated the fuel-efficiency of hybrid-electric vehicles, and the decrease in consideration of hybrids in 2007 may be a result of their more realistic understanding of the actual fuel economy capabilities,” said Mike Marshall, director of automotive emerging technologies at J.D. Power and Associates.
Chrysler Group one-upped competitors today in announcing it has lowered prices an average of $2,000
and added standard features to its fifth-generation 2008 minivans that go on sale in September.
"The new starting price of $22,470 puts Chrysler at a significant advantage over its competitors as it is the second lowest starting price of any minivan,†said Alex Rosten, Edmunds.com’s manager of pricing and industry analysis. “That low price will certainly appeal to young families and bargain hunters. Plus the standard equipment list is pretty substantial.â€
Steven Landry, Chrysler’s executive vice president of sales, said this morning the lower pricing is an effort to more closely align the Manufacturer’s Suggested Retail Price to transaction prices. Chrysler hopes to offer little or no incentives on the minivans, which Landry called this year’s most important product launch for the automaker.
General Motors appears to be serious about focusing not on sales volume and
market share but instead on profitability and on not giving away the store when it comes to incentives.
GM announced a new round of incentives on Tuesday, a week after seeing June sales that tanked and a market share that sunk to its lowest mark, aside from one month when it was being struck. Despite its dismal June performance, GM’s new incentives remain relatively conservative, as they have been all year.
“To be honest,†remarked Alex Rosten, Edmunds.com’s manager of pricing and market analysis, “I expected something more than this.â€
The most significant change in GM incentives was on full-size pickup trucks, which now have zero percent financing for 60 months to match Toyota’s deal on the Tundra.
Still, GM is giving away nowhere near what its competitors are.
General Motors’ market share last month hit an all-time low, according to Edmunds.com’s analysis of June sales.
GM’s June market share slumped to 22.17 percent, the lowest level in recent history and dipping below the previous monthly low of 22.3 percent in October 2005, according to Edmunds.com.
In June, the industry sold 1,455,236 vehicles; GM sold 322,048 vehicles, down 24.2 percent from June last year. GM closed 2006 with 24.6 percent market share.
The stock market didn't like GM's sales results. GM shares fell $1.22, or 3.2 percent, Thursday, the first trading day after GM announced lower June sales.
“GM may have miscalculated the need for incentives in June, particularly as Toyota and Honda boosted incentive spending to their record levels,” said Alex Rosten, Edmunds.com’s manager of pricing and market analysis.
For more than a year, paper shades
have covered the giant windows of an old car dealership on busy Telegraph Road in Bloomfield Hills, Michigan, home to Detroit’s automotive captains. Occasionally a teensy, quirky car is parked outside; one seen only in photographs or at an auto show, if at all.
Inside the building, well, there’s not much: a couple of offices within the cavernous shell; empty cubicles in a color scheme of yellow, silver and black; and a few inhabitants.
But in the next several months, this place will be bustling. The former dealership is the corporate headquarters for Smart USA, the Roger Penske-operated distributor of the quirky Smart cars from Mercedes-Benz.
New vehicles sales for June (retail and fleet) are expected to be 1.55 million units, a 3.4 percent increase from June 2006, according to Edmunds.com. Automakers will announce sales on Tuesday.
“In order to understand the year-over-year comparisons of sales for each automaker this month, one must remember that last June was one of the best sales months of the year for some automakers, and was particularly disappointing for others,” observed Jesse Toprak, Edmunds.com’s executive director of Industry Analysis.
“This month, automakers seem to have achieved sales at more typical and sustainable levels rather than the dramatic highs and lows of last June,” he added.
The number of alternative fuel automobiles on the roads has hit 11 million vehicles, according to a survey by R. L. Polk & Co., which tracks vehicle registrations
In the first quarter this year, 434,000 were sold, 27 percent increase over last year's count for the same period: · E85-capable vehicles jumped 40 percent from 159,882 to 266,859 vehicles; · Hybrid vehicles climbed 31 percent from 51,285 to 74,056 vehicles; · Clean diesel technology saw sales decline slightly from 108,100 to 93,012 vehicles.
The agreement on a new labor contract with the United Auto Workers (UAW), announced last Friday, finally puts auto parts supplier Delphi Corp. in a position to emerge from bankruptcy and begin rebuilding with the help from private equity firms.
The UAW agreement was the final piece Delphi needed to sell certain elements of the company that didn't fit into its future plan and pave the way for an investment by a group of private equity firms that have agreed to put up as much as $3.4 billion.
The negotiated settlement also eliminates the threat of a strike that could have crippled Delphi’s largest customer, General Motors. And it allows GM to buy parts from low-cost sources, including China and India.
Still haunted by last year’s bloated inventory of unsold vehicles, Chrysler is allowing its dealers to call leftover 2006 cars and trucks “loaners” and then sell them a day later, instead of the usual three months, at deep discounts.
The intent of the unusual sales tactic, which went into effect at the end of May as current incentives were about to expire and was revealed by the Detroit News this week, is two-fold:
· boost sales in soft months. The move may well have helped Chrysler achieve its unexpected sales increase of 4.3 percent in May;
· ditch leftover inventory from last year as Chrysler nears the time to unload the 2007 leftovers to make way for 2008 models.
Union work rules and job classifications at Detroit automakers have resulted in 8,200 assembly jobs that wouldn't be needed if the automakers had the flexibility of Toyota’s U.S. factories, according to study by Detroit turnaround expert, AlixPartners.
"Our analysis of the cost differential between the domestic automakers and Toyota just due to work rules and job classifications further points up just how important this year's labor negotiations are to the Detroit Three," John Hoffecker, managing director of AlixPartners, said in a statement, published in today's Detroit Free Press.
The study also confirms why private equity firms are so interested in auto companies and parts-making companies: they are getting bargains.
As hybrid vehicles increase in volume and proliferate in models, the segment looks increasingly like any
other vehicle segment in the marketplace and mirrors the overall market.
Fueled by record gas prices, hybrid sales in May hit an all-time high of 2.9 percent of the U.S. market, or a total of 45,095 vehicles. That makes the segment bigger than some car companies in volume and market share. Sales of every individual hybrid model increased from April to May.
What has changed is the long lines to buy hybrids and the exorbitant price premiums charged for them. An increase in the number of models and increased volumes of those models are providing consumers with more choice and bargaining room at the dealership so the huge price premiums are largely gone.
Instead, transaction prices generally are dropping and incentives overall are climbing, following the trend of the entire market, according to Edmunds.com’s analysis.
Small cars are hot and getting hotter this summer. Big trucks as well as large, midsize and luxury SUVs are not. And the Buick Enclave looks like another winner for General Motors, according to Edmunds.com's analysis of consumer intent.
Consumer intent is determined by what vehicles consumers are shopping for right now on Edmunds.com and what they likely will buy in the next 30 to 90 days. That demand -– or lack thereof -– has a direct correlation to prices and incentives.
For consumers in the market for small cars, buy now because the prices won’t be better and might even go higher. For large truck and SUV shoppers, hold off; bigger incentives are on the way, says Edmunds.com CEO Jeremy Anwyl yesterday in a presentation to the Society of Automotive Analysts.
Here’s a rundown by category and individual models of what’s hot and unlikely to see higher incentives or increased discounting so now is as good time to buy as any. Also following is a listing of what categories and individuals aren't so hot, indicating buyers should hold off their purchases for richer incentives and deeper discounting:
The question car shoppers ask after "What should I buy?" and "How much should I pay?" is "When do I buy?"
Edmunds.com already helps with what to buy and what to pay. Now, Edmunds.com is adding a feature to help consumers time their vehicle purchases to take advantage of the best pricing and richest incentives.
In a presentation to the Society of Automotive Analysts in Detroit this week, Edmunds CEO Jeremy Anwyl told the gathering that Edmunds.com analysts study consumer intent, which indicates the demand or lack of demand for a vehicle, to predict a month or so in advance whether an auto manufacturer will add incentives or if dealers will be discounting.
Conversely, Edmunds.com can predict what vehicle is hot, based on consumer intent, and subsequently won’t require incentives or discounting in the near future, making now a better time to buy than later.
The Edmunds.com will add the buy/wait designation later this year, Anwyl told the SAA.
Ford Motor Co. managed something of an upset Wednesday as J.D. Power & Associates released the results of its closely watched Initial Quality Study (IQS) of 2007 models. Neal Oddes, J.D. Power’s director of product research and analysis, said the results of the quality survey contained very good news for Ford.
“Fourteen Ford Motor Company models placed in the top three of their respective segments — an achievement unmatched by any other corporation this year — which is a testament to the improvement in quality for Ford Motor Company vehicle models and plants. In addition, their Lincoln nameplate, which receives two segment awards, improves considerably to rank 3rd in 2007, from 12th in 2006,” Oddes said.
As has been the case for years, automotive suppliers like doing business with Toyota and Honda but their relationships with General Motors are improving, according to a new report.
Toyota ranked first, followed by Honda, Nissan, Chrysler, GM and Ford, respectively, in their relationships with suppliers, according to the study by Planning Perspectives Inc., a consulting firm in Birmingham, Michigan, released today.
GM wins for most improved. It had the most dramatic year-over-year increase in the 15 years of the study, said company President and Chief Executive John W. Henke, Jr. GM has held last place for the past 15 years; now it ranks second to last above Ford. Henke credits the improvement with a program instituted by GM in 2005 to enhance supplier relations.
Reports that Ford might sell Volvo to BMW have certainly raised eyebrows in the auto industry. After all,
it’s only a few months ago that Ford told Renault in no uncertain terms that its Swedish luxury brand was not for sale.
Furthermore, Ford claims Volvo is profitable, and its role within the company’s Premier Auto Group (PAG) has become more sharply focused in the wake of Ford’s ongoing downsizing of Jaguar into a Porsche-sized prestige-and-performance car brand.
This leaves Volvo as Ford’s European luxury brand –- a direct rival to BMW and Audi. Why would Ford suddenly decide to exit this sector and surrender to a rival a brand whose star is on the rise?
For only the fifth time in history, Toyota surpassed Ford in monthly sales last month. In May, Toyota outsold Ford 10,870 vehicles, according to Edmunds.com's analysis.
Toyota outsold Ford for the first time in July 2006, beat Ford again in November 2006 (by the widest margin of any month), December 2006 and January 2007.
Month/year Toyota's Margin of Vehicle Sales over Ford July 2006 5,473 November 2006 20,544 December 2006 3,552 January 2007 14,605 May 2007 10,870
My son and I were piling into the Volkswagen Rabbit test car in
front of the 7-Eleven, loaded up with our favorite after-school snacks – frozen Cokes, Twinkies and Cheetos – when my teen noticed the woman passing in front of our car with two small children in tow.
“That’s a yoga mom,†he said matter-of-factly. I’d never heard the term before, but it rolled off his tongue as if it were an everyday label. And I knew what he meant.
Edmunds.com estimated today that the average automotive manufacturer incentive in the U.S. was $2,497 per vehicle sold in May 2007, up $44, or 1.8 percent, from April 2007, and up $123, or 5.18 percent, from May 2006. Honda, in fact, hit a record for incentives.
"The summer incentives hike has started," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com. In previous months, we have seen year-over-year declines in incentives spending, but this month the trend reversed."
As the summer wears on, incentives will grow even bigger, Toprak predicts.
The North American auto industry received its first important grade on its
2006 report card today when Harbour Consulting revealed the outcome of its annual manufacturing productivity study.
Top scorers among the six major automakers evaluated (General Motors, Ford, Chrysler, Toyota, Nissan, Honda) are:
Toyota - first in total manufacturing productivity, which includes final car assembly as well as also stamping, engine and transmission production.
Honda - first in vehicle assembly productivity.
General Motors – first to win three of the four plant awards. No. 1 were GM Oshawa #2 for vehicle assembly; GM Spring Hill, engine assembly; GM Toledo, transmission production. Honda Marysville stamping took the fourth plant award.
“Toyota was the overall leader but with a slim and marginal lead,†said Ron Harbour, president of the Michigan-based Harbour Consulting.
The productivity gap among the six manufacturers was the closest in the nearly two-decade history of the study. That gap is so close, Harbour said, “There’s no telling who will be on top next year.â€
Trying to wean itself off unprofitable fleet sales to rental car companies, Ford
expects to report its first year-over-year retail sales increase since last fall when automakers post May sales on Friday.
“That’s particularly noteworthy because it would be our first year-over-year retail sales since last October,†George Pipas, Ford’s sales analyst, told AutoObserver.com.
Still, Edmunds.com predicts Ford sales, both retail and fleet, will be down about 12.3 percent compared with May 2006.
In addition, for the first time since the 1980s heyday of the Taurus, Ford’s retail sales volume is expected to be around 50 percent cars and car-based models.
Toyota has been careful about boasting its No. 1 in global sales status while, at the same time, U.S. automakers close plants and cut jobs. Toyota executives, in fact, have downplayed the Japanese automaker’s sales outlook in North America, saying sales will slow.
But analysts and investors don’t buy it, according to a report today by Bloomberg News. They suspect Toyota is being cautious for fear of a political backlash.
They agree Toyota can't match last year's 15 percent sales growth, but most say Toyota is being too modest. "Toyota's sales growth forecast in North America seems too conservative,'' Koji Endo, a senior analyst at Credit Suisse Group in Tokyo, told Bloomberg. "Its outlook sales figure seems to be political.''
To win in the auto business, various paths to glory exist. At the Mazda Motor
Corp., they’re doing it the classic, time-honored way: by building sharp-looking vehicles with spirited driving dynamics and a solid image, cars people actually are excited to buy.
Cars like the Mazda 3 and Mazda 6, plus the Mazda 5 minivan and new wave CX-7 and CX-9 crossovers, are increasingly putting Mazda on the map and in American driveways.
Mazda’s lightweight MX-5 Miata two-seater is the world’s best-selling sports car. The radical four-seat, rotary-powered RX-8 remains an innovative and unique contender in the enthusiast sport coupe market.
Mazda’s all-new Mazda 2, its latest entry, had its world premier at the Geneva show in March. The new 2, well packaged and impressively light, already is earning glowing reviews, though it won’t immediately be heading for North America.
Something’s clearly going right for Mazda. What we are seeing is the classic product led recovery.
Automakers apparently hope to end what looks to be a flat-to-down month of sales in May on a high note by announcing Memorial Day sales that actually run through the end of the month.
General Motors’ "Memorial Day Sale" campaign, announced Thursday, runs through May 31. GM is offering zero percent financing deals for 36 months and a $1,000 bonus on several Buick, Chevrolet, GMC and Pontiac vehicles in its lineup, including large pickup trucks and SUVs from the 2006 and 2007 model years. GM is also offering zero percent financing for 60 months on three Saturn models -- the Vue SUV, Ion small car and Relay minivan. Separate sales incentives on GM's luxury Cadillac, Hummer and Saab brands will also be available.
On Wednesday, Ford began offering a $1,000 rebate on certain Ford F-Series Super Duty pickup trucks, specifically regular and super cabs, through the end of the month. Ford just launched the redesigned Super Duty truck as a 2008 model-year product.
The rebates, of which more are likely to be announced, come on the heels of dismal April sales and, as Edmunds.com predicts, a flat-to-down May during this normally brisk sales time.
A research report released today shows U.S. sales of both diesels and hybrids will grow significantly in the next five years but diesels will outpace hybrids.
The report from UBS and Ricardo predicts diesel and hybrid sales will hit 2.7 million a year by 2012, or about 15 percent of the U.S. light vehicle market. Diesel will outstrip gasoline hybrids by 1.5 million versus 1.2 million.
Increased demand for diesels and hybrids will be driven by U.S. regulators looking to revise fuel economy standards amid concerns for energy security and greenhouse gas emissions. Diesels will gain a preference because of its cost advantage, the report concludes.
New vehicle sales, including both retail and fleet sales, are expected to be 1.48 million units when May sales figures are announced next Friday. That’s down from last May, according to Edmunds.com.
This May had 26 selling days, one more than May 2006. When adjusted for this difference, sales decreased 4.2 percent from May 2006. On an unadjusted basis, sales this May are down 0.3 percent.
"As gas prices climb, many consumers are taking a conservative approach to car buying. Additionally, numbers are down because domestics continue to cut production, reducing fleet sales and better matching supply with retail demand. However, these factors are not causing sales to fall as dramatically as one might expect," said Jesse Toprak, executive director of Industry Analysis for Edmunds.com.
Much ado was made last month when Toyota surpassed General Motors as No. 1 in global sales for the first time.
Now a story in today’s New York Times business section suggests leapfrogging from 2nd place to 1st may have substantial and quantifiable benefits on revenue.
Jan H. Hofmeyr, an expert on consumer behavior at Synovate, the market research arm of Aegis, conducted a study of brand preferences and spending habits of consumers. The study demonstrated the relative benefits of moving up in the rankings. A product that leaps from 2nd to 1st in a category can really affect a company’s bottom line, Hofmeyr concluded, while the advantage of moving up to, say, No. 5 from No. 6 is much smaller.
“Marketers have always known it’s better to be No. 1 than No. 2, but now you can attach a revenue consequence to that,” Hofmeyr told The New York Times.
The automotive industry was a tough place to make a buck this
past year -– except for Toyota.
Most of the world’s major automakers struggled in 2006, with about half of them reporting lower profits. But Toyota reported record profits Wednesday.
Toyota's net income rose 20 percent to the equivalent of $14 billion (U.S.) for the fiscal year that ended March 31. Toyota's revenues rose 14 percent to a record $204 billion. Global vehicle sales for the year totaled 8.52 million units, an increase of 550,000 compared with the previous fiscal year and also a record.
For the first time in history, Toyota surpassed General Motors, which set a record itself, in global vehicles sales during the first quarter of 2007. Experts predict Toyota is poised to surpass GM as the No. 1 automaker in sales as early as this calendar year.
The new Toyota Tundra is beginning to chip away at the loyalty of
domestic truck owners.
Buyers of domestic full-size trucks, the most brand loyal in the industry, are starting to consider Toyota’s new Tundra, considered the Japanese automaker’s first credible contender against the Chevrolet, Ford and Dodge pickups.
“Now that Toyota has its full lineup of trucks available with all powertrains, domestic buyers are beginning to take notice,†said Alex Rosten, Edmunds.com’s manager of pricing and market analysis.
Edmunds.com’s analysis of truck loyalty figures, based on April sales, shows that since the new Tundra went on sale in February:
· Tundra’s share of domestic truck trades increased 5 percentage points, from 29.4 percent to 34.4 percent;
· large truck trade-ins from all brands for a Tundra increased 16.5 points from March to April, returning to February’s high level of 57 percent;
· Tundra’s conquest of all trucks, not just full-size pickups, from other manufacturers rose 5.6 points.
At the same time, loyalty rates for all other trucks but one declined in April. Only Dodge Ram improved its overall conquest rate.
April brought a deluge of bad news in terms of lower vehicle sales for automakers. Could flowers be far behind the showers?
Maybe not for the automakers, but certainly for consumers. They took a wait-and-see attitude in the incentive-sparse month of April. Their wait may prove worthwhile. Automakers are likely to launch a new crop of incentives, some of which have already sprouted, to spur sales and keep vehicle inventories in check.
“Based on last month's sales, I would almost guarantee that incentives will be up significantly this month,” said Alex Rosten, Edmunds.com’s manager of pricing and industry analysis.
Some automakers already have launched new incentives.
Within General Motors’ announcement this week of
investments in plants and next-generation models worldwide was the largely overlooked fact that GM has further committed to Saab with a new car and with a future for Saab’s assembly plant in Trollhättan, Sweden.
Speculation has swirled for years that Swedish automaker Saab would no longer build cars in its homeland and its Trollhättan plant was doomed as GM shifted to global platforms and moved future production for its 9-3 and 9-5, based on the Opel Vectra, to Germany.
Not so with this week’s announcement. The Trollhättan plant will make a new compact car to slot beneath the current Saab 9-3. The car will be based on the next-generation Opel Astra. The Astra also will be sold later this year as the Saturn Astra in North America.
GM announced this week that it would replace the existing Astra in early 2010. The automaker said it would invest 3.1 billion euros in the compact car, which will be assembled in Germany, the United Kingdom, Poland and Sweden.
If you watched American Idol this week, you might have
seen two new ads for the Ford Edge
. The commercials were directed by Pulitzer Prize winning writer/director David Mamet.
Using Mamet’s signature for dark imagery and fast-paced dialogue, the spots feature two men sitting, each in a Ford Edge. Talking out their windows, they boast the Edge is quieter than a Lexus RX 350 and quicker than a BMW X5.
The ads -- Mamet's first -- are Ford’s latest attempt to draw attention to its vehicles and convince consumers to put Ford vehicles on their shopping lists.
An analysis of March shopping consideration trends by Edmunds.com’s AutoObserver shows Ford has much room for improvement in that regard.
Ford's newest models, including the Edge and Fusion, run midpack among vehicles considered by shoppers within their segments. Ford’s Mustang and F-150 pickup top their segments for shopper consideration. But Lincoln and Mercury vehicles barely generate a blip on shopper radar screens.
General Motors Vice Chairman Bob Lutz says the automaker’s future rear-wheel-drive cars have been
put on hold until the federal government decides on fuel economy and carbon dioxide emissions standards.
"We've pushed the pause button (on future rear-drive cars). It's no longer full speed ahead," Lutz told Chicago Tribune automotive columnist Jim Mateja in an interview in Tuesday’s paper.
But that may not be the whole story behind GM’s alterations of its future product plan.
Last month, vehicle manufacturers launched a host of new incentives on their full-size pickup trucks in
response to Toyota introducing its new Tundra to the market and immediately promoting it with dealer incentives.
March full-size truck sales overall declined from a year ago, prompting truckmakers to try to not only hold onto their loyal owners but steal potential buyers from their competitors. Edmunds’ AutoObserver.com’s analysis of March sales figures showed some incentives succeeded in conquesting buyers; others did not. Here’s a snapshot of what worked and what didn’t:
· Toyota’s incentives of dealer cash paired with low-interest loans on the Tundra didn’t move the needle much in either direction in terms of conquest sales.
· General Motor’s incentives on its recently redesigned Chevrolet Silverado and GMC Sierra combined a relatively small cash bonus with low-interest financing. The incentives helped attract non-GM buyers to its fold.
Chrysler’s unions, in one way or another, will be the deciding factor in who ultimately buys the Chrysler Group.
It’ll come down to what deal is most palatable to them, and how well they’ll cooperate with -– or aggressively they’ll protest –- a potential buyer.
Of the offers now on the table, the deal likely to be most favored by Chrysler unions is an offer from Canadian auto supplier Magna International with private equity firm Ripplewood.
In contrast, a bid by Cerberus Capital Management ranks at the bottom with Chrysler’s unions, because the union suspects Cerberus intends to break it into pieces and strip it down to nothing more than a distribution company.
“Cerberus is a Trojan horse for Chinese automakers, and the unions know it,” said a source familiar with some of the bids.
Still, wild cards remain. The wildest card is the recent bid from Las Vegas billionaire Kirk Kerkorian and his Tracinda Corp. The innovative deal offers unions a stake in Chrysler and a future. Kerkorian claims Chrysler can be “a robust and lasting standalone entity,” and his Tracinda is in it for the long haul. Published reports put Kerkorian’s offered stake to the unions at 10 percent, but a source says Kerkorian is rumored to be willing to go as high as 20 percent.
The Union of Concerned Scientists released its latest report on the environmental performance of the world’s eight largest automakers this week based in 2005 model-year vehicles.
The group assigned each automaker a global warming and a smog score for its performance in limiting emissions of greenhouse gases -- blamed for global warming -- and smog-producing pollutants.
Honda took 1st place for the fourth consecutive report, followed closely by Toyota. Volkswagen was 3rd in its global warming score but near the bottom for smog production. Hyundai-Kia ranked 4th in both categories. Nissan was 3rd in the smog score.
Detroit’s Big Three ranked last. Ford’s smog rating was better than Volkswagen’s. DaimlerChrysler was the worst in both categories.
Now that it is a foregone conclusion that DaimlerChrysler has put Chrysler
Group up for sale and it quite possibly will be sold to a private equity firm, what’s next?
Everyone –- employees, suppliers and the media –- wants a definitive answer to what will happen to Chrysler once it is sold. How will the deal work? Will Chrysler still exist when all is said and done? If it does, what will it look like?
Despite relentless questioning, no one knows. Not even DaimlerChrysler insiders. The sale of Chrysler is unprecedented. There’s no blueprint for how a sale of an auto company to a private equity firm would work. In an interview with CNBC'sMorning Call Wednesday, I suggested we spectators “expect the unexpected.â€
Toyota announced to its dealers Tuesday significantly lower prices for select equipment on Prius hybrid
models, Edmunds.com's AutoObserver has learned. The price reductions, which went into effect immediately, range from $600 to $2,000, in equipment packages, some of which have been slashed by half.
The price reductions come on the heels of the Prius posting its all-time, best-ever monthly sales record in March, breaking the previous record set in February. Prius sales in March totaled 19,156, an increase of 133.2 percent over March 2006.
Toyota had some incentives on Prius models in March this year for the first time. Earlier, buyers were put on waiting lists for months before they received theirs. The new price reductions apparently are to replace the incentives but, instead of incentives, which have an expiration date, are permanent.
In addition, the federal tax rebate on the Prius of $1,575 dropped to $788 on April 1.
Even before the latest price reductions, the price consumers were paying for the Prius was dropping. Edmunds.com’s analysis calculated the Prius’ True Market Value at $21,296 in March, down from $3,284 in December.
Ford and Chrysler issued public statements denouncing a free trade agreement signed by the U.S. and Korea this week. Their objection is that the agreement doesn’t force Korea to open its restricted market.
General Motors has been mum thus far on the topic. GM has important operations in South Korea created from Daewoo that are helping buoy GM’s global sales, while Ford and Chrysler do not have anything similar. The Chevrolet AVeo comes from Korea.
Under the agreement, which must be approved by Congress, the U.S. would immediately drop a 2.5 percent tariff on small cars and auto parts. It will phase tariffs out for trucks, larger engines and tires over the next decade. In return, Korea eliminates engine taxes that penalize U.S. automakers as well as an 8 percent tariff. It agreed to create a "working group to review auto-related regulations being developed," a joint statement said.
Ford announced today the 2008 Ford Taurus will have a base manufacturer’s suggested retail price
(MSRP) of $23,995, including destination and delivery. The automaker claims the Taurus, previously known as the Five Hundred, will be priced thousands of dollars less than comparably equipped sedans like the Toyota Avalon and the Chrysler 300.
The price appears competitive depending on how you look at it – or who is looking at it.
“Considering the size, powertrain and features the new Taurus offers, it undercuts its closest competitors on price by several thousands dollars, which is good,†noted Alex Rosten, manager of Pricing and Market Analysis for Edmunds.com’s AutoObserver.
“However, old Taurus buyers looking to check out the new Taurus are in for some significant sticker shock,†he noted. “The 2006 Taurus started at $21,000, and, after discounts and rebates, could be purchased for $16,000 to $17,000. Granted, the new Taurus is a much better car, but it’s not the most affordable to Taurus loyalists.â€
March car sales are just beginning to roll in today, but one trend immediately noticeable is that some compact cars are hot, hot, hot -- and with little incentives required to prod customers.
Sales of the Mazda 3, only mildly freshened this year, soared a whopping 93 percent. Hot since it was introduced nearly four years ago, Mazda 3 sales shot up to 15,606 in March from 8,087 from a year ago. While the car had some lease programs and special financing on it, the increased demand for the Mazda 3 is due mainly to rising gas prices, according to Edmunds.com’s AutoObserver analysis.
Mitsubishi’s turnaround appears to be taking hold, led by the new Lancer. The redesigned compact car hit showrooms in March, prompting sales to soar 40 percent over March 2006 levels.
Edmunds.com's monthly True Cost of Incentives (TCI) show the industry average incentive on compact cars was $1,170 up 12.5 percent from $1,040 in February. By comparison, the average automotive manufacturer incentive on all cars was $2,512 per vehicle sold in March 2007, up $220, or 9.6 percent, from February 2007, and down $9, or 0.4 percent, from March 2006.
Automakers are adding spiffs other than low-interest financing and cash rebates to spur sales.
Ford announced today it will make Sirius Satellite Radio standard in some Lincoln models. Chrysler started promoting a free DVD system with the purchase of a Chrysler Town & Country or Dodge Caravan minivan. Last month, Chrysler pitched free Hemi engines on some models.
These spiffs come as March sales are being reported today and Wednesday. Edmunds.com predicts March sales will be down from year-ago levels. Edmunds.com further reported today that incentive spending edged higher last month.
Automakers are resorting to feature spiffs because financing and cash rebates may be losing their allure. In addition, automakers, especially domestic ones, are trying to boost their resale values and images. Adding content boosts resale value whereas rebates decrease it. Edmunds.com analysts estimate 80 percent of the cash rebate comes off the resale value of a one-year-old car.
Features allow automakers to focus on the vehicle and its content without screaming "distress sale." While, psychologically, the consumer loves getting something seemingly for free.
Japan's vehicle sales fell for a 21st straight month, led by Nissan and Toyota. Japanese automakers selling in their home market have been experiencing their business year since 1977.
What does this mean for the U.S.? The pressure will be on Japanese automakers to maintain and boost sales in the U.S. to offset slow sales in their home market.
Sales of cars, trucks and buses, excluding minicars, fell 12.6 percent to 487,738 vehicles in March from a year earlier, the Japan Automobile Dealers Association reported Monday. Nissan's sales fell 16 percent; Toyota's dropped 12 percent. Car sales have dropped despite increased household spending. The only bright spot in Japan’s auto sales is minicars.
The United Auto Workers (UAW) lost nearly 19,000 members in 2006, dropping the union's ranks to a new post-World War II low, according to a story in the Detroit News, citing a union report filed with the U.S. Department of Labor.
The lower number of members decreases the union’s clout as it enters negotiations for new national contracts for Ford, Chrysler and General Motors. With the current contract expiring in September, these negotiations are critically important for the union, which is trying to protect the jobs, pay and benefits of its remaining members, and the automakers, which need concessions in health care and retiree costs to compete with foreign automakers that don’t have the same legacy costs.
While the implications are more macroeconomic than automotive, Europe has eclipsed the U.S. in stock market value for the first time since World War I, the Financial Times reports, noting it is “another sign of the slipping of the global dominance of American capital markets.”
Ian Harnett of Absolute Strategy Research, who identified the move for the paper, said this marked a “seismic shift” in markets.
Automakers begin reporting March sales figures on Tuesday, and, based on those numbers, new incentives could be announced on slow-selling models shortly thereafter.
Edmunds.com forecasts new vehicle sales (including fleet sales) in March to come in at around 1.48 million units, a 3 percent decrease from March 2006, which was last year’s biggest month. Despite the decrease this year, March still could be one of 2007’s best months. And the industry, according to Edmunds.com, is still on track for annual sales volumes of approximately 16.5 million vehicles, along the lines of what we saw in 2006.
The compact-car segment is predicted to be the industry’s hottest for the month.
Chrysler, Ford and General Motors are expected to post declines, putting their combined market share lower than last month or year-ago levels. Toyota and Nissan are predicted to report sales increases. Chrysler will report its sales on Tuesday instead of Wednesday, likely to coincide with the DaimlerChrysler annual meeting in Berlin.
Toyota has added dealer incentives on some versions of its newly launched Tundra full-size pickup truck in an effort to stir slow sales, Edmunds.com’s AutoObserver has learned.
“Toyota apparently is coming up short on sales numbers and wants to drive volume,” said Alex Rosten, manager of pricing and market analysis for Edmunds.com’s AutoObserver. “This is not a good sign for Toyota.
Tundra incentives are: 3.9 percent to 5.9 percent financing on all models, depending on the loan term; special lease rates on all models; $1,000 trade-in assistance for early termination of leases on the previous-generation Tundra; $2,000 dealer cash incentive on Regular Cab models; $1,000 dealer cash incentive on Double Cab models. The incentives run through the end of April. Some dealers already were offering as much as a $1,500 discount on the basic Tundra work truck, which is selling particularly slowly.
The good news is: March may be one of the best months of 2007.
The bad news: March sales will be lower than last year and still be one of the best months this year, suggesting little for the industry to look forward to for the rest of the year.
This month's new vehicle sales (including fleet sales) are expected to be 1.48 million units, a 3.0-percent decrease from March 2006, according to Edmunds.com. Though sales are lower this March than last, Jesse Toprak, executive director of Industry Analysis for Edmunds.com, notes more cars were sold in March last year than any other month of last year. He predicts that this March may be one of the best months of 2007.
"This month, the industry faced debilitating winter storms, less compelling marketing messages and reduced fleet sales, so it is no surprise that year-over-year comparisons reflect a relative downturn," said Toprak. “Nevertheless, I believe we are still on track for annual sales volumes of approximately 16.5 million vehicles, along the lines of what we saw in 2006."
Typically, the summer has been the strongest period for new-car sales. This may be shifting because new-model introductions come earlier in the year than they used to, possibly sparking traffic to showrooms during historically quieter months.
Little should be read into Monday’s announcement of
management changes at General Motors. The moves are merely tweaking the new global management structure and taking into account a retirement. We can expect more tweaking and more retirements in the future.
GM announced Monday that Bo Andersson and Jim Queen were promoted to GM group vice presidents, effective April 1. Andersson will continue to lead the Global Purchasing and Supply Chain organization. Queen will remain the leader for Global Engineering. Those moves are part of GM’s efforts to create a global product development structure.
GM also announced Tom Gottschalk, the Law and Public Policy chief and a key adviser to CEO Rick Wagoner, will retire April 1. He is being replaced by a pair of executives who will split the job.
Gottschalk is 64. His retirement was first announced in June, but the company didn't assign a departure date at the time.
By all accounts, it’s hard to say no to Rick Wagoner. He has asked top lieutenants to stay on past retirement age and lured others out of retirement as the former Duke University basketball player builds a deeper management bench.
If there were a king of German automaking, Dr. Ferdinand
Piech has crowned himself as such.
After much legal wrangling, Piech now essentially has control of Volkswagen as well as Porsche. He is also trying to create Europe’s biggest truckmaker by merging MAN and Scania.
At 69, Piech appears to be writing a legacy to rival that of his grandfather, Dr. Ferdinand Porsche, the man who created VW and Porsche in the first place.
But, now that Piech controls both, what’s in store for mass-market VW and highly profitable niche Porsche?
General Motors’ string of encouraging news continued this morning as the automaker reported 2006 financial results that showed significant improvement.
Beating back rumors of imminent bankruptcy only a year ago, GM announced today it earned $950 million for the fourth quarter of 2006, only its second quarterly profit in the past two years. For all of 2006, GM still lost money, but significantly less than last year -- $2 billion compared with $10.4 billion in 2005.
The quarterly profit signals GM’s turnaround plan is beginning to work. Indeed, GM has delivered on its promises and is beginning to see the payoffs.
But there’s more work to be done. GM needs a favorable contract with the UAW. It has to lure still-wary car buyers to its brands. And it absolutely must introduce a production version of a break-through environmental vehicle like the Chevrolet Volt concept.
GM has many more promises to keep and miles to go before it sleeps.
Average transaction prices of most hybrids are at historical lows, incentives are being offered on many popular models, certain hybrid tax credits will be lower soon, and gas prices are rising.
Toyota launched the Tundra pickup truck only last month, and so far, based on Edmunds.com’s analysis, it is drawing sales largely from Toyota loyalists rather than stealing sales from General Motors, Ford, Chrysler and Nissan.
Based on February sales data, Edmunds.com puts Toyota’s loyalty rate on the Tundra -- calculated based on what make vehicle was traded in for the Tundra -- at 50 percent, up dramatically from 38.3 percent the month before. That indicates Toyota owners are trading their current Toyotas -- Tundras, largely -- for the new Tundra.
Edmunds.com estimates show the average automotive manufacturer incentive in the U.S. was $2,253 per vehicle sold in February 2007, down $33, or 1 percent, from January 2007, and down $95, or 4 percent, from February 2006.
"The industry’s incentives spend is relatively flat this month," stated Jesse Toprak, executive director of industry analysis for Edmunds.com. “Most automakers are following a strategy of steadily decreasing their overall incentives spending, but others are increasing their offers to get the competitive edge at the point of sale."
Saturn is conquering one of GM's most formidable challenges: it's getting on the shopping lists of potential buyers and converting lookers into buyers like never before, according to an analysis by Edmunds.com.
Surpassing Edmunds.com forecast for a 52-percent sales increase in February, Saturn reported a 60-percent increase in sales, helping GM boost its total U.S. sales by 3.5 percent in a flat market and while Ford and Chrysler posted declines.
Just as important, sales are coming from largely Asian brands, especially Japan's Big Three -- Honda, Nissan and Toyota.
And while GM is often criticized for having too many brands and those brands cannibalizing each other, not a single GM model ranks among the top 10 vehicles cross-shopped by potential Saturn buyers across its line in Edmunds.com's analysis.
As expected, DaimlerChrysler’s supervisory board gave the green light to its Chrysler Group, allowing it to move forward with a plan to develop and build small vehicles with China’s Chery Motor. That means Chrysler could become the first automaker to distribute Chinese-built vehicles in the United States.
Under the approved framework of an agreement –- one that excludes an equity partnership -- Chrysler brands would be able to distribute Chery-built vehicles primarily in North America and Western Europe.
Chrysler said the partnership with Chery would allow it to develop much needed small vehicles more quickly and with less money.
Last week's rumors that General Motors was in discussions to buy the Chrysler Group were immediately dismissed from Wall Street to Main Street as nonsense to sheer lunacy.
But maybe the idea isn't so crazy after all for GM. Maybe GM is playing defense, not offense.
If a foreign automaker – particularly one from China or Korea – were to make a bid for Chrysler, GM could sweep in like a knight in shining armor and save the damsel in distress – not Chrysler, but itself.
GM faces significant risk if a Chinese or Korean automaker buys Chrysler and gains instant access to its coast-to-coast dealership network to widely distribute vehicles that can be priced below the competition because they come from low-cost production sources.
Ford would be hurt as well, but it's broke, so it can't put up a solid defense. GM, however, is in reasonably good health to put the brakes on such a foreign invasion.
Everyone knows China’s automobile industry is booming. The China Association of Automobile Manufacturers confirmed that in today’s report that showed China’s auto industry made a profit equivalent to $10 billion (U.S.) in 2006, up 46 percent from the previous year.
In contrast, Ford Motor Co. alone lost more than that; it lost $12.7 billion last year, Chrysler lost $1.4 billion and GM has yet to report earnings but lost $10.6 billion in 2005.
China car sales totaled 7.22 million vehicles in 2006, up 25 percent. Higher sales resulted in China overtaking Japan as the world’s second largest auto market. Sales should surpass 8 million this year, and analysts predict it will be the world’s largest market in another decade.
But buried in the CAAM’s glowing report China’s auto industry is the fact that the good fortunes don’t trickle down to car dealers, with 40 percent losing money. China has 1,800 franchised auto dealers, of which 700 are unprofitable and of those 300 have been merged or edged out of the market. Another 20 percent are on the brink of red ink. The reason: fierce competition.
Not only is vehicle distribution ripe for consolidation, so too are auto companies. China has 1,500 registered auto producers. Of which fewer than 100 sold more than 10,000 vehicles. Many small, manufacturers sold only 300 to 500 cars, not enough to make a valid business case in any country.
Friday the frenzied buzz was that General Motors was in talks to buy Chrysler. By Monday, South Korea’s Hyundai was rumored to be interested.
And by the end of the week, even more names are likely to emerge as suitors. One could be from China – maybe Chery or Shanghai Automotive Industries Corp. (SAIC) – or some private equity firms from virtually anywhere.
Of the two automakers rumored to be interested in Chrysler so far, Hyundai makes more sense. Hyundai lacks much of what Chrysler has; GM already has too much of what Chrysler's got.
General Motors and Chrysler Group apparently have been in discussions for months about GM supplying a large SUV to Chrysler and developing small cars together.
The news came to light only this week from anonymous sources cited by the Wall Street Journal and The New York Times, after Chrysler announced a restructuring plan that would eliminate 13,000 jobs, close a plant and reduce production capacity after its $1.4 billion operating loss in 2006.
Any deal on either front appears far from complete but would be simple, project-by-project collaborations, patterned after Chrysler’s arrangement to supply Volkswagen with a minivan to sell in North American with a VW badge. A wholesale purchase of Chrysler by GM is unlikely as is any equity swap.
DaimlerChrysler is open to anything, including "far-reaching strategic partnerships." The German automaker, under increasing pressure mostly in Germany to sell Chrysler Group, didn't seem to rule out the possibility.
After reporting a significant operating loss for its Chrysler Group, DaimlerChrysler says all options are on the table, including "far-reaching strategic partnerships." Rumored have been an alliance with Nissan-Renault or a Chinese automaker.
The German automaker's official stand is: "No option is being excluded in the interest of arriving at the best possible solution for the Chrysler Group and DaimlerChrysler as a whole."
It comes as no shock to shoppers looking for a new car, but their hunch is now quantified: cars cost more than they have in some time.
The purchase of an average-priced new vehicle took 26.2 weeks of median family income in the fourth quarter of 2006, according to the Auto Affordability Index compiled by Detroit-based Comerica Bank. That 2.2 rise in the number of weeks of work required to purchase a new vehicle was the biggest one-quarter deterioration in affordability ever recorded by the index. The sharp drop in affordability in the fourth quarter reversed most of the improvements in affordability recorded over the prior three quarters.
Including finance charges, the total cost of buying an average-priced light vehicle was $29,400 in the fourth quarter, up three percent from a year ago. Median family income rose about four percent over those same four quarters.
Wednesday morning, DaimlerChrysler announces its 2006 earnings — or lack thereof in the case of its Chrysler Group — and what it plans to do about the red ink.
DaimlerChrysler Dieter Zetsche and his supervisory board hold the company’s annual briefing in Auburn Hills, Michigan, instead of in Germany. They are expected to report a Chrysler loss of $1 billion or more for the year. The parent company is expected to report a profit, thanks to earnings from Mercedes-Benz.
As many as 11,000 Chrysler jobs likely are gone, plants will close and others will cut back production. The plan could also include a tighter link between Chrysler and Mercedes-Benz in codeveloping vehicles, increased parts sharing and joint production.
The press positioned a speech delivered by Toyota Motor North America President Jim Press in Chicago last week as extending an olive branch to struggling Detroit automakers.
Oh stop it!
In his speech to the Economic Club of Chicago in conjunction with the Chicago Auto Show, Press called for greater cooperation and technology-sharing partnerships among automakers.
It came as no surprise when on Friday Primedia Inc. announced it wants to sell its auto enthusiast properties, including monthly magazines Motor Trend,Automobile, Hot Rod as well as Automotive.com, TV shows, special events and such.
Primedia overpaid and went deep into debt for the properties, which it says generate $500 million in sales a year. Buff books are in a slump, due to overall cutbacks and re-allocation of advertising especially by the automakers, aging demographics and competition from the Internet.
Let’s hope Ford’s new CEO Alan Mulally has bolder moves up his sleeve than just the renaming of a few cars.
Ford announced this week at the Chicago Auto Show that it would re-name the Ford Five Hundred and Freestyle and the Mercury Montego. Their names change to the Taurus, Taurus X and Sable, respectively, with the introduction of the 2008 versions. Reviews were mixed on the move (see yesterday’s post).
Ford’s President of the Americas, in his keynote speech to open the show, vowed Ford’s “Bold Moves†advertising tagline is more than a tagline. It's the company's guiding light.
Prove it. Bring it on. Let’s see some bold, smart moves – something more than changing the names on some cars.
Never mind brain-wave analysis. Edmunds' CarSpace audience rated, ranted about and praised the automobile advertisements aired on Sunday's Super Bowl.
In a nutshell, here's what they thought of them:
Hands-down favorite: General Motors ad boasting the automaker's improved quality and five-year/100,000-mile warranty. The ad starred a robot sent packing from the factory after a mishap that caused the assembly line to stop. To the tune "All By Myself," the sad robot jumps off a bridge in despair -- though it wakes to find it is a dream.
Funny: The Chevrolet HHR ad created by student Katelyn Cravv, University of Wisconsin at Milwaukee. She won the Chevy Super Bowl College Ad Challenge. Her ad showed men of all shapes, sizes and ages ripping off their shirts in their excitement over the HHR. (One viewer joked she wouldn't buy an HHR if it was going to attract some of the unattractive characters shown in the ad!)
Mixed signals: The Chevrolet ad featuring songs about Chevrolet vehicles. Viewers liked the music but didn't recognize some of the celebrities and thought the ad's message was unclear.
Awe-struck: The Toyota ads featuring the Tundra driving on a giant seesaw and screeching to a halt at the mountain's edge. Viewers said they'd trade their lounge chairs for the driver's seat to do those stunts.
Clever: The Ford Super Duty truck ads featuring the nuts and bolts coming together to build the pickup.
Lackluster and empty: The Honda ads, especially one for the CR-V. "Nothing makes me want to check out the CR-V," said one writer.
The 2007 North American International Auto Show is now history. The Detroit show closed last night (Jan. 21).
Show organizers reported public attendance was down for the fourth consecutive year. Total public attendance came to 705,226 people. The 2006 show drew 759,310 visitors. In 2003, the show broke records with 838,000 people.
The dealers who sponsor the show blamed an ice storm along with the state's sagging economy for the lower attendance.
A Saturn VUE Green Line recently was put into service as a taxi in New York City. This is the first GM vehicle to be approved by the NYC Taxi and Limousine Commission since 1996 when GM discontinued the rear wheel drive Caprice. GM's goal is to show other taxi operators that the VUE Green Line is an affordable hybrid taxi vehicle.
The VUE Hybrid vehicle , now in service, has received very favorable comments from the driver and customers, according to owner/operator Placida Robinson. The Hybrid VUE has a sunroof and premium stereo system. It also the lowest priced hybrid SUV on the market—MSRP under $23,000. The VUE Green Line was an attractive fit for Ms. Robinson because it met the Commission's hybrid requirement, was competitively priced (under $23,000 MSRP), and offered excellent cargo capacity. She says that customer reaction has been very positive so far. Riders apparently like the hybrid and have commented that as taxis go, it's one of the nicer ones they've been in.
General Motors announced an attractive price on its 2011 Buick Regal, which is generating a lot of positive buzz. But the automaker likely will lose money or at least not make much on every one it sells in the early going. 
The company 
One fully expected those gathered Wednesday in the White House rose garden -- environmentalists, captains of the global auto industry and government officials -- to break out into a rousing chorus of Kumbaya. 
DETROIT - General Motors plans to extend its usual summer shutdown from two weeks to as much as two months for many of its North American assembly plants as it attempts to reduce its record-high inventories of unsold vehicles. 
SANTA MONICA, Calif. -- The still-deteriorating economy and the continued uncertainty about employment kept consumers away from buying new cars again in February despite the record-breaking deals available to them.
