Sharing Brands in China Has Benefits and Drawbacks

Tim Dunne

Sharing a joint brand* with a major domestic automaker in China is a way for General Motors to target buyers at a lower price point without hurting the company’s international image for producing higher-end vehicles, according to a recent news report in The Wall Street Journal. However, unlike the old joint venture (JV) approach, the joint brand means that intellectual property is held in common with the Chinese partner.

In the same article, an expert on the Chinese automotive industry said that in the long-run, this joint branding may not be good news for GM and other foreign joint venture automakers because China has made it clear that it wants its own national manufacturers to dominate the domestic market. Continue reading ›

Near-Term Green Vehicle Growth Remains Limited

Growth of alternative powertrain vehicle sales in the near future will be limited by consumer concerns about costs as well as functionality, according to our new J.D. Power and Associates 2011 U.S. Green Automotive Study.SM In fact, our Automotive Forecasting division projects that the share of hybrid and electric vehicles will remain below 10% of the US market through 2016.

Mike VanNieuwkuyk

Alternative powertrains face an array of challenges as automakers attempt to gain widespread acceptance of these vehicles in the market. It is the financial issues that most often resonate with consumers, whether it is the higher price of the vehicle itself, the cost to fuel or recharge the vehicle, or the fear of higher maintenance costs. The bottom line is that most consumers want to be “green,” but not if there is a significant personal cost to them.

In addition, despite a rapid increase in the number of alternative powertrain vehicle models expected to reach the market during the next few years, automakers will be competing for a relatively small number of consumers who are willing to drive green. By the end of 2016, J.D. Power expects there to be 159 hybrid and electric vehicle models available for purchase in the US market. This is a significant increase from the 31 hybrid and electric models that were available to buyers in 2009. Continue reading ›

Competition to Heat Up in Thailand Pickup Market

Ammar Master

Following four years of declining sales, Thailand’s pickup truck market recovered in 2010 to achieve sales of 347,000 units, which translates to a 40% increase vs. 2009 volumes. Yet, the strong growth of last year is unlikely to be repeated, and we are forecasting pickup truck sales in Thailand to decline 6% in 2011 and for the market to be flat in 2012.

The 60% share of pickup trucks in Thailand’s total light-vehicle market has shrunk to today’s smaller 45% share of overall light-vehicle sales in the country, and we expect this share to fall even further in subsequent years. However, these negative factors are not deterring the smaller players who want to capture a larger share of the pickup truck pie. Continue reading ›

North American Vehicle Output Climbs 17% in First Quarter of 2011

Jeff Schuster

First-quarter light-vehicle production in North America (US, Canada and Mexico) was up 17% from the same period in 2010, based on our analysis. Nearly 3.4 million units were built in the first three months of the year, compared with 2.9 million units in the same time frame of 2010. However, near-term production already has been affected by parts shortages caused by power and assembly plant problems from the March 11 earthquake and tsunami in Japan. Shortages are expected to increase in the coming weeks. Continue reading ›

April Retail Sales in US Remain Surprisingly Resilient

Jeff Schuster

Retail light-vehicle sales in the United States during the first half of April* got off to a strong start, partly due to the fact that consumers may be purchasing vehicles earlier than they normally would have, while there is still ample inventory. It’s likely that the selling pace will slow down during the remainder of the month when there may be inventory constraints due to shortages related to the Japan crisis.

April retail car and light-truck sales are expected to reach 948,100 units, which represents a seasonally adjusted annual rate (SAAR) of 11.1 million units, based on analysis of our Power Information Network® (PIN) retail transaction data. This is a stronger pace than a month ago, when the SAAR was 10.7 million units, and is significantly ahead of last April’s weaker 9.3 million-unit selling pace. The latest estimated sales pace may not be sustainable as inventory dries up toward the end of April and into May, especially for small cars. Continue reading ›

Global Auto Sales Shift Hampers Reducing Vehicle Emissions

As emerging markets, led by the BRIC countries, eclipse mature markets in global auto sales growth, it will become more challenging to control or reduce emissions from vehicles powered by internal combustion engines (ICEs).

John Humphrey

A major reason is that passenger-vehicle buyers in these markets already tend to be more sensitive to price pressure than are buyers in economically mature markets, which favors the sale of traditional ICE-powered passenger vehicles. Therefore, it is unlikely that buyers in these developing markets will accept the price premium charged for hybrid-electric or battery-electric powertrains with a price differential expected to average about US $11,000.

Although some governments, such as China’s, are taking steps to reduce auto-related carbon emissions, the sheer volume of vehicles being added to the global fleet during the next decade will largely negate these efforts, which means carbon emissions and overall air quality will get worse before it gets better. Continue reading ›

Stunning Growth in Emerging Markets Overshadows Mature Auto Markets

John Humphrey

A new world order has been established with respect to global automotive sales. With China at the forefront, emerging markets—especially the BRIC countries, which also include Brazil, Russia and India—already have overtaken mature automotive markets in terms of sales, and will continue to be the primary source of growth for the sector going forward.

In 2010, light-vehicle sales in these emerging markets comprised slightly more than one-half (51%) of global sales. Going forward, the share of emerging markets is expected to increase steadily to 60% of global automotive sales in 2015. Sales in China alone in 2015 are projected to reach 29 million units, with the United States following with just 16.5 million unit sales. The U.S. and other mature markets like Western Europe and Japan are expected to return to pre-recession sales levels by 2015. Continue reading ›

China Adjusts Policy to Curb Congestion, Smog, Reliance on Oil Imports

Tim Dunne

China may be changing government policies as a way to slow down strong auto sales and to curb congestion on major city streets in Beijing and Shanghai—traffic is “beyond awful” there. For example, the way China’s government has managed to control sales in Shanghai in the past was that new-vehicle owners would have to pay a lump sum fee (something like the equivalent of $5,000 to $7,500) before being able to register a new vehicle. This has kept a lot of people out of the market.

In regard to cutting down on smog and emissions, China is still pushing ahead with electric vehicles (EVs) and is providing a 60,000 RMB (US $8,800) subsidy with the purchase of an EV. But like everywhere else, the changeover to alternative energy vehicles is going to be a long-term transition, requiring lots of time and investment. Continue reading ›

Retail Sales Lead US First-Quarter Auto Market Revival

First-quarter light-vehicle sales in the United States were up 18.6% from the same three-month period in 2010, based on our Automotive Forecasting Division analysis. Overall car and light-truck sales advanced to 3.05 million unit sales during the quarter, from 2.5 million units a year ago. Nearly 513,000 more new vehicles were delivered in the quarter than in the first quarter of 2010.

Retail sales led the early 2011 recovery with a 23.0% increase, while fleet sales were up only 4.6%, based on our Power Information Network® (PIN) retail transaction data. Escalating gasoline prices (nationwide average approaching $4.00 per gallon) during the first quarter boosted the Compact segments, which were up 25.4% from the same period a year ago, while the Midsize and Large segments increased only 13.1% and 16.4%, respectively. Continue reading ›

Shanghai GM Broadens Product Portfolio in China Market

Tim Dunne

Shanghai GM* reports that first-quarter sales of Buick, Chevy and Cadillac vehicles in China increased more than 33% from the same period in 2010, to 313,651 unit sales. GM’s sales in China in the first quarter still outdistanced its first-quarter sales in the United States, even though it was not as lofty a figure this year. What’s interesting is that GM sales were up much more than the market (33% vs 12%), according to our research. The new Buick Excelle XT/GT did very well in the first quarter, as did the LaCrosse and new Regal. In addition, the Chevrolet Cruze has been averaging 20,000 unit sales a month, and the New Sail is averaging almost 15,000 unit sales a month.

Looking ahead, GM has indicated that it is planning the global launch of the latest version of its Chevrolet Malibu midsize sedan at the Shanghai Auto Show later this month. The Malibu is an important model for Chevrolet in China. The midsize segment in China accounts for about 12% of passenger-vehicle sales (more than 1.4 million unit sales annually). Currently, the volume leaders in this segment are the Toyota Camry, Honda Accord and Nissan Teanna. Continue reading ›