Innovation: Critical to Development of China’s Auto Industry

 

Marvin Zhu

After two years of strong growth, the car market in China has begun to slow. Chinese brands, which have grown considerably over the past few years, seem to have lostmomentum faster than their joint-venture counterparts. According to the J.D. Power Asia Pacific 2011 China New Vehicle Intender Study,SM the purchase intent toward local brands has fallen from 26% in 2009 to just 20% this year.

Although the local OEMs have continued launching new products, more and more car buyers are voting with their feet, as they find most of those “new models” are facelifts or copies of other popular models. Meanwhile, the joint ventures are offering cars of similar size at increasingly competitive prices. Continue reading ›

US New-Vehicle Sales Recovery in Progress with Higher Transaction Prices

Thomas King

As 2011 wraps up, possibly the most important trend for the US auto industry is that new-vehicle sales are recovering. Light-vehicle demand continues to increase. Retail sales in calendar 2011 will likely hit 10.3 million units, up from 9.2 million units in 2010. Growth is expected to continue into 2012—our retail sales forecast for next year is 11.3 million units. Three other major trends that we see looking at our Power Information Network® (PIN) data include:

Trend 2: OEM Emphasis on Transaction Price Growth

While industry sales volumes are increasing, they are still well below the levels recorded in 2004-2007, when annual retail sales were in the 13-14 million-unit range. The primary reason that the industry has not rebounded to these record sales levels is a change in focus among OEMs. Automakers now emphasize strong transaction prices in addition to sales volumes.

This change is evidenced by the record transaction prices that are being earned across the industry. For example, in early 2010, average retail transaction prices were slightly more than $27,000, while at the end of 2011, we have observed transaction prices consistently exceeding $29,000. These strong transaction prices are helping to offset lower volumes, and are driving increased profitability for OEMs. Continue reading ›

Collaboration on Green Car Technologies Makes Good Sense

David Sargent

Earlier this month, BMW and Toyota Groups announced that they will work together to develop lithium-ion batteries for electric and hybrid cars. In addition, BMW will supply diesel engines to Toyota in Europe. Officials from both automakers signed a MOU at the Tokyo Auto Show for mid- to long-term collaboration on next-generation environment-friendly technologies.

The cost of new powertrain technology is very high and so it makes sense for automakers to form alliances in order to share development costs. This is especially so when the two automakers concerned have complementary strengths. BMW produces some of the most highly regarded diesel powertrains, which have been extremely successful in Europe. In turn, Toyota is a clear leader in electric and hybrid powertrains. Therefore, the agreement seems to make a lot of sense. Continue reading ›

Brawn, Utility and Performance Attract Male Buyers in US Market

Grace Hamulic

Premium sporty cars and large pickups remained the most popular models with male buyers during the first 11 months of 2011, based on real-time transaction data from J.D. Power’s Power Information Network® (PIN).

Six of the 10 new-vehicle models with the highest percentages of male buyers or lessees this year are light trucks—large pickups or vans. The two best-selling models in the US market through the first 11 months of 2011—the Ford F-Series and Chevrolet Silverado—are among the models with the highest percentages of male buyers. Both the F-Series and Silverado have posted higher sales this year vs. 2010, and the category’s sales have also outpaced the industry this year—year-to-date, large pickup sales are up slightly more than the industry’s 10% gain. Continue reading ›

China’s Domestic Brands Narrow Dependability Gap with Foreign Brands

Dr. Mei Songlin

Vehicle dependability in China dramatically improves this year from 2010, mainly due to the significant rise in dependability among Chinese domestic brands, according to the 2011 China Vehicle Dependability Study (VDS). This year, China’s local brands, including BYD, FAW and Wuling, narrowed the gap with international brands in dependability by 34% vs. 2010.

The study is based on evaluations of ownership from nearly 11,700 owners of vehicles in 33 cities across China, who purchased their passenger vehicles between June 2008 and August 2010. Some 202 problem symptoms in eight categories are examined and dependability is indexed during the first 13 to 36 months of experience based on the average number of problems experienced per 100 vehicles (PP100). A lower PP100 score reflects higher reliability and quality. Continue reading ›

A Suggestion to Chinese OEMs: Focus on Strengthening Existing Brands

 

Tim Dunne

China’s automotive market currently offers more than 60 locally produced brands and nearly 20 imported, or foreign, brands. As if that were not enough, we recently learned that several more entrants intend to join the fray. Among them are two new brands developed by Chinese domestic automakers.

The FAW Car Group unveiled the Olney brand in November. The company said that the brand would be targeted at younger consumers. The first Olney car will be priced between 80,000-100,000 RMB ($12,500-$15,600) and is scheduled to launch in March 2012.

Chery Automobile Co. also announced plans in November to launch a new passenger-vehicle brand named Qoros. The brand’s vehicle will be built by Qoros Automotive Co., a 50-50 joint venture between Chery and the Israel Corp., an investment firm based in Israel. The company said it has three passenger-car models under development, the first of which is scheduled to launch in late 2013. Continue reading ›

Mini Car Competition Intensifies in India

The introduction of Hyundai’s all-new small car, the Eon, which was previously known by its code HA H800, will heat up the mini car battle in India. The Eon is expected to be a strong challenger to market leader Maruti Suzuki’s Alto. The Eon, an entry-level hatchback aimed at capturing first-time car buyers in India, was developed over 4 years at a cost of INR 9.56 billion (US $181 million).

In order to meet the requirements of car buyers in this growth market, Hyundai Motor’s research and development team in Hyderabad worked with Hyundai’s engineers in South Korea to design and develop the Eon exclusively for India. The result is a model that is stylishly designed and promises fuel economy of 21 kilometers per liter (equivalent to 13.05 miles per liter or about 79.38 miles per gallon)under test conditions. Powered by an 814 cc 3-cylinder gasoline engine, the Eon is also competitively priced from INR 285,309 (US $5,400) for the base model Eon D-Lite to INR 396,262 (US $7,500) for the top-end Sportz version, which has additional features such as keyless entry and a driver air bag. Continue reading ›

Two Domestic Trucks Remain Best Sellers in U.S.

Despite fuel costs that are 14% higher than last year and increased demand for compact models with more efficient powertrains this year, two domestic large pickups remain the best sellers in the US market through November, based on Power Information Network® (PIN) and LMC Automotive research data.

During the first 11 months of 2011, nearly 500,000 Ford F-Series trucks were sold—up nearly 9% from the same period a year ago (selling day adjusted). The Chevrolet Silverado is the second best-selling model in the US market with sales of nearly 367,400 units for a 12% increase over last year. Another large pickup, the Ram 1500 from the Fiat-Chrysler Group just made the Top 20 model list this year. Ram sales climbed by nearly 25% from a year ago. Combined Ram LD and HD sales gave the truck seventh place standing in the US market. Continue reading ›

Global Digital Marketing: Different Approaches in Different Regions

Jeremy Detgen

Cultural, sociological and technological differences need to be considered in digital marketing approaches around the world, according to a panel of experts including an OEM, digital marketing firms, and an online car service, at our 2011 Automotive Internet Roundtable in Las Vegas, NV. J.D. Power’s Tim Dunne, director of global automotive business coordination, asked them to comment on how digital marketing is being conducted and how consumers are influenced and reacting to digital marketing around the world.

Panel members included:

Will Hodgman, executive vice president-International, ComScore, Inc.

Daniel Leon, general manager, Mobile, Groundlink Inc.

Michael Sachs, general manager, CRM & Owner Loyalty, Volkswagen of America, Inc.

Chris Worrell, head of European Consumer Insight, Specific Media Continue reading ›

US Retail Sales Post Double-Digit Climb in November 2011

US retail light-vehicle sales in November rose 14.8% from a year ago to 818,609 units, which translates to a seasonally adjusted selling pace (SAAR) of 11.7 million units, based on analysis by J.D. Power’s Power Information Network® (PIN) and LMC Automotive. The sales pace in November was much stronger than the 9.7 million-unit pace in November 2010 and also surpassed October’s retail sales rate.

Fleet sales in November were less than 175,000 units and down 10.6% from a year ago. The fleet SAAR of 1.9 million units receded from 2.5 million units in November 2010. Continue reading ›