China’s Government Backs Off EVs, Looks to Hybrids

Tim Dunne

After a major push to jump start an electric vehicle (EV) industry in China, it appears that the Chinese government is backing off plans for the world’s largest EV industry, and is instead redirecting its focus on promoting hybrid powertrains.

If history is any indication—and automotive history is filled with a . . . Continue Reading China’s Government Backs Off EVs, Looks to Hybrids

Chinese Passenger-Vehicle Exports and Imports Climb Steadily

Tim Dunne

During the past few years, exports of passenger vehicles from China have quietly been making gains, with total exports quadrupling from just 100,000 units in 2009 to more than 400,000 units in 2011. China’s exports are forecast to surpass 1 million units annually by 2019, according to LMC Automotive. China’s export performance in 2011 made it the fourth-largest exporting nation in Asia, behind Japan, Korea and Thailand.

 

China’s Auto Exports Grow More Slowly due to Local Market, Quality Issues

While China has been the center of production and exports for many of the world’s goods, the export of vehicles has not been as prominent. There are several reasons why auto exports have lagged: First, because the Chinese domestic market has been growing at such an unprecedented pace, automakers with local production have focused on capturing and building their share of the local market; and secondly, the quality of Chinese-made vehicles has needed to become more competitive with global quality standards. Continue reading ›

Foreign Automakers to be Impacted by China’s New Government Purchase Policy

Tim Dunne

From the perspective of political expediency, U.S. President Barack Obama isn’t really allowed to drive an Audi (or VW), and Germany’s Chancellor Angela Merkel isn’t allowed to drive a Cadillac (or Chevy). So why should Chinese government officials be any different?

China announced a new policy in February that government vehicle purchases would be restricted to Chinese domestic brand vehicles only, and that vehicles used for official operations (such as tax collection) could not exceed 180,000 RMB (US $28,500). According to media reports, total government spending on vehicles reached about $12 billion in 2011, and government purchases accounted for roughly 4.5% of all passenger-vehicle sales in China.

The new policy will likely make a significant dent in the sales of foreign brands operating in China—such as Audi, Volkswagen, Buick, Citroen, Toyota, Honda, Hyundai and others—as foreign-branded vehicles are currently estimated to account for 80% of all government vehicle purchases. Continue reading ›

Strong Finish Predicted for First-Quarter US Retail Auto Sales

U.S. new-vehicle sales in the first quarter are likely to end on a particularly strong note, based on an updated monthly auto sales forecast from J.D. Power’s Power Information Network® (PIN) and LMC Automotive.* The retail sales pace is projected to come in at 11.6 million units in the first quarter, with total sales (retail and fleet) set to hit 14.4 million units, which is ahead of the J.D. Power/LMC Automotive 2012 calendar-year forecast of 11.4 million units for retail light-vehicles and 14.1 million units for total light-vehicle deliveries.

Based on the sales performance in the first 15 selling days of the month, March retail new-vehicle sales are projected to reach 1.086 million units, which would be the highest monthly sales volume in more than two and one-half years, and would translate to a seasonally adjusted annual rate (SAAR) of 11.6 million units. Continue reading ›

Sub-Compacts, Compacts Gain Momentum and Share in US Market

Grace Hamulic

Fuel-efficient, smaller vehicles are moving off U.S. retailer lots much faster in the first two months of this year compared with the same time period in 2011, due in part to the rise in prices at the gas pump—averaging more than $3.80 per gallon across the country.*

Sub-Compact Conventional vehicles, led by the Nissan Versa, averaged only 36 days on retailer lots before being sold this year, down from an average 92 days in the same period of 2011. Compact Conventional models, led by the best-selling Honda Civic, averaged 42 days before being sold vs. 66 days a year ago, according to our Power Information Network® (PIN) transaction data.

Both categories posted higher year-to-date sales, and together have gained more than 1 point of market share. Combined total (retail and fleet) sales for these two vehicle segments account for slightly less than one-fifth of the U.S. market’s deliveries—19.73% share vs. 18.66% a year ago (+1.07%). Continue reading ›

Four Auto Brands Recognized as J.D. Power 2012 Customer Service Champions

Gina Pingitore

Four automotive nameplates—Cadillac, Jaguar, Lexus and MINI—are among 50 brands that stand out in customer service excellence this year and are recognized as 2012 J.D. Power 2012 Customer Service Champions in the second annual cross-industry special report, “Beyond Satisfaction: Brands that Deliver Service Excellence to Maximize Business Results.”

To be identified as a J.D. Power Customer Service Champion, each of the auto brands had to achieve among the highest customer satisfaction levels in their own industry, as well as across multiple industries, in five key areas (the J.D. Power 5Ps) that include Presentation, Price, Process, Product and People. These drivers of excellence* in customer satisfaction are proven to influence key outcomes during the purchase and post-purchase (vehicle service) experiences.

Service Excellence Hinges More on People than on Price

It’s noteworthy that since the onset of the recession in 2008, the importance of using People to ensure real-time response, personalized service and problem resolution continues to be more important than Price as a driver of satisfaction.While value for the price paid is still important, it’s the service experience delivered by an organization’s people that can truly differentiate a brand and foster customer loyalty and advocacy.

The four auto brands that stand out in customer service this year recognize the importance of People in the service experience. Each provides a level of sales service that is significantly above industry average, as identified in our 2011 Sales Satisfaction Index (SSI) Study. It’s notable that each brand applies less sales pressure than the industry average, while at the same time thoroughly explaining the vehicle’s features to the new owner. Continue reading ›

Raising Dealer Service Satisfaction Despite Lower Volumes

Although auto sales in the US market continue to recover after faltering during the recessionary years of 2008 through 2009, J.D. Power projects that service volume at dealerships will continue to dip through 2013 before rebounding. Our 2012 U.S. Customer Satisfaction Index (CSI) Study finds that the frequency of routine dealer maintenance and repair visits in addition to recall events declined this year vs. the 2011 study.

The challenge for automakers and dealerships will be to maintain high levels of satisfaction now and once service volumes rebound. We identify specific actions that dealerships can take to maintain high levels of satisfaction in periods when service volume is down. Some best practices:

Promote online scheduling of service appointments. Just 4% of customers set up their service appointment online this year, up from 3% in 2011.

Benefits:

• Customers who schedule a service appointment online are notably more satisfied with the service experience than are customers who call to make an appointment or who drop by the dealership without an appointment.

• Customers who schedule service online spend $36 more on service per year than do customers who do not make an appointment, and they spend $17 more per year than customers who call to make an appointment. Continue reading ›

US CSI Rises Significantly in Line with Focus on Whole Ownership Experience

Zeeshan Hasan

Overall satisfaction among vehicle owners with the dealer service industry as a whole improves significantly—up 19 index points from 768 in 2011 to 787 (on a 1,000-point scale) in our 2012 US Customer Service Index (CSI) Study, which is based on responses from more than 84,000 owners and lessees of 2007 to 2011 model-year vehicles.

This improvement, which includes double-digit advances in all five factors* and all 16 attributes evaluated in the study, falls in line with the overall improvement (+13 index points) in overall satisfaction with the new-vehicle sales experience as measured in our 2011 US Sales Satisfaction Index (SSI) Study. Some 28 of 33 brands that are eligible for ranking in the 2012 CSI Study improve their performance from last year, and eight of these brands’ scores advance by at least 20 index points.

A few more highlights from our latest CSI Study:

• Despite stronger US sales volumes in 2011 than in 2010, the average number of service visits declined again this year. However, although service visits are down, satisfaction with dealer service is way up. Continue reading ›

A Long Runway for Growth in China and Some Notable Trends

Geoff Broderick

In the coming scramble to win sales in the Tier 2-4 markets and earn profits in China, there is the temptation for OEMs to invest heavily in production, which can result in overcapacity. Discipline must be maintained in China or history will repeat itself—as illustrated by the imbalance of supply and demand in the U.S. market during the past decade. There is likely still more consolidation to come in the global auto market, but there is room for the smart players with solid business and product plans.

In the past five years, the combined vehicle sales market share of the emerging countries—including China and India—grew from less than 20% of the world’s total, to more than 50%. Among all emerging markets, China has one of the longest runways for continued growth based on its low penetration rate (vehicles per 1,000 people), in addition to a growing per capita income and rising disposable income. There also is a real opportunity for a steep takeoff, especially in China’s Tier 2 and 3 urban markets.

China Remains a Pillar in the Global Auto Industry

By 2018, China, the United States, India, Brazil and Russia will be the world’s five largest auto markets in terms of light-vehicle sales, with China as the far-and-away frontrunner at almost double the sales of the United States (30-35 million units vs. 17 million units). Japan, followed by Germany, the UK, Italy and France will round out the 10 largest markets, according to J.D. Power and LMC Automotive Forecasting.*

With closely aligned global supply and demand coupled with improved macroeconomic conditions—albeit slower for Europe—and significant new product introductions and an improvement in available credit—at least in the U.S. market—global sales, led by China (32.9 million unit sales), will boom by 2018 to slightly less than 114 million units.Although China will continue to see an increase in discretionary income, as well as much sales growth fueled from a further penetration of financing and the introduction of leasing, there will likely be intense competition to gain share in Tier 2 and Tier 3 markets. Continue reading ›

Compact CUVs Continue to Gain Momentum with US Consumers

Grace Hamulic

Nearly one of every four new vehicles purchased or leased in the US market during 2011 was a crossover (CUV), which can be defined as a car-based utility vehicle. The four CUV segments, including non-premium and premium categories, accounted for nearly 24% of new-vehicle sales, which was up 1.37% from 2010, when 22.61% of new-vehicle purchases or leases were CUVs.

Compact CUVs were the most popular among CUV models, accounting for 11.3% of industry sales in 2011, which was up nearly 1 percentage point from the previous year’s 10.4% share. Total (retail and fleet) deliveries of these smaller CUVs climbed by nearly one fifth (+19.42%) in 2011 from 2010.

Among the four CUV segments, only the midsize premium CUV segment, which includes the segment sales leader Lexus RX Series, experienced a decline, as deliveries for the segment dipped a fraction of a point (-0.73%) from a year ago, largely due to Lexus RX production setbacks and shortages following Japan’s devastating March 11 earthquake and tsunami. Continue reading ›