Shift to Smaller Engines: Driven by More than Gas Price Hikes

Tyson Jominy

More than one-half (54.1%) of the new cars and light trucks purchased or leased in the U.S. during the first three months of 2012 were equipped with fuel-efficient, 4-cylinder powertrains, according to retail transaction data from our Power Information Network® (PIN) Division at J.D. Power. That’s up a dramatic 14.9 points from the first quarter of 2008, the early months of the recent U.S. recession, when 42.7% of new vehicles that were purchased or leased were equipped with 4-cylinder powertrains.

Gas price hikes this year that have seen the average price across the country increase to more than $3.93 per gallon for regular unleaded, in addition to an expanded array of 4-cylinder engine choices—including turbocharged variants and direct-injection diesel engines—from both mass-market and premium automakers may be providing some of that renewed demand for these smaller powertrains.

Consumers Move into New Vehicle Segments

However, we see some other factors driving this sea change. Consumers are shifting from large to midsize vehicle segments and from midsize to small or compact segments, which bring with it a decrease in engine size. In addition, we see that consumers who do not downsize are finding more fuel-efficient powertrain options at the segment and model level, where there previously were no options—such as large pickups. Ford is now offering EcoBoost 6-cylinder powertrains in its high-volume F-Series trucks, and the company says that 41% of its F-Series retail sales in March were equipped with EcoBoost powertrains. Continue reading ›

Vehicle Owners Expect Many Safety Features to be Standard

Mike VanNieuwkuyk

Vehicle owners expect safety features and technologies that have been in the market for a longer period of time to be included in their vehicle’s base price, according to our 2012 US Automotive Emerging Technologies Study, which measures vehicle owner interest and purchase intent for 23 emerging technologies, before and after a market price is revealed.

Among owners of both Premium and Non-Premium vehicles, more traditional emerging safety features that are expected to be standard content and included in a vehicle’s base price are: Blind Spot Detection (54% for both groups); Electronic Stability Control (45% Premium and 43% Non-Premium); and Rear-Vision Camera (51% Premium and 42% Non-Premium).

Wireless Connectivity is Among Most Considered New Features

As expected, among the new and more traditional emerging automotive technologies evaluated in the study, vehicle owner interest and purchase intent declines once a market price is introduced. Only the Wireless Connectivity System emerging technology appears in the top-five considered technologies before and after a market price is given in the study, which is based on responses from more than 17,400 vehicle owners. Continue reading ›

The World’s Largest Auto Market Shifts Gear

Charles Mills

Currently, new-vehicle shoppers in China have the world’s widest range of choices, with 94 brands and 476 models from which to choose, according to our research and analysis with LMC Automotive.* That compares with fewer than 40 brands and nearly 100 fewer models available in the U.S. market, the second-largest automotive market in the world in 2011.

Entry-Level Segment Sales Hardest Hit in China’s Auto Market

In our overall analysis of global sales this year, we see that China new-vehicle sales in the first quarter of 2012 increased by just 2% from the same period last year. This sluggish sales growth has affected sales in entry-level vehicle segments more than other segments, despite a continued increase in retail gas prices in China. Fuel prices in China are now more than 20% higher than the average price in the United States. Continue reading ›

Changing Economic Factors in China Curb Dealer Profits

 

Charles Mills

Auto dealers in China report experiencing lower profits on 2011 operations in comparison with results in 2010, mainly due to factors including a changing economic and regulatory environment in China, coupled with a proliferation of brands and models, according to our 2012 China Dealer Attitude Study.

The percentage of dealers . . . Continue Reading Changing Economic Factors in China Curb Dealer Profits

April Retail Sales Pace is Consistent with First Quarter

Although April is considered a challenging month for sales comparisons because the Easter holiday falls in April some years and in March during other years, signs of sustained growth in the U.S. auto market are evident. In fact, the daily selling rate in April is projected to be 37,000 units, which is higher than the 34,000-unit average rate in the first quarter. (Note: There are 24 selling days in April 2012 vs. 27 in April a year ago.)

Retail sales volume this month is projected to increase 8%* from April 2011, which matches the first-quarter year-over-year increase of 8%. Sales in April are predicted to reach 894,100 units, which translates to a seasonally adjusted annual rate (SAAR) of 10.2 million units, based on the monthly sales forecast update from our Power Information Network® (PIN) and LMC Automotive.**

Total (retail and fleet) light-vehicle deliveries for the month are forecast to reach 1.13 million units, which is up 11% when adjusted for the number of selling days, from 1.15 million units in April 2011. This pace is equal to a SAAR of 13.8 million units vs. 13.2 million a year ago. Higher fleet sales continue in April, with fleet volume expected to account for 21% of total sales this month. Continue reading ›

Learn How to “Personalize” Web Content at the Upcoming J.D. Power Auto Marketing Roundtable

Stephanie Haina

What are the newest and best ways to use available platforms—such as smartphones and tablets as well as PCs and TV—to attract and reach automotive shoppers? This could be a topic for a panel discussion by an internet search engine expert, OEM marketer and auto dealer official at the J.D. Power . . . Continue Reading Learn How to “Personalize” Web Content at the Upcoming J.D. Power Auto Marketing Roundtable

Small-Car Sales Rise Driven by Shift in Demand Since Recession

Mike VanNieuwkuyk

Small-car sales in the U.S. market are up by nearly 102,000 units in the first quarter of 2012 vs. the same period a year ago, based on our research. The increase in small-car sales, especially sub-compact deliveries, during the first quarter, may be a direct effect of several key market drivers coming together. Manufacturers’ advances in powertrain technology in addition to automakers enhancing feature content in smaller vehicles have appealed to consumers’ shifting needs. Continue reading ›

Satisfaction with Auto Claims Experience Declines in Recent Period

Jeremy Bowler

For the first time in three calendar quarters, satisfaction with the claims experience among auto insurance customers who filed an auto claim for damage to their vehicle has declined. In fact, the industry index score dropped 13 points to 842 (on a 1,000-point scale), according to the J.D. Power and Associates 2012 U.S. Auto Claims Satisfaction StudySM—Wave 2.

Among the six factors* measured in the study, First Notice of Loss, which is when the customer first notifies the insurance provider of damage to their vehicle, experienced the biggest drop (-19 points). Some 47% of claimants delayed dropping off their vehicle at the body shop in order to wait for a more convenient time, and 20% indicated waiting for weekends or holidays. Continue reading ›

First-Quarter US Sales Increase Sets Positive Tone for Auto Industry

The first-quarter of 2012 ended on a strong note for automakers in the U.S. market despite higher gas prices, which began to drop slightly in the past week and in spite of the negative influence of still high unemployment rates. On a seasonally adjusted annual selling basis, the first-quarter selling rate, or SAAR, averaged 11.7 million units for retail and 14.5 million units for total light vehicles—a tempo that was ahead of our earlier retail and total sales forecast.

In fact, the selling pace in the first three months of 2012 outperformed the J.D. Power annual sales forecast for the first time since 2008, when the auto market began slipping into recession, according to Jeff Schuster, senior vice president of forecasting at LMC Automotive.*

Fiat-Chrysler and VW Groups Make First-Quarter Sales Headlines

Two multi-franchise automakers, Fiat-Chrysler and Volkswagen Groups, achieved stellar double-digit sales and share gains in the first quarter of 2012 vs. their results in the same 3-month period a year ago. In addition, two of the four smaller independents, Fuji Heavy Industries’ Subaru brand and Mazda, also posted robust, double-digit year-over-year gains vs. the same period in 2011. Continue reading ›

Luxury Brand Competition gets Tougher in China’s Auto Market

Tim Dunne

Luxury brand automakers and dealers operating in China—who discovered their own metaphorical gold mine in the country’s automotive market these past few years—may be starting to find mining their mother lode has become more difficult.

According to LMC Automotive*, sales of luxury vehicles in China have, on a percentage basis, grown faster than the total market in China during the past few years, with 2011’s luxury-vehicle sales totaling nearly 600,000 vehicles, up 30% compared to a year earlier (and much higher than the total industry growth rate of 10% in 2011). A booming economy, rapid individual wealth creation, and a relative dearth of luxury-vehicle inventory from which to choose have created an enviable vehicle seller’s market in China. Dealer gross profit margins on a single vehicle frequently range from US$10,000-US$30,000, according to J.D. Power research. Continue reading ›