U.S. New-Vehicle Sales Recovery in Progress with Higher Transaction Prices

Tyson Jominy

Tyson Jominy

As 2012 wraps up, possibly the most important trend for the U.S. auto industry is that new-vehicle sales continue their recovery. Light-vehicle demand continues to increase. Retail sales in calendar 2012 will likely hit 11.74 million units, up from 10.3 million units in 2011. Growth is expected to continue into 2013—our retail sales forecast for next year is 12.25 million units. The forecast assumes that there is a deal reached in Washington, D.C. before the so-called “fiscal cliff” constellation of tax hikes and expenditure cuts are slated to happen at the start of 2013. Three other major trends that we see looking at our Power Information Network® (PIN) data include:

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 2012, we have observed average transaction prices approaching $30,000. These strong transaction prices are helping to offset lower volumes, and are driving increased profitability for OEMs. Continue reading ›

Maruti Suzuki, Toyota Produce Most Appealing Models in India Study

India’s national Maruti Suzuki brand produces three models that receive highest scores at the segment level for delighting their owners, according to the J.D. Power Asia Pacific 2012 India Automotive Performance, Execution and layout (APEAL) Study.SM 

Two Toyota models delight their owners the most and earn the highest satisfaction scores in the utility segments, . . . Continue Reading Maruti Suzuki, Toyota Produce Most Appealing Models in India Study

Vehicle Interior is a Major Driver of New-Vehicle Satisfaction in India

Mohit Arora

Mohit Arora

Satisfaction with the vehicle interior has the greatest impact on how delighted and gratified India’s new-vehicle owners are with their new vehicle during the first two months of ownership, according to our 2012 India Automotive Performance, Execution and Layout (APEAL) Study.

The study finds that during the past 4 years, the impact of the vehicle interior on overall satisfaction has increased consistently, especially in the two fastest-growing vehicle segments in India—small car (which includes entry compact, compact and premium compact cars) and utility (including MUV/MPVs, SUVs and vans). The vehicle interior factor has increased by 52 index points in comparison to performance in 2009.

Although visibility and driving safety followed by fuel economy continue to be the leading drivers of satisfaction among new-vehicle owners in India, we see that vehicle interior, among the 10 performance categories evaluated, is a major differentiator for customers when it comes to satisfaction with their vehicle, especially since they interact and spend the most time inside their vehicle. Continue reading ›

Automakers Ready to Turn Attention to the Future after Strong Finish in 2012

 

Tim Dunne

Tim Dunne

J.D. Power Asia expert Tim Dunne provides a perspective for members of the auto industry, especially automakers in Japan, on the U.S. market and offers a glimpse at issues and concerns and changes that are likely to impact the world’s manufacturers in the future. Excerpts from an article published recently in Japan’s Automotive Daily Nikkan Jidosha Shimbun are featured in this post.

As 2012 draws to a close, light-vehicle sales in the United States are expected to finish the year strongly. Vehicle manufacturers estimate total sales will top 14.4 million units for the year, which translates to a healthy 14% increase vs. 2011’s total of 12.7 million units. The 14.4 million-unit total would be the highest annual sales in the United States since the industry reached 16.1 million units in 2007, and represents nearly a 40% increase over 2008, when industry sales tumbled to an anemic 10.4 million units at the lowest point of the recent “Great Recession” (December 2007–June 2009, according to the National Bureau of Economic Research).

For many Japanese brands operating in the United States, 2012’s final results will be even better than the industry average. Sales of Toyota Group vehicles (Toyota, Lexus and Scion brands) are currently up a combined 29%, and are on track to reach 2.05 million vehicles for the year; Honda Group sales (Honda and Acura brands) are currently up 24%, and are expected to top 1.4 million units for the year; Subaru sales are up 29%, and are expected to top 330,000 units for the year. Continue reading ›

December U.S. Auto Sales Expected to Continue Double-Digit Climb

John Humphrey

John Humphrey

Despite economic uncertainty related to down-to-the-wire “fiscal cliff” negotiations about tax hikes and expenditure cuts that are slated to happen at the start of 2013, consumers continued to head to dealer showrooms in December to buy and lease more new vehicles than they did a year ago. U.S. new-vehicle sales remain resilient and are likely to increase by 14% from last year, according to the monthly forecast update from our Power Information Network® (PIN) and strategic partner LMC Automotive.

Based on sales transactions during the first 13 selling days of December, retail sales this month are anticipated to reach 1.153 million units, which is 15% higher than last December’s 1.04 million units on a selling-day adjusted basis.* This estimate translates to a seasonally adjusted annual rate (SAAR) of 12.2 million units, which is stronger than last December’s 11.3 million-unit pace, but not as strong as the 13.2 million-unit SAAR in November, 2012—which turned out to be the highest monthly retail selling rate since January 2008. Continue reading ›

Facebook Engagement with Consumers is a Work in Progress

Mike Sullivan

Mike Sullivan, owner of the LAcarGUY family of dealerships with headquarters in Santa Monica, CA, was asked about his dealer group’s innovative social media campaigns during a panel discussion about reaching new-vehicle buyers and new media at the recent NADA/J.D. Power Western Automotive Conference in Los Angeles.

Some two decades ago, . . . Continue Reading Facebook Engagement with Consumers is a Work in Progress

Western Auto Conference New Media Site Panel Discusses Some Best Practices

During the recent NADA/J.D. Power Western Automotive Conference in Los Angeles, the panel of three automotive marketers from Facebook, Google and Microsoft’s Xbox joined a West Coast owner of multiple franchise dealerships who is an innovator with social media, to discuss how companies in industries beyond automotive are reaching consumers and creating best practices. Panelists’ perspectives on current and future business were excerpted in the first post, Western Auto Conference Panel Talks about How New Media Meets Consumers. In this second post, more insight on how companies in other industries are working with new media are excerpted.

Moderator: John Lisko, Executive Communications Director, Saatchi & Saatchi

Panel members:

Doug Frisbie, head of automotive for Facebook

Michelle Morris, Automotive Industry Director, Google, Inc.

Randy Shaffer, Western Regional Sales Manager, Xbox, Microsoft Corp.

Mike Sullivan, Dealer/owner of LAcarGUY Family Group in California*

John: Michelle and Randy, are there other industries outside of automotive with best practices that you can talk about?

Doug: One brand that I think has relevance that is an example of best practices is Samsung USA. They made Facebook a major part—across all channels—of their Galaxy S3 launch earlier this year. First of all, they focused on the pre-launch phase before the phone actually went on sale. They focused on growing their connection to their fan base. They went from about 1 million to 8 million people that they were connected with on Facebook. Right when the phone went on sale, they really leveraged reach. They wanted to tell everyone at that point about the new smartphone that they were launching. After that, they sustained that connection for a period during the post-launch.

Samsung USA really focused on their publishing strategy and made sure that things were locally relevant. They used geo-targeting. They also used some targeting capabilities that enabled them to reach specific device owners. They were able to customize that message after the post-launch period. I think it totally reached over 100 million people during that campaign and generated $130 million in sales that they attributed to the campaign, which was a significant return on their ad spend.

The reason I reference that campaign is that a smartphone launch is similar to a new car launch. It’s something that’s a very considered purchase. Both are high technology products. There are a lot of similarities with the pre-launch, the main spike during the retail launch period and the post-launch that are very comparable to automotive. Continue reading ›

What Automakers Can Learn During Growth Surge in Thai Market

Gerrit Kuyntjes

Solid new-vehicle demand in the Thai market is being driven mostly by the rebate program for first-time car buyers* as well as pent-up demand and new-model introductions following last year’s severe floods during the monsoon season in Thailand. All of these factors, including the Eco-Car program, contributed to high double-digit growth in new-vehicle sales vs. 2011.

Last year was a rather dramatic year for Thailand. The massive flooding basically incapacitated the industry for months. We are expecting the sales boom this year to hit somewhere in the neighborhood of 1.4 million units from 794,081 sold in Thailand last year. That’s a phenomenal rise of 76%.

The rise has been driven by two factors: 1) the catch-up of the pent-up demand for the vehicles that were not sold last year because they simply were not available; and 2) the government’s first-time buyer’s program that heavily incentivizes car purchases. This program will no longer be available in 2013. However, we have sales carried over from last year where there was no supply and we’ve also cut into sales for next year. Continue reading ›

Western Auto Conference Panel Talks about How New Media Meets Consumers

“The future is now” is not a cliché in automotive marketing. During the recent NADA/J.D. Power Western Automotive Conference in Los Angeles, three automotive marketers from Facebook, Google and Microsoft’s Xbox joined a California auto dealer with 11 stores and multiple franchises to talk about the rapid changes they have observed and encountered in reaching consumers and marketing autos across platforms. Several upcoming posts will feature excerpts from their discussion at the event about channels, processes, best practices and connecting with consumers—especially new-vehicle shoppers and buyers.

Moderator:

John Lisko, Executive Communications Director, Saatchi & Saatchi

Panel members:

Doug Frisbie, head of automotive for Facebook

Michelle Morris, Automotive Industry Director, Google, Inc.

Randy Shaffer, Western Regional Sales Manager, Xbox, Microsoft Corp.

Mike Sullivan, Dealer/owner of LAcarGUY Family Group in California*

Heading in the Right Direction and Picking Up Momentum

“The economy struggles a bit, but is heading in the right direction,” said John Lisko, moderator of the panel discussion on the intersection of new media and new-vehicle buyers. Summing up the current retail setting, Lisko added, “We’re seeing consumer confidence pick up. We’re seeing the right momentum. We’re coming off of Black Friday and Cyber Monday with record-breaking sales—a 100% increase in mobile platform purchases.” In first remarks, Lisko first asked panelists to describe their businesses today in relation to the auto buyer and also what they see ahead. A few highlights:

John: How are your businesses? How are they looking today?

Mike: We came off of record years—six years in a row. This is our first flat year, but it’s a very good flat year. I think the 14.5 million-unit sales forecast this year was very predictable. And I think we are going to have nice, arithmetic growth from here on out. I just don’t see the big pop and bubble that some are seeing. One of the biggest concerns for me is: there are a lot of cars out there and the market is coming back nicely. Production is coming back on a rail.

Doug: It’s been an interesting year for Facebook. There has been a massive shift to mobile, which was much faster than anticipated. There are three factors driving that—the first is usage. Last year, we had about 376 million users. This year, it’s over 600 million. The second is engagement. The time that people are spending on Facebook on a mobile device is actually greater—about 8 hours a month vs. 7 hours on desktop. The third part is the monetization aspect. In our fourth quarter, about 14% of our advertising revenue came from mobile. That’s notable because we didn’t have an advertising revenue stream at the beginning of 2012. Those three factors combined are having an exponential effect in making mobile such a significant part of our business. Continue reading ›

First-Time Buyers of Compact Cars in Thailand are More Critical of Vehicle Quality

Gerrit Kuyntjes

New-vehicle initial quality in Thailand has slipped slightly this year due to a higher incidence of problems with compact cars, which have become more prevalent in the vehicle mix due to a government eco-car incentive program* and a first-time buyer program,** according to our 2012 Thailand Initial Quality Study (IQS).

Overall initial quality this year averages 116 problems per 100 vehicles (PP100), compared with 113 PP100 in 2011. In the IQS, performance is determined by the number of problems experienced per 100 vehicles (PP100), with a lower score reflecting higher vehicle quality. Our 2012 Thailand IQS is based on evaluations from 4,674 new-vehicle buyers during the first two to six months of ownership, and examines more than 200 problem symptoms in eight categories.***

Thailand New-Car Buyer Demographics are Changing Requirements

One reason for this year’s dip in initial quality may be due to changes in the vehicle segment mix and the increased number of first-time buyers. In the 1980s, the Thai government (Ministry of Industry and Board of Investment) created industry policy to encourage OEMs to build pickup trucks with diesel engines in Thailand, according to Tim Dunne, J.D. Power senior global automotive analyst.

He points out that pickups are easier to engineer and manufacture than cars, and diesel engines are more durable and fuel efficient than gasoline engines. Pickup trucks also received favorable tax treatment from the government (lower taxes on pickups compared with passenger cars), which made them much more affordable to Thai consumers. Thailand is the second largest producer of pickups in the world (after the United States), and the largest exporter of pickup trucks in the world, according to our research. Continue reading ›