One-Third of Vehicle Mix to Feature Alternative Powertrains in 2025

Tim_Dunne

Tim Dunne

By 2025, it is likely that more than one-third (36%) of new passenger vehicles in the world market will be equipped with alternative powertrains, according to a forecast from J.D. Power’s strategic partner LMC Automotive. That means that some 30 million of about 110 million passenger vehicles forecast to be sold in 2025 will rely on alternative powertrains and alternative fuels.

A majority of this group of fuel-efficient powertrains (17.5%) are expected to be hybrids—those passenger vehicles incorporating hybrid gasoline/electric powertrains (HEVs) such as the Toyota Prius and plug-in hybrids (PHEVs), which rely on both electric batteries and a gasoline engine, such as the Chevrolet Volt. Plug-in electric hybrids will account for a 5% share and gasoline/electric hybrids will make up 12.5% of the product mix. Only 2.5% of the world’s passenger-vehicle mix will be electric vehicles (EVs), such as the pure electric Nissan LEAF, in 2025. Continue reading ›

Autonomous Driving Attracts Small Interest; Semi-Autonomous Features Prevail

VanNieuwkuykM

Mike VanNieuwkuyk

The concept of a self-driving system in a car, or what is termed autonomous driving mode, is no longer considered “outside the box” for vehicle owners. In fact, Google’s pilot self-driving vehicles are legal in Mountain View, CA, near Google headquarters. In addition to California, self-driving cars are also now legal in two other states: Nevada and Florida.

We see that awareness of this new technology is higher than a year ago. In spite of a $3,000 suggested market price, we see that “probable” and “definite” interest in equipping an owner’s next vehicle with this new technology is slightly higher, according to the results from our 2013 U.S. Automotive Emerging Technologies Study, than it was last year—21% vs. 20% in 2012.

Both “probable” and “definite” interest in having this emerging technology in an owner’s next vehicle rises to 39% before a market price is introduced.

Interest in some of the other “advanced” emerging technologies takes a back seat to autonomous driving mode when market pricing is introduced. For instance, the percentage of vehicle owners interested in having biometrics (including finger print car locks and stress level monitors for heart rate or blood pressure) in their next vehicle falls from 52% before a price is presented to just 20% after a market price of $350 is shown. Additionally, interest in customizable home screen technology that provides consumers options on information to be displayed on the vehicle’s center stack screen plummets from 72% to just 17% when a $1,250 market price is provided. Continue reading ›

Fuel Efficiency Features are Most Popular New Technologies

VanNieuwkuykM

Mike VanNieuwkuyk

Although U.S. drivers may see a drop in the average price of gas at the pump in the next few months vs. the same time frame a year ago*, new-vehicle owners have fuel economy on their minds when it comes to their interest in advanced features and emerging technologies to consider when they purchase their next vehicle, according to our 2013 U.S. Automotive Emerging Technologies Study.

Two of 22 features evaluated in the study with the highest percentages of vehicle owners who “definitely would” and “probably would” want a certain feature enhance fuel economy. Higher interest among owners this year may be because these technologies are already available in many non-premium vehicles; they are lower-priced than some technologies and owners are already familiar with them.

Energy Feature: Highest Interest among 22 Emerging Technologies

The fuel economy indicator feature has the highest overall interest before a suggested price is provided (79%) and also after an estimated market price of $50 is introduced (72%). In addition, the percentage of vehicle owners who “definitely would” want the feature in their next vehicle actually edges up from 28% to 30% after a price is revealed. Also, as expected, non-premium brand vehicle owners are even more interested in this feature than are premium vehicle owners. Continue reading ›

J.D. Power’s President Discusses Good News for China’s Auto Industry; Presents Awards

 

Executives from 14 of China’s automakers attended a J.D. Power Asia Pacific presentation and awards ceremony in Shanghai. Finbarr O’Neill, president of J.D.Power and Associates (center) spoke at the event.

During the past decade, the auto industry in China has achieved exponential sales growth and also has made significant strides in improving . . . Continue Reading J.D. Power’s President Discusses Good News for China’s Auto Industry; Presents Awards

U.S. Auto Sales Remain Strong Due to Pent-Up Demand from Aging Fleet Owners

HumphreyJ

John Humphrey

Through the first half of April, retail new light-vehicle sales in the U.S. market remained strong enough to remain in “a healthy holding pattern” with continuing consumer demand to replace aging vehicles, according to a monthly sales forecast update from J.D. Power’s Power Information Network® (PIN) and strategic forecasting partner LMC Automotive.

Retail new-vehicle deliveries in April, which has 25 selling days vs. 24 in the same month of 2012, are anticipated to reach 1.03 million units, which is a 9% increase from 908,685 unit sales in April a year ago (on a selling-day adjusted basis). That translates to a seasonally adjusted annual rate (SAAR) of 12.1 million units, up slightly from 12.0 million units in March 2013, and 1.5 million units stronger than the 10.6 million units in April 2012.

Total new-car and light-truck sales (including retail and fleet) are forecast to rise 7% from a year ago, to 1.3 million units vs. 1.2 million units in April 2012. That represents a 15.2 million-unit SAAR, which matches the March SAAR, but is 1.1 million units stronger than the 14.1 million-unit pace in April 2012. April’s fleet share of total deliveries is projected to be a little larger than a year ago and will account for 22% of total sales. Continue reading ›

Auto Insurance Claims Satisfaction Dips; Out-of-Pocket Expenses Up

Jan_AB_ChordasCover.indd

Jeremy Bowler

Satisfaction with the experience of filing and settling an auto claim among customers who settled a claim in the past 6 months dropped from the previous period, partly due to higher out-of-pocket costs (including the deductible and car rental), according to the J.D. Power and Associates 2013 Auto Claims Satisfaction StudySM—Wave 2. Consumers who settled an auto insurance claim with their provider in the latest period paid an average of $499 for repairs, up $30 from $469 in 2012.

We see that satisfaction tends to slip during the winter months for several reasons. First, when consumers have an accident and need to repair their vehicle during the winter holidays, it’s not only an inconvenience, but it’s frustrating because they may have to dip into holiday savings to pay for repairs.

Another reason for the 11-point dip in satisfaction to 850 (on a 1,000-point scale) is that road conditions tend to batch accidents in the winter, causing volume peaks for the repair industry. This shows up in longer appraisal, settlement and repair times. Continue reading ›

Mary Ann Keller Says the Franchise System is Here to Stay

Mary Ann Keller speaks about the franchise system at the New York Automotive ForumThe franchise system remains strong and in place in most states despite attempts over the years to dismantle these laws with start-ups of factory-owned stores to change the model, according to Mary Ann Keller, independent automotive consultant and auto business writer and former investment analyst and director on several auto company and dealership boards. Keller presented her thoughts about the franchise system in the U.S. market to auto industry members during the New York Automotive Forum that was co-sponsored by J.D. Power and Associates and the National Automotive Dealership Association (NADA).

Keller’s speech is excerpted:

A Little History about Corporations Trying to Change the Franchise Network

One myth promulgated in the 1990s has now resurfaced. Tesla wants to open factory stores to save money by reducing distribution expenses, which they estimate to be 30% of total expense—that percentage is nonsense.

Remember Ford’s ill-fated Auto Collection experiment? It proved conclusively as told to me by a retired Ford executive last week that corporate guys are not risk takers and they lack the entrepreneurial spirit that is required to manage dealerships.

Big corporations control from the top. Selling cars requires street smarts and adapting to local market conditions and competition. After a couple of years, Ford ended its experiment after its market share losses were too painful and there was mounting evidence that factory stores did not deliver customer satisfaction or reduce costs. Continue reading ›

GM’s JV Brands Set March and First-Quarter Sales Records in China

GM-China-HQGeneral Motors and its joint venture operations in China set all-time sales records in the largest passenger-vehicle market during March and through the first quarter of 2013, according to the company. March deliveries rose nearly 13% from a year ago to 290,538 unit sales. It was the second-highest monthly sales tally in GM’s history in China. Its first-quarter total sales in China also rose nearly 10% from last year to 816,373 units.

In related news, GM also outsold Volkswagen Group in China for the first time in the past three quarters, thanks to increased demand for Buick vehicles, according to news reports. China’s auto manufacturers group said that VW’s growth surpassed the overall passenger-vehicle market in China during the first quarter but its increase in March was not as strong. Continue reading ›

Dealers Outline Financial Hurdles and Challenges of New Technology

NY Auto Forum Dealer Paneli-CQFWkSW-SThree auto retailer owner/operators discussed opportunities and challenges that lie ahead for dealerships, during a one-day New York Automotive Forum jointly sponsored by J.D. Power and Associates and the National Automobile Dealers Association (NADA) that was held before the New York International Auto Show (March 29 – April 7). The following post features dealer views on the financial side of the business for dealers in the current economic environment and discusses some challenges retailers face such as selling and explaining technology and sophisticated electronics in new vehicles.

Moderator: Glenn Mercer, Independent Consultant

Panelists:

Earl Hesterberg, President and Chief Executive Officer, Group 1 Automotive, Houston, TX; the fourth-largest public dealership group in the U.S., U.K. and Brazil (142 dealerships)

Jon Lancaster, Retired Toyota/Lexus Dealer, Madison, WI

Wesley (Wes) L. Lutz, Owner, Extreme Chrysler/Dodge/Jeep, Inc., Jackson, MI

Will the Financial Side of the Auto Business Become More of a Challenge?

Glenn: Right now, interest rates are low. At some point they will go up. Do you have a feel for the impact on the dealer body as to how many people might have over-leveraged in terms of facility upgrades or do you think it will be a stressful period when it goes to whatever normal interest rates are?

Earl: The business model of auto retailing is a high leveraged or debt-laden business because you’re financing the inventory. And you are financing a facility through a mortgage or a lease. Sure, there are some dealers who own their land outright. But we’re getting lulled to sleep by these interest rates, which are barely positive. Historically, we paid 6% and 7% for inventory. It will come again. Dealer profitability is somewhat overstated. Right now our flooring rates are low, our facility rates are low, and anybody who is borrowing working capital is also borrowing it at an attractive rate. Everyone knows that can’t go on forever. That will put huge profit pressure on the system some day if rates jump. Continue reading ›

Battery Capacity is Only One Hurdle in Promoting EVs in China

In 2009, four of China’s ministries launched collaborative energy-saving and New Energy Vehicle (NEV) promotion programs, identifying 25 pilot cities to participate in the programs. The cities included Beijing, Shanghai, Chongqing, Hangzhou, and Shezhen.

China-02A year later, in May of 2010, the four Ministries* issued a subsidy policy for private alternative energy vehicles. This subsidy is based on battery capacity at a rate of RMB 3,000 RMB (US $484) per kWh. Buyers of plug‐in hybrid cars will receive up to RMB 50,000 (US $8,070.50) in subsidies, and as much as RMB 60,000 (US$9,6840.60 will be given to buyers of pure electric vehicles.

The pilot cities also launched their own “new energy” development plans to provide further local incentives based on the subsidies of the four ministries in order to reach a target of 53,000 NEV sales before the end of 2012. Continue reading ›