U.S. Auto Sales Reach Post-Great Recession High Mark in March

Salesperson and Couple at DealershipSales of new cars and light trucks in the United States may hit their best mark in March since before the start of the Great Recession in December 2007, despite news about the fiscal cliff and sequester in Washington, D.C. Economic news was more positive with better employment figures in March, which is giving car buyers renewed confidence.

 New-car shoppers continued to replace aging vehicles and took advantage of easier credit including low-interest-rate loans. A proliferation of new and refreshed models—including popular crossovers and large pickups—also enticed buyers into showrooms. Discounts on large pickup models that are being replaced by new 2014 models as well as a recovery in the housing sector helped prime the market for large pickups. It should also be noted that March typically is a strong month for the auto business.

 In early reports, J.D. Power’s Power Information Network® (PIN) and its strategic partner LMC Automotive report that automakers sold 1.45 million units in the third month of 2013. If sales are adjusted for one less selling day in March this year, deliveries rose 7.4% from March 2012, which translates to a seasonally adjusted annual rate of 15.2 million units. Continue reading ›

J.D. Power International Roundtable Provides Future Industry Outlook

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John Humphrey

After a successful 2012, the outlook in 2013 for the automotive markets in the United States and China remains optimistic, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. He gave projections for the global auto industry during a presentation at the recent J.D. Power 2013 International Automotive Roundtable in Orlando, FL. Some 500 auto industry members—including dealers, marketers and executives from automakers—attended the one-day conference that was co-sponsored with the NADA. Some highlights from the presentation:

Auto Sales Shift to Emerging Markets

In 2013, the global automotive industry faces a somewhat mixed economic bag; the average GDP of mature markets will grow at about 1.4%, while the world’s largest emerging markets will grow by 5.5%, on average.*

Clearly, the United States and China are the bright spots to watch in 2013 and thereafter, in terms of sales and production potential. That said, there are pockets of overcapacity in the global industry that need to be addressed. In 2012, total global capacity for light vehicles reached 116 million units, against total global sales of 81 million units. This roughly translates to a utilization rate of 70%—well below the 80% threshold that most automakers need to reach to achieve financial breakeven. While utilization rates can vary widely by market—and impact the health of individual industries—the overall rate for the global industry can positively or negatively affect automakers with global operations.

Looking toward the end of the decade, the global automotive industry is plainly being driven by the largest emerging markets. In 2012, Asian markets accounted for 41% of the 81 million light vehicles sold globally—primarily China and India. By 2019, Asian markets will account for 49% of the 115 million vehicles forecast to be sold globally.

Continue reading ›

Small-Vehicle Demand Bolsters September U.S. Sales

Consumers continued to replace their aging cars and trucks with more fuel-efficient new models in September—especially since higher gasoline prices* helped prime demand for sub-compact or compact new vehicles with smaller engines and even alternative powertrains, in particular hybrids. In addition, discounts on outgoing 2012 models plus excitement about new and redesigned models helped boost sales by nearly 13% from the same month last year.**

Total U.S. new-vehicle sales in September reached 1.187 million units, which translated to a relatively strong 14.9 million-unit seasonally adjusted selling rate (SAAR), according to J.D. Power’s Power Information Network® (PIN) and strategic partner LMC Automotive. September’s sales pace was significantly stronger than last year’s 13.1 million-unit SAAR. Continue reading ›

Pent-up Demand, Access to Consumer Credit Spur US Auto Sales in February

Pent-up demand due to the continued replacement of an aging vehicle fleet, along with a rebound in leasing, easier access to consumer credit and long-term financing, are driving new-vehicle sales momentum this month, according to a monthly sales forecast update based on analysis from J.D. Power’s Power Information Network® (PIN) and LMC Automotive.

Our . . . Continue Reading Pent-up Demand, Access to Consumer Credit Spur US Auto Sales in February

Honda Faces Major Challenge in Southeast Asia

 

Ammar Master

Honda has had a tough sales year in Southeast Asia, as the automaker’s total sales in Thailand, Indonesia, Malaysia and the Philippines have shrunk by 18%—to 110,000 units—in the first seven months of this year vs. the same period in 2010. Yet, Honda did not start the year poorly. Sales in the first quarter were up 19% year-over-year, to about 60,000 units, partly boosted by the facelift of the Accord and minor changes to the Jazz (sold as the Fit in the United States). The Japanese automaker was betting big on the launch of the Brio, its first eco car model, to further drive up sales volumes in Thailand.

Then, disaster struck Japan in March with the 9.0-magnitude earthquake and tsunami. As a result, Honda was forced to slash output by as much as 50% in the second quarter, as key vehicle components from Japan dried up. The lack of supply at dealerships led to a sales downfall in subsequent months. Continue reading ›

Risks Apparent as China Remains Preoccupied with Size and Speed

 

Marvin Zhu

China’s government has earmarked a previously unimaginable 2 trillion yuan (about $300 billion) to build the world’s largest national high-speed railway network. So far, only about half of the total planned route distance of 25,000 kilometers (16,000 miles) has been completed. One of the most recent additions to China’s high-speed railway marvel is an express train between Beijing and Shanghai, which opened in June 2011, some two years ahead of schedule.

China’s ambitious “great leap forward” in industrialization and modernization has been understandably making headlines around the globe. However, these glowing platitudes abruptly turned somber on July 23, 2011, when one of the celebrated Beijing-Shanghai high-speed railroad trains crashed, killing 40 people and injuring some 200 others.

While bad weather and a subsequent system failure were found to be the main causes of the crash, some people speculate that the haste with which the railway was built—driven by thought of generating fast profits and political goodwill—should not be overlooked as a mitigating factor. China has been operating for some time on a progressively “build bigger, go faster” agenda, one where safety and reliability are not always given top priority.

Automotive Industry Caught in Bigger, Faster Tailwind

For more than a decade now, the “build bigger, go faster” mantra has prevailed in China’s automotive industry as well. Ever since China supplanted the US as the world’s largest automotive market in 2009, industry players have been in a fierce race to expand. Over the past two years alone, trillions of yuan have been invested in the car-making business, as automakers race to ramp up production. This frenzied expansion is expected to raise China’s vehicle production capacity to 31 million units by 2013, nearly doubling total sales recorded in 2010. Continue reading ›

China Adjusts Policy to Curb Congestion, Smog, Reliance on Oil Imports

Tim Dunne

China may be changing government policies as a way to slow down strong auto sales and to curb congestion on major city streets in Beijing and Shanghai—traffic is “beyond awful” there. For example, the way China’s government has managed to control sales in Shanghai in the past was that new-vehicle owners would have to pay a lump sum fee (something like the equivalent of $5,000 to $7,500) before being able to register a new vehicle. This has kept a lot of people out of the market.

In regard to cutting down on smog and emissions, China is still pushing ahead with electric vehicles (EVs) and is providing a 60,000 RMB (US $8,800) subsidy with the purchase of an EV. But like everywhere else, the changeover to alternative energy vehicles is going to be a long-term transition, requiring lots of time and investment. Continue reading ›

India Auto Sales Growth Surge—Will it Last?

August auto sales in India climbed by one-third from the same month last year and set a monthly record, according to recent wire service reports, which also suggest that passenger-vehicle sales in India are expected to moderate during the rest of the year, partly due to limited supplies of parts.

Light-vehicle sales continued an . . . Continue Reading India Auto Sales Growth Surge—Will it Last?

China Auto Sales Rise Significantly with Inducements

Auto sales in China rebounded in August, climbing nearly 56% from the same month’s sales results in 2009, to 1.21 million vehicles, according to news reports citing CATARC (China Automotive Technology and Research Center). In July, sales were close to 1.0 million units—a 17.0% improvement from last year’s same month. Media reports said that . . . Continue Reading China Auto Sales Rise Significantly with Inducements

August Sales Decline is Distorted by CARS Program Comparison

Light-vehicle sales in the US in August cooled in comparison to a full-boil finish in August 2009, when the government’s CARS program was in place. Last summer’s CARS program, also known as “cash for clunkers,” offered $3,500 to $4,500 in cash incentives to consumers who traded in an older car or truck for a . . . Continue Reading August Sales Decline is Distorted by CARS Program Comparison