S&P Chief Economist, J.D. Power Executive Offer Cautious but Positive Outlooks

Two experts from Standard & Poor’s and J.D. Power offered cautiously positive outlooks for the U.S. economy and for the U.S. auto industry to some 300 auto dealers and industry participants during the recent Western Automotive Conference, sponsored by J.D. Power and the National Automobile Dealers Association (NADA).

Beth Ann Bovino, U.S. chief economist for Standard & Poor’s, said that the U.S. is in its fourth year of recovery with an average growth rate of 2%. On a global level, she cited challenges to be faced including a slowdown in China, the remaining effects of the debt crisis in the Eurozone, and spikes in global oil prices.

In addressing current conditions in the U.S., Bovino said the Fed is focusing on creating jobs and is offering incentives for businesses to invest and hire, which will lead to higher growth. She said there has been robust demand and hiring in the private sector in spite of shocks. Continue reading ›

Initial Quality in China Sets New Benchmark; Domestics Improve Significantly

Dr. Mei Songlin

China’s domestic brands are improving their initial vehicle quality and are narrowing the gap with international brands, which is reducing the overall problem rate in China to a record low, according to the 2013 China Initial Quality Study (IQS). At the industry level, overall initial quality averages just 119 problems per 100 vehicles (PP100) in 2013, which represents the lowest number of problems since the study was introduced in 2000.

The 2013 China IQS, which examines problems experienced by new-vehicle owners within the first two to six months of ownership, evaluates two general types of problems: design-related problems, and defects and malfunctions. Some 21,181 owners of new vehicles purchased between October 2012 and June 2013 in 46 major cities were surveyed for the study. The overall initial quality score for 2013 is determined by calculating PP100, where a lower problem incidence rate indicates higher quality. Continue reading ›

A J.D. Power Perspective on Ford’s Dramatic Sales Climb in China

Tim Dunne

Tim Dunne

Although Ford is somewhat of a late bloomer in the China auto market, the Detroit-based automaker is set to outpace major Japanese competitors such as Toyota and Honda Groups in passenger-vehicle sales in the China market this year, according to media reports. The major U.S. automaker still is behind General Motors and Volkswagen Group auto sales in the China market.

A Ford official told Reuters that it is possible the company will sell more than 900,000 units in 2013—including both passenger cars and commercial vehicles—in the world’s largest auto market, mainly due to a stronger product lineup. Small SUVs, including the Ford EcoSport and Kuga, have sold well and a redesigned Focus has been on sale since last year. Continue reading ›

China Rolls Out New Green-Vehicle Subsidies and Awareness Campaign

China Bustle and Street TrafficChina’s urban air quality has long been a source of concern for China’s government and citizens, as the country’s relatively environmentally unregulated factories spewed harmful emissions into the air. Now that the country has become the global leader in annual light-vehicle sales—and the number of light vehicles in operation has exceeded 120 million units, more than triple the number from 2000—China’s air quality challenges are an even greater concern.

Early this year, air pollution in China’s major cities, such as Beijing, was so challenging that residents stocked up on face masks and air purifiers. This kind of smog incidence is partly behind several modest programs that China’s government administrators rolled out recently.

These include another incentive program for buying fuel-efficient vehicles and a “No Car Day” campaign to help curb increasing levels of vehicle pollution in large cities, according to news reports in The Wall Street Journal and China Global Times. Continue reading ›

Tesla Plans to Enter China Luxury Car Market Later this Year

Tim Dunne

Tesla is building its first electric car store in Beijing, China, in spite of two major challenges: a very limited charging infrastructure and intense competition in the luxury segment from Audi, BMW and Mercedes-Benz.

The new Tesla “lifestyle store,” which is slated to open later this year, is located in an exclusive . . . Continue Reading Tesla Plans to Enter China Luxury Car Market Later this Year

First-Quarter Passenger-Vehicle Sales in China—Better than Expected

China-02China’s passenger-vehicle sales ended the first quarter with a double-digit gain from the same quarter a year ago, mainly due to new product launches, increases in luxury or premium brand sales, in addition to dealer incentives, based on analysis and data from J.D. Power’s strategic partner LMC Automotive.

A 14% gain in passenger-vehicle sales to 1.43 million units during March bolstered first-quarter totals. First-quarter light-vehicle sales in China rose by 15% from the same period in 2012 to 5.44 million units.

SUVs and Luxury Cars Create Enthusiasm in China Market

The best-performing segment in China during the quarter was the SUV segment, which saw sales surge by 43% from the same quarter in 2012. New product launches added momentum to demand in this category. 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 ›

Record Smog Levels Cause China to Incentivize EVs; Consumers Not Convinced

Lorraine Wang-Resized DSC0225

Lorraine Wang

Smog in China hit record levels in the past month. Dubbed the “airpocalypse” by local media, smog levels are becoming a major health and economic problem for the country. On a recent day, pollution levels in some of China’s largest urban areas were 30 times higher than levels considered safe by the World Health Organization (WHO), according to media reports.

Local governments in Shanghai and Beijing are moving forward to mandate electric vehicles (EVs) for government fleet vehicles and for taxis, according to a recent blog post in The Wall Street Journal. More government initiatives and incentives are being considered as China takes baby steps to transition from vehicles powered by internal combustion engines (ICEs) to more electric vehicles (EVs).

In the Journal post, China expert Michael Dunne said that Beijing already offers free license plates and a $19,000 rebate to private EV buyers. In the last week of February the UK’s Guardian newspaper reported that Shanghai traffic police have been given nasal filters in a pilot program to help them withstand the city’s smog. Continue reading ›

J.D. Power International Roundtable Provides Future Industry Outlook

HumphreyJ

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 ›

World Auto Sales Set for Modest Gains in 2013

Global Auto Forecast After a 5% gain in global light-vehicle sales to 81 million units in 2012, the world outlook for 2013 from our strategic partner LMC Automotive is for slower expansion, with global sales rising by 3% to 83 million units this year. While some large markets performed solidly in 2012—notably the United States and China—the key macroeconomic risks that prevailed during 2012 look likely to persist well into 2013 with negative implications, and an unbalanced risk profile, for Europe. Regional variations will continue this year, according to Pete Kelley, managing director of LMC Automotive.

Some forecast highlights are featured from a recent issue of China Automotive Monthly—Market Trends:

More Favorable Economic Outlook to Boost China Sales in 2013

China light -vehicle sales (including imports) rose by 6.2% to 19.1 million units in 2012 from 2011, which was higher than the annual growth rate of 4.4% in 2011 vs. 2010. This advance was largely due to the phase‐out of the pay‐back effect from booming car sales in 2009-2010, and in particular the surge of the light commercial vehicle sector. Continue reading ›