U.S. Auto Sales Climb in November as Total Pace Surpasses 16 Million Units

John Humphrey

John Humphrey

Through the first half of November 2013, sales returned to a stronger pace than in September and October—which were hampered by negative external factors, including the U.S. government shutdown in October and the pull forward of Labor Day sales with two less selling days in September—according to an auto sales forecast update from J.D. Power and strategic partner LMC Automotive.

Retail new-vehicle deliveries in November are expected to reach 1.03 million units—up 4% from November 2012 on a selling-day adjusted basis*. This figure translates to a 13.0 million-unit seasonally adjusted annual selling rate (SAAR), which is higher than the year-to-date level of 12.8 million units.

Fleet sales on a selling-day adjusted basis are expected to account for 16% of the sales mix in November, which is 3% lower than a year ago and consistent with the low fleet share that has held throughout 2013. Continue reading ›

J.D. Power Expert Outlines Key Forces behind U.S. Sales Growth

Deirdre Borrego presents auto industry outlook at J.D. Power Automotive Marketing Roundtable “The U.S. auto industry has enjoyed remarkable revenue growth this year,” Deirdre Borrego, J.D. Power vice president of client services, said during a presentation at the October J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas, NV. “From a consumer standpoint,” she said, “there are specific market forces that have kept sales strong and transaction prices high.” Borrego pointed to four key drivers:

• Long-term loans are a key enabler. Nearly one in three 2013 sales to date was facilitated by a loan of 72 months or longer. Extended terms, combined with. . .

• . . . Low interest rates have allowed consumers to buy a richer mix of vehicles while keeping their monthly payment within their household budget.

• Strong residuals enable manufacturers to offer attractive leases to consumers, again with desirable monthly payments.

• Tight used-vehicle supply is another key factor. The average price of a used vehicle increased by roughly $3,000 since 2008 to reach $18,800 so far this year. This drives stronger in-equity positions for existing owners, improving purchasing power or removing barriers to entry. Continue reading ›

China Continues to Restrict Auto Sales to Curb Smog Levels

Tim Dunne

In order to reduce traffic congestion and pollution, China has been curbing new passenger-vehicle sales in mainly Tier I cities—Beijing, Shanghai, Guangzhou and Guiyang—by limiting the number of license plates issued and selling them to consumers through auctions and lotteries.

Recently, the China Association of Automobile Manufacturers said it hopes to . . . Continue Reading China Continues to Restrict Auto Sales to Curb Smog Levels

Social Media Usage Rises to Nearly Ubiquitous Levels in the U.S. Automotive Market

Tim_Dunne

Tim Dunne

Consumers have flocked to social media in recent years. According to the J.D. Power & Associates 2012 Social Media Usage StudySM, slightly more than 90% of U.S. adults who are online use a social networking site.

As a result of this consumer interest in social media, companies are racing to embrace the medium as well. According to Fortune magazine, 73% of Fortune 500 companies had an active Twitter account in 2012 (up from just 11% in 2011), and 66% of these companies maintain a corporate Facebook page (up from 8% in 2011).

Even with these high adoption rates, however, there is little consensus about how companies should maximize the opportunities social media provide, or what consumers are expecting to obtain from these interactions. Moreover, there is no clear direction about how to interact in a way that consumers prefer. The result is an online world of fragmented social media content and interactions, with companies searching to understand and fill the needs of consumers. 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 ›

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 ›

Gap Continues to Diminish Between Vehicle Initial Quality and Dependability

Dave_Sargent

David Sargent

The dependability of vehicles in the U.S. market continues to improve, according to J.D. Power research as illustrated by the shrinking of the gap between initial quality of new models that are now three years old, according to our 2013 U.S. Vehicle Dependability Study (VDS), which is based on responses from more than 37,000 original owners of 2010 model-year vehicles after three years of ownership.

The industry average score gap between initial quality and dependability of models that are now three years old has narrowed to just 17 problems per 100 vehicles (PP100). Overall dependability is determined by the number of problems experienced per 100 vehicles, with a lower score reflecting higher quality.

In 2013, overall vehicle dependability averages 126 PP100—a 5% improvement from the 2012 average of 132 PP100—and is the lowest problem count since the inception of the study in 1989. Among brands measured in the study, 21 of the 31 included improve in dependability from 2012.

It’s also noteworthy this year in our VDS that the domestic and the Japanese brands achieve the largest year-over-year advances in dependability—each improve by 6% from 2012. Continue reading ›

A Quick Perspective: Big Wins Before the Big Game

Jeremy Detgen3_v

Jeremy Detgen

As has been the tradition in advertising, the annual Super Bowl is one of the most watched sporting events on TV, with the advertisements being as popular with some viewers as the game itself.

While this opportunity for high viewership has great potential, it comes at a great cost to advertisers. In contrast, social media has an even broader audience and is available at a much smaller cost. The hype of a “Super Bowl Commercial” can be transferred to online media and expanded over weeks of air time instead of being designated to one 30-second, $4 million spot as many auto brands have demonstrated this year and in past years.

Taking Super Bowl Ads to Social Media

Before the game, Ad Age noted the success of Toyota’s “Wish Granted” campaign that already had totaled over 11 million views across the Web the week before the 47th annual Super Bowl. According to Visible Measure’s Viral Video Chart, auto brands consist of the top three views of pre-released or teaser Super Bowl ads this year. Continue reading ›

Western Auto Conference: Focus on Change, Trends, Demographics, Social Media

The outlook for the auto industry—and the U.S. economy—appears to be much healthier, though the industry is still recovering from the downturn that began in 2008, according to Paul Sheard, chief global economist at Standard & Poor’s in New York and John Humphrey, executive vice president, who heads the global automotive division at J.D. Power and Associates.

Both of these experts, in addition to Jim Lentz, president and CEO of Toyota Motor Sales U.S.A, and other auto company executives, Internet and social media marketers, and dealers, presented their observations and perspectives about change in the industry, both now and in the future, at last week’s NADA/J.D. Power Western Automotive Conference held in Los Angeles.

Humphrey also offered a West Coast or California perspective. He and other speakers and panels spoke about the differences in consumer demographics and new ways to understand and engage the customer through social media—especially with the objective of how to appeal to 80 million+ millennial consumers. The conference began with welcoming remarks from Bill Underriner, chairman of NADA, and ended with a panel discussion dealing with the idea of “mobility” in the future that was led by Joe White, senior editor from The Wall Street Journal. Continue reading ›

Understanding Consumers from a Traditional, Digital, and Mobile Perspective

Jeremy Detgen

Defining how consumers engage with media is one way to measure the effectiveness of digital, according to Mike Spadafore, director of Analytics and Solution Development for Acxiom Corp., a technology and marketing services company based in Little Rock, AR. Spadafore described consumer engagement in terms of viewer usage habits and media consumption during his presentation at the recent J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas.

Using data from Acxiom and partner BIGinsight, a consumer information portal, Spadafore said his group has assessed media usage with scores from Passive to Active and Tethered to Mobile. For example, he said that watching television at home is passive and very tethered. In comparison, when a consumer is looking at vehicle information at the dealership, media usage is active and mobile. Continue reading ›