J.D. Power Expert Offers Insight on the Shift in the Global Automotive Industry

Tim Dunne

The global auto industry is in flux with dramatic changes and growth in emerging markets—especially in the Asia-Pacific region, according to J.D. Power’s Tim Dunne, director of global automotive industry analysis.

In a recent paper that has been published in several Standard & Poor’s publications, including CreditWeek®, Dunne discusses some of these changes and provides future forecasts and an outlook for the industry in terms of auto production, changes in technology and engineering, and the impact of these changes on the environment and the economy.

A few highlights about the Asia-Pacific market are excerpted from “The Changing Landscape of the Global Automotive Industry; A Global Shift in the Balance of Power:”

• In 2013, LMC Automotive (J.D. Power’s strategic partner) expects the Asia-Pacific region to account for 36 million light-vehicle sales, representing 43% of the world’s total. Continue reading ›

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 ›

China’s Domestic Automakers Take a Hit, But Not All the News is Bad

Jacob George

After years of significant sales growth and business expansion, China’s domestic automakers have been on the receiving end of bad news in recent months. Some recent examples of stumbling blocks for China’s national automakers include:

• Year-to-date, the combined market share of China’s domestic automakers—which typically accounts for about one-third of annual passenger-vehicle sales—is down nearly 4%, in an overall market that is up 9%.

• In July, an influential automotive industry association predicted that more than half of China’s 48 domestic automotive brands (a majority have only been established in the last dozen years) would be discontinued in the next 3-5 years, principally due to foreign competition.

• In August, two of China’s leading domestic brands were forced to announce vehicle recalls in Australia (due to the affected vehicles containing the banned substance, asbestos). This recall prompted sober admissions of wrongdoing from the offending companies.

Certainly, these setbacks have been disappointing for a young industry racing to catch up with the world’s leading automakers. However, based on progress being made in other facets of the industry, there is still a major reason for optimism among China’s domestic brands. One area in which much progress has been made is initial vehicle quality. Continue reading ›

Cost of Vehicle Ownership in Brazil Has Greatest Impact on Satisfaction

Jon Osborn

New-vehicle owners in Brazil, which is the world’s fifth-largest country in terms of population and geographic area—spend a disproportionate amount of their personal income on their vehicles, compared to new-vehicle owners in other countries. Vehicle owners in Brazil pay much higher prices to purchase their new vehicle—often twice as much as US owners pay—due in part to taxes. Owners in Brazil also spend more to finance their new vehicles. A typical new-vehicle loan can have interest rates as high as 15% per year. Finally, in addition to the costs of purchasing a vehicle, new-vehicle owners in Brazil are concerned about the costs of ownership—which include maintenance and repair, insurance and fuel costs. In fact, according to J.D. Power research, these owners place more importance on the cost of owning a new vehicle than do new-vehicle owners in many other countries.

Each year J.D. Power conducts its Brazil Vehicle Ownership Satisfaction Study (VOSS) on an annual basis to measure new-vehicle owner satisfaction after 2 years of ownership in four factors: Vehicle Quality, Vehicle Appeal, Dealer Service Experience, and Cost of Ownership. And, according to our analysis, Cost of Ownership accounts for 31% of the overall satisfaction index and is the most important of the four key factors in the Brazil VOSS.

Among the other countries where J.D. Power has published VOSS—Canada, France, Germany, Italy, Mexico, and New Zealand—Italy is the only other market where cost of ownership has a similarly high importance weight (32%) in determining overall vehicle ownership satisfaction. In contrast, Cost of Ownership accounts for just 23% of the overall satisfaction index weight in measuring vehicle owner satisfaction in Mexico and only 24% in Canada. Continue reading ›

Chinese Passenger-Vehicle Exports and Imports Climb Steadily

Tim Dunne

During the past few years, exports of passenger vehicles from China have quietly been making gains, with total exports quadrupling from just 100,000 units in 2009 to more than 400,000 units in 2011. China’s exports are forecast to surpass 1 million units annually by 2019, according to LMC Automotive. China’s export performance in 2011 made it the fourth-largest exporting nation in Asia, behind Japan, Korea and Thailand.


China’s Auto Exports Grow More Slowly due to Local Market, Quality Issues

While China has been the center of production and exports for many of the world’s goods, the export of vehicles has not been as prominent. There are several reasons why auto exports have lagged: First, because the Chinese domestic market has been growing at such an unprecedented pace, automakers with local production have focused on capturing and building their share of the local market; and secondly, the quality of Chinese-made vehicles has needed to become more competitive with global quality standards. Continue reading ›

New Duty will Likely Not Impact Chinese Consumers Who Want Luxury Imports

Tim Dunne

I appreciated recent comments from one of our readers, Tim S. from Wisconsin, about a post “New China Duty Only Impacts Makers of Vehicles with Larger Engines” on the minimal impact of a new duty that has been imposed by the Chinese government on cars imported from the U.S.

I want to address some of the reader’s questions and concerns.

First, what percentage of vehicles with larger engines are produced in China by General Motors and Ford? Between GM and Ford, approximately 99% of the vehicles they produced in China in 2011 were fitted with sub-2.5-liter engines.

As for GM and Ford vehicles that are exported to China from the U.S., I would guess (the data is not readily available) that nearly the opposite is true, and that nearly all are fitted with engines greater than 2.5 liters. But let’s put things into perspective: In 2011, GM and Ford built and sold nearly 1.6 million vehicles in China, but their combined exports to China from the U.S. were only some 35,000 vehicles (or a ratio of 50-to-1 of locally built vs. imported vehicles.) Continue reading ›