Hybrid Vehicles Face a Bumpy Road in Southeast Asia

bangkok-thailandThree years ago, Toyota Group began producing and selling the first hybrid model—a Camry—in Thailand. Since then, sales of hybrid cars in that country have grown significantly. In 2012, hybrid sales in Thailand were 19,000 units. Sales of hybrids in Thailand have been growing at an average rate of almost 60% during this time frame. Now, there are at least four hybrid models being sold in the Thai market, and this year hybrid vehicle sales are projected to surpass 20,000 units.

Despite strong and stable growth, a volume of 20,000 unit sales is miniscule in a country where projected sales volume in 2013 is 1.2 million light vehicles. The hybrid vehicle sector accounts for only a 1% share of the entire domestic market (3% of passenger-vehicle volumes). This is very small compared with an 18% hybrid share in Japan, the home market of the key OEMs that have sales operations in Thailand. To be fair, the ratio of hybrid vehicles in Malaysia, a key competitor for regional production of hybrids, amounted to just 2%, or sales of 15,000 units, last year.

Currently, we expect the market share of hybrid cars in Thailand to be under 5% for the foreseeable future. Our projection for hybrid sales in 2020 is slightly over 30,000. In comparison, hybrid vehicle sales in Malaysia are likely to nearly reach 50,000 units by 2020, and will account for almost 10% of that country’s passenger-vehicle market. 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 ›

Automakers Ready to Turn Attention to the Future after Strong Finish in 2012

 

Tim Dunne

Tim Dunne

J.D. Power Asia expert Tim Dunne provides a perspective for members of the auto industry, especially automakers in Japan, on the U.S. market and offers a glimpse at issues and concerns and changes that are likely to impact the world’s manufacturers in the future. Excerpts from an article published recently in Japan’s Automotive Daily Nikkan Jidosha Shimbun are featured in this post.

As 2012 draws to a close, light-vehicle sales in the United States are expected to finish the year strongly. Vehicle manufacturers estimate total sales will top 14.4 million units for the year, which translates to a healthy 14% increase vs. 2011’s total of 12.7 million units. The 14.4 million-unit total would be the highest annual sales in the United States since the industry reached 16.1 million units in 2007, and represents nearly a 40% increase over 2008, when industry sales tumbled to an anemic 10.4 million units at the lowest point of the recent “Great Recession” (December 2007–June 2009, according to the National Bureau of Economic Research).

For many Japanese brands operating in the United States, 2012’s final results will be even better than the industry average. Sales of Toyota Group vehicles (Toyota, Lexus and Scion brands) are currently up a combined 29%, and are on track to reach 2.05 million vehicles for the year; Honda Group sales (Honda and Acura brands) are currently up 24%, and are expected to top 1.4 million units for the year; Subaru sales are up 29%, and are expected to top 330,000 units for the year. Continue reading ›

Suzuki Leaves U.S. Auto Market; Focuses on Asian Markets

After 27 years in the United States, Japan’s Suzuki Motor Corp. will stop selling its current lineup of four models here and concentrate on other parts of its global business, particularly business in India and Southeast Asia. The company, which is a major mini car maker in Japan, will continue to market motorcycles, all-terrain vehicles and marine engines in the United States, according to a company statement.

Recently, Suzuki’s U.S. distributor filed for Chapter 11 bankruptcy protection in California. Declining sales, a small, aging product lineup, and the strength of the yen were listed as reasons for the Japanese automaker’s decision to exit this market. Separately, Suzuki has stated that it will continue to sell vehicles in Canada, where it once operated a joint venture production plant with General Motors.

In regard to dwindling sales in this market, Suzuki, with a lineup of four models in the U.S. market, sold only 21,172 units through the first 10 months of 2012, which was 5% fewer than last year. Sales have been sliding during the past few years. In fact, Suzuki had its best sales year in the United States five years ago when it sold 102,000 vehicles. Since the company still has 220 U.S. car dealerships, it plans to work out an agreement with dealers to continue to serve current Suzuki vehicle owners with parts and service. All warranties will be honored, according to a company statement.

Suzuki to Focus On Stronger Asian markets

The Japanese automaker may be leaving the U.S. auto market, but plans to bolster its business in other parts of the world—especially in the growth markets of India and Southeast Asia. Currently, Suzuki has a 3% share of global auto sales—the same as in 2011, according to analysis from our strategic partner LMC Automotive.

Region 2011 2012
Global 3.0% 3.0%
Japan 13.4% 12.3%
India 33.8% 33.5%
ASEAN 3.2% 3.7%

 Source: LMC Automotive

Its Maruti Suzuki India unit is a market leader in that country, and deliveries accounted for nearly 40% of the company’s total 2.49 million unit sales in its last fiscal year. This year, Suzuki’s market share in India—though still the largest—is 33.5%, down slightly from 33.8% a year ago. Continue reading ›

Luxury Brands Rank Highest in Japan’s APEAL Study

The overall industry index in the 2012 Japan Automotive Performance, Execution and Layout (APEAL) Study improves from 2011 by 3 points to an average of 691 points (on a 1,000-point scale), although the segment averages for two of the five segments—compact and mini-car segments—are below industry average, according to the recently released study. 

At the . . . Continue Reading Luxury Brands Rank Highest in Japan’s APEAL Study

Japan Vehicle Owners Who Downsize Find Smaller Models Less Appealing

New-vehicle owners in Japan who downsize to smaller vehicles because they want better fuel economy and lower vehicle maintenance costs rate their new vehicles as less appealing in comparison to owners who purchase replacement vehicles in the same segment as they previously owned, according to the 2012 Japan Automotive Performance, Execution and Layout (APEAL) Study.

Among those owners who downsized, more than 80% indicate that maintenance costs and fuel economy were important considerations at the time of purchase, compared with a slightly lower 70% of buyers who purchased a vehicle in the same segment as their previous vehicle. The APEAL score for owners who downsized is 15 points lower than the score for owners who replaced their vehicles with vehicles in the same segment. 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 ›

Service Satisfaction among Japan’s Mini-Car Owners is a Major Challenge

Taku Kimoto

The mini-car segment in Japan continues to gain share and attract more attention, accounting for one-third of total industry sales. Traditional mini-car brands—mainly Daihatsu and Suzuki—are competing in a tight market with Japan’s six mass-market brands—Toyota, Honda, Nissan, Mazda, Subaru and Mitsubishi. Some, including Honda, are launching their own tiny models with engine sizes of 660 cc or less.*

The competition between mini-car brands and mass-market brands is presenting a severe challenge to satisfying customers with after-sales service—especially among those vehicle owners who have switched from domestic mass market brands to mini-car brands, according to our 2012 Japan Customer Service Index (CSI) Study.

This year, overall customer satisfaction with service performed at automotive dealer facilities averages just 617 index points (on a 1,000-point scale), which is down from 623 in 2011. Continue reading ›

August Retail Sales Surge, Fleets Dip; Strongest Performance in 4+ Years

Retail light-vehicle sales in August climbed 21% from a year ago to 1.094 million units, which translated to a seasonally adjusted annual selling rate (SAAR) of 12.6 million units—3.0 million units ahead of last August’s 9.6 million-unit pace, according to data and analysis by J.D. Power’s Power Information Network® (PIN) and LMC Automotive.*

A robust sales finish in the final days of the month added unexpected strength to retail numbers, according to J.D. Power and LMC Automotive experts, especially since fleet deliveries in August declined 8.6% from a year ago and were down 7.4% from July’s numbers on a selling-day-adjusted** basis. Continue reading ›