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 ›

Shorter Delivery Times in Japan Increases Sales Satisfaction Levels

Kimoto Taku NEW_C_Lg

Taku Kimoto

Customer satisfaction with the new-vehicle sales experience in Japan has improved as delivery times are nine days shorter on average than in 2012 when there were longer delays in delivery due to the initiation of an eco-car subsidy program, according to our 2013 Japan Sales Satisfaction Index (SSI) Study.

This year, the average time for delivery to buyers of non-hybrid vehicles declines to 28 days from 34 days in 2012, and the delivery time for hybrids drops by 23 days and averages 50 days instead of 73 days. Among Japan’s domestic brands, Toyota—the largest seller of hybrid vehicles in Japan—and Honda, which had its production in 2012 negatively affected by flooding in Thailand, achieve notable reductions in delivery times. Continue reading ›

J.D. Power’s Humphrey Remains Bullish on China Auto Market

John Humphrey

John Humphrey

The Chinese automotive industry has received a lot of buildup over the past several years related to the strength of the economy, and the potential of the market, according to John Humphrey, senior vice president of global automotive at J.D. Power and Associates. In a presentation at the recent J.D. Power and Associates 2013 International Automotive Roundtable in Orlando, FL, Humphrey discussed the outlook for China.

China’s Economic Strengths May Outpace Risks

Industry forecasters* are expecting vehicle sales in China to reach 21 million units in 2013, up 10% from the 19.1 million vehicles sold in 2012. China was able to withstand the recession of 2008-2009, and actually grew quite aggressively during that period due to government incentives and stimulus. On the whole, China was far more effective in dealing with the recession than was the U.S. market, and that has pushed the industry ahead.

Going forward, the potential for China remains substantial. In the past, China’s success has been export-driven. In the future, there will be economic growth inland to the Tier 2, Tier 3 and Tier 4 cities, and there will be a shift towards increased domestic consumption that will bode well for light-vehicle purchases. In terms of risk, environmental concerns remain a great one, especially air and water quality. On top of this, vehicle gridlock in many of the Tier 1 and Tier 2 and Tier 3 cities has been a problem for some time, and is not easily solved in a short period. Continue reading ›

Will Datsun Return as a Low-Cost Brand?

Tim Dunne

Editor’s note: Recently, Nissan CEO Carlos Ghosn and other company executives told The Wall Street Journal and other media outlets that the company has plans to revive the Datsun brand as the marque for a line of low-priced cars in emerging markets. As many as six Datsun models could be introduced in 2014, according to a Journal article, “For Datsun Revival, A $3,000 Gamble,” which points out that Nissan is hoping to set new lows for pricing, and will offer the cheapest Datsun model for about $3,000 to $5,000. This price range is below all but a handful of models available in China, India and Mexico markets. Tim Dunne, J.D. Power global analyst and Asia expert, offers some insight on the project:

A Perspective on the Datsun Venture for Emerging Markets

In the past, Datsun was a much-loved sports car brand. However, it’s been 30 years since the Datsun brand has been marketed, so the number of people familiar with the brand is relatively low. So, how much value is there to resurrecting the Datsun name? No one really knows. Second, adding another brand imposes all types of extra cost and complexity to a company. It means forming complete new teams in every department to oversee and carry out operations.

Still, the idea could be a good one if Nissan can deliver a bare bones vehicle that is bulletproof in quality and easy to maintain—and available at an inexpensive price. But it is difficult to engineer quality on the cheap. And it’s difficult to do it profitably—that is the big thing. Nissan may be able to offer quality Datsun vehicles, but can they make money while doing it?

In addition, it could easily cost Nissan one billion dollars to launch a new car if there is a new engine, transmission, greenfield plant, production tooling, design and engineering. Perhaps the strategy is to move buyers up the automotive brand chain from Datsun to Nissan and then to Infiniti, but we cannot be sure that strategy will be successful. If price is the key selling point for Datsun, Nissan doesn’t hold that same advantage when you move up to its target segment—where everyone is priced relatively the same, and quality and accessories also are similar. Continue reading ›

One in Five Digital Auto Shoppers Use a Smartphone or Tablet for Research

Arianne Walker

As the proliferation of mobile devices continues to rise in the United States and globally,* it’s no surprise that one in five new-vehicle buyers who use the Internet to shop for a new car or light truck use their tablets and smartphones to conduct research, according to our 2012 New Autoshopper Study, which is based on an online survey of nearly 12,300 purchasers and lessees of 2010 to 2012 model-year vehicles.

Overall, a majority (79%) of new-vehicle buyers use the Internet (termed Automotive Internet Users, or AIUs) to research their vehicle purchase. Nearly one-third (30%) of AIUs use several devices, including desktop PCs, smartphones and/or tablets. In fact, 20% of AIUs use a smartphone to gather information while shopping for a new vehicle, and 18% use a tablet. Continue reading ›

Mini Car Competition Intensifies in India

The introduction of Hyundai’s all-new small car, the Eon, which was previously known by its code HA H800, will heat up the mini car battle in India. The Eon is expected to be a strong challenger to market leader Maruti Suzuki’s Alto. The Eon, an entry-level hatchback aimed at capturing first-time car buyers in India, was developed over 4 years at a cost of INR 9.56 billion (US $181 million).

In order to meet the requirements of car buyers in this growth market, Hyundai Motor’s research and development team in Hyderabad worked with Hyundai’s engineers in South Korea to design and develop the Eon exclusively for India. The result is a model that is stylishly designed and promises fuel economy of 21 kilometers per liter (equivalent to 13.05 miles per liter or about 79.38 miles per gallon)under test conditions. Powered by an 814 cc 3-cylinder gasoline engine, the Eon is also competitively priced from INR 285,309 (US $5,400) for the base model Eon D-Lite to INR 396,262 (US $7,500) for the top-end Sportz version, which has additional features such as keyless entry and a driver air bag. Continue reading ›

US Consumers Want “Green” Vehicles Without the Price Premium

Nearly two-thirds of consumers (61%) in the US market are interested in purchasing a hybrid vehicle, but that percentage drops to less than one-third (30%) when consumers are told that the hybrid purchase price would be $5,000 higher than a comparable vehicle powered by an internal combustion engine (ICE), according to a J.D. Power . . . Continue Reading US Consumers Want “Green” Vehicles Without the Price Premium