India’s Auto Dealers Anticipate Lower Profits; Express Need for Exciting Models

MArora

Mohit Arora

Only 44% of India’s dealers expect to be profitable in the 2012-2013 fiscal year, partly due to a slow-down in new-vehicle sales as well as a dip in satisfaction with the available product lineup, according to our 2013 India Dealer Satisfaction with Automotive Manufacturers Index (DSWAMI) Study.

The study, which is based on responses from 618 dealership general managers or principles across all major nameplates, measures dealer satisfaction with automakers and importers in India* and identifies dealer attitudes about the retail business now and in the future.

Key findings from this year’s study are highlighted:

• In 2013, the largest decline in dealer satisfaction is in parts operations, with notable brand level declines in the areas of prompt delivery of parts and ease of ordering parts.

• Satisfaction with product lineup also declines this year. On average, 82% of dealers indicate their brand provides a model range that is effective in a highly competitive auto market. Continue reading ›

A Long Runway for Growth in China and Some Notable Trends

Geoff Broderick

In the coming scramble to win sales in the Tier 2-4 markets and earn profits in China, there is the temptation for OEMs to invest heavily in production, which can result in overcapacity. Discipline must be maintained in China or history will repeat itself—as illustrated by the imbalance of supply and demand in the U.S. market during the past decade. There is likely still more consolidation to come in the global auto market, but there is room for the smart players with solid business and product plans.

In the past five years, the combined vehicle sales market share of the emerging countries—including China and India—grew from less than 20% of the world’s total, to more than 50%. Among all emerging markets, China has one of the longest runways for continued growth based on its low penetration rate (vehicles per 1,000 people), in addition to a growing per capita income and rising disposable income. There also is a real opportunity for a steep takeoff, especially in China’s Tier 2 and 3 urban markets.

China Remains a Pillar in the Global Auto Industry

By 2018, China, the United States, India, Brazil and Russia will be the world’s five largest auto markets in terms of light-vehicle sales, with China as the far-and-away frontrunner at almost double the sales of the United States (30-35 million units vs. 17 million units). Japan, followed by Germany, the UK, Italy and France will round out the 10 largest markets, according to J.D. Power and LMC Automotive Forecasting.*

With closely aligned global supply and demand coupled with improved macroeconomic conditions—albeit slower for Europe—and significant new product introductions and an improvement in available credit—at least in the U.S. market—global sales, led by China (32.9 million unit sales), will boom by 2018 to slightly less than 114 million units.Although China will continue to see an increase in discretionary income, as well as much sales growth fueled from a further penetration of financing and the introduction of leasing, there will likely be intense competition to gain share in Tier 2 and Tier 3 markets. Continue reading ›

Shanghai GM Broadens Product Portfolio in China Market

Tim Dunne

Shanghai GM* reports that first-quarter sales of Buick, Chevy and Cadillac vehicles in China increased more than 33% from the same period in 2010, to 313,651 unit sales. GM’s sales in China in the first quarter still outdistanced its first-quarter sales in the United States, even though it was not as lofty a figure this year. What’s interesting is that GM sales were up much more than the market (33% vs 12%), according to our research. The new Buick Excelle XT/GT did very well in the first quarter, as did the LaCrosse and new Regal. In addition, the Chevrolet Cruze has been averaging 20,000 unit sales a month, and the New Sail is averaging almost 15,000 unit sales a month.

Looking ahead, GM has indicated that it is planning the global launch of the latest version of its Chevrolet Malibu midsize sedan at the Shanghai Auto Show later this month. The Malibu is an important model for Chevrolet in China. The midsize segment in China accounts for about 12% of passenger-vehicle sales (more than 1.4 million unit sales annually). Currently, the volume leaders in this segment are the Toyota Camry, Honda Accord and Nissan Teanna. Continue reading ›

Chinese Automakers’ Profits Helped by Government Measures

The profits of China’s automotive industry surpassed 30.2 billion yuan (US $4 billion) in the first half of 2010, according to the China Association of Automobile Manufacturers (CAAM). The figure was nearly 66% higher than in the same period last year, according to Asia Times Online, the online successor to the former Asia Times, . . . Continue Reading Chinese Automakers’ Profits Helped by Government Measures