Tag Archives: Automotive sales

2012 Automobile Quality Reports

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According to the 2012 J.D. Power & Associates quality reports, released earlier this week, automobile manufacturers are producing higher quality vehicles than ever before, except when it comes to audio, entertainment, and navigation technologies. The overall quality of all automobile manufacturers increased by 5% since the 2011 quality reports, but “problems” related to the usability of the systems increased by 8%.

David Sargent, vice president of global automotive at J.D. Power & Associates, says that this does not mean that the quality is getting worse. “At one time, these sophisticated technologies were found only on high end vehicles. Over the past couple years, it is becoming more prevalent in mainstream automobiles. An increase in users who expect the same innovative technology found in their smartphones can quickly become dissatisfied when they can’t get it to work. Automobile manufacturers are listening to the consumers and work hard to meet their expectations but need to keep safety in mind as well. There is a learning curve for drivers to get adjusted to new features.”

This is the 26th year that J.D. Power & Associates has done their initial quality study. It not only serves as an industry benchmark for initial quality measured by the consumer, but it is also used by manufacturers to help them design and build better vehicles. Initial quality is a sign of long-term durability, which directly impacts consumer purchase decisions.

Consumers Fail To Respond To Recalls

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After three recalls and multiple recall notices, owners of certain 1998-2003 Ford Windstar minivans continue to fail to bring in their vehicles to get their recalled rear axles replaced. The automaker had even offered to buy back the vehicles with cracked or perforated axles, but only 60% of the vans have been repaired. There has been substantial talk in the news lately about vehicles being rented and sold with unfixed recalls on them. Automobile manufacturers, rental companies, and car lots have all been working with the government to improve recall notification policies and to improve the recall process, but ultimately it is up to the consumer to take their vehicles in to their local dealerships for repairs. Recalls often seem insignificant to some consumers because of the constant bombardment of recall notices, also known as “recall fatigue”. Unfixed recalls not only affect the occupants of the vehicle, it can have dangerous repercussions to everyone on the road.

May Automobile Sales Rise

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Automobile manufacturers reported the sales of new vehicles rose 26% in May compared to last year despite the slow recovery of the American economy. Americans bought over 1.3 million new vehicles last month according to Autodata Corp., giving automobile manufacturers a reason to add jobs and increase production. Analysts say the numbers are distorted because last year major Japanese auto companies were dealing with shortages brought on by the aftermath of the tsunami and earthquake in Japan. This year they posted some of the largest gains. Industry analysts, however, had predicted an even better year over year increases, predicting the annualized sales rate would be 14 million to 15 million. Much of the higher demand for new vehicles is being blamed on the age of existing models on the road. Vehicle registration data shows the average vehicle age at 10.8 years. Better sales, combined with the deep restructurings in recent years, have also resulted in healthy profits for the car companies.

Auto makers expressed confidence the industry will remain on an upward trajectory. “I don’t believe that the employment data in and of itself will have an impact,” according to Ken Czubay, Ford’s U.S. marketing and sales chief. “The dealers are telling me that they had excellent traffic over the weekend. There is significant pent-up demand in the marketplace.”

GM Cuts Its Advertising Spending

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Last week GM announced that they will no longer be paying to advertise on Facebook, except for the pages that cost nothing to create. GM said that with the continuing rise of advertising costs, they question the effectiveness of certain media and are restructuring where the money is spent in order be more effective. Price concerns are not only confined to GM, with many large companies saying it is hard to know where is the best place to put their advertising money. The announcement came days before the highly anticipated Facebook stocks were to be publicly offered. The uncertainty in Facebook advertising has dampened enthusiasm for the stock as the shares for the social networking company tumble.

This week GM continues to cut its spending as they announce that they will not advertise in the next Super Bowl. According to GM’s global marketing chief, the Super Bowl advertising is effective but has become too expensive to justify the cost. Part of the GM advertising overhaul will include an emphasis on markets outside of the U.S., where GM hopes to expand into up-and-coming markets. Last year, GM spent almost $5 billion on ads.

Protection From Buy Here Pay Here Autos

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“Buy Here Pay Here” (BHPH) automobile sales are under attack by a new bill that hopes to regulate business practices of these car dealerships. A recent article in the Los Angeles Times stated that 20% of all used car purchases in the U.S. are financed with BHPH deals. Many of these dealerships are known for high purchase prices, interest rates nearly triple the national average, and aggressive repossession practices. These unregulated loans are known for taking advantage of people with poor credit histories who need a car but can’t get a loan.

Senate Bill 956 contains several important protections that will prevent these dealerships from taking advantage of California consumers. The bill hopes to:

  • Impose regulations that requires “Buy Here Pay Here” auto dealerships to obtain a California Finance Lender license.
  • Limit loans to a maximum 17 ¼ % interest rate.
  • Give consumers an eleven day “grace period” after due payments before the vehicles can be repossessed.
  • Require BHPH dealers to provide written notices to their customers informing them of their legal rights.

The Bill is expected to be reviewed within the next month.

Car To Car Networking

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David Strickland, head of the National Highway Traffic Safety Administration (NHTSA), has announced that the NHTSA is considering new regulations that they say could eliminate up to 80% of traffic accidents. The agency will be conducting a year long study involving about 3,000 vehicles to test technology that will allow car to car networking. General Motors, Ford, Toyota, Honda, Hyundai, Kia, Mercedes Benz, Nissan and Volkswagen will all be working with the NHTSA to provide support for the study.

The above video shows how interconnected sensors in vehicles will gather information about the conditions around it and will send this information through a wireless local network to surrounding vehicles. Other drivers will be alerted about slow-downs, bad weather, accidents and other road problems ahead and can safely reduce their speed. If the new technology is adopted, it could benefit Google as they talk to car companies about developing self driving cars to bring to the market within the next decade.

The End Of The Chevy Avalanche

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After nearly a decade of production, General Motors has announced that 2013 will be the last year that they will be manufacturing the Chevrolet Avalanche. The vehicle has been labeled as starting the boom toward crew cab pickups due to its innovative design and unique features. Not only does it offer the passenger comfort of a SUV, but doubles as a work truck by allowing drivers to extend the length of the cargo area from five to eight feet by removing its “midgate”. The truck has sold over 580,000 units since being released in 2001, but sales tapered off as buyers gravitated toward standard pickups which became available with four doors and a broad range of car like features.

GM said it will end production of the vehicle with a 2013 special edition model called the Black Diamond. This special edition Avalanche will feature body-colored bed surrounds, unique badging, and additional features like rear cameras, and park assist standard on LS and LT models. Chevrolet said that the Black Diamond Avalanche edition will get an $2,500 price cut across the entire lineup.

Fuel Saving Technology At A Cost

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With fuel prices on the rise, more Americans are turning to electric and hybrid vehicles for the promise of saving money. Today’s consumer is offered a wider selection of vehicles, advertising better fuel economy with super fuel saving technologies. Even the government has jumped on the bandwagon with significant changes to fuel economy window stickers that estimate what a drivers annual fuel costs and savings will be. But, once the consumer starts looking into buying one of these vehicles, the promise of saving money is not always apparent.

According to recent studies, even if gas prices would climb to $5 a gallon, it would take the average hybrid or electric vehicle, six years before the consumer would start to see any savings. Analysts say that the price of these new technologies is a road block that limits the appeal of fuel efficient cars and trucks. The proof in in the numbers, with hybrid and electric car sales accounting for less than three percent of the total market.

So why do consumers pay more for these advanced technologies that promise to save them money? Many are blinded by advertising, but never actually sit down to do the math, or they overestimate the miles per gallon savings compared to actual savings. Some see the better fuel economy as better for resale, and hope to make up the difference when they sell their vehicle. Others just want to do something for the environment. Regardless of what the reason is, every day that gas prices increase, electric or hybrid automobile owners can feel better about the purchase they made.