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It definitely seemed there was more going on at this year’s North American International Auto Show in Detroit; more buzz, more pizzaz, more enthusiasm. There were over 40 product unveilings, including some highly anticipated new models like Cadillac’s ATS, Acura’s NSX and Ford’s new Fusion, just to name a few.
Now that the show has closed for another year, those observations proved to be true. The 2012 show was the best attended since 2005, with some 770,932 people walking through the doors to ogle the auto industry’s latest wares, more than 92,000 on the first public day alone.
And although not a record, NAIAS chairman Bill Perkins was still pleased at the results. “A lot of people counted Detroit down and out,” he said “but  has been a major year for our industry and show. Detroit is still the center of the North American auto industry, and the importance of this show draws people here from around the world.”
According to Perkins, NAIAS has an economic impact of some $400 million for the city of Detroit and South Eastern Michigan, more than the Super Bowl.
The higher attendance numbers have no doubt helped to add a bit of luster to the Detroit show’s status as one of the major events of its kind in the world, along with the likes of Geneva, Frankfurt, Paris, Tokyo and Bejing.
“NAIAS is positioned with [those shows] because of the number of worldwide product unveilings we host,” remarked Jim Seavitt, the show’s vice chairman. “We are traditionally very strong in both categories, which is why NAIAS remains an important part of the automakers’ global product launch strategies.”
With fewer and fewer quality, low-mileage used cars on the market (thanks to slowed production output and reduced sales over the past few years), those who are looking towards saving some money are finding that buying a new car is costing roughly the same as buying a used one. In fact, in many cases, a new car is actually cheaper.
According to Edmunds.com, buying a new BMW M3 costs just $34 a month more than buying a one year old example. It gets even better if you’re looking for a Chevrolet Corvette, as a new model is about $12/month less than a used model.
These are just two examples in an industry that is filled with them. According to chief economist Paul Ballew, as much as 500,000 new cars would be sold to people who would have bought used.
Ballew said: “There’s a substitution effect going on between new and used. When you get those price gaps closing, you get people that are willing to shop new that wouldn’t have before.”
All this is good news for the auto industry, which has taken quite a tumble in the post recession era. Although some companies are still trying to recover, luxury car manufacturer BMW has risen 13% and Mercedes-Benz has also sold 7.3% more cars this year, compared to last. Even the sportscar market has seen a upswing, with a 2.9% growth.
So with car companies putting more effort into shifting new products, if you’re in the market for a car, surprisingly, you might get a better deal on a new one.
According to Anfavea, Brazil’s national automobile manufacturers association, a total of 3.45-million vehicles will be sold by the end of 2010, which gives Brazil the number four spot for vehicle sales, behind China, U.S.A. and Japan. Germany now places fifth.
This will certainly get the attention of more car companies to get their feet into the Brazilian market.
Anfavea president Cledorvino Belini, who is also the head of Fiat in Brazil said, “with a population of 192 million, had approximately one vehicle per seven residents, leaving plenty of room for growth.”
Currently there are about 30-million vehicles in Brazil, and as the economy improves, that number can balloon very quickly.
Brazil is currently the sixth largest car producing nation in the world, making 3.64-million units under 17 different brands. With Hyundai and Chery looking to open new factories, that number can climb higher still.
Nearly 80% of the cars produced in Brazil are exported, mostly to Argentina and other South American markets.
With their currency ‘the real’ continuing to grow and the number of luxury imports also rising, Brazil is a market worth keeping an eye on.
The Ann Arbor, Michigan based Center for Automotive Research (CAR), recently complied a study that illustrated that the orderly, structured bankruptcies of General Motors and Chrysler, conducted with financial assistance from the U.S., Canadian and Ontario governments, helped result in the saving of more than 1 million jobs during 2009.
The study also estimated that a further 314,000 jobs were saved in 2010, while government intervention helped save approximately $96.5 billion in potential personal income losses, while allowing some $28.6 billion to be paid to the feds in the form of social security and personal income taxes.
“To date, $13.4 billion in principal has been repaid on the government’s $80 billion U.S. investment in the automotive industry,” declared Sean McAlinden, chief economist at CAR. ”This study shows that $28.6 billion in net losses to the U.S. Treasury were averted by the policy to provide federal assistance to General Motors and Chrysler. With this in mind, CAR’s analysis shows the government need only recover $38 billion of the remaining $66.6 billion outstanding investment in this industry to achieve a two-year break-even.”
Overall, most industry analysts agree that the US economy has performed better over the last 18 months than expected and although auto sales were down, the market share of Detroit’s big three held up better than anticipated. Furthermore, based on data compiled from the last couple of months, sales appear to have grown by as much as 20 percent in some segments.
“The federal decision to invest in the auto industry in 2008 and 2009 deployed critical resources to one of the country’s most productive industries with the highest economic multipliers of any industry,” said CAR researcher Kristin Dziczek, “it was clearly a very successful policy intervention at a critical time.”
[Source: The Detroit Bureau]
In the old days, fierce brand loyalty was a given when it came to car sales and it was often handed down through generations – i.e. your grandfather drove a GM product, your dad drove a GM product and so did you.
Not any more. According to a recent survey by Morpace, these days, when it comes to shopping for vehicles it’s all about the deal. Out of 1,000 people surveyed, approximately 74 percent said they’d choose a vehicle based on price and incentives. Not only that but research shows they’re often willing to travel to get the best deal on a car or truck, so even much talked about elements such as customer service and dealer location don’t appear to be hugely important.
In fact, the survey illustrated that although many vehicle purchases might begin with referrals from family and friends, along with prior experiences and dealer marketing programs, when it comes to the actual purchase consumers “are willing to travel for a good deal on the product they really want, ” according to Morpace Vice President Karen Gaule.
As a result, when GM and Chrysler terminated more than 2,000 dealerships last year, there was little mourning, at least from consumers.
“The fact is, the American consumer buys products that are convenient, predictable and affordable. It’s the same for cars. The most important factors for a car buyer are overall price and monthly payment,” said Ed Tonkin chairman of the National Automobile Dealer’s Association at a conference in Detroit last week.
And with that kind of statement coming from the horse’s mouth, one question we have to ask ourselves now is, when will Walmart start selling cars?
[Source: Automotive News]
China is the world’s biggest auto market in the world, so it might not be so surprising that China is also Hyundai‘s new biggest market, after the automaker sold more cars in China than Korea for the second straight month. Buoyed by the success of the Yuedong (aka our Elantra) and the Tuscon crossover, Hyundai was able to move 57, 014 cars in China in May, versus 55, 339 in Korea.
The Yuedong was able to usurp the title of #1 selling compact car from the Chinese engineered and built BYD F3, a significant coup for the Korean automaker. Hyundai expects to move 670,000 cars in China for the year 2010.
[Source: Joon Gang Daily]
A report out of Europe claims that BMW and General Motors are collaborating on a system that will scan road signs, including speed limit warnings and relay the information to drivers. The system still has a few kinks being worked out, but the objective is for the system to be able to display warning signs as well as speed limits for any road the car is being driven on.
Technology like this might add a little pizazz to an otherwise unremarkable car, but there’s certainly the prospect of a slippery slope with this sort of system. Invasive speed limits mandated by the government might not be far off, and that could quickly spell an end to one of the greatest pleasures of driving, the complete autonomy one has when behind the wheel of a car.
Honda was forced to shut down all four of its Chinese car plants, after 1,850 workers at an auto parts plant went on strike over wages. The strike is reported to have crippled Honda’s production capability in what is now the world’s largest car market.
The lack of parts means that Honda is unable to assemble cars at any of its four Chinese plants. The employees at the parts plant want their wages increased to between 2,000 yuan ($293) and 2,500 yuan per month, from 1,500 yuan ($220). Workers at Honda’s car plants make a similar wage.
“China is experiencing a labor shortage that’s shifting the natural bargaining power to workers,” Chang-Hee Lee, a Beijing-based industrial relations specialist at the International Labor Organization told Bloomberg News. While much of China’s economy is owned by the state (and Honda’s own operations are jointly owned with the Chinese government), governmental authorities claim that Honda has done nothing wrong in the labor dispute. China account for about 17 percent of Honda’s global sales, making it a crucial market for its operations.
Despite record recalls and public humiliation over quality control scandals, Toyota announced that it expects to see a profit of $3.35 billion by the end of their fiscal year in March, a 48% increase.
Toyota sales rose 24 percent in April, as strong incentives helped Toyota move cars like the Corolla and Prius. Despite the strong performance, Toyota Senior Managing Director Takahiko Ijichi said that the recall of 8 million vehicles for unintended acceleration issues cost the company 50,000 sales and $1.94 billion.
Despite the setbacks, analysts are optimistic about Toyota’s prospects, especially in the crucial North American market. “Based on the recent sales numbers, the recalls aren’t posing a problem,” said Gentoku Kiyokawa, a fund manager at Fortis Investments in Tokyo, in an interview with Automotive News.
Still, Toyota faces tough competition from renewed competitors like Hyundai and Ford. Hyundai in particular poses a threat to Toyota’s dominance, as the Sonata sedan has seen sales skyrocket by 57 percent in April, while the Camry has only increased by 10 percent.
[Source: Automotive News]
Strong demand in emerging markets like India and China, as well as a recovering U.S. economy helped Honda post a quarterly profit of $774 million. The Japanese automaker reported a 28 percent increase in sales, to $24.5 billion. Honda is forecasting a $3.7 billion profit through the coming fiscal year (which ends March 31, 2011), and sales of $100.4 billion, a 9 percent jump.
The strong results come days after Honda’s CEO admitted that the company had become “complacent”. However, strong demand for small, energy efficient models like the Fit and the upcoming CR-Z hybrid sports car helped the company back into the black. Honda’s motorcycle division also reported strong sales, adding to the company’s fortune.
[Source: Detroit News]
Between sticking accelerator pedals and rollover-prone SUVs, this year has not been kind to Toyota. However the Japanese automaker is poised to return a handsome $532 million profit, despite expectations to the contrary.
Toyota had initially forecasted a loss of $213, but a weak yen and a series of cost-cutting measures meant that Toyota is likely to beat expectations. On the other hand, Toyotas sales were down 5 percent, or about 7.2 million vehicles. All in all, Toyota’s earnings are admirable in a year where the Japanese auto giant was forced to recall some 10 million vehicles, forced to testify before Congress and endure a series of devastating quality control problems. Toyota will report its earnings on May 11th.
[Source: Automotive News via Autoblog]