Wednesday, July 6, 2011 | Edited by Daniel Moores
||Low Stocks Stifle June Vehicle Sales
Execs See a Stronger Second Half
Auto sales in June slowed to their weakest pace in a year. But you wouldn't know it by listening to industry executives.
In the meager 7 percent increase over a weak June 2010, they saw the silver lining of pent-up demand. Given the myriad reasons consumers had to sit on their hands last month, the execs predicted a strong second half.
A dearth of incentives meant skittish shoppers weren't cajoled into showrooms. And those who did make it to dealer lots often couldn't find what they were looking for.
Sales at both Toyota Motor Sales U.S.A. and American Honda Motor Co. fell 21 percent, while Subaru dropped 8 percent from year-earlier levels. Those automakers blamed severe inventory constraints related to the March 11 Japan earthquake.
But every other automaker's sales rose, and the major players' sales climbed at least 10 percent.
June light-vehicle sales rose 7 percent to 1.1 million units, after a down May that snapped eight straight months of higher sales. But industry insiders were surprised by a seasonally adjusted annual sales rate of just 11.4 million units, down from 11.8 million in May.
One reason for the lackluster month wasn't related to the quake: Reports on housing, unemployment and consumer confidence all looked bleak.
But the fact that most automakers other than Toyota and Honda had higher sales despite the head winds seems to have emboldened industry execs. Many are predicting a strong second half as inventories eroded by the after-effects of the Japanese earthquake are replenished.
"While we've had these couple of bumps, we believe that the recovery will get back on track," said General Motors U.S. sales chief Don Johnson. He points to "high pent-up demand that's backstopping the industry."
Incentive spending remained at rock-bottom levels in June, an average of $2,300 per car industrywide, according to TrueCar.com. Incentives remain at their lowest levels in nearly six years.
The average transaction price in June topped $30,000 for the first time ever.
Toyota reiterated last week that all of its U.S. plants and models will be at 100 percent production by September.
"We are back in the sales business," declared Bob Carter, Toyota Division general manager.
Discounts could start flowing again as Japanese automakers recover, said Jesse Toprak, TrueCar's vice president of industry trends. Last month Honda, Toyota and Nissan all increased spending, especially lease deals -- a sign they're ready to fight to get customers back.
"We expect incentives to increase strongly from this point on," Toprak said.
He said he believes the perceived shortage of Japanese inventory is partly to blame for the sluggish sales.
Al Castignetti, vice president for Nissan sales, agrees.
"We didn't see the floor traffic we expected all month," he said. "I believe people are thinking that with the low inventories that are available they're going to get gouged, and so they're staying away."
Full-sized pickup sales bounced back, in line with a steady fall in gasoline prices during June. Industrywide, pickups sales rose 9 percent after falling 13 percent in May.
"We're starting to see some stability in fuel prices, which is bringing people back into the market," Toyota's Carter said. "We continue to be optimistic on growth of the market on the pickup side."
Better truck demand helped Chrysler Group, which rode to a 30 percent jump in June volume on sharp demand for Jeeps and a 35 percent jump in Ram truck sales.
Ford said its F-series pickup sales rose 7 percent to 49,618, for one of its strongest months in three years. GM said sales of full-sized GM pickups rose 6 percent from a year earlier. GM's Johnson expects the segment "to steadily increase for the remainder of the year."
Chevy dealer Skip Weber says customers at his four stores in the St. Louis area have reacted much differently to this year's higher gasoline prices that they did during the last spike in 2008.
Back then, many of his customers flocked to fuel efficiency by trading in trucks for cars. This time they sat tight.
"A lot of people this time just chose not to buy a new truck," Weber said. "As gas prices go down, I think it will spur some of that pent-up demand."
April Ancira, vice president of the Ancira Auto Group in San Antonio, said she's optimistic about the summer but worries that the budget standoff in Washington could start to weigh on customers' minds.
"I'm very bullish, especially considering gas prices are steadily dropping," she said. "That's a good sign for the popular summer selling months."
(Source: Automotive News, 07/04/11)
||Cities Where American Car Brands Stand Out
In a study that compared the car shopping behaviors of consumers from 50 major U.S. metro areas, CarGurus (www.cargurus.com), the auto research and shopping site, found that consumers in the Midwest (the Detroit, St. Louis, Cleveland and Milwaukee metro areas) showed the strongest interest in buying American brand cars as compared to Asian and European brands.
For the study, CarGurus examined the car shopping behaviors of consumers using its flagship DealFinder car shopping service in 50 major U.S. metro areas during the past six months. For each metro area, CarGurus calculated the percentage of total pursued cars that were American brands, Asian brands or European brands.
Of the inquiries by car shoppers in the Detroit metro area, 67% were American brand vehicles, while only 16% were Asian brands and 16% were European brands. American brand interest in St. Louis was similar at 67%. Rounding out the top 10 metro areas exhibiting the most interest in American cars were Cleveland (59%), Milwaukee (58%), Tulsa (57%), Indianapolis (56%), Louisville (55%), Pittsburgh (54%), Minneapolis (53%) and Memphis (52%).
The metro areas with the lowest relative interest in buying American brand cars were all on the West Coast: Los Angeles (27% American car brand interest), San Francisco (27%), San Diego (27%) and San Jose (29%). Additionally, major East Coast metro areas of New York (32%) and Boston (33%) were among the 10 metro areas with the lowest interest in American brands.
According to the CarGurus study, consumers in the metro areas of Phoenix (56%) and Salt Lake City (52%) showed the strongest interest in Asian brand vehicles. These two cities were followed by Denver (48%), Columbus (48%), Boston (47%), San Diego (46%), Austin (46%), Oklahoma City (46%), Richmond (46%) and San Jose (45%).
Regarding European auto brands, the CarGurus study showed that Los Angeles (34%) and San Francisco (31%) car shoppers were the most interested. Also among the top cities in European brand inquiries were New York (29%), San Diego (27%), Miami (27%), San Jose (26%), Portland (25%), Atlanta (24%), Philadelphia (24%), Washington (23%) and Seattle (23%).
(Source: Marketwire, 06/27/11)
||Hybrid Technology Enters the Mainstream of Auto Production
Your next car will probably have a little bit of Toyota Prius or Chevrolet Volt in it, whether you think of yourself as a high-tech fuel saver or not. Technologies pioneered by the 50-m.p.g. Prius and the Volt, which burns no gasoline at all on most trips under 40 miles, will soon be omnipresent.
Virtually every car will be a hybrid, with so many variations of electric-assistance that some manufacturers won't even use the word.
It's a challenge for automakers. They're struggling with how to tell buyers about the new features, which will increase fuel economy in a variety of ways.
"Customers think 'hybrid' means the Prius," a car mostly powered by gasoline but capable of driving on battery power alone for short distances at low speeds, said Jim Hall, managing director of 2953 Analytics. "That's very simplistic."
Technology that uses electricity to reduce petroleum consumption can already be found in everything from the battery-powered Nissan Leaf to the 414-horsepower twin-turbo BMW M3's automated stop-start system.
The number of vehicles with some degree of electrification will jump from five in 2008 to 116 by the end of 2011, David Vieau, president and CEO of battery maker A123 Systems, told the Detroit Economic Club last week.
That's just the start.
"It could become tough to find a car without electric augmentation in seven or eight years," Hall said.
Lincoln took a major step in the mass-marketing of hybrids when it made a 41-m.p.g.-in-the-city hybrid the base model of its MKZ sedan.
Many upcoming vehicles using electrification won't call themselves hybrids. They'll promise better fuel economy or performance without getting into nuts-and-bolts tech talk most people don't care about.
Buick and Chevrolet are prime examples. The base 2012 Buick LaCrosse will promise 36 m.p.g. on the highway and 25 in the city for less than $30,000, thanks to an electric system Buick calls eAssist. The 2012 Buick Regal midsize sedan aims to use eAssist for EPA ratings of 37 m.p.g. on the highway and 26 in the city.
The 2013 Chevrolet Malibu midsize sedan's Eco model will have the same system when it goes on sale early next year.
They won't wear "hybrid" badges, but they wouldn't exist without systems they share with high-profile hybrid and electric cars.
Hybrid technology has become an enabler, a means to an end -- lower fuel consumption.
"The manufacturers will talk about what the customer cares about, either the technology or the fuel economy," Hall says. That means models like the Toyota Prius will continue to headline the word hybrid, while others will talk dollars and cents gas mileage.
For a final confirmation hybrid tech has gone completely mainstream -- or a sign the apocalypse is upon us, depending on your point of view -- Toyota Racing Development, the rogues responsible for the company's 680-horsepower V8 NASCAR engine, have built a performance package for the Prius. It doesn't add any power to the Prius, but includes a ground-effects kit, 17-inch forged alloy wheels, low-profile tires, faster steering and a lower ride height.
Electrification is putting a charge into everyday vehicles.
(Source: Mark Phelan, Detroit Free Press, 07/03/11)
Daily Sales Tip: Three Key Rules of Sales
Rule 1: Know more about the customer than anyone else.
Rule 2: Get closer to the customer than anyone else.
Rule 3: Emotionally connect with the customer better than anyone else.
Every great sales professional excels at following and living by all three of these rules. In a customer-driven market, which we are in and will be in for the foreseeable future, there are no substitutes for knowing more about, getting closer to, and emotionally connecting with the customer.
The Three Rules are actions that take place simultaneously, for when you know more about the customer than anyone else, you have the ability to get closer than anyone else, and you then begin to connect emotionally. Combining these three actions will give you the single greatest competitive advantage in business.
I have always remembered something taught by the great sales trainer Tom Hopkins. Hopkins always said that your first goal as a salesman is to have the customer "like you and trust you." I agree with this idea, but it's not the starting point. Having the customer like and trust you is what happens when you get closer and establish an emotional connection. The process begins with knowing more about that customer.
Source: Branding consultant/business author Joe Calloway