Wednesday, October 12, 2011 | Edited by Daniel Moores
||Why Auto Sales Will Outpace the Economy
Automakers expect new-car sales to outperform the lousy overall economy in the coming months -- just as they did in a surprisingly strong September.
What's driving the fresh optimism among auto executives?
-- A flood of new and redesigned models.
-- Replenished Japanese supplies, signaling a production recovery from the March earthquake in Japan.
-- A belief that demand won't remain pent-up much longer.
All three factors were key to September's 10 percent sales increase. A surge in retail sales pushed the seasonally adjusted annual selling rate to 13.1 million light vehicles, the highest in five months.
"There is a lot of pent-up demand," said General Motors sales chief Don Johnson.
"Consumers are being cautious, but they are not out of the market. We think that will continue the rest of the year."
Auto executives say dramatic changes have occurred in the four months since vehicle shortages and troubling economic indicators derailed a budding auto recovery.
"Things are already changing -- and in a very big way," Toyota brand boss Bob Carter said last week. With resumed full production, larger dealership stocks and five new models this autumn, he pledged that September's 18 percent decline would be the last year-over-year loss this year for Toyota Motor Sales U.S.A.
"We expect to exceed year-ago sales levels beginning in October -- and we will continue to do so every month through the fourth quarter and beyond," he said.
The economic indicators normally linked with auto sales growth -- the unemployment rate, new-home starts, consumer confidence and financial market indices -- remain at or near several-year lows.
And analyst Itay Michaeli of Citi Financial warns that the number of vehicles per licensed driver may continue to decline since peaking at 1.18 in 2007, further dampening demand.
Despite the considerable headwinds, automakers still see improvement ahead.
For example, Jonathan Browning, CEO of Volkswagen Group of America, expects U.S. auto sales to end the year at 12.85 million, then rise to 13.5 million to 14 million in 2012.
Automakers say the U.S. car fleet is disintegrating, and with the average car in use more than 10 years old, many buyers can't defer purchases much longer.
In recent weeks, buyers' top three reasons for acquiring a new vehicle are: "'My lease is up,' 'My car is broken' or 'I have a new child,'" said Jesse Toprak, vice president of TrueCar.com, citing the dealer transaction data his firm collects.
"The tune has changed," he said. "Consumers have stopped saying, 'I'm going to wait until the economy settles' and started saying, 'I can't wait any longer, I'm going to buy anyhow.'"
Toyota distributor Toby Hynes thinks the number of vehicles per licensed driver will rebound.
"I don't believe the American consumer is done buying cars and trucks," said Hynes, Houston-based president of Gulf States Toyota, one of Toyota's two remaining U.S. distributors. "People drive a long way to work and a long way to see friends or relatives. They may drive less, but they still need cars and trucks."
Manufacturers also are rolling out lots of new products and cool new technology, driving demand. Toyota is launching three redesigns (the Camry, Tacoma and Yaris) and two new models (the Prius V and Scion iQ) by year end. Toyota also will expand its Entune multimedia system from three models to 10 by early 2012.
Ford, GM, VW, Honda and others also have major new and redesigned models.
And the Japanese are restocking, and running their Japanese plants at an accelerated pace to make up for lost production.
At Toyota Motor Sales, the days supply of vehicles on Oct. 1 rose to 39 days, from 34 a month earlier. At American Honda the figure was 33 days, up only slightly from 32 last month. But Honda said output of most models is almost back to normal.
Incentives also will play a greater role. As the Detroit 3 and Hyundai-Kia gain ground and fuel prices decline, the uneasy summer marketing cease-fire is ending. Industry average incentives inched up $101 in September to $2,716, said Toprak, who expects more targeted incentives in the months ahead.
GM's Johnson has said for months that Toyota and Honda rejoining the game would help all automakers by signaling to idle buyers that there are deals available. Last week Carter said Toyota not only would continue zero-percent financing on all 2011 models in October but it also would add "a tremendous amount" of advertising.
"You'll see us use both (incentives and advertising), but we will lead with our new product and marketing messages to let consumers know how much new product we're bringing to the market," he said.
Ford is increasing supplies of the Focus, Fusion and Fiesta to meet anticipated sales growth.
"We continue to see a restocking of inventories and increase in merchandising throughout the industry," said Erich Merkle, Ford sales analyst.
"Despite everything that's been thrown at us this year, auto sales continue to be one of the few economic bright spots," Carter said, adding that auto sales are back "on track to hit our initial forecast of 12.5 million vehicles -- and with a strong fourth-quarter push from Toyota, the industry should actually do a little better than that."
(Source: Automotive News, 10/10/11)
||10 Notable Things About September's Hot Vehicle Numbers
While the rest of the world seems to be waiting for the economy to fall through the floor, car and truck buyers seem to have something different in mind.
U.S. car and truck sales climbed 9.9 percent in September, compared to the same month in 2010, and sales are up the same percentage for the year, according to AutoData Corp.'s figures.
But there's a lot more behind those numbers; here are the 10 things we learned from September sales numbers.
1. Americans like good deals and trucks.
Really, they do. In September, more people (53.8 percent) bought trucks than cars, even though for the year, more people (50.5 percent) have bought cars. So why the change in heart? Full-size pickup sales were through the roof, jumping 25.7 percent in September, mostly because many were sold with steep discounts and incentives. Yes, carmakers have to unload last year's models, but teaching consumers to buy only when there's a sale is not a safe business model.
Another reason truck sales were up is that nearly everything qualifies as a truck nowadays. Crossovers like the Mazda CX-7, up 90.8 percent for the month; Jeep Compass, up 305.7 percent; and Dodge Caravan, up 26.9 percent; all contributed to the big truck month. They may qualify as trucks on paper, but few mistake a minivan or oversized wagon as a truck.
2. America's top luxury brand still too close to call.
Lexus has held the title of America's top-selling luxury brand for years. Between supply problems after the March tsunami in Japan and much tougher competition, Lexus will lose that title on Dec. 31. Sales are down 16.9 percent for the year. Meanwhile, Mercedes-Benz and BMW are racing ahead. Mercedes holds less than a 5,000-vehicle lead over BMW with three months to go. The real winner could be consumers come December.
3. Small cars not as big as some thought.
If you follow the auto industry, you're bound to hear someone talk about how big -- important -- small cars are. There's some truth to this, of course, because small cars are typically some of the most efficient vehicles out there.
But gas prices seem to have stabilized. Or consumers are just used to them being high. So the fear of rising gas prices has left our collective car-buying psyche. It makes sense that September was not a big month for lots of little cars. Toyota Yaris sales were down 43.5 percent, Chevy Aveo sales were down 80.6 percent (as its Sonic replacement moves into dealerships), Hyundai Accent sales were down 7.4 percent and even the Honda Fit saw sales drop slightly.
The big winners in the small car race were the Ford Fiesta, up 30.1 percent, and the Nissan Versa, up 68.1 percent. The Versa was the only little car to sell more than 10,000 units. In fact, not counting the Kia Soul, which sold 6,666 units, the next best-selling tiny car was the Honda Fit, at 4,737 units.
4. More people buying American.
It has been interesting to follow sales this year as Detroit's carmakers continue to gain share in the marketplace. In September, the traditional domestic carmakers grabbed 48.1 percent of the market, a 16.9 percent jump over last year. For the year, Ford, Chrysler Group LLC and General Motors Co. have 47.3 percent of the market.
One reason often overlooked for the increasing domestic sales is the solid lineups of Ford and GM, in particular. Chrysler, which has improved dramatically in the past two years, still lacks a competitive compact car, though I have been told that it is working on that just as fast as humanly possible.
While it's refreshing to see, I would never tell someone to buy a car or truck because of the nationality of the people who built it, but I would tell them to buy the best vehicle for the best price for what you need. Nowadays, nearly half the time, consumers are choosing something from Detroit.
5. Chrysler: The next million maker.
Chrysler has already likely crossed this threshold with the first week of sales in October. And when the numbers come out at the end of the month, Chrysler will join Ford, Toyota and GM as automakers to sell more than 1 million vehicles during the year.
The milestone would not be that important if it wasn't for the fact that through September last year, Chrysler had only sold 820,000 vehicles. This year, it has sold 996,000 vehicles, a jump of 20.8 percent. No other major carmaker has seen this much improvement over the past year.
Honda and Nissan are the other carmakers that will clear the million vehicle mark by the end of the year.
6. VW Passat running strong.
While many carmakers have adopted a global vehicle approach, meaning they make the same vehicle around the world, Volkswagen has decided to make a few vehicles just for the American market. The compact Jetta was the first to arrive and then this past summer came the midsize Passat.
The move, which created a much less expensive Passat, has been a hit with consumers.
Passat sales were up 339.9 percent in September. Of course, Jetta sedan sales are up 69.3 percent for the year as well. It only proves the point that price matters.
7. Alternative powertrain sales low.
Every month I wait for Chevy Volt sales to shoot through the roof. But sales remain flat with 723 units sold in September and 3,895 sold for the year. Meanwhile, the Nissan Leaf, the all-electric competitor to the Volt, has maintained a steady pace and topped 7,000 units sold for the year, still a low number. The most popular hybrid in the world, the Toyota Prius, has also seen sales lag by more than 10 percent for the year and were down 18.2 percent in September.
So what's going on? Lower gas prices and high-mileage compact cars have consumers thinking twice before committing to hybrids or electrics. There's still room for these cars in the market, but maybe not as much as some people think.
8. It's still for sale.
Beyond the top-selling vehicles, there were a few other notables. Chevrolet managed to unload four compact Cobalts, the car the Cruze replaced a year ago. Lincoln sold 709 Town Cars even though its production was halted as well. Honda sold more discontinued Elements, 799, than it sold Ridgelines, 700.
9. Enthusiasts won't like this.
The two vehicles many enthusiasts shun over at Porsche also happen to be the two best-selling Porsches in America. The Porsche Cayenne, the big SUV, has nearly half of all of Porsche's sales. Through September, Porsche has sold 10,301 Cayennes. During the same time, it has sold 12,633 cars. And of all of those cars, nearly half of those, 5,184, have been the Panamera sedan.
It goes to show you that sometimes it's the unexpected successes that can push a brand into a whole new market.
10. Fun with numbers.
Ford sold more F-Series pickups, 54,410, in September than Hyundai Motor Corp. sold total vehicles, 52,051. Bentley sold nearly as many vehicles, 151, as Chevrolet sold HHRs, 152. Land Rover sold nearly as many vehicles, 2,740, as Fiat sold 500s, 2,773. The Ford Ranger flexed its muscle in September with 7,154 units sold, outselling the Dodge Challenger, 3,328, Chevrolet Camaro, 6,994, and Ford Mustang, 5,054.
(Source: Scott Burgess, The Detroit News, 10/08/11)
||The New Models That Will Shake Up the Car Business
A handful of cars and crossover SUVs hitting the road over the next year or so could shake up the competitive balance among the world's top automakers.
By the end of next year, these and other key vehicles may have rewritten the sales tables and changed how buyers think of some of the industry's leading brands. Here are the vehicles that could lead to an industry realignment, brand by brand:
- GM's Buick and Chevrolet brands look to continue momentum in their car lineups.
- Ford's adventurous design team has radically reshaped two of the brand's perennial best sellers.
- BMW, Lincoln and Cadillac will introduce dramatic sport sedans in the luxury market's most competitive segment.
- Honda has a chance to reverse its momentum and re-establish itself as a leading innovator.
- Toyota aims to show it has the right formula for everything from pickups to plug-in hybrids and inject life into its Scion brand.
- Buyers will judge the first car created by the new Chrysler-Fiat alliance.
The success of the outstanding CTS sport sedan, wagon and coupe has overshadowed the weakness of the rest of Cadillac's car line.
The brand hopes to change that in 2012 with the large and luxurious XTS and the smaller, sporty ATS. "Cadillac needs additional models to round out its portfolio," said Jim Hall, managing director of 2953 Analytics in Birmingham.
The XTS's elegant exterior and sumptuous interior look like winners. Unlike most large luxury sedans, though, it's based on a front-wheel drive architecture -- all-wheel drive will be optional -- and will come with a high-performance V-6, but no V-8 option. The smaller ATS breaks less new ground.
"It's supposed to go directly after the BMW 3-series," said Bill Visnic, analyst and senior editor at Edmunds AutoObserver. "Globally, that size is the volume segment for luxury brands. Cadillac needs to be in the segment, and it needs to be a player in the high-output, high-fuel-efficiency four-cylinder engines the ATS will use."
The Accord midsize sedan and CR-V SUV are mainstays of Honda's lineup and two of the best-selling vehicles in the country.
After taking unaccustomed criticism for the new Civic compact that went on sale this year, the new models are a chance for Honda to right the ship. "The Civic was a letdown. Honda can't afford to have the same reaction to the Accord, but their recent track record says they will," 2953 Analytics' Jim Hall said.
The current Accord's claim to leadership when it went on sale was simply being bigger than competitors from Chevrolet, Ford, Nissan and Toyota. That was a surprise from a company that built its reputation with creativity and efficiency.
"The CR-V is a bellwether car for Honda," AutoObserver's Visnic said. Recent Hondas have gotten bigger, but not better. "Adding size has not worked for them. We need to see some of the innovation we used to expect from Honda," Visnic said.
Chevrolet got some hard-won bragging rights when the Cruze compact spent several months as America's best-selling compact this year. It needs the Sonic subcompact and Malibu midsize to build on that strength.
Shorter but wider than the current model, the Malibu offers a bigger passenger compartment and trunk, but less rear legroom. Only the high-mpg Eco model -- 38 highway mpg -- is to be available for the first six months of 2012.
A new 2.5-liter gasoline engine that goes into production midyear will power a less-expensive model. Availability of parts for the Eco's hybrid system could limit sales, 2953 Analytics' Hall warns. The Sonic -- the only subcompact built in America, was designed to attract young buyers with looks, features, 40 mpg on the highway and a $13,735 base price.
"It's a real test for the new GM," said Visnic. "If the Sonic succeeds, following the strength of the Ford Fiesta, the domestic automakers will have established themselves as credible players in the small-car market."
We don't even know its name yet -- "Hornet" is a popular rumor -- but the compact car Dodge plans to launch early in 2012 will be a defining vehicle for the new Chrysler.
If this replacement for the Caliber is a hit, it could launch the new Fiat-Chrysler alliance on the path to build a line of competitive, fuel-efficient small and midsize vehicles. It will be the first car to combine a Fiat platform with Chrysler styling. Chrysler says the car will get at least 40 miles per gallon on the highway.
In addition to its Fiat-based platform, the small Dodge will probably use a turbocharged version of the Fiat-designed 1.4-liter engine built in Chrysler's Dundee, Mich., factory. The car is widely expected to be built in the Belvidere, Ill., plant that assembles the Caliber, Jeep Compass and Patriot.
The new Fusion midsize sedan and Escape crossover SUV coming in 2012 are two of Ford's most important models.
The current vehicles are perennial best sellers. The new ones will break new ground in style and technology.
The Escape takes its looks from the dramatic Vertrek concept vehicle that drew raves at auto shows in 2011. It's a drastic departure from the conservative looks of the current Escape. "The new model is critical," AutoObserver's Visnic said. "If it looks like the concept and continues Ford's recent track record of good fuel economy, there's the potential to hit it out of the park."
The Fusion is a similarly drastic styling departure. It will resemble the hyper-modern and upscale Evos concept car Ford unveiled at the recent Frankfurt auto show in Germany. Look for new drivetrains and the next generation of Ford's hybrid system to boost fuel economy.
After years on life support, Buick appears to be on the mend.
Two strong new midsize models are already on the road. The compact Verano sedan -- built in Orion Township (Mich.) plant and going on sale later this year -- has its sights set on younger buyers and a hipper image.
"Buick is re-entering the shopping lists of Americans under 70," said Eric Noble, president of the Carlab, a consultancy in Orange, Calif. "Buick is on a roll."
The Verano's challenges will include fuel economy and matching the performance and refinement of other upscale compacts like the Audi A3.
The Range Rover Evoque small luxury SUV is a survival strategy, but a potentially risky one.
As fuel-economy standards rise around the world, Land Rover must find a way to build smaller, more fuel-efficient vehicles that still command the premium prices its rugged, big SUVs traditionally get.
"It may be too small for the traditional Land Rover buyer," said Eric Noble of the Carlab. "The challenge is to get the same buyer demographics and profit margin with a smaller interior and a two-door model. Nobody sells a two-door luxury SUV in the United States. It was a big mistake to have brought that body style."
The Evoque just went on sale. Prices start at $43,145. Land Rover claims 28 mpg highway fuel economy -- pretty good for an all-wheel-drive luxury SUV, even a small one.
The 3-series is not just BMW's best-selling model; it defines the entire class of small luxury sport sedans, wagons, coupes and convertibles.
"All the other companies aim for the 3-series when they develop a new car," said Hall.
The new model will adopt the elegant new styling theme BMW introduced with the 6-series coupe and convertible this year. That's good, but recent BMWs have suffered from unaccustomed extra weight that hampered their handling. The new 3-series had better reverse that trend, particularly since it will rely heavily on high-output, high-mpg four-cylinder engines to improve its fuel economy.
The 3-series sedan is to go on sale in 2012. The coupe and convertible are to follow in 2013.
The Altima is Nissan's best-selling car and one of the top sellers in America. Despite that indisputable success, it frequently gets overlooked when people talk about the leading midsize sedans.
The new Altima that goes on sale in 2012 can't afford to be overshadowed by its pricier and more powerful corporate cousin, the Maxima.
Every midsize sedan that matters will have been replaced since 2010. If the Altima is going to raise its profile, the time is now. "If Honda missteps with the Accord, Nissan could have a market opportunity with the Altima," said Hall. "If not, there's a risk it could become another irrelevant Japanese sedan."
The excitement around the long-awaited Scion FR-S sporty coupe resembles the buildup to the release of a new video game.
Engineered by Subaru, the car has fan-boy cred and promises exciting performance at budget prices. The little rear-wheel-drive car has been in the works for so long it'll be hard for it to meet expectations, but Scion desperately needs a hit -- even if Toyota's own engineers can't develop one for it.
The FR-S is to go on sale in the second half of 2012. Power will come from a 2.0-liter Subaru boxer engine that uses Toyota's direct fuel injection for more power and better fuel economy.
The all-new MKZ sport sedan must inject life and excitement into the slumbering Lincoln brand.
Lincoln's best-selling model desperately needs a new look and some exciting features. The arrival of stylish new Fords with advanced drivetrain and interior features makes it vital that Lincoln raise its game to compete with luxury brands like Audi, Cadillac and Lexus.
Without new models that transform its stodgy image, Lincoln is doomed to join brands such as Mercury and Pontiac in the dustbin of history. Lincoln needs a compelling new MKZ to begin the brand's reinvention. Look for the 2013 MKZ to go on sale next fall.
Toyota replaces two of the vehicles that built its reputation and adds a high-profile newcomer within the next year.
The new Camry midsize sedan just went on sale. A new version of the Tacoma midsize pickup is to arrive in the second half of 2012. "The Tacoma is the volume small pickup," said Hall. "It's a core vehicle for Toyota."
While the Tacoma and Nissan Frontier have clearly been the best small pickups in recent years, Chevrolet hopes to provide tougher competition with its new Colorado. The critical response to the Camry has been lukewarm so far. Its fuel economy is fine, but the interior is unimpressive. Toyota hopes the Entune voice-recognition and Internet connectivity system it developed to compete with Ford's Sync will ignite enthusiasm for the Camry.
It'd be surprising if the Camry and Tacoma don't remain sales leaders in their segments.
The Prius plug-in hybrid aims to strengthen Toyota in a segment it dominates: hybrids. It should cover 10 to 15 miles on battery power alone; the engine will kick in after that. Toyota suggests it made the right trade-off by balancing a lower $32,000 base price vs. less than half the Chevrolet Volt's all-electric range.
The Prius plug-in is to go on sale on the East and West coasts next spring, then across the rest of the country in 2013.
(Source: USA Today, 10/03/11)>
Daily Sales Tip: Making Your Sales Meetings Meaningful
What can managers do to make sales meetings valuable?
I've found four simple rules seem to work very, very well:
1. No purpose, no meeting. Only hold meetings when there is a REASON to hold a meeting. That may be once a month, once every two weeks, once a week, or as needed. That the company is no longer paying for coffee is not a reason for a meeting; that's a memo. Reviewing the pre-call planning steps is a reason for a meeting.
2. No preparation, no meeting. If for any reason the person managing the meeting has not had time to thoroughly prepare, the meeting is canceled. There is no excuse for wasting the team members' time because the manager didn't get their job done.
3. A sales meeting is not the place for individual coaching. A sales meeting is a group activity. Address the group's needs and issues, not individual salespeople's. There is no excuse for denigrating anyone in front of the group or for wasting the group's time for individual coaching. Each team member should have coaching time scheduled outside the sales meeting. The rule is, if a meeting degenerates into individual coaching, the team members are free to leave (note, however, that answering a specific issue a team member has with the subject matter being discussed is not individual coaching).
4. Set a time limit, stick to it. Salespeople need to be selling, not attending meetings. Under normal circumstances, sales meetings should be kept to an hour or less. Only under extraordinary circumstances should a meeting exceed an hour.
Your sales meetings should concentrate on helping team members sell. Reviewing market conditions; presenting new products or services; reviewing sales skills such as prospecting, making presentations, asking questions, pre-call planning, and the other aspects of selling and the sales process; role playing activities; and other core content should be the heart of the meeting.
Seller recognition and reinforcement should also be an integral aspect of your meetings. Leave the meeting on a high note, not a downer.
Source: Sales trainer/consultant Paul McCord