Thursday, December 29, 2011 | Edited by Daniel Moores
||Auto Sales Could Hit 14 million in 2012
Analysts Cite Easier Credit, Aging Fleet
Rising employment, better credit availability, new products and urgency to replace aging vehicles will drive U.S. auto sales higher in 2012, forecasters say.
Sales predictions from 11 independent analysts ranged from 13 million light vehicles (Wells Fargo Securities) to 14 million (Morgan Stanley). The average outlook of 13.6 million would be up 6 or 7 percent from this year's sales, which are likely to finish between 12.7 and 12.8 million units.
That 1 million unit spread in forecasts is narrower than the 1.5 million spread among 2011 forecasts by seven analysts a year ago.
All the analysts expect as much disruptive and unsettling economic news in 2012 as there was this year. But they say American auto buyers don't scare as easily as they did three years ago, when the financial crisis hit.
Crisis-jaded consumers have become less likely to change car-buying behavior based on economic news -- good or bad, says Alec Gutierrez, senior market analyst for Kelley Blue Book.
Gutierrez noticed the change in summer during the congressional debt-ceiling standoff that triggered a cut in the U.S. credit rating.
"The Dow fell 1,500 points -- and car sales stayed smooth and consistent," he said. "The American consumer has seen so much gone wrong. If they have to buy a car, they will."
Economic ups and downs won't greatly alter 2012 auto sales, said Jeff Schuster, top forecaster of the Americas for LMC Automotive, formerly a unit of J.D. Power and Associates. He forecasts sales of 13.8 million.
A sharp European recession would trim 2012 U.S. light-vehicle sales by no more than 300,000, Schuster said, while a U.S. economic surge might add 200,000 units. More important are pent-up demand, larger inventory and growing credit availability.
"So 2012 depends on those positive trends and the will of consumers to replace vehicles," he said.
Jesse Toprak, vice president of TrueCar.com, said: "Consumers are changing their attitude. Many are comfortable buying a car even though there is no clarity on the economy."
Even relative pessimists say U.S. consumers are harder to scare.
"Consumers are feeling insulated from bad news and secure in their own jobs, so pent-up demand has been driving sales," said Mike Jackson, head of North American auto forecasting for IHS Automotive, who sees 2012 sales at 13.3 million. But Jackson worries that if conditions worsen, particularly if Europe's debt crisis affects credit availability in America, "then consumers will once again postpone purchases."
Most forecasters minimize the odds that troubles in Europe will hurt U.S. auto sales. Polk's Germany-based analysts, for example, compare the debt-crisis debate there to the August U.S. debt-ceiling squabble, said Anthony Pratt, Polk's director of research, Americas.
"There will be lots more noise yet, but in the end it'll get done," Pratt said.
Paul Taylor, chief economist for the National Automobile Dealers Association, says that if European sales falter, U.S. shoppers could benefit.
"German automakers will target the U.S. market to sop up excess capacity," Taylor said. For the same reason, he said, Asian automakers would boost shipments to North America, probably triggering higher incentives and sales.
The increase in sales will be mirrored by a rise in North American production. In fact, four forecasters project the same North American light-vehicle production next year: 13.8 million, up from about 13.0 million this year. That's about the same rise as U.S. sales.
The four prognosticators are IHS Automotive, LMC Automotive, NADA, and Polk.
Most forecasters see sales momentum accelerating in the second half of 2012.
Adam Jonas, top global auto analyst for Morgan Stanley and the most optimistic forecaster at 14 million, expects the seasonally adjusted annual sales rate -- which has been slightly above 13 million since September -- to fall back into the high-12 millions in the first quarter and then start to build.
"We expect a slow start" in 2012 once a flurry of Japanese catch-up buyers eases and because of the end of the accelerated-depreciation (business tax rule that has boosted truck sales) on Jan. 1," Jonas said. "Then the SAAR will improve to the 14 million level by May or June and exit the year in the high 14s."
Forecasters said the recovery of auto sales, from a low of 10.4 million in 2009, likely would continue the slow pace into 2012. The economic fundamentals most closely tied to auto sales -- personal income, unemployment rate and housing starts -- are still weak.
But other factors are helping sales, especially the need to replace America's aging vehicle fleet. The average age of vehicles on the road has risen to 10.7 years, up from 8 or 9 years during most of the past decade, said Tom Kontos, executive vice president of customer strategies and analytics for auction house ADESA.
"Americans have gone without for a very long time," he said. "'I need a car' is the biggest reason for optimism."
Morgan Stanley's Jonas cited higher leasing rates, new model launches and better credit availability.
It's no longer difficult to finance new-car buyers at Egglefield Ford in Elizabethtown, N.Y., said owner Dennis Egglefield.
"A buyer with a 620 credit score can get a loan in the 4 percent range," he said. "Lenders are actually trying to do some business."
A Better Year
Forecasts for 2012 U.S. light-vehicle sales, in millions of units:
Morgan Stanley -- 14
NADA -- 13.9
Center for Auto Research -- 13.8
TrueCar.com -- 13.8
LMC Automotive -- 13.8
Polk -- 13.7
Industry avg. -- 13.6
Manheim -- 13.6
ADESA -- 13.5
IHS Automotive -- 13.3
Kelley Blue Book -- 13.3
Wells Fargo -- 13
(Source: Automotive News, 12/26/11)
||Travelers Increasingly Choose Luxury in the Sky
Travelers increasingly are splurging in the air and scrimping on the ground.
A new American Express Business Insights study finds that spending on first- and business-class airline tickets increased by 9.1% and 5.4%, respectively, in the third quarter. But on the ground, travelers spent more of their dollars -- an additional 10.5% -- on economy lodging vs. only 2.2% more on luxury hotel accommodations in that time.
The reason for the seemingly bipolar spending: A growing frustration with flying and an improvement in the quality of economy lodging, industry analysts and travelers say.
"It really speaks to the fact that (consumers are) so concerned about the airline experience that they're willing to make the trade-off," says Maryam Wehe, senior vice president of hospitality at Applied Predictive Technologies, a consulting firm.
The spending trend applies to traveling for business or leisure, the study indicates.
Frequent traveler John Harding, a family law attorney in Pleasanton, Calif., says he doesn't mind paying more to fly business class. But when it comes to lodging, he's looking to save.
"It's a whole lot more miserable for me to spend five or 15 hours on an airplane in economy than for me to spend a couple of days in a budget hotel," Harding says.
Harding follows the same pattern whether flying for business or pleasure. He recently spent $1,100 each for business-class tickets to Hawaii for himself, his wife and two teenage children. But he spent less than $200 a night for the hotel.
Usually, he says, he tries to keep the nightly hotel bill under $125. "The only time I spend in a hotel is when I'm sleeping," he says. "I don't need all the accoutrements."
That seems to be the case among both affluent and average-income travelers. The American Express study found that midscale and even upscale hotels, the second-highest category, lost favor among all types of travelers, with declines of 3.4% and 3.9%, respectively.
"The most pronounced trend we're seeing is 'luxury or value,' which also speaks to the barbell effect apparent in travel -- and other sectors -- wherein consumers selectively choose either high-end or low-cost options, squeezing out the midtier providers with flat or declining spending growth," says Ed Jay, senior vice president of American Express Business Insights.
Other frequent business travelers say they're doing the same thing.
"A good comfortable bed and shower, the ability to work and get food and drink when needed works for me," says Stephanie Dickey, who lives in Richmond, Texas, and works as vice president of sales for an import company.
The upswing in business travelers opting for premium seats may also be attributed to companies loosening their policies on letting employees fly first or business class as the economy has improved.
According to a Global Business Travel Association report, just 42% of companies banned premium-class air travel this year compared with 47% last year.
And, analysts say, business travelers often may have had no choice but to upgrade their seats. In 2009, the economic downturn and high fuel costs forced airlines to cut flights.
Business travel has rebounded, but airlines have been slow to add flights, says Joel Wartow, senior director of the Solutions Group for Carlson Wagonlit Travel, a corporate travel agency.
(Source: USA Today, 12/13/11)
||Gen Y, Boomers on Same Smartphone Page
Boomers...they're just like Millennials, at least when it comes to smartphones.
According to research commissioned by Consumer Cellular (which is the official cell phone plan provider for the AARP), Boomers use their smartphones in much the same way that younger customers do.
One survey conducted by the company found that 90% of current 40-plus smartphone owners taught themselves the features and functions of the device, and nearly 60% cite email as the most-used app on their phones.
The survey also indicated that Boomers wanted to use their phones to access the Internet as much as younger consumers. A full two-thirds of the respondents said they use the phone's WiFi features to connect to the Internet.
According to the survey, 64% of male smartphone owners and 48% of female smartphone owners most frequently visited news Web sites (although men were three times more likely to visit sports Web sites, while women tend to visit social media websites).
Meanwhile, a quarter of them have given up their landlines in favor of cell phones. "These surveys show that Boomers are as interested in the latest phones and technologies as younger generations," said Consumer Cellular CEO John Marick, in a statement.
(Source: Marketing Daily, 12/23/11)
Daily Sales Tip: 'Let's Do This'
Get advances if you can't close.
"Let's do this" is a proven technique that allows you to talk about the next steps in the process while you move your prospect forward toward a final decision.
Let's suppose you're an hour into the sales call and the prospect has shared with you some of the problems he has, but he's still unsure of your product or service's value.
You want to go back to your office and study them prior to giving a proposal. In this case, you would say, "Let's do this. I'm going to go back and put some thought into this and then let's set a time we can come back in a week and take it a little further."
The better process manager you are, the better salesperson you are.
Source: Sales trainer Bill Caskey