Wednesday, February 29, 2012 | Edited by Daniel Moores
||Sizzling February Sales Point to a Bigger Year
New-vehicle sales are on fire in February, by almost all accounts. Now forecasters are recalculating -- and figuring on a bigger year than they expected just weeks ago.
The February selling rate is expected to hit 14 million units for a second straight month -- a surge that has prompted several analysts to boost their full-year forecasts for 2012.
J.D. Power and Associates expects February's seasonally adjusted annual rate of sales to be 14.0 million. TrueCar.com predicts a 14.3 million SAAR for the month, topping January's 14.2 million rate and up a million units from February 2011.
"This looks like the real deal," said TrueCar analyst Jesse Toprak.
Retail sales are driving the growth, said John Humphrey, Power's head of global automotive operations. He expects a retail SAAR of 12.0 million for the month, up from 11.0 million a year earlier, which would compensate for relatively lighter fleet volume.
"We're increasingly confident that the fundamentals are in place to support an upbeat outlook for the coming year," Humphrey said.
Carmakers and dealers are sounding buoyant, too.
"We're seeing some positive sales momentum in February," said Erich Merkle, Ford's chief sales analyst. "We're on a nice pace, a healthy sales increase over last year."
Many analysts are convinced that the market has shaken off its mid-2011 swoon and is in a sustained recovery from its 2009 low of 10.4 million unit sales. Indeed, February looks to be the sixth straight month with selling rates above 13 million.
Toprak forecast that February industry incentives would fall about $100 a unit from a year ago.
"We're selling the car, not the price," he said.
Since December, several independent forecasters have raised their 2012 outlooks.
Last week, IHS Automotive and Kelley Blue Book revised their forecasts to 13.6 million, up from 13.3 million. LMC Automotive, J.D. Power's forecasting partner, moved to 14.0 million from 13.8 million. TrueCar.com also moved to 14.0 million from 13.8 million, although Toprak said the change won't be official until after February sales are reported on Thursday.
Not everybody has changed since December. Morgan Stanley is sticking with its 2012 forecast of 14 million, said top analyst Adam Jonas. Polk is still at 13.7 million, although analyst Tom Libby said it will review that figure once February results are in.
Jeff Schuster, senior vice president of forecasting for LMC Automotive, said pent-up demand, greater credit availability and a rebound in leasing are helping boost auto sales this year.
"Overall, the economy is in a little better position," he said. "Two months is not a trend, but since September, we're seeing some (auto sales) consistency and we're easing back on the risk factors."
Toprak cited better economic fundamentals and pending 2012 introductions of "a slew of new products that give consumers the best choices they've ever had."
In addition, more leasing, low-interest car loans and greater lender competition for auto business are driving sales growth, he said.
Lenders have cut new-vehicle loan rates to the lowest level in at least four years, Experian Automotive reported last week. The research firm said the reason is that the cost of money is low and fewer car buyers are delinquent. The average interest rate for a new-vehicle loan fell to 4.52 percent in the fourth quarter from 4.84 percent a year earlier.
Despite adding 300,000 units to its 2012 forecast, IHS Automotive is carefully monitoring rising fuel prices and the potential for the European debt crisis to affect U.S. sales, said analyst Chris Hopson.
"Gasoline prices could hit a tipping point that would affect auto sales volume and not just the mix," he said.
The five publicly traded dealership groups that have reported fourth-quarter financial results in recent weeks all cite robust sales so far in 2012.
"It feels like things are loosening up," said Lithia Motors COO Bryan DeBoer last week. "Through the first half of February things are looking pretty solid."
(Source: Automotive News, 02/27/12)
||Toyota Tops Consumer Reports' Annual Survey
Japanese automakers dominated Consumer Reports' annual survey of the best cars, with Toyota Motor Corp. taking five of the "Top Picks" and Subaru Motor Co. taking the top score as best-overall automaker.
Subaru ousted Honda Motor Co. as the top overall manufacturer, and Honda fell to fourth place. Japanese automakers held the top five spots, with Nissan Motor Co. in fifth.
"While Japanese automakers still hold the top five spots, their lead is shrinking. In some of Honda's and Toyota's recently designed models, cost-cutting has become more noticeable," said David Champion, senior director of Consumer Reports' automotive test center.
Toyota's top picks are the Toyota Camry hybrid, Highlander, Sienna, Prius and RAV4, the only time since 2003 that one nameplate has had so many winners.
Two U.S. vehicles were among the top 10 picks. The Chevrolet Avalanche was best pickup, and the Ford Mustang was best sporty car.
The influential magazine's rankings of nearly 300 vehicles and 13 major automakers helps millions of car buyers decide what vehicle to buy annually, and automakers tout positive results.
Mazda Motor Corp. showed the biggest improvement, climbing to second place overall from seventh last year.
Ford Motor Co. fell the furthest, dropping from fifth place last year to 10th place this year, as the magazine raised concerns about the automaker's reliability and concerns about its MyFord Touch infotainment system. Ford was ahead of Mercedes-Benz in 11th place.
General Motors Co. was in 12th place and Chrysler Group LLC was in 13th place, though it was the second-most improved automaker. Chrysler's average road test score improved by eight points.
"GM and Chrysler are building nicer cars with each redesign," Champion said. "Still, their scores are dragged down by several older designs that score low or have reliability issues."
Overall Automaker Rankings
Top 10 Picks by Category
Family Sedan: Toyota Camry Hybrid ($29,052)
Sporty Car: Ford Mustang ($28,880 to $43,880)
Small SUV: Toyota RAV4 ($24,405 to $30,328)
Affordable Family Sedan: Hyundai Sonata ($21,800)
Family Hauler: Toyota Sienna V6 ($35,810)
Sports Sedan: Infiniti G ($34,225 to $37,225)
Green Car: Toyota Prius ($26,750 to $28,217)
Small Car: Subaru Impreza ($21,345)
Pickup Truck: Chevrolet Avalanche ($47,435)
Family SUV: Toyota Highlander ($38,578 to $47,255)
(Source: The Detroit News, 02/28/12)
||Car Buyers Finding Fewer Options When It Comes to Options
When it comes to ordering new cars, buyers are finding you can't always get what you want.
Automakers are drastically cutting the potential combinations of trim levels and options in a trend that recently has accelerated:
Automakers say fewer choices lead to higher quality because they perfect the few configurations. It avoids "creating complexity for the sake of complexity," says Chuck Russell, General Motors director of compact cars in North America.
- Buick offers its new Verano compact in only 18 potential combinations of trims and options.
- Volkswagen slashed the ways you can order a Passat midsize sedan from 148 to 15.
- Toyota cut the ordering complexity of its current-generation Sienna minivan by 80%.
It also cuts costs with fewer combinations to plan for and track on assembly lines. And it simplifies inventory planning for dealers.
One way automakers cut complexity is to herd options into "packages." Sienna's "preferred" package, for example, bundles power side doors with satellite radio. To get a Passat with a sunroof, you also must buy the premium sound system.
The potential downside: "You end up buying things you don't want or need in order to get things you do want or need," says John O'Dell, a senior editor for car research site Edmunds.com.
But automakers say the lower costs may be passed on to buyers and that they've gotten better at figuring out bundles buyers want.
"It's actually a relief. They are removing the work of trying to figure out what I want," says Kristen Andersson, senior analyst for shopping site TrueCar.com, who says buyers can even end up happier, with goodies they wouldn't have ordered but later love.
Not all makers are embracing the trend. High-end brands are more likely to still let buyers pick and choose. About 30% of Porsche buyers, for instance, custom order their cars. "It's expensive to do it the way we do it," spokesman Dave Engelman says. "It slows down the assembly line."
And even mainstream makers are going that way for key models.
Chrysler Group, for example, has cut combinations on many vehicles, reducing the number of ways you can order some of its biggest-selling vehicles for 2012, like the Dodge Durango crossover or the Grand Caravan minivan. It reduced trim levels to five, down from 12. But for its $15,995-to-start, all-new 2013 Dodge Dart compact, it is allowing custom factory orders in up to 100,000 combinations.
Dodge Director Richard Cox says à la carte choices include "citrus peel" paint -- a "vivid greeny yellow" -- and push-button ignition. "They might want the 8.4-inch touch-screen but don't want navigation. We give them the ability to get that (without having to buy) a $3,000 package."
How does a plant handle that without driving up cost? "World-class manufacturing," says Cox.
(Source: USA Today, 02/27/12)
Daily Sales Tip: Taking Personal Accountability
It's a given customers feel more secure agreeing to do business with a salesperson who has their best interests at heart.
One of the most effective ways to convey that sentiment is by taking personal accountability for ensuring all issues are resolved quickly, and -- more importantly -- the customer is satisfied with the outcome.
It might even be helpful to let prospects know during the initial selling process that you're always available to answer any questions they have.
This way, the two of you are in sync every step of the way, which ensures you'll be the first to know when or if any issue does arise.
More importantly, it allows salespeople to transform the occasional service issue into an opportunity to build trust, increase loyalty, and, ultimately, create the type of customer relationships great businesses are built upon.
Source: Adapted from From a Good Sales Call to a Great Sales Call, by Richard M. Schroder