Wednesday, December 12, 2012 | Edited by Daniel Moores
||Which Vehicles Will Be the Best-Sellers of 2013?
For decades, a relatively small number of cars and light trucks have dominated U.S. sales, whether American, Japanese or European manufacturers built them. This trend goes all the way back to the Ford Model T.
The dominance of the market by a few vehicles continued this year, and 24/7 Wall St. forecasts it will continue in 2013.
Twelve million cars and light trucks were sold in the U.S. through the first 10 months of 2012. According to sales data provided by Edmunds.com, about 3.7 million of these were from sales of just 16 of the more than 250 models available.
The models have more than one characteristic in common. They tend to be inexpensive sedans that get high gas mileage. Every vehicle on the list has a base price of under $25,000. Fourteen have base models that have four-cylinder engines, which tend to get better mileage than engines with six and eight cylinders.
And of the 16 top-selling models, Japanese manufacturers will continue to dominate the list next year. Of the seven best-selling cars for 2013, six are Japanese. The exception is Ford's F-150 pickup, which has been a staple model line of the No. 2 U.S. car company since the 1940s.
Japanese cars usually do well on consumer quality surveys, and these manufacturers, which include Toyota, Honda and Nissan, have been in the high-mileage end of the market since they became popular in the 1980s.
Using the figures from Edmunds.com, 24/7 Wall St. has forecast the "Sweet 16" cars and light trucks that will sell best in 2013, including projected full-year sales.
1. Toyota Camry, 2013 sales forecast -- 483,977
2. Ford F-150 -- 455,305
3. Honda Accord -- 387,779
4. Nissan Altima -- 358,187
5. Honda Civic -- 357,621
6. Toyota Corolla -- 333,933
7. Honda CR-V -- 327,955
8. Ford Fusion -- 290,424
9. Chevrolet Silverado 1500 -- 282,627
10. Ford Escape -- 273,846
11. Chevrolet Malibu -- 251,403
12. Chevrolet Cruze -- 247,870
13. Chevrolet Equinox -- 247,468
14. Ford Focus -- 243,965
15. Hyundai Sonata -- 235,218
16. Hyundai Elantra -- 215,721
(Source: USA Today, 12/05/12)
||Detroit's Unsold Cars Pile Up
Detroit automakers are piling up big stocks of passenger cars at dealers despite brisk new-vehicle sales in the U.S. -- a problem that executives vowed to avoid since their painful downturn three years ago.
General Motors Co. ended November with enough Malibu sedans and Camaro sports cars to last more than five months at the current rate of sales. Ford Motor Co. had more than four months' worth of Fiesta subcompacts and Chrysler Group LLC had a nearly six month stock of its 2013 Dodge Dart.
It's an abrupt reversal from a year ago. In 2011, U.S. automakers' market shares, especially in compact cars, soared as gasoline prices jumped and Japanese auto makers struggled with back-to-back natural disasters. This year, production at Toyota Motor Corp. and Honda Motor Co. came roaring back. Both began offering deeper sales incentives, something they hadn't done for many years. That has the Detroit Three in a quandary: Do they cut production or match incentives?
"They (the Japanese auto makers) really had to get aggressive about getting their market share back and maybe that did catch some by surprise or even flat-footed," said Edmunds.com automotive analyst Michelle Krebs. Toyota and Honda "have a lot of zero-percent financing" rates.
"Look at the ads, you see a lot of zero, zero, zero," she said. Edmunds.com also estimates that 38% of Toyota-financed sales last month carried interest-free loan rates.
Toyota's average incentive per vehicle rose to $2,075 in November from $1,717 in January, according to automotive tracking firm TrueCar.com. Zero percent interest rates aren't counted in TrueCar's incentives tally.
Honda, meanwhile, has increased its average incentive to $2,428 from $1,978 in February despite releasing new versions of its top selling cars in the past year. The largest incentives offered in the U.S. last month were from Japan's Nissan Motor Co., whose Altima has become a top selling sedan. Its average jumped to $4,273 a vehicle last month from $2,764 in January.
That is not to say the U.S. automakers aren't also using incentives. Ford now offers as much as $2,895 off its 2013 Focus sedan, which had only two months' of inventory to start the month. Fiat SpA's Chrysler has offered up to $5,000 off its Ram pickups, which had 3.5 months of inventory to start the month. GM has recently offered between $2,900 and $3,500 in average incentives for its vehicles, according to Truecar.com.
But Detroit auto makers didn't expect rivals recuperating from a tsunami and floods to go toe to toe. GM started December with 788,194 unsold cars and trucks, and warned it won't meet a target of finishing the month with a U.S. inventory of less than 670,000 new vehicles. GM executives said they were caught off guard by the heavy incentives offered by others and will idle two plants for an additional week in December. It may take more steps as needed.
GM also miscalculated demand for its pickup trucks. The industry norm for U.S. automakers is between 60 days and 70 days of sales in inventory. GM had 138 days worth of Chevrolet Silverados at the start of this month. In passenger cars, its Chevrolet Cruze inventory jumped to 64,390 vehicles or 96 days. One of the two plants that GM will idle this month produces the Cruze.
"We thought the economy would have been further along at this point but as we look into December and 2013, we will get a tailwind from housing which benefits not only autos but the entire economy," said GM spokesman Jim Cain. "The one thing we won't do is commit the sins of the past and lose our discipline around rental cars and incentives. Our competitors may be doing it, but we have come too far to go backward and do something that may hurt our brands."
Ford, which finished November with 73 days of total inventory, insists the overall number "is right exactly where it needs to be," said U.S. sales analyst Erich Merkle. "We are very comfortable with our inventory levels for the month of November and as we approach historically the strongest selling month of the year."
In contrast, Toyota has kept its U.S. inventory at about two months of sales. For example, it finished November with 68,975 Camrys and 53,835 Corollas in the U.S., a 60 day supply of each. Its big sedan, the Avalon, has 120 days of sales on dealer lots, or 6,266 vehicles.
Producing too many cars and trucks is a problem the U.S. automakers have wrestled with since the late 1970s. To keep their factories humming, GM, Ford and Chrysler would build vehicles and stock them at pop-up parking lots created on vacant land throughout the Detroit area. When the stocks grew onerous, they would unleash heavy incentives that eroded profitability and brand image.
Today, all three face tough decisions on cutting production or profitability as inventories have soared. Ford, for instance, finished November with 18,336 unsold Fiestas, or 124 days' worth of supply, compared with 96 days in October.
The Dart, Chrysler's most important new offering of the year and its first compact sedan since 2005, began December with a 173 day supply. Sales of the Dart slipped in November compared with the previous two months.
Reid Bigland, chief executive for the Dodge brand, said Dart sales will break through the 5,000-vehicle mark in December, typically a strong selling month for automakers. There are no plans to offer incentives beyond the $750 in cash as part of its year-end sales promotions.
"To throw $1,000 or $2,000 on the Dart is always an option," Mr. Bigland said. "No question the car will respond from a sales perspective...We're just pretty content with where we're at right now."
(Source: The Wall Street Journal, 12/05/12)
||Study Finds Innovation Pleases Car, Truck Owners
Strategic Vision's new Total Value Index study finds that innovation is driving how consumers feel about the auto brands they buy.
The study, which looks at over 350 cars and trucks owned by 77,000 people, gives a snapshot of how consumers feel, per dollar spent, about how much of a value they are getting from their vehicles. And the most important parameter is innovation.
Consumers feel Hyundai and Kia are especially good at that, particularly when it comes to how the cars look. The Hyundai Equus luxury car is the highest scoring model in the study. The firm says Kia Sportage and Sorento models also lead their respective segments. Other brands that did well were Volkswagen and sibling Audi, which had strong capability and "fun-to-drive" scores. BMW and MINI were good in sporty auto segments like coupe and premium roadster.
Alexander Edwards, president of Strategic Vision, told Marketing Daily that innovation isn't just about technology, but also defined by styling and performance.
"With Hyundai, it's styling; with Volkswagen, it's the sporty feel and TDI (diesel) technology," he says, adding that styling is the strongest driver of innovation. "We see style as having a huge impact on perception, especially with vehicles like (Hyundai) Elantra and Sonata. It's a look that is more up-to-date, what the next generation of vehicles should look like."
Edwards says "functional luxury technology" is the second-most powerful driver for ownership and consideration.
"It seems luxurious but also fits a very specific purpose. That could be telematics." He adds that even if new platforms aren't ready for prime time, most owners are still pleased with them, and are willing to be forgiving at least for another couple of years. That, he says, gives automakers some breathing room.
"But they have to get it right the next time, or they will lose that customer."
Ford, for example, has taken risks in this area that have not paid off initially -- MyFord Touch being an example -- but the firm says buyers appreciate Ford innovation and benefits. Ford has eight models, including Ford Flex, and F-150, leading in their segments. Chevy Volt won in the Special Category area, and has the second highest Total Value score in the industry. Buyer sentiment gave the Volt an almost perfect score in the study.
At the corporate level, Volkswagen won the most segments with Golf, Jetta Wagon, CC, Eos, Audi A3 Wagon, Q5 and Q7. At third was Honda, but it didn't get an increased value in the Innovation area, per the firm. That's a critical measure, per Darrel Edwards, co-founder of the Tustin, Calif.-based market research firm. He explained that factors like resale and MPG are less definitive now that many brands are getting competitive at both of those.
"Quality is at the base of value but in looking for that key influencing factor that most heavily predicts future success, 'True Innovation' will be the common denominator of winners."
Most improved are the Chrysler and Dodge siblings. Again, innovation improvement fueled the lift: last year the brands' innovation scores were the worst in the industry. This year they are industry average.
The following list contains the number one ranked vehicles in Total Value in their segments as rated by new vehicle buyers:
Small Car -- Hyundai Elantra Sedan
Small Multi-Function -- Volkswagen Golf
Mid-Size Car -- Hyundai Sonata
Mid-Size Multi-Function -- Volkswagen Jetta Wagon
Large Car -- Volkswagen CC
Near-Luxury Car -- Lexus ES 350
Luxury Multi-Function -- Audi A3 and Porsche Panamera
Luxury Car -- Hyundai Equus
Specialty Coupe -- Mini Cooper Coupe
Premium Coupe -- Chevrolet Corvette Coupe
Convertible -- Volkswagen Eos
Premium Convertible/Roadster -- BMW Z4 Roadster
Minivan -- Honda Odyssey
Entry Utility -- Kia Sportage
Mid-Size Crossover Utility -- Ford Flex
Mid-Size Traditional Utility -- Kia Sorento
Large Utility -- GMC Yukon XL
Near-Luxury Utility -- Audi Q5 and LandRover Evoque Coupe
Luxury Utility -- BMW X6 and Audi Q7
Standard Pickup -- Honda Ridgeline
Full-Size Pickup -- Ford F-150
Heavy-Duty Pickup -- Ford F-250/350
Special Category -- Chevrolet Volt
(Source: Marketing Daily, 12/04/12)
Daily Sales Tip: The 'Problem Creator'
Solving your prospects' or clients' problems is no longer an effective sales strategy. The successful salespeople in today's marketplace and the marketplace of tomorrow will be creative problem creators. Effective salespeople will be ruthless in their pursuit of uncovering or creating an awareness of client problems that they weren't even aware they had. They will think far ahead of their clients, not just along with them.
If you want to guarantee your success in the coming years, it will only take one approach. Find out what is preventing your prospects from getting a good night's sleep. Determine what is keeping them up at night worrying and you won't have to worry about customer loyalty, reducing prices or over-aggressive competition.
Source: Sales speaker/trainer Tim Connor