Wednesday, January 30, 2013 | Edited by Daniel Moores
||2013 Vehicle Sales Off to a Good Start
New car sales are off to a strong start in January as the industry's retail sales rate moves to its best level in five years, according to the monthly sales forecast from J.D. Power and Associates' Power Information Network and LMC Automotive.
January new-vehicle retail sales are expected to come in at 812,600 vehicles, which would represent a seasonally adjusted annualized rate, or SAAR, of 12.9 million units, and well ahead of the expected 12.4-million-unit annual level for 2013. Retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.
Adding in fleet demand, the estimated SAAR for January could hit 15 million units, considerably higher than the 13.9 million sales pace in January, 2012.
"The year is off to a fast start, which bodes well for the remainder of 2013," said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates. "Building on the momentum the industry has been gaining over the past two years, sales remain on a trajectory to return to pre-recession levels within the next few years."
Other forecasters echoed that sentiment, suggesting that 2013 will get off to a good start in spite of -- or even because of -- some recent challenges.
"January's numbers show that vehicle sales stayed strong, even after the holiday ads faded away and the replacement sales following Hurricane Sandy started to dry up," says Edmunds.com Senior Analyst Jessica Caldwell. "These results certainly reinforce the exuberance and optimism that filled the air at the North American International Auto Show in Detroit."
Edmunds is also predicting significant year-over-year sales increases for major automakers in January.
Total light-vehicle sales in January 2013 are projected to reach 1,027,700 units, an 8% increase from January 2012. Fleet share is expected to dip to 21%, considerably lower than the 25% share in January 2012, signaling continued discipline in the industry-related rental car fleet market.
The brisk sales paces is also prompting carmakers to raise production, while the overall inventory levels have fallen back to a near normal mark.
Based on a strong finish in 2012 and a higher-than-expected pace to begin 2013, LMC Automotive is increasing its 2013 U.S. forecast for total light-vehicle sales by 100,000 units to 15.1 million. In addition, the outlook for retail light-vehicle sales increases to 12.4 million units from 12.2 million units for 2013.
"The global industry is looking for the United States to offset risk in Europe and potentially slower growth in the emerging markets in 2013," said Jeff Schuster, senior vice president of forecasting at LMC Automotive. "The good news is that the U.S. market is primed to over-deliver as the recovery heats up. The concern now is shifting from the continuing recovery to whether the automotive supply base will be able to keep up with hearty demand."
North American light-vehicle production was 15.4 million units in 2012, 18% higher than in 2011, marking the first time since 2007 that North American production has surpassed 15.0 million units.
Vehicle inventory returned to an ideal level in early January with a 59-day supply, compared with 69 days in December. A strong sales pace in November and December 2012, coupled with the holiday production shutdown period in late 2012, drove inventory down to the current level. Overall, there are approximately 3.1 million units currently available on dealer lots or in transit -- an increase of about 600,000 units from January 2012.
Schuster said LMC Automotive expects 2013 North American production to be 15.9 million units in 2013, a 3% increase from 2012, with further upside potential contingent on the pace of demand in the first half of the year. For 2014, the North American production forecast is expected to increase to 16.6 million units.
"With inventory in check and demand remaining strong, all indications suggest that production levels -- and automotive supplier profits -- will be at a high pace during 2013 for North America," Schuster said.
(Source: The Detroit Bureau, 01/28/13)
||$30,000 is the New Luxury-Car Hot Spot
There's a new price battleground -- $30,000 -- for luxury-car makers as they chase younger buyers with small front-wheel-drive vehicles that are sliding down into mass-market territory.
Mercedes-Benz, BMW, Audi and others are going after the 75 million 30- to 40-year-olds who are forcing "the biggest changes the automotive industry will face," said Bernie Glaser, head of marketing for Mercedes-Benz USA. "They have big expectations for products and brands."
Those buyers cannot and will not pay the $40,000-plus sticker prices some of their status-conscious baby boomer parents can afford, industry researchers say. Yet they demand "attractive highly styled cars and the right technology," Glaser said.
Nonluxury brands are likely to feel the heat from new models such as the Mercedes-Benz CLA, which was shown to journalists just before the recent Detroit auto show.
"They could eat into the mass market," said IHS Automotive analyst Rebecca Lindland. "A $30,000 Mercedes -- and they will cap the car at $35,000 -- is an incredibly competitive price point, even against the higher-end Honda Accord."
The young shoppers targeted by Mercedes, BMW and Audi want fuel-efficient four-cylinder engines -- the engines most luxury brands shunned for the United States until two years ago -- without compromised performance.
Many of the cars will be front-wheel drive, although they'll perform like luxury vehicles, Mercedes-Benz and BMW executives say. All-wheel drive will be optional on many models.
"Our small cars will drive and feel like BMWs," said Paul Ferraiolo, manager of product planning and strategy for BMW of North America.
Mercedes-Benz is leading the charge with the fwd CLA, a sleek sedan with coupe styling that will debut this fall. It's the first of three new compacts priced at about $30,000 that Mercedes will bring to market by early 2015.
BMW has announced it will offer a 320i sedan starting this spring for $33,445, including shipping -- $4,300 lower than today's entry-level 328i sedan.
"It is a full-blown 3 series," said Ludwig Willisch, CEO of BMW of North America. "We wanted a clear offer to attract younger people who enter the brand."
While BMW says the average 3-series buyer is 46, the 320i will appeal to 30- to 40-year-olds, said Victor Leleu, 3-series product manager.
"They want the 3 series, and it is a hard car for people who are in their first job to attain," he said.
In August, BMW introduced the X1, a compact crossover with rear-wheel drive or optional awd that starts at $31,695, including shipping. It's small -- 175.5 inches long -- but not as small as BMW's new fwd family of cars that starts to arrive in 2014.
The first of those models will be a wagon based on the Active Tourer concept that debuted at the Paris auto show in September. BMW won't specify what other fwd models are in the pipeline but says the platform will be used for at least 12 new or replacement vehicles for BMW and Mini.
Early next year, Audi plans to introduce the new A3, a fwd four-door sedan smaller than the A4 that is meant to compete with the BMW 3 series. Audi's Q3 crossover also is coming next year.
The A3 will be priced under $30,000; and if Audi continues its aggressive pricing strategy, it will position the Q3 below BMW's X1 and bring it in at $30,000, or just over.
Cadillac has entered the fray with the ATS compact sedan that went on sale in September with a base price of $33,990 with shipping.
This summer Infiniti's volume-leading G37, which starts at $38,255, including shipping, will be reborn as the Q50, using the G's existing 3.7-liter V-6. But Infiniti later plans to introduce a smaller-displacement turbocharged four-cylinder optional engine derived from the Mercedes Benz C-class four-cylinder.
Infiniti's more ambitious move will come in the next two years with the introduction of a smaller, lower-priced vehicle that will become the brand's entry point.
Mercedes-Benz will follow up with the GLA compact crossover in mid-2014 and the B-class electric sedan in early 2015. The CLA has collision prevention, attention assist and stop-start as well as the mbrace2 cloud-based entertainment and communications system that offers concierge services and links applications with smartphones as standard equipment.
Lindland of IHS says the $30,000-or-so Mercedes-Benz offerings could lure mass-market brand customers.
"You could argue that people will say, 'For just a little more money I can buy a Mercedes rather than the touring version of the Accord that goes for $35,000,' " she said. "It presents a threat to the mainstream marketplace. And it is becoming more socially acceptable to be in a luxury vehicle."
Still, outsiders wonder whether a $30,000 Mercedes-Benz will damage the brand's image. Mercedes-Benz USA CEO Steve Cannon answers: "The only way to dilute the brand -- just ask Jaguar about the X-Type -- is to do it wrong. That is why we held Stuttgart off for many years and said we will not bring the (first-generation) A and B class because those vehicles did not fit the Mercedes-Benz brand. They were small, boxy and utilitarian."
He says a bigger danger than brand dilution is not bringing new buyers into the brand.
Going more mainstream could be a challenge for some luxury brands, said John Mendel, executive vice president of American Honda Motor Co.
"You can de-content too much," he said. "I don't know if people buy a brand because it's de-contented -- if it's Cartier but it's not real silver," he said. "There's a lack of genuineness if you err on the side of being the Ferrari of Costco."
(Source: Automotive News, 01/21/13)
||How Auto Makers Keep You Coming Back
John Kwiecien, 47, is a commercial photographer who reckons he has owned vehicles from about 10 different brands since he started driving.
"I don't want to put myself in a box," says Mr. Kwiecien, who lives in suburban Detroit. He chooses cars that fit his lifestyle at a given time. Right now, he's driving a Volkswagen GTI, but he and companion Camille Milroy spent part of a recent Sunday touring the Detroit auto show with an eye on a Jeep Wrangler Unlimited to take on outdoor adventures with their two "big, hyper dogs."
If Mr. Kwiecien is the epitome of the automotive brand-hopper, Susan Imbrunnone, 49, also from the metro Detroit area, is a classic loyalist. She says she's on her fifth Honda Civic and isn't looking to switch. "I don't have any trouble," she says. "They're reliable and they're good on gas."
Auto makers are paying close attention to consumer attitudes about sticking with a brand, because loyalty isn't just an admirable personal virtue to them. It's money in the bank. That's something every driver should bear in mind when car shopping or wrangling with a dealer.
The latest R.L. Polk study of brand and vehicle loyalty in the auto industry found that 48% of people who bought a car in 2012 bought from the same brand they were already driving. Polk says the three brands with the most loyal customers were Ford, with 61.2% repeat buyers, Mercedes-Benz (57.7%) and Toyota (54.4%).
Reasons for staying loyal can vary. For buyers across the vehicle and price spectrum, the top attributes that inspire a purchase include fuel economy, reliability and pricing, according to consumer research firm J.D. Power and Associates. In the luxury segment, though, the top three criteria include performance, quality of workmanship and exterior styling.
For car makers, it costs far less to sell to a satisfied repeat customer than it does to win one away from a rival brand. Loyal buyers tend to spend more with a brand over time, but analysts say the days when a car dealer could charge loyalists a lot more than a first-time buyer are mostly gone -- due to the easy availability of price information.
"There is no more important topic for our industry, in terms of the revenue for different companies, than loyalty," says Jim Farley, executive vice president of global marketing, sales and service for Ford Motor Co.
Because auto makers recognize the revenue potential in loyal customers, they are offering more incentives to stay with the brand. And whether you stick or not, it is often worth taking advantage of the offers.
The most basic weapons in the automotive loyalty wars are the cash "loyalty" discounts that car makers offer at various times, including at year-end and during end-of-summer clearance time. Buyers shopping around can often have those discounts matched by rival makers offering "conquest cash" to pry customers out of their old brand. Sometimes these deals aren't publicly advertised -- you'll need to dig in automotive websites and press the dealer.
Customers who need more than point-of-sale cash discounts to inspire loyalty will find that car makers are trying to offer more value in other areas.
About a quarter of General Motors Co.'s Chevrolet dealers, for example, participate in what the auto maker calls the "GM Preferred Owner" program. Customers can sign up and get points, or credits, when they get their cars serviced at the dealership. The reward credits can be converted into discounts on repair work or on a new vehicle, says Don Johnson, vice president for sales and service at GM's Chevrolet division. Mr. Johnson says he's pushing more dealers to offer the program.
Maintenance and repair services -- done well -- can be a key to earning consumer loyalty, industry executives and analysts say. This is why more dealers are offering such things as fast, low-cost oil changes to persuade drivers that coming back to the dealership for maintenance isn't just the road to an empty wallet.
German luxury car maker BMW has for several years offered buyers of new BMWs four years of free maintenance. The deal has an obvious benefit to owners, but it helps BMW and its dealers, too, because, as BMW North America's executive vice president for operations Peter Miles puts it: "They've got to come back."
Before BMW offered the free maintenance program, only about 42% of customers got service at the dealership. Now, close to 100% do during the first four years. That gives dealers more opportunity to nurture a relationship with customers, and potentially pre-empt any wavering toward, say, Mercedes-Benz.
Beyond that, BMW and its dealers reward particularly loyal customers with invitations to golf tournaments, racing events or access to BMW's performance driving track near its U.S. factory in South Carolina.
Ford Motor Co., among others, uses its vehicle-financing arm, Ford Credit, as a loyalty tool, using finance data to target customers with offers to end a loan or a lease early -- and to encourage them to pick out a new Ford to drive.
As vehicles have become more reliable, people are gradually widening their shopping lists, according to new research from J.D. Power and Associates. Only 21% of shoppers buy without looking at other cars, compared with 29% in 2010, the market research company found.
Loyalty discounts, service deals and early lease buyout offers have one aim, says Larry Dominique, president of Automotive Lease Guide and a former executive with Nissan Motor Corp.'s U.S. arm: "Their whole goal is to stop you from shopping."
Mr. Dominique says brand loyalty is a factor in the formulas companies use to predict a car's value at the end of a lease -- a figure that directly affects the math determining the monthly lease payment.
Auto-industry consultancy ALG maps brands according to loyalty and resale value. Those with high loyalty and high resale values -- Honda, Lexus and Mercedes-Benz -- often aim to charge higher prices based on their brand power.
Bargain hunters, Mr. Dominique says, should look to brands that have high resale values -- an indicator of good quality and attractive design -- but haven't yet built a strong loyalty base. Makes in that category include Hyundai, Audi, Kia, Volkswagen and Mazda.
(Source: The Wall Street Journal, 01/23/13)
Daily Sales Tip: Prospecting the Right Way
Unless we have an all-referral business, we all have to prospect to generate new business opportunities. To do that effectively, follow these simple tips and watch your results improve:
1. Ask for permission. Ask if they are open to talking with you now. If they are, ask why they are open. If they aren't open to talking with you now, move on.
2. If you've engaged the prospect in a conversation, ask if your follow-up would be welcomed or an intrusion.
3. If your follow-up will be welcomed, ask when your follow-up would be appropriate. When you arbitrarily set the follow-up date, you have no idea what is on the prospect's plate and you have no idea of their priorities. If you have secured permission to follow up and then asked deeper questions about when, you start to align yourself with their priorities and you don't become a pest.
Most salespeople get frustrated waiting for the prospect to respond. Then they get nervous and tend to start stalking. If you let the prospect set the timetable for follow-up, not only are you building respect and rapport, you are also reducing the amount of time you spend stalking the prospect and losing rapport. You'll also reduce your frustration levels and the number of voicemails you leave for prospects who don't return them.
4. Ask for permission to send business articles that apply to the prospect's problem. Doing that is as simple as this: "I'm constantly staying on top of industry trends and issues. If, between now and the time I am supposed to follow up, I find an article or an idea that might make sense for you, would you be open to receiving that?"
Securing permission to send articles and ideas gives you permission to "market" to them. Giving them something they can use, giving them something of value instead of "just checking in" sets you apart from everyone else. Now your follow-up is about them, and not about you. And when you voicemail them you can insert a fact the prospect can use, thereby adding value.
5. If they are open to receiving articles or ideas, ask them to tell you more about what they are looking for. That will give you tremendous insight into their priorities and how they think. It will also help you qualify the prospect in a different way and help set yourself apart from the rest of the herd.
6. Use reverse psychology. When leaving your voicemail, don't say "Just checking in..blah blah blah!" Instead, try "I found this fact (or I had this idea) and wanted to make sure you had it." Then, leave your name and number, but don't ask them to call you back.
Everyone says, "Call me back." If the prospect is interested, they'll call. If they aren't interested, they won't. So don't ask. Calling back is understood. If you've piqued their interest, they will pick up the phone, or email you, and further engage. Telling the prospect to call you back won't make them contact you if they aren't planning to already. So don't bother. You'll be less frustrated and the prospect will feel less guilty.
Prospecting today has changed. You've got to do the things that get prospects' attention and add value. If you are just checking in, your prospects are checking out. Prospect the right way.
Source: Sales author/trainer Ryan Sarti