Wednesday, May 8, 2013 | Edited by Daniel Moores
||The State of Radio's No. 1 Advertising Category
Automotive expert John McElroy addressed the recent RAB Board of Directors meeting in Detroit. During his appearance, he outlined the state of the auto industry, why it is doing well, and what the future holds, including the "next big thing" -- driverless vehicles.
The audio of his 20-minute presentation is available to download here.
(John McElroy is the host of "Autoline Daily," the first industry webcast of industry news and analysis. He is also the host of the television program "Autoline This Week," a weekly half-hour discussion program featuring top automotive executives and journalists. McElroy also broadcasts five radio segments daily on WWJ Newsradio 950, the CBS affiliate in Detroit, and writes a weekly blog for Autoblog.com and a monthly op-ed article for Ward's AutoWorld.)
||Japanese Auto Makers Lose Their Midsize Edge
Ford Fusion, Hyundai Sonata, VW Passat, Others Pose Real Challenge After Closing Quality Gap
For Charley Smith, buying an affordable family sedan used to be a no-brainer. He mainly bought vehicles from Nissan Motor Co., believing Japanese autos cars stood out for their quality, reliability and resale value.
But when looking for a new vehicle a few months ago, the 63-year-old Templeton, Calif., sales manager broadened his search, checking out models from Volkswagen AG, Hyundai Motor Co. and the Detroit auto makers. He wound up buying a Fusion Hybrid, from Ford Motor Co., his first domestic-brand car in years.
Mr. Smith said he felt "an emotional connection" to the $27,200 Fusion's curvaceous creases and edgy design. Ford's gains in reliability and fuel economy were a selling point, too. "The Fusion just won in every category," he said.
His purchase reflects a fundamental shift in the large and influential midsize sedan market. Competition is greater and consumer deals are rising. Nissan last week cut the list price of its redesigned Altima by 2.7%, or $580, and General Motors Co. in February dropped its Malibu sticker by up to $770 and is offering rebates.
A weaker yen may give other Japanese makers room to lower prices as well.
A few years ago, Toyota Motor Corp.'s Camry and Honda Motor Co.'s Accord were top sellers by a wide margin. Their share fell to 28% in the first quarter, from 37% of the U.S. midsize sedan market in 2008, according to Edmunds.
Now, it is a wide-open market. Ford and GM have turned their midsize sedans into real challengers and closed the quality gap with Japan; meanwhile, the Japanese were knocked off stride by recall troubles that hurt Toyota in 2010 and production disruptions in Japan that resulted from the 2011 earthquake and tsunami.
The rising challengers include Ford's Fusion, with a 11.9% share of U.S. sales through April, up from 6.8% for all of 2008, Kia Motors Corp.'s Optima at 6%, up 3.9 percentage points, and Volkswagen AG's Passat at 3.9%, up 2.5 percentage points, according to auto website Edmunds.com.
"We've never had anything like this," said Michael J. Jackson, chief executive of AutoNation Inc., the large chain of new-car dealerships. "If you look at the quality, innovation and distinctive design of these midsize vehicles, this is what luxury cars used to be 10, 15 years ago."
Winning over midsize car buyers is crucial for auto makers. In 2012, 3.5 million midsize cars were sold in the U.S. -- a quarter of the entire light-vehicle market. At an average price of $25,000, that is a $90 billion business.
Toyota and Honda's grip on the segment started to loosen in 2011, following the arrival of a boldly designed Hyundai Sonata and cheaper VW Passat. New versions of the Nissan Altima, Ford Fusion and Chevrolet Malibu arrived in showrooms last year.
Chrysler, on the other hand, is still struggling with aging midsize cars that won't be replaced for at least another year.
Both the Camry and Accord were recently redesigned, too. But they are no longer head and shoulders above the pack. "People buy them because they're reliable but they've started to fall into the appliance category," said Mr. Smith, the Fusion buyer. Last month, sales of the sedan jumped 28% over the year-earlier month.
The Ford Fusion is rated to go 36 highway miles on a gallon of gas, matching the Accord's rating, and the Nissan Altima has a 38 highway miles rating, three more than the Camry.
Further intensifying the competition is the fact that the midsize-car market is no longer growing as fast as it did last year, putting more pressure on auto makers to steal buyers from rival brands to boost sales.
"The Camry is under intense pressure," said Tom Libby, an auto analyst for research firm, R.L. Polk. "It is not just one model anymore. For the buyer who wants a midsize family car, it is a perfect time because of the competition."
The new competition has forced the Japanese to do something unexpected: Raise their discounts and other sales incentives. Toyota recently began offering zero-percent financing on its 2013 Camry, hoping to spur sales after a sluggish start to the year.
While still the market's top-seller, Camry sales were down 7% through April this year. The average net price on a Camry last month was about $21,336, down about $2,700 from March 2012, according to Edmunds.com.
The Accord, while still the second-best selling car in the U.S., is falling short of Honda's internal goals, said John Mendel, the company's vice president for sales. In April, Honda's sales fell 5% from the same month a year ago. Honda now has among the lowest incentives in the market for its midsize sedan.
GM, Ford, and others are also nudging up incentives. GM is now offering up to $2,000 in cash rebates on the Malibu on top of its price drop. Ford is offering $1,500 in rebates on the Fusion. Most manufacturers are offering dealers discounts that they can pass on to consumers to close sales, too.
"It will probably get crazy before the year is over," said Mike Shaw, who owns dealerships in Texas, Colorado and Louisiana with Toyota, Honda, Chevrolet, GMC and Ford franchises. "There are great deals out there already, but I think it is going to get better as the year goes on."
(Source: The Wall Street Journal, 05/06/13)
||Survey Ranks Shopping Preferences of New Car and Truck Buyers
New-car and -truck buyers ranked Fuel Economy, Ownership Costs, Brand Perception, Safety and Vehicle Design as the five most important attributes considered when shopping for a vehicle, according to a recent survey by NADAguides.com.
Factors were scored on a scale from 0 to 100, with a higher score indicating greater importance.
Passenger Car Survey Results
Both new-car and -truck shoppers ranked Fuel Economy as the most important factor. Car buyers placed a greater emphasis on Fuel Economy compared to truck buyers with scores of 89 and 84, respectively.
Car buyers gave Vehicle Design a score of 76 making it the second most important factor considered behind Fuel Economy.
"The fact that car shoppers ranked Vehicle Design so highly is a reflection of the ongoing parity we've seen in the areas of quality, dependability and efficiency among the brands," said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide. "As we've seen from the success of Hyundai and Kia over the past few years, inspirational design can change how consumers view a brand and act as a catalyst to increase new-vehicle sales."
Banks added that the restyles of the 2013 Honda Civic and 2014 Chevrolet Malibu, just one year after major revisions, were examples of how "manufacturers are keenly aware of the pronounced role of design in shaping the sales success of a brand."
With scores ranging from 67 to 72, Brand Perception, Safety and Ownership Costs rounded out the top five most important factors considered by new-car shoppers.
Performance Capabilities received a moderate score of 56, a second place ranking for luxury car respondents, just behind Vehicle Design.
Car respondents ranked Versatility/Utility, Incentive Availability and Advanced Technologies as the three least important factors.
SUV/Truck Survey Results
For SUV and truck buyers, Ownership Cost was the second most important purchase attribute with a score of 83, just one point behind Fuel Economy.
"The close proximity of these two factors resulted from the broad composition of SUV and truck respondents, which was comprised of consumers shopping for pickup trucks and SUVs of all sizes," said Banks.
"Shoppers of small SUVs ranked Fuel Economy as their top concern and Ownership Costs as third, while shoppers for mid-size and large trucks ranked Ownership costs as their top concern and Fuel Economy third. Results indicate that larger truck shoppers want to maximize fuel economy, but they also understand that the added size required to support their household and recreational needs will result in higher gasoline costs. To compensate for this, buyers will look to reduce maintenance expenses and purchase dependable trucks with solid used value retention," Banks added.
Truck shoppers, similar to car shoppers, rated Safety and Brand Perception as the third and fourth most important purchase considerations with rankings of 69 and 68, respectively. Vehicle Design and Versatility/Utility followed closely behind with respective scores of 65 and 63.
Brand Perception ranked fourth for truck shoppers overall, but was the No. 1 most important attribute for pickup shoppers who are loyal to specific brands in the pickup truck segment.
With an average score of 58, Performance Capabilities was ranked seventh by truck shoppers, but pickup truck shoppers ranked Performance fourth. Luxury truck shoppers, just like luxury car shoppers, ranked Performance as the second most important purchase factor.
Incentive Availability received a score of 27 making it the least important purchase factor considered by truck buyers.
NADA New Vehicle Shopper Survey: Passenger Cars
The importance of new vehicle consideration factors on a scale of 0 (low) - 100 (high).
Fuel Economy -- 89
Vehicle Design -- 76
Brand Perception -- 72
Safety -- 72
Ownership Costs -- 67
Performance Capabilities -- 56
Versatility/Utility -- 38
Incentive Availability -- 27
Advanced Technologies -- 18
NADA New Vehicle Shopper Survey: SUVs/Trucks
Fuel Economy -- 84
Ownership Costs -- 83
Safety -- 69
Brand Perception -- 68
Vehicle Design -- 65
Versatility/Utility -- 63
Performance Capabilities -- 58
Incentive Availability -- 28
(Source: National Automobile Dealers Association, 04/30/13)
Daily Sales Tip: Understand Each Prospect's Buyers
No one holds more keys to a prospect's needs than the customers they do business with on a regular basis.
Understanding the needs of each prospect's customers gives salespeople additional insight into the prospect's mission and goals.
Online message boards, social networking sites and industry blogs are tremendous sources for finding customer feedback.
Customer research may also reveal the role a specific product or service can play in helping the prospect's business grow.
More than anything else, customer research provides valuable clues about what the prospect's company values most, and how that info can be leveraged to create a stronger sales approach.
Ultimately, it provides sales pros with a competitive edge before the initial handshake even takes place.
Source: From Value-Added Selling, by sales consultant Tom Reilly