Wednesday, July 3, 2013 | Edited by Daniel Moores
||Ford, Nissan Set Pace as June Sales Rise 9% on Trucks, Crossovers
SAAR Surges Past Projections to 15.98 Million
U.S. light vehicle sales, led by Ford Motor Co. and Nissan Motor Co., rose 9 percent in June, easily topping many forecasts and providing fresh signs that the industry's recovery will remain robust in the second half of the year.
The seasonally adjusted annual sales rate -- a key barometer of the U.S. auto industry's overall health -- surged above the sunniest projections to 15.98 million, from 14.4 million a year ago.
The June SAAR marks a new high in the current recovery cycle and the industry's strongest sales pace since late 2007. The SAAR has now topped 15 million units every month but one -- April -- starting in November 2012.
"The industry had a great month in June, easily the best June in six years. We were within a tipping point of that magical 16 million (SAAR) mark," said Bill Fay, general manager of the Toyota division. "We expect the momentum to roll into the rest of the summer."
U.S. sales have now advanced 8 percent this year to 7.8 million. Analysts expect U.S. light-vehicle volume to reach 15.3 million to 15.5 million for the year, compared with 14.49 million in 2012.
"America's families are better off than they were at the beginning of the year and they believe -- with good justification -- that the economic expansion is going to continue," General Motors' chief economist, Mustafa Mohatarem, said in a statement. "Even moderate economic growth will be enough to keep the auto sales rate in the second half of the year at healthy levels around the mid 15 million-unit mark."
Among major automakers, Ford Motor and Nissan Motor deliveries increased 13 percent, while volumes at Toyota Motor Corp. and Honda Motor Co. rose 10 percent.
BMW also enjoyed a solid June, with sales rising 25%, while Mercedes-Benz transactions increased 8%.
Jaguar sales jumped 59% in June, while Porsche was up 23%.
At GM, sales advanced 7 percent from a year earlier, while Chrysler gained 8 percent.
Subaru finished the first half with an industry-leading 25 percent gain, thanks to a 42 percent June increase propelled by the redesigned Forester and all-new XV Crosstrek.
Two other companies that have been among the industry's biggest winners in recent years -- Volkswagen Group and Hyundai-Kia -- continued to struggle, managing tiny June gains.
Truck demand set the pace for sales at the Detroit 3, while new models or redesigned cars or crossovers helped nearly every brand.
Chrysler's 8 percent increase was led by a gain of 23 percent at the Ram truck brand and an 11 percent advance in car deliveries. Ford tallied a 24 percent jump in F-Series pickups.
GM's deliveries of the Chevrolet Silverado advanced 29 percent and GMC Sierra volume rose 32 percent. Sales rose 5 percent at GMC, 7 percent at Chevrolet and 15 percent at Cadillac, while Buick deliveries slipped 4 percent.
GM said its retail sales rose 14 percent while fleet shipments declined 9 percent.
At Chrysler, light truck volume rose 7 percent, with Ram pickup deliveries jumping 23 percent to nearly 30,000 units.
June marked Chrysler Group's 39th consecutive monthly increase in U.S. sales.
"The fundamentals for continued industry gains in new vehicle sales remain intact," Reid Bigland, head of U.S. sales for Chrysler Group, said in a statement.
Volume rose 1 percent at the Fiat and Chrysler brands, and 12 percent at Dodge, while Jeep deliveries were up slightly compared with June 2012, Chrysler reported. Jeep's U.S. sales, which are off 5 percent this year, have suffered since the Liberty SUV was discontinued in August 2012.
The Liberty's replacement -- the 2014 Jeep Cherokee -- will not be widely available until the third quarter, Chrysler officials said last week.
Ford said sales of small cars -- Fiesta, Focus and C-Max -- rose 39 percent to 35,851, while deliveries of the redesigned Escape crossover increased 1 percent to a monthly record of 28,694. Lincoln volume slipped 1 percent.
U.S. light-vehicle sales had been projected to end up at 1.38 million units for the month, a 7 percent increase, based on a survey of 10 analysts by Bloomberg.
Dealers and analysts say June sales started off strong because of extended Memorial Day holiday deals and then slowed briefly before regaining momentum on early July 4 holiday incentives.
GM, Ford, and the Hyundia-Kia Group raised incentives in June compared with a year ago by 8 percent to 18 percent, TrueCar Inc. estimated on Tuesday.
A surge in Elantra sales and higher demand for the redesigned Santa Fe crossover helped volume rise 2 percent to 65,007 units last month at Hyundai, despite ongoing shortages of many models.
Hyundai said fleet deliveries represented 19 percent of its June volume.
At Mazda, June sales rose 13 percent on strong demand for the redesigned Mazda6 mid-sized sedan.
Mike Vasquez, general sales manager at Gilman Chevrolet in San Benito, Texas, said despite somewhat volatile showroom traffic, pickup demand remained robust in June.
"Trucks are hot right now," Vasquez said, citing the redesigned 2014 Chevy Silverado and its heavily discounted outgoing predecessor.
John F. Bergstrom, chairman of Bergstrom Automotive in Neenah, Wis., said low finance rates, and truck and SUV demand were driving results at his 25 stores located mostly in the Green Bay area.
"We are giving 1.9 financing for new and used vehicles for 72 months," Bergstrom said Friday. "It would be very hard to say something bad about how June is going. It feels like consumer confidence is back."
Large pickup and compact utility vehicles propelled the market in June with sales in both segments climbing nearly 20 percent.
GM, Ford and Chrysler -- the primary beneficiaries of the rebound in large pickup sales -- have each gained U.S. market share through June.
Stable gasoline prices, a rebound in construction activity, higher stock prices and the steadily improving U.S. economy are motivating new-car shoppers.
"The industry continues to benefit from modest improvements in housing, unemployment and consumer confidence," said Alec Gutierrez, senior market analyst of automotive insights for Kelley Blue Book.
New or redesigned models such as the redesigned Ram pickup, Cadillac ATS, Mazda CX-5, BMW X1, Acura RDX, and Ford Escape and Toyota RAV4 crossovers, are drawing shoppers.
Sales of the redesigned Honda Accord topped 30,000 units for the fourth consecutive month and helped the Honda brand to a 13 percent increase in June. With Acura volume off 10 percent, Honda Motor Co.'s overall sales rose 10 percent in June to 136,915 units.
The surge in pickup sales and new car and crossover models that are highly contented drove the average transaction price across the industry in June to $31,125, up $617 over June 2012 and an increase of $147 over May, TrueCar said.
"The auto cycle seems poised to up-shift to 3rd gear," said Jefferies & Co. analyst Peter Nesvold. "Consumer spending has held up despite higher payroll taxes and federal spending cuts, and we expect automotive purchases to remain strong as consumers replace aging vehicles and credit is becoming more available and at lower rates."
(Source: Automotive News, 07/02/13)
||NADA: U.S. Dealers' Average Pretax Profit Rose 6% in 2012
U.S. car dealers had a good year in 2012.
Higher new- and used-vehicle retail sales volumes and prices pushed revenues higher, resulting in a 6 percent rise in pretax profit at the average U.S. dealership, even though total dealership pretax margins eased slightly.
That's according to NADA Data 2013, an annual report on U.S. dealership sales and financial trends compiled by the National Automobile Dealers Association.
The report, released Monday, also shows that in 2012, there was a net increase of 95 U.S. franchised dealerships, bringing the total to 17,635 at year end.
Most of the new franchised dealerships were added in the Western regions, with a drop in the number of franchised dealerships in the Eastern regions, the report said.
Profits up, margins down
Total dealership pretax profit margins slipped to 2.2 percent from 2.3 percent, the report said. The average dealership generated pretax profits of $843,697 in 2012, up 6 percent from $794,536 in 2011.
Total dollar sales at new-car dealerships increased 9 percent in 2012, the third full year of post-recession growth, the report said. Revenues rose 13 percent in the new-car department and 7 percent in the used-car department.
A 13 percent gain in new light-vehicle sales volume; a 0.8 percent rise in the average selling price for a new light vehicle, including accessories and options; and lower floorplan costs because of low interest rates helped support new-vehicle profits last year, the report found.
Net profit per new vehicle retailed rose to $111 from $23 in 2011. The average new-vehicle selling price in 2012 was $30,910, up from $30,659 the previous year.
The average 2012 used-vehicle retail selling price was $17,547, up 2 percent from $17,267 the previous year. Net profit per used vehicle retailed fell to $194 in 2012 from $269 in 2011.
Staff and wages
Total dealership expenses rose 4 percent last year, to about $4.4 million for the average dealership.
Dealerships added staffers and paid them more as the economy gained momentum last year. And the trend appears to be continuing this year in various parts of the country.
Total employment at new-car dealerships rose 3 percent to 963,400 employees from 933,500 a year earlier. The average number of employees per dealership rose to 55 from 53 last year, the report states.
New-car dealerships had an annual average payroll of about $2.9 million in 2012, up 12 percent from the previous year. The total payroll for all U.S. new-car dealerships was $51.6 billion, up 13 percent.
The average weekly earnings of employees at U.S. new-car dealerships last year was $1,030, up 9 percent from the previous year.
U.S. vehicle sales at new-car dealerships accounted for 15 percent of total U.S. retail sales, the report said. New-vehicle dealerships accounted for 12 percent of total U.S. retail payroll, and their employees accounted for 6 percent of total U.S. retail employment.
(Source: Automotive News, 07/01/13)
To download a copy of the NADA report, click here.
||Women Quoted Higher Prices for Auto Repairs
Study Shows Informed Men and Women Get Bigger Discounts
When it comes to what it costs to get a car repaired, women may be at a decided disadvantage, according to a new study.
Women who appear to have no automotive knowledge are more likely to be quoted a higher price as men for the same repair; however, women who haggle about the price more often get a better price break than men.
Northwestern University's Kellogg School of Management conducted the study using mystery shoppers who asked for prices on a radiator replacement for a 2003 Toyota Camry. The shoppers, who used scripts, participated in one of three scenarios: knowing the market price of $365; overestimating the price at $510; or claiming to have no idea what the repair should cost.
"Our findings suggest that auto shops may assume men know the market price for a given repair, so they automatically grant it," said Meghan Busse, associate professor of management and strategy at the Kellogg School.
"However, they may not expect women to be knowledgeable in this area, so the perception is they can charge them more."
Auto repair shops will change their initial price quotes depending upon the perceived knowledge level of the consumer regardless of gender. This includes quoting higher prices for women if they appear to be uninformed.
Among those uninformed, women were "constantly quoted higher prices," according to the study; women who knew the market price were quoted at market value. Men were quoted the same price regardless of whether they knew the market value or were uninformed.
When it came to negotiating for a lower price, many shops were unwilling to budge. However, women did have a decided advantage in one situation. While they were more often quoted higher prices, women were able to negotiate lower prices more often than men.
In fact, 35% of women were able to get their requested price met, compared to 25% of men.
"It's kind of an ironic twist," said Florian Zettelmeyer, the Nancy L. Ertle professor of Marketing. "The same kind of cultural expectations that cause repair shops to overcharge women are probably also responsible for showing preference toward women in negotiations."
The best way for consumers -- regardless of gender -- can avoid overpaying for any repair: tell the mechanic what he or she expects to pay for a repair. If a consumer has an idea of what his or her auto repairs will cost, it is likely they will not get ripped off.
"Once callers refer to a price, gender differences disappear," the study found.
Obviously, this requires consumers to do some research in advance of bringing a vehicle to a mechanic. Women benefit from this legwork the most, Busse said.
If you are a woman, once you have gathered some information, "when you call each additional shop," Busse said, "reveal that you know what you’re talking about -- that you know the car, you know the repair, and you know what a sensible price is -- right off the bat. And if you get a price that's above that, ask for a discount."
(Source: The Detroit Bureau, 07/02/13)
Daily Sales Tip: Selling Future Benefits
Most salespeople sell the current benefits of what they do. But your customers already know the current benefit you offer.
One of the reasons customers leave you for a competitor is that you haven't cemented the future benefit you can bring them. Your goal as a salesperson should be to establish a long-term, problem-solving relationship with customers rather than a short-term transaction.
Your most profitable customer is a repeat customer. Therefore, you want customers to see the benefit you can give them over time, not just in the present. You want to show how the products and services you offer are going to be evolving with their needs. In other words, you want to sell the evolution of your products or services.
Unfortunately, most salespeople don't know their future benefit. Therefore, you need to sit down with your fellow salespeople and create a list of future benefits that you have for your customers. Also, talk to the people developing the products and services and get an idea of where they're taking them.
Realize that you're more likely to deliver future benefits if you think of them ahead of time. As a side benefit, this kind of dialogue will also help internal communications within the company.
Source: Business strategist Daniel Burrus