Wednesday, July 17, 2013 | Edited by Daniel Moores
||Detroit Seizes Share in First Half with New Kind of Buyer
Nate Amoth has faithfully driven sporty little Japanese and German hatchbacks for years. Until recently when the Baltimore salesman took the keys to a new Ford Focus ST.
"The way it drove didn't remind me at all of other American cars that I've driven," said Amoth, 27, who paid $26,100 for his black-on-black, fully loaded Focus. "It's nice to see Detroit stepping up to the plate and making things truly worth buying."
General Motors Co., Ford Motor Co. and Chrysler Group LLC captured buyers at a rapid rate in the year's first half as all three Detroit automakers gained U.S. market share for the first time in 20 years. Their above-average deliveries are driving industrywide sales to the highest rate since 2007, up 9.2 percent in June to an annual pace of almost 16 million.
Even that superlative doesn't do justice to the job Detroit is doing, said John Wolkonowicz, an automotive historian based in Boston. Back in 1993, the last time the Detroit 3 collectively gained share in the year's first half, many buyers came from the Depression generation, which was more forgiving of flaws in models from Motown than Baby Boomers are, he said.
"These are probably some of the best products we've seen from American manufacturers since the early 1970s," said Wolkonowicz, who believes a new generation is embracing Detroit.
"Younger buyers are more prone to buy American and one reason is they want to be different than Mom and Dad, who fell in love with Japan Inc."
U.S. carmakers have helped the industry pick up the pace throughout the year. Automakers may sell 15.4 million cars and light trucks in the U.S. this year, the most in six years, according to a survey of 18 industry analysts by Bloomberg News.
Analysts have raised their projections from an average of 15.1 million in a survey at the beginning of the year.
Replacement demand and "historically low interest rates irrespective of the conversations surrounding the Fed" are fueling continued growth for the auto industry, Ken Czubay, Ford's vice president of U.S. marketing, sales and service, said on a recent conference call.
"The tailwinds continue to be strong" and are "pretty forceful," he said.
The new-generation buyers are choosing the kind of car from Detroit that their parents purchased from Toyota Motor Corp. and Honda Motor Co. Sales of Ford's Fiesta small car more than doubled last month, leading the automaker to an overall gain of 13 percent, exceeding analysts' forecasts.
Chrysler's Dodge Dart compact car had its best month ever, as the automaker majority-owned by Fiat SpA reported a 39th straight monthly increase.
Sales of GM's Chevrolet Cruze compact, which Automobile magazine praised in May for its "impressive build quality" and an interior that feels "as though it belongs in a more expensive vehicle," jumped 73 percent last month. GM's total June sales rose 6.5 percent, three times more than analyst forecasts.
"We live in a time where you can, with a straight face, say the best compact sedan that you can buy in the marketplace is a Chevrolet," Ed Kim, an analyst with AutoPacific Inc. in Tustin, Calif., said of the Cruze. "When was the last time anyone could say that and not get laughed out of the room?"
Detroit's deliverance from a time when its cars were a laughingstock came courtesy of its challenging 2009. Government-backed bankruptcies of GM and Chrysler and a self-financed restructuring at Ford transformed the business case on small cars from loss leaders to reputation rebuilders. With sedans no longer an afterthought, Detroit is offering stylish models such as the Ford Fusion and Cadillac ATS.
"The Big Three look like they can go toe-to-toe with Toyota, Honda," Eric Noble, president of industry consultant Car Lab, said on Bloomberg Television. "On the hybrid side, Ford is actually cutting in on Toyota."
Rising demand for Fusion and C-Max hybrids drove Ford to break its previous annual record for hybrid deliveries in the first five months of this year.
Ford, the second-largest U.S. automaker, increased its market share by 0.8 percentage points in the first half to 16.5 percent, according to the Automotive News Data Center. Market share for Chrysler, the third-biggest domestic carmaker, grew by more than 0.1 point to 11.6 percent. GM, the top-selling automaker in the U.S. market, boosted its share by less than 0.1 point to almost 18.2 percent.
The Japanese are not standing still. Toyota, offering interest-free loans and other incentives, boosted sales 9.8 percent last month, more than its 6 percent gain for the year's first half. The Prius and other Toyota hybrids had their best June results. And after four down months, Toyota sold more than 35,000 Camry sedans, keeping it the top-selling car in America.
"Camry's still the No. 1-selling car in the segment, but it's been having chunks taken out of its share from a lot of these much more interesting competitors," Kim said. "Having spent significant seat time in all of these vehicles, by far and away, the Camry comes off as the most underwhelming."
Nissan notched record sales in June after cutting prices on seven models. Its Altima family car, which had a $580 price cut, jumped 23 percent to 26,904, as Nissan's total sales rose 13 percent, including its Infiniti luxury brand.
"The Altima is a very strong value that offers attractive styling, very appealing price and very good fuel economy," Kim said. "And the Fusion is a looker. I don't think the Camry can afford to be the way it is for that much longer."
Similar sentiments were once shared by critics of Detroit's automotive offerings, even when all three companies were gaining market share while slipping in quality back in 1993.
"This is a completely different landscape than in '93," said Kevin Tynan, Bloomberg Industries auto analyst. "This is much better share with much better product and much better margins. The domestics, for the first time since well before 1993, are legitimately competing."
The Focus ST is the first American car for Amoth since his very first car, a used 1988 Cadillac DeVille. "It was awful," he recalled. "We didn't change the oil so much as replenish it."
Now Amoth said his Ford doesn't seem like "a gamble."
"In the past, all American cars had to offer in my segment was cheaper transportation," Amoth said. "Now, I don't feel like I'm sacrificing anything to drive an American car."
(Source: Automotive News, 07/03/13)
||Winners and Losers (So Far) This Year
A rising tide lifts all boats, and as the seasonally adjusted sales rate for cars and trucks races past 15 million units for the first six months of 2013, most everybody in autoland is looking good.
But there are varying temperatures of good, ranging from sizzling to tepid, and a closer look behind the numbers can reveal the trajectories and directions of new industry trends. Here are some that have appeared so far this year.
Product Segment Winner: Pickups
Truck sales are booming, thanks to increased consumer confidence and gains in construction activity and energy exploration. For the first six months of the year, sales of Ford F-series trucks rose 19.2%, and Chevy Silverado bumped ahead 25%, even though both are nearing the end of their model life, while Ram climbed 23%. Expect to see an escalation of truck sales wars soon. General Motors launched its all-new 2014 Silverado on July 4th, and analysts are expecting Chevy to make a big advertising push to close the gap with the F-150.
Product Segment Loser: Convertibles
Automotive News reports that convertible sales have been basically flat for the past four years despite rising industry results. They now account for just 1% of the market. That's a steep drop from the heady days before the Great Recession, when drop-top share stood at 1.8% as recently as 2008. Those numbers could reverse in a hurry if a couple of models catch the public fancy. Convertibles are basically fashion items, and it would only take an eye-catcher or two to reignite the segment.
Volume Brands Winner: Ford Division
In an overall market that rose 8% for the first half, Ford sales went up 14%. Ford's small cars, the Fiesta and Focus, are selling strongly, as are its crossovers and pickups, and the company is starting up a second assembly line to meet demand for the mid-size Fusion. Ford is also turning into a hybrid powerhouse. Its sales of gas/electric vehicles are now second only to Toyota.
Volume Brands Loser: Hyundai
The once-hot hot Korean automaker saw sales rise only 1% in the first half, as capacity constraints kept a lid on the availability of popular models like the Elantra. The good news is demand remained strong, so fleet sales stayed low, and Hyundai dealers saw their inventories turn over quickly.
Domestic Luxury Winner: Cadillac
The Standard of Excellence notched a 33% gain for the first half, almost entirely due to the success of two new models. Cadillac sold 19,183 of the smaller, sportier ATS and 14,664 of the larger, more traditional XTS. Their success bodes well for the redesigned 2014 CTS.
Domestic Luxury Loser: Lincoln
New models haven't done much to float Lincoln's boat. The "sensible luxury" brand saw sales fall 9% as the launch of the MKZ has so far failed to lift sales at all from the previous model.
Import Luxury Winner: Porsche
Showing no ill effects of its acquisition by Volkswagen, the German sports car maker recorded a sizzling 30% improvement, thanks to redesigned Boxsters and Caymans and continued strength from the 911 Carrera. If Porsche sales were a leading indicator, the U.S. economy would be heading toward an economic boom of enormous proportions.
Import Luxury Loser: Infiniti
Struggling with a new naming convention (alphanumerics starting with Q for passenger cars) and in the early stages of a product line overhaul, Infiniti saw sales fall 13% to 52,233 units. Now selling just 170,000 cars a year worldwide, the brand will have a tough time reaching its goal of 600,000 a year by 2020.
Niche Brands Winner: Subaru
A redesigned Forester, its most popular model, and the all-new XV Crosstrek lifted Subaru sales to new heights, up a sparkling 25%. Having outgrown its Philadelphia-area headquarters, Subaru is searching for new digs to accommodate its larger volume.
Niche Brands Loser: Volvo
The once-proud Swedish automaker, now under Chinese ownership, saw sales fall 6% for its aging product line. Dealers are hoping to get a lift later this year from four face-lifted models that represent the core of its U.S. business, but Volvo is just not keeping up with the competition.
Powertrain Technology Winner: Fuel Cells
Long the subject of overpromising and under-delivering (anybody remember GM's vow to get a marketable car on the road by 2010?), fuel cells are fashionable again. GM and Honda announced they're teaming up to develop a fuel-cell system for mass-market cars by 2020. The presence of Honda, a steadfast supporter of fuel cells that has continued to work on their development, adds credibility to the partnership. In a nod to needed infrastructure investment, the two companies also pledged to work together on storage technologies for the hydrogen needed to power fuel cells. An interested observer will be Toyota, which recently confirmed it will put a fuel cell car on the road in 2014.
Powertrain Technology Loser: Diesels
Automakers continue to roll out more diesels, but the buzz factor is close to zero, and outside of a Volkswagen showroom, the handful of models available look like orphans. VW now sells five diesel models that represent a fifth of its U.S. sales, but it is experiencing a transition year in 2013 with flat sales while it waits for redesigned models to arrive. Elsewhere, new for 2013 are diesel-powered Chevy Cruzes, Mazda6's, and Jeep Grand Cherokees -- all pioneering models for their brands -- but you would hardly know it from the lack of attention.
(Source: Fortune, 07/16/13)
||Showroom Policies Likely to Close -- Or Lose -- Deals
When she began looking for a new car, Chris Anderson had her heart set on a midsize Ford sedan. But in the end, she wound up buying from the Detroit maker's cross-town rival General Motors.
It wasn't that she liked her new car better. It was the dealer she liked -- or more precisely, the Ford dealer she didn't want to buy from.
And the Detroit saleswoman is not alone. What happens when a customer walks into the showroom can have a big impact on what they buy -- or where they buy -- says Fran O'Hagan, an automotive analyst whose annual Pied Piper Prospect Satisfaction Index is aimed at measuring which dealers and brands do the best job in treating prospective car shoppers. And this year, the study found Mercedes-Benz repeating as the industry leader.
The Pied Piper study relies on so-called "mystery shoppers" who go through the car buying process at thousands of U.S. showrooms each year, subtly notating how well salespeople handle such basics as providing buyers with a vehicle walk-around, brochures and test drives, things O'Hagan explains "correlate highly with whether a customer buys."
Not surprisingly, he adds, manufacturers who have carefully defined the sales process and who have convinced dealers to consistently adopt those practices tend to have a significantly higher closing rate -- the percentage of customers who walk into a showroom who actually drive off with a new vehicle. For the industry, as a whole, the figure is a mere 15 to 20%.
The good news, contends California-based O'Hagan, is that, on the whole, "dealerships all over the U.S. do a better job selling cars today" than they did when the first Pied Piper Satisfaction Index, or PPSI, was released in 2007.
That said, there's a big gap between the best and worst brands and showrooms and, the analyst cautions, there have actually been some setbacks in recent years.
O'Hagan revised the study this year but found those brands that have traditional done well continued to lead the pack, while marques that previously fell to the bottom continued to lag. Mercedes-Benz came in at the top with a score of 113, followed by Infiniti at 110, Lexus at 106, and Audi and GMC tied at 104. Hyundai, Jaguar and Kia were next, all with scores of 103
Mercedes, O'Hagan notes, has been the industry leader for four years running -- after long being a mid-pack brand. That reflects a conscious corporate decision to improve the way the German maker's U.S. dealers treated customers -- and it was reflected in not only improve PPSI scores but improved closing rates.
"The way your salespeople sell is relatively simple to change," the analyst suggests, "and the payoff is more sales."
So, perhaps, it's not surprising that some of the market's poorer-performing brands lag in the dealer survey. Scion is at the bottom with a score of 88, followed by Mitsubishi at 89, and Mazda and Chrysler, both with scores of 94. It's perhaps less of a surprise that Lincoln, rounding out the bottom five with a score of 95, has said it wants to transform the sales experience at its showrooms as it rebuilds the brand.
Part of the challenge, however, is to not just lay out a better sales process on paper, O'Hagan stresses, but actually to get dealers to buy in -- consistently.
"There are some Scion and Mitsubishi dealers who perform brilliantly," he explains, "but they don't do so consistently."
Some of the things that distinguish a good dealer from a bad appear unexpectedly simple. It starts with the way shoppers are greeted when they walk into a showroom. Pied Piper's mystery shoppers are told to record whether they are given brochures and offered test drives. Putting a shopper behind the wheel, O'Hagan notes, is one of the most effective ways to clinch a deal. Yet, one of the biggest surprises is how often salespeople fail to ask the most basic question: "Are you ready to buy?"
While the PPSI suggests the car buying process has, on the whole, improved, there were some setbacks and weak points. O'Hagan says the biggest problem is the Internet. About 80% of U.S. car shoppers now begin the buying process online, he notes.
But there's a big difference between the way good and bad dealers respond. Among those in the top quartile of the 2013 survey, 93% will respond to a customer's online query within 24 hours. Among dealers in the bottom quartile, only 16% respond.
"The Internet side of the business is the wild west," O'Hagan says. "There's a huge difference between dealers that do a good job and a bad job selling online," and in the long run, that can make the difference between not only success or failure for a showroom but for the brand it represents.
(Source: The Detroit Bureau, 07/08/13)
Daily Sales Tip: Actions to Control Your Sales Success
Have you planned how you're going to make successful sales? If you haven't, it isn't too late -- but you're already behind the eight ball. Here are 7 actions you must take and take now if you want to control your own destiny:
1. Flush Out All of the Tail-Chasing "Prospects" in Your System.
We all have "prospects" in our pipeline that take up time and energy but that we know in our hearts will never buy. Get them out of your system now. Don't spend any more of your precious time on them. Concentrate on real prospects, not the "hope someday." Vow not to spend any more time chasing your tail.
2. Get Organized.
Most of us spend as much or more time "organizing" each day as we do working. Take a day or two and get yourself organized and then 30 minutes each evening getting ready for the next day. Don't waste time "getting ready" to sell.
3. Know Who a Real Prospect Is.
If you haven't already defined your ideal prospect(s) in detail, do so now. Many salespeople waste a great deal of time chasing unqualified prospects because they haven't taken the time to define for themselves exactly who their real prospects are.
4. Focus Only on Real Prospects.
Even many who have defined in-detail who their real prospects are, find themselves chasing after those who don't qualify. Commit yourself to staying on track. Defining your prospect doesn't do any good if you allow yourself to wander.
5. Eliminate the Success-Killing Busy Work.
If what you do isn't directly involved with finding qualified prospects, making sales presentations and closing sales, or getting a sale completed, it's busy work. Busy work may make you feel like you're accomplishing something but it isn't making you a dime. If it doesn't make you money, don't do it.
6. Learn to Generate Referrals.
Referrals are the best, most cost-effective prospecting and marketing method there is. Nothing can beat referrals in terms of ROI, close ratio, and client loyalty. Yet, few salespeople generate many quality referrals. Less than 15% of all salespeople generate enough quality referrals to impact their business. Learn the process that really generates a large number of high-quality referrals and turn your clients into your marketing platform.
7. Create a Consistent Client Communication Campaign.
If you don't already have a consistent communication campaign for your clients and prospects, create one now. You should be touching each of your clients and long-term prospects 12 to 16 times a year. Use a combination of media, and make sure each of your communications brings value to your client. The key question to ask yourself before making any contact is "does this benefit the client or only me?" If it doesn't benefit the client, don't send it or don't call. Never waste your client's time.
Time is short. But implementing these 7 "musts" will get your sales on track.
Source: Paul McCord, President of McCord and Associates