Wednesday, September 11, 2013 | Edited by Daniel Moores
||Some Surprising Winners and Losers in August Automotive Sales Numbers
August saw the U.S. automotive market deliver its strongest sales surge since at least 2006, with double-digit increases the norm, rather than the exception.
Little Subaru posted the biggest gain for the month of any major maker, up 45% over August 2012. Volkswagen, meanwhile, was among the rare losers, with a decline of 1.6% -- even though it had one of its best months in the U.S. market in the last 40 years.
Strong sales can mask some big problems, but a closer look at the August sales numbers clearly revealed some winners and losers.
From an individual model standpoint, the Ford F-Series continued to dominate the U.S. sales charts last month -- as it has for decades, according to numbers crunched by AutoData. But the big surprise was the sudden surge by the Toyota Camry, which nudged past the Chevrolet Silverado to land in the number two sales spot. Camry has long been the country's best-selling passenger car, but the two full-size pickups have traditionally delivered a one-two punch on the overall sales list.
What's behind Camry’s surge? Actually, it may have helped that Chevy is prepping to launch an all-new Silverado, and the changeover is temporarily hurting the truck's numbers as it slid into the number three sales slot. Even so, Camry is now one of the older models in the midsize sedan segment and newer challengers such as the Nissan Altima, Honda Accord and Ford Fusion have again been frustrated in their efforts to knock Toyota's powerhouse off its perch.
Don't feel too sorry for Nissan and Honda, however. The latter maker managed to nab number four with the Civic, and the Accord took fifth place in August's sales sweepstakes. Nissan, meanwhile, saw Altima slip into eighth.
The August Top 10 list can be divided up several ways: cars vs. trucks, or domestics vs. imports. Actually, the results would be the same. There are three truck models on the chart, all Detroit-made, with the Ram series grabbing spot number seven.
We'll put the CR-V in the car-based category, with the crossover giving Honda its third Top 10 spot, at number six. Toyota finished the month with four on the list, with the Prius and Corolla finishing things off in spots nine and 10.
Sales aren't the only measure of success, however. Another revealing factor can be gleaned by counting cars in dealer inventory and factoring in the pace at which they're being sold off. In industry-speak, the result is what's called "day's supply," or how many days it would likely take to sell off the cars now in showrooms.
Here's where British automaker Land Rover shines -- twice. According to an analysis by cars.com, the redesigned 2014 Range Rover Sport is hotter than hot, with just a three-day supply.
To put things into perspective, the industry considers 50 to 60 days of inventory the norm, though it can be a bit higher with trucks, for various reasons. The numbers for the Range Rover Sport may be misleading, as it's just in launch phase and there haven’t been a lot of shipments reaching dealers yet. But the bigger Range Rover SUV, which was re-launched for 2013, is close behind with a mere six-day supply.
At the other end of the spectrum is the little Acura ILX. The upscale arm of Honda had a lot of high hopes for this entry-level luxury sedan when it debuted last year. Apparently, American consumers haven't been convinced, and the data show Acura dealers are suffocating under a whopping 244-day supply of ILX sedans.
While new models -- like the 2014 Range Rover Sport, often experience early shortages, outgoing products can be a real headache for dealers hoping to clear out inventories and make space for their replacements. As TheDetroitBureau.com reported, many Chevrolet retailers are already seeking premiums for buyers looking to get in line for the new 2014 Corvette Stingray. But they're handing out big deals to get rid of the leftover 2013 Corvette coupes, now facing a 206-day inventory backlog.
Other "movers" with 10 days or lower of dealer inventory include: the Ford Fusion and Fusion Hybrid, the Honda CR-V, several versions of the Mercedes-Benz GL ute -- notably including the new Bluetec diesel model -- the Jeep Wrangler and Subaru Forester.
Models with the biggest backlog also include: the Cadillac Escalade Hybrid, the Mercedes SL63 AMG, the Mercedes CL550, and three VW models -- the Golf R, the standard Golf and the GTI. These "loser" vehicles range from a 141 to 244-day backlog.
Shoppers might consider that vehicles in short supply will likely yield the lowest incentives and least amount of showroom bargaining while dealers should be set to do whatever it takes to move those models with a serious backlog.
(Source: The Detroit Bureau, 09/05/13)
||Crossovers Lead the Sales Charge
Sales of Toyota's RAV4 soared 50 percent in August, and Honda's CR-V had its best month ever. And that says a lot about how the surging auto market has changed.
In a strong market, small cross-overs are leading the charge. And crossovers of all sizes have become dominant players.
"We're all having a difficult time keeping up with the growth," Bob Carter, senior vice president of automotive operations for Toyota Motor Sales U.S.A., said of the small-crossover surge. "I would like a lot more."
The 36 percent increase in small-crossover sales more than doubled the industry's 17 percent gain overall for the month. It was the 10th straight month in which small crossovers gained market share.
Crossovers of all sizes accounted for more than 1 of every 4 vehicles sold last month, growing from 23.5 percent of the market a year ago to 25.6 percent now.
Small crossovers were responsible for nearly all of that increase.
Crossover sales totaled 2.6 million through August, putting them on pace to approach 4 million for the year. Their popularity -- outselling pickups by a nearly 2-1 ratio last month -- is among the big differences between the U.S. auto market today and before the recession.
In 2007, the last time U.S. sales surpassed 16 million vehicles, only 2.4 million of them were crossovers.
Why the surge in small crossovers?
"It's a vehicle that makes a lot of sense to people," said Honda spokesman Chris Martin, adding that Honda now considers the CR-V as central to its business as the Civic and Accord.
"It's not too big, it's not too small -- it's a Goldilocks vehicle. It's a great family vehicle that doesn't require you to buy a larger garage."
With its 45 percent year-over-year increase last month, the Honda CR-V leapfrogged the Ford Escape to become the best-selling crossover overall through August. With sales of more than 200,000 each through August, the CR-V and Escape could become the first crossovers with sales of more than 300,000 in one year.
Toyota hopes to sell at least 200,000 RAV4s this year, which would be a record for the nameplate. Carter said he believes annual sales can reach 250,000 in the near future.
Ford Motor Co., an exception to the small-crossover surge in August, cited tight supplies to explain a 5 percent decline in Escape sales.
The industry's seasonally adjusted annualized rate of sales rose to 16.1 million in August, the highest level since November 2007, from 14.5 million a year ago. Automakers sold 1.5 million vehicles, the most in any month since May 2007.
GM's chief economist, Mustafa Mohatarem, said total sales for the year will "definitely" exceed the company's forecast of 15.5 million. He said he expects the SAAR to remain above 16 million for the rest of this year.
"I think it's here to stay," he said. "With the economy growing steadily and most importantly with the job market fairly stable -- the fear of losing your job is dissipating -- we expect that more and more people that delayed the decision to buy will keep coming into the market."
(Source: Automotive News, 09/09/13)
||NADA Survey Ranks Consumer Preferences for New Vehicles
Both car and light-truck shoppers ranked Quality/Dependability as the No. 1 factor considered when making a new-vehicle purchasing decision, according to the latest survey from the National Automobile Dealers Association.
Fuel Economy, cited as the most important preference of both car and light-truck buyers in last year's survey, was selected as the second-most important factor by car shoppers in this year's survey. Light-truck shoppers ranked Brand as No. 2, one spot ahead of Fuel Economy.
"While higher gasoline prices and stiffer federal regulations have raised the profile of fuel economy over the past few years, the survey results clearly indicate that car and light-truck shoppers are looking for a trouble-free ownership experience above all else," said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide.
Factors Considered Most Important in Next New Car Purchase
Quality & Dependability, 23.3%
Fuel Economy, 14.1%
Vehicle Design, 10.8%
Power & Performance, 8.1%
Warranty Coverage, 5.1%
Navigation System, 3.8%
Smartphone Connectivity, 3.1%
Versatility & Utility, 2.6%
Maintenance Fees, 1.6%
Driver-Assist Technologies, 1.3%
Insurance Fees, 1.1%
Factors Considered Most Important in Next New SUV/Truck Purchase
Quality & Dependability, 25.1%
Fuel Economy, 9.6%
Vehicle Design, 9.3%
Versatility & Utility, 7.6%
Towing & Payload Capacity, 6.6%
Power & Performance, 4.7%
Warranty Coverage, 3.9%
Smartphone Connectivity, 2.7%
Navigation System, 1.7%
Driver-Assist Technologies, 1.7%
Maintenance Fees, 0.9%
Insurance Fees, 0.8%
(Source: National Automobile Dealers Association, 09/05/13)
Daily Sales Tip: Handling Price Objections
You would think every salesperson would be proficient at handling price objections, considering how often customers push back on price.
In my experience, though, most salespeople can strengthen their skills in this regard. Sorry to be blunt, but too many salespeople are quick to leave profit on the table when they really don't need to.
Here are 3 ways skilled salespeople handle price objections:
1. They don't respond. "What?!" you may be thinking. It's true, though! When a customer first asks for a reduction in price or makes a comment that the price is too high, skilled salespeople simply ignore this. The goal is to determine if the customer is serious.
It is not unusual for customers to ask for a lower price simply because they think that's what they are supposed to do as a customer. They haven't genuinely given any thought to whether the price is accurate or not. Knowing this, skilled salespeople will not even entertain a conversation that focuses on price reduction the first time the customer brings it up.
I have found that this one tactic alone is often enough to move the customer off the price issue.
2. They ask "need-based" questions. Your goal as a salesperson is to always bring the customer back on track to focusing on what they want and need. Through effective questioning, not only will you uncover surface needs, you will discover needs and desires the customer possibly hadn't even considered.
The more you can do this, the more likely it is the customer will see value in what you offer -- and be willing to pay for it. I know it sounds obvious, but it is ridiculous how many selling situations end with a salesperson offering a discount because he or she didn't take the time to understand the customer's needs.
The key to effective questioning, of course, is body language that clearly conveys your confidence in your product and price. If your words are saying one thing, but your body language is conveying hesitancy, the customer will gravitate toward the message from your body language.
3. They don't waste time on customers who aren't willing to buy. This sounds harsh, but let me explain. Skilled salespeople develop an almost uncanny ability to differentiate the customers who are serious about buying from those who perpetually prolong making a decision.
If a customer is persistent in pressing for a price reduction or seems stuck in an unwillingness to buy, your "go to" method should not be to sabotage your profits. You should stop investing time and resources in this customer and instead turn your focus toward prospects and customers who are willing to buy.
The only way this point works is if you have a pipeline full of prospects. I always tell salespeople that if they start banking all their sales numbers on one or two big customers, they are headed into dangerous territory.
The most profitable salespeople are wise about who they spend time with -- and they make sure they have plenty of solid prospects and customers with whom to invest that time.
Source: Sales trainer/consultant Mark Hunter