Wednesday, October 9, 2013 | Edited by Daniel Moores
||Sales Race: GM Reigns But Ford Gains
In 2007, the auto industry's last good year before the recession, General Motors outsold Ford Motor Co. in the United States by more than 105,000 units a month on average.
In the past 12 months, the gap has narrowed to fewer than 25,000. In September, Ford nearly pulled off what would have been only the third monthly upset of GM in 15 years, falling short by 2,743 units, or less than half a day's worth of Ford sales.
Ford's upward momentum is pressuring GM to play more defense as it seeks to maintain its long-held spot as the nation's sales leader. And it is refueling the age-old, crosstown rivalry that had cooled somewhat during the downturn.
GM is raising incentives on its lucrative, newly redesigned pickups and other vehicles this month after sales fell 11 percent in September.
"The first three weeks of September, there was no traffic," said Brad Lillie, general manager of Gregg Young Chevrolet in Omaha, Neb. "They just weren't very competitive, especially on trucks."
Ford gained half a point of market share through three quarters of 2013, more than any other automaker, while GM's share slipped another tenth of a point. The crosstown rivals are now separated by just 2 points of U.S. share, whereas the gap was nearly 8 points in 2007.
Three nameplates -- the F series, Fusion and Escape -- are largely responsible for Ford's rising share. They alone accounted for more than 1 million of the company's 1.9 million sales through three quarters of 2013.
In particular, the Fusion's sudden transformation from mid-sized also-ran to a legitimate Toyota Camry challenger highlights how Ford has succeeded. Meanwhile, GM is hurrying a refresh of the Chevrolet Malibu in response to tanking sales of that sedan.
"Ford has taken a few more risks trying to be more progressive in terms of style and it's paid off," said Alec Gutierrez, senior market analyst for Kelley Blue Book. "Ford just seems to have the right product in those key growth segments right now, and they are going to continue to close the gap."
Ford up, GM down
Ford Motor Co. sales increased 6 percent in September, compared with a 6 percent decline for the rest of the industry. Overall, auto sales declined 4 percent for the month. Automakers' September results were hurt by the fact that the busy Labor Day weekend counted toward August, and the industry's seasonally adjusted annualized selling rate fell to 15.3 million from 16.1 million the previous month.
GM attributed a portion of its decline to a 27 percent cutback in September fleet sales, while Ford's fleet sales rose 8 percent. GM said its retail sales slid 6 percent, which was roughly average for the industry.
"We held our own in terms of retail market share," Kurt McNeil, GM's vice president of U.S. sales operations, told analysts and reporters during a conference call.
Chevy sales fell 15 percent, dragged down by a 25 percent decline for the Impala and 51 percent decline for the Cruze, which had its worst month since production reached full speed at the end of 2010.
Dealers said the end of some GM stair-step incentive programs and a lack of incentives on the 2014 Chevrolet Silverado and GMC Sierra pickups hurt demand. Many dealers have sold most of their 2013 pickups, which had bigger discounts, and have a limited mix of 2014 versions.
As October began, GM upped rebates on the 2014 pickups and other vehicles. It also expanded its employee-pricing program to increase discounts and include more extended family members. Company officials said both moves were planned in advance. GM also expanded incentives for members of the military.
Lillie of Gregg Young Chevrolet said last month was tough, saved for his dealership only by three days of strong sales at the end. But he remains confident that GM is in a good position for the fourth quarter.
Ford, on the other hand, boosted its retail share significantly in September, as the only one of the seven largest automakers to manage higher retail deliveries, according to the Automotive News Data Center. Ford's retail sales rose 5 percent last month.
"Our balanced portfolio is paying dividends," Ken Czubay, Ford vice president of U.S. marketing, sales and service, said on a conference call. "We're getting the uplift from the truck business, which is recovering, but we're getting solid recovery on the car side also."
As a result, in three quarters of 2013, the Ford brand narrowly outsold GM's two mass-market brands, Chevy and GMC, by 1,278 units. In 2007, Chevy and GMC easily topped the Ford brand by about 650,000 units. (GM also sold nearly 600,000 Pontiacs and Saturns that year.)
That means GM's upscale brands, Cadillac and Buick, are entirely responsible for fending off Ford, which is struggling to revive Lincoln.
Despite Ford's progress, George Magliano, an analyst with IHS Automotive, no longer envisions it overtaking GM on an annual basis, something he projected during the recession would happen by 2015. But he does expect Ford to continue gaining ground on GM, forecasting 2020 market share of 17 percent for GM and 15.9 percent for Ford.
He said Ford's efforts to increase prices and margins on many of its top-selling models will come at the expense of some volume, keeping GM in first place.
(Source: Automotive News, 10/07/13)
||Jurors Pick 'Short List' for North American Car, Truck of the Year
Whatever the polls may say, you have to wait for election day to be sure who's going to win the big prize.
And that goes for the annual North American Car and Truck of the Year balloting which started out with 45 different models in contention -- 29 passenger cars and another 16 vehicles in the truck/utility category.
But the 49 U.S. and Canadian journalists who make up the NACTOY jury have held their equivalent of a primary ballot, cutting the original list down to an even two dozen vehicles -- and there are a number of surprises in the initial results.
For one thing, there's not a single Ford Motor Co. model in either category. But cross-town rival General Motors not only dominated the list this year but landed all six of its new 2014 products in the so-called short-list, among the best showings by any maker in the more than two decades since the widely followed North American Car of the Year program debuted.
The list includes the Buick Encore, Cadillac CTS, Chevrolet Corvette and Chevy Impala in the passenger car category, with the Chevrolet Silverado and GMC Sierra pickups on the truck/utility side. GM would be among the rare makers to pull off a sweep if it takes both trophies home next January 13th, when the final NACTOY results are announced during the opening ceremonies of the 2014 Detroit Auto Show. Cadillac, meanwhile, would be among an only slightly larger group to take home the passenger car award if the CTS followed last year's victory by the Caddy ATS model.
A total of 11 automakers have products that have made it to the NACTOY short list this year. The next stage will be the announcement of the three car and three truck finalists in December.
Following GM, Toyota has three semi-finalists, as do Hyundai-Kia, if you count the Korean siblings as one manufacturer. The latter brands' nominees include the Kia Cadenza on the passenger car side and the Kia Sorento and the new long-wheel-base Hyundai Santa Fe in the truck/utility category. Toyota's entries are the Corolla and Lexus IS sedans and the Toyota Tundra pickup.
Nissan has one model in each category, the Rogue crossover and Infiniti Q50 sedan, and so does BMW, with the new 4-Series coupe and X5 crossover. Mazda has two in the passenger car category, the Mazda3 and Mazda6. Indian-owned Jaguar Land-Rover has one model in each category: the new F-Type and the Range Rover Sport.
Chrysler Group, last year's other winner, with the Ram 1500 pickup, has just one model that made it into contention at this point, the new Jeep Cherokee.
How are the remaining models playing out among jurors? As one of those 50 journalists, I can't get too specific about ongoing discussions but GM is clearly impressing the group, on the whole, with a variety of products that show a renewed emphasis on design, functionality and performance. The 2014 Chevrolet Corvette, in particular, seems to have charmed the NACTOY collective based on the reviews members have been filing. And despite some disappointment with the conservative styling of the two GM full-size pickups, their strengths seem to be overcoming that one concern.
Jaguar, meanwhile, has struck a responsive chord with its F-Type, a sports car that many agree is the "spiritual successor" to the legendary E-Type of a half-century ago. The Range Rover Sport, meanwhile, has delivered some surprises of its own: the new ute is lighter, more fuel-efficient and more comfortable on-road, yet actually increased its off-road capabilities.
The downside for luxury models -- a list also including the Cadillac CTS, is that NACTOY jurors have a tendency to favor more affordable, mass market models that put more emphasis on value for the money. But Mercedes-Benz might actually benefit from that mindset.
Notably, neither the top-line S-Class nor the mid-range E-Class made the short list cut this year. The maker's one model that moved to the second round is the new CLA, a compact coupe-like sedan that offers a base price of just $29,990 -- less than some mainstream competitors. That approach might also curry favor for the new Lexus IS, a traditionally stodgy model that debuted for 2014 in an all-new and much more emotional skin.
BMW is always a darling of the automotive media and could sway jurors in either category, though there's not the buzz of prior years for either the 4-Series or X5.
Neither Toyota's Corolla nor Tundra have been generating much buzz, either, though the compact sedan is clearly expected to remain a darling in the market where it has long been one of the best-sellers.
Two small Japanese brands, Subaru and Mazda, could prove spoilers as they have been showing how much they can do on relatively modest budgets compared to big-name makers like GM and Toyota, while the Korean twins could also deliver a knock-out punch. Hyundai has won NACTOY's passenger car trophy twice now, first with Genesis and more recently with the Elantra. But the bigger buzz this year seems to favor the striking styling of the Kia Cadenza.
All sorts of factors, of course, could impact the jury's final decision, so we'll get a better sense of who's going to win when the finalists are announced two months from now.
This is the short list for the 2014 North American Car of the Year:
BMW 4 Series
Chevrolet Corvette Stingray
This is the short list for the 2014 North American Truck/Utility of the Year:
Hyundai Santa Fe LWB
Land Rover Range Rover Sport
(Source: Paul A. Eisenstein, The Detroit Bureau, 10/07/13)
||Compact Luxury Cars Could Be the Next Big Thing
While the all-new 2014 S-Class sedan might serve as the "flagship" of the Mercedes-Benz line-up, the German luxury maker's big news this coming year is actually its smallest offering, the new CLA.
At first glance, it'’s easy to confuse the coupe-like sedan with the older Mercedes CLS model, something that was far from coincidental, company officials concede. But there's no confusing the numbers on the Munroney window sticker, the compact CLA starting at just $29,990 -- compared with the $73,025 base price of the bigger four-door.
With the launch of the CLA, Mercedes is going after a new generation of luxury buyers that it hopes will become long-term brand loyalists. But the German maker isn't alone. Virtually every manufacturer in the luxury car segment, from BMW to Volvo, is rushing to market downsized and lower-priced luxury models, whether sedan, coupe or crossover. And that could be particularly bad news for mainstream manufacturers like Ford Motor Co. who have themselves been pushing upwards into the luxury segment.
Compact luxury cars are "the next big explosion in the U.S. market," said Bernie Glaser, marketing chief for Mercedes' U.S. sales subsidiary, during an interview coinciding with the first media drive of the CLA.
Until now, the German maker had avoided bringing its smallest models, such as the A-Class and B-Class lines to the U.S. And it had little success, a decade ago, with the pint-sized C-Coupe, a two-door spin-off of the C-Class line once known as the Baby Benz.
Indeed, there have been far more failures than success stories in the segment, such as the old Jaguar X-Type. And BMW generated, at best, ho-hum sales with its original 1-Series line. Audi didn't do much better with the original A3 hatchback.
But the times, they are a-changing, as Bob Dylan might say, as those stalwarts of the luxury market, the Baby Boomers, age and a new generation of Millennials begin to covet more exclusive brand offerings.
"Gen-Y make up the next big wave," Glaser stressed, adding that, "if you want a future, you have to have a Gen-Y strategy."
Research suggests that Millennials -- used to the downsizing of smartphones and other electronic toys -- are less likely to measure the value of a luxury car like their parents did: by the pound or inch. They're also struggling to get good jobs and pay off college loans, so they're on tighter budgets, which is why Mercedes pushed to deliver the CLA at a base price below $30,000 despite offering the car with a surprising level of standard features and a reasonably swanky interior.
To pull that off, the maker developed a new compact platform it will eventually share with at least five different models, including the CLA, the pint-sized GLA crossover coming to the U.S. for 2014, and new versions of the A- and B-Class. A battery-electric version of the B-Class also will make it to the States.
Mercedes has done a good job recognizing there is "a hole at the bottom of everyone's line-up," says Dave Sullivan, senior auto analyst with consulting firm AutoPacific, Inc.
But Mercedes will soon have plenty of company. Audi will launch a new sedan version of the A3 next year developed specifically for the American market. BMW is readying a new 1-series. Jaguar recently revealed a compact crossover concept, the C-X17, but a sedan sharing the show car's platform will be first to market in less than two years. Cadillac is gaining momentum with the new ATS sedan -- which was named North American Car of the Year last January -- and Detroit rival Lincoln will soon launch the MKC compact crossover.
Sullivan expects such models not only to attract traditional luxury buyers, but also "people who might otherwise go into a mainstream vehicle."
Indeed, there's been a blurring of the lines in recent years, with luxury makers moving down-market while mainstream manufacturers have moved upscale with offerings like the Ford Fusion Titanium edition which starts at $31,295 and can push into the high-$30,000 range when fully loaded with options.
Not everyone buys the compact luxury strategy, however. Jim Hall, of Detroit-based 2953 Analytics, warns Mercedes is stepping onto "potentially dangerous ground." The maker, he says, could actually dilute its exclusive image if products like the CLA "become too common."
But attracting Millennials isn't the only reason why Mercedes and competitors are entering the new segment. With a fuel-economy rating of 38 mpg on the highway, the CLA is "part of our CAFE (Corporate Average Fuel Economy) and greenhouse gas strategy," explained marketing chief Glaser.
Meeting the escalating U.S. mileage numbers -- which will jump to 54.5 mpg by 2025 -- will be a particularly difficult challenge for luxury makers who more traditionally offer heavy, high-power products to buyers who traditionally don't care as much about prices at the pump.
The higher mileage of cars like the CLA, Cadillac ATS and the BMW 1-Series will make it easier to keep selling traditional luxury models like the all-new Mercedes S-Class.
(Source: The Detroit Bureau, 10/02/13)
Daily Sales Tip: Master the Critical Skills
If you're going to sell more every year, you need to get better every year. Let's look at this a different way. If what you are currently doing would produce the results you are looking for, the results should have already shown up.
So what skills should you focus on improving? Start by honestly answering a few of these questions:
-- How much preparation are you putting into each call?
-- Are the questions you ask thought-provoking or mind-numbing?
-- Do your ideas have value for the prospect or do you find yourself just pitching the "latest" widget from the factory?
-- When was the last time you got feedback on your presentation skills?
-- What are the top three obstacles prospects throw at you?
-- How do you clearly and concisely address these obstacles?
-- What are you doing every week to help build better relationships?
It takes courage to admit you could be a better sales rep and confidence to believe you can change. It takes nothing to create excuses.
There is an abundance of sales books, tele-seminars, podcasts, webinars, and sales training programs available today. What are you waiting for?
Source: Sales trainer/consultant Tim Wackel