Tag Archive | "New Vehicles"

New-Vehicle SAAR Falls Below 17 Million in August, Manheim Reports


ATLANTA — The seasonally adjusted annual rate (SAAR) for new vehicles fell below 17 million for the second time this year in August, according to Manheim. The firm, however, said the drop should not be cause for concern, noting that it “may be a good think.”

A lower SAAR, the company stated, points to manufacturers not overly pushing the market. Although incentives in August were up compared to a year ago, they were flat sequentially. This was caused by a lot of stair-step money not being dispersed during the month due to dealers not reaching their quotas.

Preliminary numbers also show that a reduction in lease incentives might have caused a year-over-year decline in lease penetration rates in August, according to the company.

While leasing and new-vehicle sales stumbled this month, used-car sales are thriving.

“In the first seven months of 2016, used unit sales by both franchised and independent dealers increased at the fastest pace of this recovery, and more than twice as fast as last year. While new retail unit sales have declined this year, used unit sales are up. That’s normal for this point in the automotive cycle, and we expect it will continue into 2017,” read Manheim’s Used Vehicle Value Index report for August.

Certified pre-owned sales rose 6% in August compared to a year ago and 4% year to date, according to Manheim. The company said it expects full-year sales to reach a record 2.7 million.

Wholesale used-vehicle prices declined slightly in August, according to Manheim. However, the recorded Manheim Used Vehicle Value reading for the month was still 2.1% higher than the same time last year at 126.9.

According to Manheim, wholesale pricing this year has been supported by a retail market that has experienced higher volumes, stabilizing margins and respectable turn rates. But primarily, Manheim stated, wholesale pricing has been supported by the improved efficiencies in dealers’ used-vehicle operations.

A couple issues that played a part in last month’s decline in used-vehicle pricing, according to Manheim, were a lack of growth in hourly earnings and a cut to the average work week during the month. In terms of aggregate demand, Manheim added, the combination of these factors equated to a loss of 300,000 jobs during August.

For the second consecutive month, the number of people employed part time for economic reasons grew in August, the company stated.

“How did the financial markets react to this? With glee. They took it as a sign that rates would not be hiked at the September meeting, even though the normalization of monetary policy is long overdue. Federal-funds futures put the odds of a rate hike this month at only 32%, and only 60% by December,” Manheim noted in its report.

However, this mindset is misguided, according to Manheim. The company said it expects employment growth to slow over the next year and, and in order for the market to thrive, employment needs to grow. But low interest rates will not help employment growth, the firm added.

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NADA Maintains 17.7 Million Sales Forecast for 2016


MCLEAN, Va. — The National Automobile Dealers Association (NADA) is sticking to its initial forecast of 17.7 million news cars and light trucks for 2016, despite current economic and political uncertainties.

“We’ve had six straight years of steadily rising sales, which has been a fantastic period of growth, and vehicles per household have returned to the same level prior to the Great Recession,” said NADA Chief Economist Steven Szakaly at the Center for Automotive Research Management Briefing Seminars in Traverse City, Mich., on Tuesday. “But most pent up demand has been satisfied. For 2017, we expect new-vehicle sales to reach 17.1 million units.”

Szakaly listed the rising employment rate, leases, and cheap gas and diesel prices as reasons why sales will remain strong throughout 2016.

“For 2016, light trucks will account for about 59% of the new-vehicle sales market and cars will account for 41%,” he said. “Leases are increasing, which now accounts for more than 34% of the market.”

He added that although interest rates on auto loans are expected to increase by about 0.50%, consumers shouldn’t notice the change due to automakers rolling out incentives to counteract the higher rate.

While slightly higher interest rates won’t do much to curtail new-vehicle sales, Szakaly did have some ideas of what could. “The aging vehicle fleet discourages long-term vehicle sales; average loans terms for new vehicles have risen to 68 months; and new-vehicle transaction prices are continuing to rise, up about 3% this year, while wages remain stagnant.”

Millennials, he concluded, will be the greatest growth factor for new-vehicle sales in the foreseeable future. “Until millennials come of age with higher wages, get married and have children, the auto industry will experience stagnant growth periods.”

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KBB Releases List of Best Family Cars of 2016


IRVINE, Calif. — Kelley Blue Book released its list of the 16 Best Family Cars of 2016. The list contains three minivans, six sedans, three two-row crossover/ SUVs and four three-row SUVs.

“For two weeks’ time we drove, lived with, folded down seats of, paired phones to and installed baby seats in each and every one of the contenders,” said Jack R. Nerad, executive editorial director and executive market analyst of Kelley Blue Book’s KBB.com. “ … This wasn’t just a cursory exercise, but instead it drew heavily upon our family-car experiences, needs and wants.”

The cars listed on KBB’s 16 Best Family Cars include:

  • Sedan: Honda Civic, Honda Accord, Kia Optima, Chevrolet Malibu, Chevrolet Impala and Hyundai Sonata
  • Two-Row Crossover: Honda HR-V, Honda CR-V and Subaru Outback.
  • Minivans: Kia Sedona, Honda Odyssey and Toyota Sienna.
  • Three-Row Crossover / SUV: Nissan Pathfinder, Toyota Highlander, Honda Pilot and Chevrolet Tahoe.
  • Runners-up were the Ford F-150, Ford Explorer, Hyundai Tucson, Kia Soul, Ram 1500, Subaru Crosstrek, Toyota Avalon and Toyota Camry.

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Fiat Chrysler Wants to collaborate With Others on New Vehicles


Fiat Chrysler Automobiles Chief Executive Sergio Marchionne said his company is in talks with other automakers to share the costs of developing new vehicles and technology, particularly to cut greenhouse gas emissions, and called on the United States to ease fuel economy targets for 2025, reported Reuters.

“I think (automakers’) costs … (are) well in excess of what I consider a mature industry to be able to afford,” Marchionne told reporters at the Detroit auto show on Monday.

The U.S. government wants automakers to average 54.5 miles per gallon of gasoline for their lineup of vehicles by 2025. Marchionne said that with gasoline prices sliding to $2 a gallon or less, consumers have less incentive to pay extra for advanced fuel-saving technology. The U.S. Environmental Protection Agency will review the targets by 2018, and Marchionne said he expects other automakers to lobby the EPA to extend the timetable for achieving the 54.5 mpg target and the corresponding target for carbon dioxide emissions.

Marchionne deflected questions on whether FCA was in merger talks, but said that automakers’ relatively low stock values reflect investor perceptions that car companies are wasting capital producing their own versions of commoditized technologies, such as the hardware for four-cylinder engines.

Recently, separate media reports suggested that the Italian carmaker was talking to PSA Peugeot Citroen and Volkswagen about a potential tie-up. Both reports were denied by Fiat and the French and German companies.

FCA’s October announcement that it would spin off luxury unit Ferrari prompted speculation that the automaker would seek another merger partner, possibly to plug a hole in Asia.

Marchionne said Ferrari will always stick to its policy of keeping production levels below market demand, and dismissed speculation that the luxury group could significantly increase sales after the spin-off.

“To cite Enzo Ferrari, we will always sell one less Ferrari than the market wants,” said Marchionne, who also serves as Ferrari chairman. “That’s a policy that will never change.”

FCA plans to sell 10 percent of Ferrari via a public offering and distribute the rest of FCA’s stake to its shareholders. A bond issue may accompany Ferrari’s IPO in the second quarter, Marchionne added on Monday.

He said he expects the car markets in Europe, Brazil and the United States to post single-digit growth in 2015.

He said FCA would sell more than 5 million vehicles this year, up from an expected 4.7 million in 2014. The carmaker also expects to report 2014 results in line with guidance, he added.

The group said earlier on Monday it would add more than 1,000 workers at its Melfi plant in southern Italy thanks to “extremely positive” sales for its new Jeep Renegade and Fiat 500X models, allowing it to fully utilize the plant’s production capacity.

Marchionne said the new positions were a “big step forward and a positive sign for the country.” FCA will also end a state-backed temporary layoff scheme at the plant, allowing 5,418 employees to return to work full-time.

The positive results at Melfi are just a first step in FCA’s bid to make its European operations profitable by 2016.

They are part of a bigger goal to invest 48 billion euros ($56.73 billion) over five years to 2018 to boost sales by 60 percent to 7 million cars and increase net profit five-fold. Analysts have called those targets highly ambitious, but Marchionne reiterated on Monday that those targets still stood.

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California on Track to Sell 1.8 million New Units in 2014


SACRAMENTO, Calif. — New-vehicle registrations in the state continued to improve during the first half of 2014 vs. 2013, according to a report from the California New Car Dealers Association (CNCDA). With an increase of 7.3% this year, California’s sales are still on track to approach 1.8 million new units.

California also continues to outpace the U.S. new-car sales growth of 5.4% this year. “Thanks to consistently better technology and improved fuel economy in these new models, the growth gain in new-vehicle sales compared to used sales is three times higher,” said Randy Denham, CNCDA chairman and owner of S.J. Denham Chrysler Jeep in Redding, Calif.

California’s used-vehicle market is also on an upward trend of 2.4%, though the vast majority of vehicles sold at franchised dealerships are new — more than 910,000 through June.

The Toyota Camry took over as the state’s best-selling new model, slightly beating Toyota’s Prius and Corolla and Honda’s Accord and Civic. The Japanese brands continued to increase their sales by 10.2% and now account for 49% of the California new car market.

Domestic brands held steady at 27.7% and Korean brands increased slightly at 7.9%. The Hybrid segment continues to trend at a decrease this year, while Plug-in and Electric vehicles experienced a slight increase. Interestingly, for the second consecutive quarter, Tesla experienced the sharpest year over year decline of any manufacturer listed in the report, officials said.

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