Tag Archive | "vehicle sales"

KBB: Average Transaction Price Climbs to Record High in December


IRVINE, Calif. — The estimated average transaction price for light vehicles in the United States reached an all-time record high of $35,309 in December, according to Kelley Blue Book (KBB). This increase, the auto firm added, amounted to a 1.5% increase over the same time last year.

Virtually all vehicle OEM recorded increases in average transaction prices, with Fiat Chrysler, Ford Motor Co. and Nissan North America leading the way. However, KBB noted that just as new prices have grown, so have incentives.

“Even though transaction prices are at an all-time high, incentives have grown similarly to counterbalance the increased prices,” said Tim Fleming, analyst for Kelley Blue Book.  “Higher average transaction prices are reflective of the rapid shift in consumer demand away from cars and into trucks and utility vehicles, which are more expensive. Should the sales mix of cars to SUVs reach a stable point in the near future, actual transaction price growth could match or fall just short of inflation.”

For Fiat Chrysler, average vehicle transaction prices rose 3.3%, driven primarily by the automaker’s Chrysler, Dodge and Jeep brands. The strength of the Pacifica minivan propelled average transaction prices for the Chrysler brand up 10%, as did fewer sales of the brand’s 200 Sedan. The Dodge brand was up 5% on a lower mix of its compact car, the Dart, and strong performance from the Charger. The average for the Jeep brand was up 2% thanks to a strong month from the refreshed Grand Cherokee.

“December was an interesting month for FCA. Though the Jeep and Ram brands are up, incentives are high, and vehicles such as the Cherokee saw big drops. Jeep has to hope its 2017 redesigns can stem some of the bleeding and help reduce incentives,” said KBB analyst Akshay Anand. “Alfa Romeo and Fiat continue to be drags on FCA, with Alfa’s volume still next to nothing and Fiat continuing to decline in sales. The Pacifica was a great story for Chrysler, but the brand still needs more models in order to become a player.”

Essentially matching Fiat Chrysler’s growth rate, Ford Motor Co. realized a 3% rise in its average transaction price for December. The main drivers were the automaker’s Explorer, Escape and Fusion, which saw their transaction prices climb by 11%, 3%, and 4%, respectively. The Lincoln brand’s average transaction price rose 3% increase due to the Continental $57,156 average transaction price.

Nissan North America realized the biggest year-over-year increase among all the OEMs, with its average transaction price rising 5.9% over the same time last year, according to KBB. Michelle Krebs, senior analyst for AutoTrader, noted that the brand’s growth was driven in large part by the success of its Nissan Rogue sport utility, which benefited from the advertising tie-in with Rogue One: A Star Wars Story.

“Appealing products, incentives, and financing likely drove the industry to another record year in 2016. A three-peat is possible (if not probable) if Wall Street, consumer confidence, and the economy continue to respond favorably to the incoming administration. There are a lot of old cars on the road still and a lot of new technology awaiting shoppers in today’s showrooms,” said Rebecca Lindland, senior analyst for Kelley Blue Book.

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Embracing Tech Results in Higher Customer Satisfaction, J.D. Power Finds


WESTLAKE VILLAGE, Calif. — Dealerships that use technology like tablets and computer displays during the sales process can substantially improve customer satisfaction among new-vehicle buyers, according to the J.D. Power 2015 U.S. Sales Satisfaction Index (SSI) Study.

Released on Thursday, the study measures satisfaction with the sales experience among new-vehicle buyers and rejecters — those who shop a dealership and purchase elsewhere. Buyer satisfaction is based on four factors: working out the deal (17%); salesperson (13%); delivery process (11%); and facility (10%). Rejecter satisfaction is based on five factors: salesperson (21%); fairness of price (8%); experience negotiating (8%); facility (7%); and variety of inventory (7%). Satisfaction is calculated on a 1,000-point scale.

In the study’s 29th year, overall sales satisfaction improved to 688 in 2015, up slightly from 686 in 2014. It concluded that dealerships that integrate technology tools into their sales process deliver a superior customer experience, while dealerships that fail to invest in consumer-facing technologies risk being trumped by competitors.

According to the study, among both non-premium and premium buyers, use of tablets by sales personnel to perform such tasks as record customer vehicle needs, demonstrate vehicle features and display pricing information yields higher satisfaction with technology usage than when a tablet is not used (8.12 vs. 7.02 and 8.63 vs. 7.52, respectively, on a 10-point scale). Notably, handwritten price quotes have a negative impact on buyer satisfaction with technology usage, with a -0.55 point gap in satisfaction between non-premium buyers when this method is used and when it is not and a -0.45 gap between premium buyers.

As for F&I products, satisfaction was higher among customers who were offered these options. Among non-premium owners, satisfaction was 46 points higher when a dealer offered them a pre-paid maintenance contract vs. when they do not (788 vs. 742, respectively). And among premium buyers, the gap is 26 points (827 vs. 801). Moreover, when F&I product and pricing/payment options are presented on a computer or tablet screen, satisfaction is higher than when any other method is used, including printed materials, verbal quotes/descriptions and handwritten figures.

“With retail vehicle sales in the United States in 2015 forecast to reach 14.2 million units and this positive momentum expected to carry into 2016, dealers face challenges in properly servicing a high volume of new-vehicle buyers who are increasingly tech savvy,” said Chris Sutton, vice president of the automotive retail practice at J.D. Power. “Dealerships should understand that customers want and trust technology and that it can enhance efficiencies. Dealers that disregard it may risk being left behind in three to five years. Customers are experiencing interesting uses of technology in many of their other retail transactions—and now expect this in auto.”

The study showed that Porsche ranked highest in sales satisfaction among luxury brands with a score of 752, improving by 14 points from 2014. For a sixth consecutive year, MINI ranks highest among mass market brands with a score of 762, a 35-point increase from 2014.

The 2015 U.S. Sales Satisfaction Index (SSI) Study is based on responses from 27,831 buyers who purchased or leased their new vehicle in April or May 2015.

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Ford’s U.S. Vehicles Sales Dip 1% in May


DETROIT – Ford Motor Co.’s total U.S. vehicle sales slid 1 percent year-over-year to 250,813 units in May, with retail sales down 2 percent to 171,535 vehicles and fleet sales flat at 79,278 units, reports mlive.

While trucks and SUVs have been strong sales drivers in the U.S. for automakers this year, Ford’s results were mixed, which is curious, especially after the company announced Tuesday it was reducing its production-shutdown schedule this summer to meet demand in these segments.

Sales of the company’s best-selling vehicle, the F-Series truck, fell 10 percent in May to 61,870 units. However, Ford said Tuesday that result was on “tight supply, as the second F-150 facility – Kansas City Assembly Plant – ramps up to full line speed this quarter.”

Meanwhile, the Ford Edge established a May sales record, and commercial vans had their best performance in the month since 1978. The company also noted that its 2016 Explorer went on sale in May, and sales were up 24 percent.

Here’s a closer look at sales by brand and segment:

Ford

Sales of Ford-brand vehicles dipped 2 percent to 241,639 units in May, compared with the same month in 2014.

Ford cars

Sales of Ford cars were up 2 percent to 85,846 units. The increase was led by rises of 31 percent to 9,426 units for the Fiesta and of 40 percent to 13,616 units for the Mustang. Focus sales edged up 1 percent to 23,934 units. Sales of the C-Max dipped 8 percent to 2,607 units, while Fusion sales also dropped 8 percent to 31,325 units.

Ford utilities

Ford utilities sales slipped 1 percent to 72,541 units. Escape sales fell 8 percent to 29,2487 units, Flex sales declined 14 percent to 2,443 units and Expedition sales dropped 18 percent to 4,147 units. Those decreases were partially offset by a 34 percent rise in Edge sales to 14,399 units.

Ford trucks

Sales of Ford truck were down 5 percent to 83,252 units in May. As mentioned, the F-Series fell 10 percent to 61,870 units. Sales if the Transit connect rose 8 percent to 4,576 units, while sales of Heavy Trucks dipped 2 percent to 727 units.

Lincoln

Lincoln-brand vehicle sales were up 4 percent on an annual basis to 9,174 units in May.

Lincoln cars

Sales of Lincoln cars fell 14 percent to 3,909 units. The MKZ was off 11 percent to 3,296 units, and the MKS dropped 28 percent to 613 units.

Lincoln utilities

Lincoln utility sales climbed 23 percent to 5,265 units. Sales of the Navigator grew 50 percent to to 1,046 units, and the MKC sold 2,289 units, compared to 677 for a previous model. Sales of the MKX dropped 38 percent to 1,488 units, and the MKT fell 12 percent to 442 units.

“We continue to see strong consumer demand for our newest products, including Edge, F-150, Mustang, Transit Vans and Lincoln MKC,” Mark LaNeve, Ford’s vice president of U.S. marketing, sales and service, said in a release. “Our all-new F-150 is still turning on dealer lots in 26 days against tight supply, and F-150 average transaction prices set a record in May, as customers continued buying a rich mix of high-series pickups.”

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Audi Edges Past BMW to Lead Luxury-Car Sales Race in April


Audi was the world’s biggest seller of luxury cars in April, edging out BMW AG’s namesake brand and fast-growing Mercedes-Benz, reported Bloomberg.

Bolstered by U.S. demand for the Audi Q5 and Q7 sport utility vehicles, the Volkswagen AG unit’s deliveries rose 2.5 percent to 152,850 cars last month, compared with BMW’s 5.6 percent increase to 148,896 autos. Daimler AG’s Mercedes remained the fastest growing of the world’s three biggest luxury-car brands, posting an 11 percent gain to 148,072 cars.

“We’re seeing growth at a good pace,” Audi Chief Executive Officer Rupert Stadler told reporters on Tuesday at a presentation of the revamped Q7 sport utility vehicle in Verbier, Switzerland. “We started the year with a very decent first quarter.”

BMW has vowed to defend its annual lead in global premium car sales, even as key models such as the 7-Series sedan age. The three German luxury-car brands are adding all-new models to widen their appeal and gain an edge over rivals. BMW is rolling out the van-like Gran Tourer this year, and Mercedes plans a pickup truck by the end of the decade.
Through the first four months of 2015, BMW held onto its No. 1 ranking, with sales up 5.5 percent to 600,473 cars. Audi’s deliveries increased 5.2 percent to 591,050 vehicles, while Mercedes demand jumped 14 percent to 577,674 autos.

Audi will expand its SUV offerings with the new subcompact Q1 next year and the full-size Q8 by 2019, Stadler said. The Ingolstadt-based carmaker expects SUVs to account for about 40 percent of total vehicle sales in 2020 compared with 32 percent now.

Those new additions could be critical. Competition in China, the manufacturer’s largest market, is set to intensify as growth moderates. Stadler forecast industrywide demand in the country to rise about 8 percent this year, which is still faster than many other major markets.

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DealerRater, J.D. Power Examine Service’s Connection to Sales


WESTLAKE VILLAGE, Calif. — Dealers wanting to boost vehicles sales should focus on the experience their service department delivers to customers, concluded a joint analysis conducted by J.D. Power and DealerRater.

The two firms used the release of their new finding to announce an alliance that will bring together J.D. Power’s customer satisfaction research and DealerRater’s consumer ratings and reviews to deliver a monthly analysis called PowerRater Consumer Pulse.

For March, the two firms examined the connection between vehicle sales and the service experience. And according to data collected by DealerRater, 40% of car buyers indicated that the service department’s reputation was significantly important in choosing the dealer from which to buy, making service reviews critically important to the sales efforts of the dealership.

“Clearly, there is a strong incentive for dealers to maximize customer satisfaction as it leads to a greater likelihood that customers will post a positive review, helping to support the reputation of the dealer’s service department,” said Chris Sutton, vice president, U.S. automotive retail practice at J.D. Power.

According to J.D. Power, highly satisfied customers (overall satisfaction scores between 901-1,000 on a 1,000-point scale) are more likely to write a review about their experience, compared with those who are merely satisfied or indifferent (scores of 750-900). Among the 37 percent of highly satisfied customers, 4.3 percent indicate that they posted an online review of their experience. In contrast, less than 3 percent of service customers who are either merely satisfied or indifferent posted an online review.

And among highly satisfied customers who posted an online review of their last service experience, 91 percent of the reviews were positive. Among customers who were merely satisfied or were indifferent about their service experience and posted a review, only 71 percent of the comments were positive.

“Considering how competitive the market is, and the tight profit margins that dealers are fighting, strengthening online reputation to maximize sales opportunities is becoming a critical business objective for new-vehicle dealers,” said Gary Tucker, chief executive officer of DealerRater.

J.D. Power also identified five processes with the highest potential impact on customer satisfaction with dealer service. They include:

  1. Service advisor who focuses on customer’s needs (+73 points)
  2. Providing the customer with helpful advice (+55 points)
  3. Getting the vehicle fixed right the first time (+53 points)
  4. Access to the service advisor within two minutes of arrival (+45 points)
  5. Ensuring the vehicle is ready when originally promised (+41 points)

On average, dealers fix vehicles right the first time 93% of the time, and service advisors focus on customers’ needs 92% of the time. Where dealers need to focus, however, is in improving timely access to advisors and setting realistic expectations for when vehicles will be ready, which are met only 73 percent and 77 percent of the time, respectively.

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IHS Forecasts 88.6 Million Global Light-Vehicle Sales in 2015


SOUTHFIELD, Mich. — With 2015 off to a good start, IHS Automotive, part of IHS Inc., forecasts global automotive sales for 2015 to reach 88.6 million, an increase of 2.4% over 2014, continuing an unbroken five-year run of sales recovery and growth from the low point set in the depth of the Great Recession in 2009. However, a slowdown is being signaled with just two of the high-potential BRIC markets likely to see increased sales this year.

China will lead the sector’s volume growth, though IHS expects the market to slow from 2014. The North American market will continue its upswing, though the pace differs by country. The size of the contraction of the Russian car market remains a significant wild card that will impact the European market throughout the year, according to the analysis, while other countries in the region continue to recover at a rate of 2.5% to 3%, helped by the European Central Bank’s (ECB) commitment to full-blown Quantitative Easing (QE).

For the APAC region in 2015, China’s economic growth will decelerate further, to 6.5% from 7.4% in 2014, as a result of industrial overcapacity and weakness in the real estate sector. However, IHS Automotive analysts still expect light vehicles sales in China to grow by 7% in 2015 to 25.2 million units, aided with increased auto finance penetration, fast dealership expansion and government vehicle scrappage programs.

According to the analysis, the current anti-trust campaign environment could alter the relationships among consumers, dealers and OEMs. The campaign is expected to have a long-lasting effect on premium parts/vehicle prices in China. Coupled with this, the momentum could lead to downward adjustment in premium pricing, which helps provide solid foundation for premium vehicle penetration to further increase in China in the next decade. IHS expects premium vehicles in China to top two million units in 2015 with year-over-year growth of 15%.

IHS Automotive experts also expect SUVs to remain the fastest-growing segment in China in 2015. “We see SUV market share (as percent of passenger vehicle sales) to increase from 26% in 2014 to 28% in 2015 as consumers look to this segment to address evolving transportation needs,” said Lin Huaibin, manager, China light vehicle sales forecast, IHS Automotive.

In India, falling inflation, lower interest rates, energy prices and regained confidence will help lift the car market into growth mode starting in 2015 after a two-year lull.

North America continues to be an impetus to global light vehicle demand levels. Improving credit conditions throughout the region and sustained, but tenuous economic growth among the countries in the region have helped to motivate total auto sales levels.

“Although the economic conditions and pace of recovery differ slightly among the North American countries, consumer confidence, credit availability and pent-up demand have played key roles in sustaining auto demand momentum since the Great Recession,” said Chris Hopson, manager, North American light vehicle sales forecasting, for IHS Automotive. “This should help motivate sales once again in 2015.”

IHS Automotive projects regional light vehicle sales volume in North America to hit more than 20 million units in 2015, up 2.5% from last year.

In the United States, IHS Automotive analysts continue to believe the upside risks for auto demand are more apparent than the downside risks. With a strong exit to 2014, and gasoline prices currently plunging, consumers may feel even more positive throughout 2015. The IHS Automotive U.S. light vehicle sales forecast for 2015 is 16.9 million units.

Light vehicle sales in Canada set an annual record in 2014 that is scheduled to be broken once again in 2015. Light truck sales, especially CUVs, helped motivate demand levels last year and with lower fuel prices expected, should once again dominate growth in 2015. The Canadian light vehicle sales forecast from IHS Automotive for 2015 stands at 1.88 million units.

In Mexico, auto sales stalled through the first seven months of 2014, causing some concern that new tax policies implemented at the beginning of 2014 were hurting auto demand growth; however, motivated by incentives to help spark demand, light vehicle sales grew throughout the second half of the year. This momentum should continue in 2015, and IHS projects sales volume to grow 3% to 1.17 million units.

There was a stark change in 2014 South America automotive demand compared to 2013, when monthly sales broke the 500,000 unit mark seven times. The year preliminarily closed with 5.34 million units — a 10% drop from 2013; with politics impairing Argentina and Venezuela, and the economic climate weighing down markets like Brazil, Chile and Peru, where it may take a few years for demand to recover to previous highs.

Uncertainty lingers over Argentina, Brazil, Chile and Venezuela for 2015. Argentina is displaying hints of the “tango crisis” of 1998: uncontrolled inflation, lack of foreign currency and risk of devaluation. As a result, IHS Automotive is expecting 2015 sales in Argentina of roughly 500,000 units. In Brazil, banks have been tightening credit for the last three years, and they are not showing interest in boosting credit to the automotive sector. This, along with the increase in the IPI (an industry tax) in early January, higher financing rates and weak job generation should translate into sales in Brazil of 3.25 million units.

In Chile, doubt over car sales is drawn from the emissions tax and the risk of further currency devaluations will ring in the market close to the 300,000 unit mark. Finally, it is difficult to imagine the Venezuelan market tumbling any lower than it already has; however, as oil prices plummet, the government’s access to foreign currency will continue to be limited, thus impairing vehicle production.

In Europe, the crisis in Russia could offset the boon of lower fuel prices for Europe’s car buyers and even the new QE boost from the ECB. As the Russian economy slumps into a deep recession in 2015, its negative impact on the Eurozone and surrounding countries could be large enough to offset the consumer benefit from falling fuel prices. Overall, the IHS forecast for light vehicle sales in Western Europe has only been fractionally upgraded for 2015 despite the benefits of $60 oil.

After a better-than-expected 5% increase in 2014, light vehicle sales in the mature West European region are forecast to improve by another 3% in 2015, with upside coming if the apparent open-ended commitment to QE by the ECB pushes the Euro down still further.

“The size of the market contraction in Russia is the biggest wild card facing vehicle manufacturers across the European continent, if not the world, in 2015 and 2016,” said Nigel Griffiths, chief automotive economist, IHS Automotive.

After the recent enormous volatility of the Russian currency, prices of imported cars look like they will increase well over 20% or so and even domestically-produced vehicles will have to see double-digit price hikes. This, along with a deep recession compounded by the recent credit rating downgrades, could push the market down to just 1.8 million units; a 27% decline over 2014 and nearly 40% (1.2 million) below the market level recorded in 2012.

From a global perspective, the auto industry is now being faced with and will have to adjust to very large and widespread exchange rate movements, commodity and raw material price changes and, of course, the new low oil prices. The last two will be significant tailwinds for the auto sector, its margins and for most of the world consumers, but at the same time, their unpredictability will mean long-term business plans will likely change at a more cautious pace.

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