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Sports Car Market Sees Dwindling Number of Buyers, BMW Says

BMW-Z4BMW Group said that the popularity of sport cars is starting to diminish, resulting to significantly lesser buyers than they did before the global recession struck.

During an interview at BMW’s headquarters in Munich, Ian Robertson, the company’s head of sales, mentioned that the sports-car market is almost half of what it used to be. He added that after the recession in 2008, the sports-car market collapsed and there is no certainty if it will ever recover.

Once considered as a status symbol, the sports car is seeing tough competition against SUVs and crossovers, particularly in Europe and North America. On a similar note, the hot weather, pollution as well as increasing demand for chauffeured limousines in China and emerging markets have also made sports cars less appealing to richer clients.

Despite diminishing popularity, selling cars designed for speed and performance plays a crucial role in establishing a brand’s appeal. As such, according to Robertson, BMW, which has built its name around manufacturing and selling sporty luxury cars, is collaborating with Toyota Motor Corp. for the development of a midsize sports car. Feasibility study for the said project has already been completed and is now moving towards the concept stage. Further details about the project are yet to be disclosed by the two automakers.

In Europe and North America, where sports cars such as Daimler AG’s Mercedes-Benz SLK and Audi TT are popular, auto markets are slowly getting back on their feet after demands hit their lowest in decades due to the global recession. Helping offset the declines is the demand in Asia where annual growth goes beyond 10 percent.

In an analysis by the IHS Automotive, it was found that the combined global sales of TT, SLK and the BMW Z4 reached their highest in 2007, selling about 114,000 units. This drastically declined by 45 percent in 2010. By the end of the decade, global sales of the aforesaid vehicles are expected to reach about 72,000 units.

Tim Urquhart, analyst at the IHS, attributed the diminishing popularity of the sports-car segment to the growing number of offerings that appeal to the kind of demographic that sports cars used to appeal to. He mentioned that younger generations of professionals now have wider range of vehicles to choose from that befit their lifestyle aside from sports cars.

Photo credit: M 93 / Flickr / CC BY 2.0



NHTSA Investigates Power Steering Flaws on Honda Accord and Infiniti Vehicles

2013-Honda-AccordThe National Highway Traffic Safety Administration (NHTSA) is investigating Honda Motor Co.’s Accord and Infiniti after several complaints were filed against the flawed power steering of the said vehicle models.

In a statement posted by the NHTSA’s Office of Defect Investigation, the auto safety regulator noted it is carrying out preliminary investigations on 374,000 Honda Accords (2013 model year) and 17,000 Infiniti EX35 crossovers (2008 model year).

24 complaints were filed against the Accord, which happens to be one of Honda’s best-selling vehicles in the US for the first half of 2014. The complaints claimed that the Accord’s steering wheel either completely loses its power or suddenly increases in steering effort. Of the said complaints, four alleged that the flawed power steering resulted in crashes at speeds below 30 miles per hour. Some complaints noted the issue can be corrected by turning the car off and restarting it, but others said the problem reoccurred even after doing the said tactic.

Aside from the Accord, the NHTSA is also looking at Honda’s Infiniti vehicles after two complaints claimed the steering wheel shaft in the 2008 Infiniti EX35 crossovers separated. One said the problem occurred on a vehicle that only has 20,000 miles on it, while running at 40 miles per hours. The driver of the said crossover stated that after slowing down, the vehicle’s steering went out of control with the steering wheel rotating without turning the wheels.

The other complaint, on the other hand, happened to an Infiniti with 75,312 miles on it. The driver reported that while driving home, the steering wheel loosened up and eventually got detached after parking the crossover in his driveway.

This new investigation involving Honda vehicles comes at a difficult time for the Japanese automaker, as it is also involved on the ongoing probe over the flawed air bags created by Takata.

Photo credit: M Dreibelbis / Flickr / CC BY 2.0



Study Finds Long-Term Car Ownership Can Lead to Diminished Brand Loyalty

Dodge-Challenger-SRT8In a recent automotive study carried out by Experian Automotive, it has been found that consumers who held onto their vehicles for a longer period of time are less likely to trade in their existing ride for or buy a new car model of the same brand.

However, the study, which analyzed the sale of more than 1.1 million vehicles in first quarter of this year, also revealed that many consumers keep their existing vehicles longer, with an average length of ownership reaching a high of 93 months or 7.75 years. That is three months more compared to the first quarter of 2012.

Of the automotive brands that were analyzed, Dodge and Buick recorded the longest ownership periods, each averaging 113 months. Chevrolet and Ford followed suit at both 110 months and Mitsubishi completes the list at 109 months.

Despite such long-term ownership, though, Experian says that brand loyalty tends to suffer overtime. The study shows that consumers who have kept their vehicles for at least 12 years only exhibit 33.8 percent brand retention when trading in for newer models, while 57.3 percent of consumers (usually lessees) who held onto their cars for just a year or so tend to opt for a replacement vehicle from the same make.

According to Brad Smith, Experian Automotive director of automotive market statistics, leases, which commonly have fixed-length ownership cycle, play an integral role in brand loyalty. He explained that in just seven years of ownership, things can change due to factors like evolving product offerings of automakers and the changing budget and credit score of consumers.

Smith also added that unlike long-term car owners who less likely bring their vehicles to the dealer for service and maintenance, short-term car owners get to interact more with a dealership because of required maintenance trips. Such continued interaction helps establish brand loyalty.

Smith then encourages automakers and dealers to focus on keeping customer loyalty by understanding how long they hold onto their vehicles and how often they go back to the market and buy the same vehicle make. He also noted that customer interactions should be used by automakers and dealers to emphasize their new offerings or soon-to-be product launches, as this will help increase service revenue and brand retention.

Photo credit: Nicolas Serre / Flickr / CC BY 2.0



US Automakers Register Strongest October Sales in Years, Fiat Chrysler Takes the Lead

Chrysler-Hubcap-1On Monday, US automakers registered their strongest October sales in several years, suggesting that US consumer spending is continuously improving.

Six of the largest automakers collectively show a six percent increase in their monthly US sales from the previous year, meeting early forecasts from analysts. The said improvement was attributed to the decreasing prices of gasoline, which, in turn, have increased consumer demands for crossovers and SUVs.

Leading the pack was Fiat Chrylser Automobile US whose sales went up by 22 percent on the back of strong sales of their pickup truck and Jeep SUV. Chrylser’s Ram pickup truck sales moved up 33 percent, while sales of its Jeep brand grew by 52 percent.

Nissan Motor managed to increase its sales by 13.3 percent, trumping earlier analyst expectations of 11 percent. The Japanese automaker’s core brand sales went up by 15 percent, with the sales of its Rogue crossover going up by 14 percent and its small car Sentra by 56 percent. However, sales of its luxury brand Infiniti declined by 1.2 percent.

Honda Motor similarly registered higher sales in October, jumping by 5.8 percent, missing analysts’ earlier estimates of an 8 percent increase. The carmaker’s top-selling crossover gained a 30 percent increase in sales.

Sales of Toyota Motor Corp, on the other hand rose by 7 percent, meeting the expectations of analysts, while General Motors’ sales were 0.2 percent higher, but still missing analyst estimates.

Of the six automakers that reported their October sales, only Ford Motor Co registered a slight decline. The American automaker reported that its sales dipped by 2 percent to 188,654 units, still beating the 6,000 vehicles that were earlier estimated by analysts. Its popular F-Series pickup trucks maintain their position as the country’s best-selling models, selling more than 63,000 units in the month, 0.6 percent lower than the previous year.

Ford’s lower sales were already expected given that the company has recently reduced the production of its F-150 pickup truck as part of the model’s transition to an aluminum body. Ford also noted that the results were down as it has cut down its sales to rental car companies by 13 percent.

Generally, the auto industry is steadily recovering based on the abovementioned increase in sales by the largest automakers. As Kurt McNeil, sales chief of GM US noted, the US economy has shown steady improvement throughout the year and the auto industry is ready for a stronger expansion at the back of improved job market, higher level of consumer confidence and decreasing prices of fuel.

Photo credit: Steven Depolo / Flickr / CC BY 2.0



Reuters Poll: US Auto Industry October Sales Seen to Rise By Six Percent

Tanabe-USA-Garage-Sale-Car-Meet-1In a recent poll by Reuters, analysts believe US auto industry sales will continue to recover from last year and will likely show a 5.7 increase for the month of October this year.

Two automakers expected to lead the said growth are Chrysler Group and Nissan Motor Co, while Ford Motor Co. is seen to experience its second consecutive month of year-on-year sales drop. Analysts attribute the said decline to the limited production of Ford’s best-selling F-150 pickup truck.

According to John Kracik, president of automotive consultancy firm TrueCar, US auto sales in October is one of the strongest since 2004.

The result of Reuters’ poll reveal that most analysts estimated that seasonally adjusted annualized selling rate (SAAR) for the US car industry will hit 16.3 million, about 0.7 million units higher than October sales last year. Should such estimate be achieved, this will be the eight consecutive month the US SAAR will go higher than 16 million units.

TrueCar noted that the industry will achieve gains despite the 12 percent decline in 2013’s incentive spending. J.D. Power, on the other hand, estimated that a total $32.5 billion will be spent by consumers on new vehicles, slightly higher than the $30.7 billion consumer spending registered in October last year.

J.D. Power partly credited the strong performance of the auto industry to the customer’s decision to settle for long-term vehicle financing, which makes monthly payments more affordable. In fact, almost a third of the vehicles sold in October this year were financed for a minimum of 72 month or even longer.’s analyst Jessica Caldwell shares the positive sentiment saying that US auto sales are in a groove and will remain steady through the year’s end. She attributed the increased sales to the falling prices of gasoline.

One major concern analysts have over higher car sales is the level of incentives given to consumers. According to TrueCar, incentive spending went up by 2 percent from the previous year but has plummeted by 12 percent from last month.

Alec Gutierrez of Kelly Blue Book also noted that while incentive spending has remained consistent and cannot be considered a red flag yet, it suggests that the growth the industry is experiencing in recent years is slowing down. Gutierrez also added that the incentive spending-car price ratio is at its highest level since 2010.

Reuters poll of analysts reveal that Nissan Motor Co Ltd and Fiat Chrysler NV will register double-digit growth, with Chrysler growing by 22 percent and Nissan by 11 percent. Sales from General Motors are expected to increase by 2.5%, while Toyota Motor Corp, Honda Motor Co Ltd. and Hyundai Motor Co. will likely rose by 7 percent, 8 percent and 5 percent, respectively. Ford, on the other hand, is seen to go down by 4 percent.

Photo credit: Moto “Club4AG” Miwa / Flickr / CC BY 2.0



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