Road Reality » Industry Update

Average New-Car Purchase Price Rises in 2010

admin — Thu, 15 Jul 2010 14:00:39 +0000

According to a report done by Detroit Free Press, The average purchase prices of new cars has risen from $28,160 in 2009 to $29,217 in 2010, an increase of about 3.75%. This is due to several factors, including new technology, different buyers and less incentives.

These reasons all make sense, since generally, only the most qualified buyers are buying cars right now, as they are the most economically stable. In addition, BlueTooth, GPS navigation and iPod integration are some of today’s most popular options, which many automakers have been striving to add or improve in their cars. Click here for a list of many of today’s options and how they work.

2010 Ford Fusion Hybrid

Meanwhile, since sales volume is down, automakers have to concentrate on selling better-equipped models to make up the difference, which has also led to higher quality cars. Options, and option packages, are the biggest profit makers when selling a car. Whereas the profit margin on a base model family sedan can be under $2,500, the profit margin on an option package including a moonroof, upgraded stereo and GPS navigation for about $3,000 adds another $1,500 or so to the bottom line.

The real winners in this new report are the Detroit 3 – Chrysler, Ford and GM. While their competitors are all below the industry average, Ford and GM are well above it. Chrysler is only $7 per car short of the average, but still $2,256 higher than rival Toyota. This can be attributed to better quality and glowing reviews to many new Ford and GM models, while Toyota’s recalls have forced them to increase incentives to buyers to keep from losing them.

2011 Hyundai Sonata

Catching up is what Hyundai has been doing for years, and a 6.4% increase in their purchase prices from 2009 to 2010 means they get the “most improved” award. With the new 2011 Sonata sedan and 2011 Tucson SUV, Hyundai is poaching competitor’s buyers left and right.

With sales looking to be higher in 2010 than in 2009 by a significant margin, and new models being delivered by all of the companies included in the report, look for these purchase prices to continue rising, especially for Ford, GM and Hyundai.

by John Suit

Source: Detroit Free Press; Image Source: Edmunds.com

Sales Figures: June, 2010

admin — Fri, 02 Jul 2010 14:26:16 +0000

Well, the numbers are in, and they don’t look good. May kicks off the summer sales events for automobile manufacturers, and June is truly the kick-off for the industry. Convertible and sports car sales usually get into full swing this time of year, but not this year. While almost all of the manufacturers’ sales were down from May, BMW, Jaguar/Land Rover (owned by Indian company Tata), and Hyundai had their sales increase. Of those three, Hyundai was up about 3,000 cars, Jaguar/Land Rover was up 800, and BMW was up about 1,300.

The significance of this shows up when you look at May’s sales figures and realize that this is more than a 33% increase for Jaguar/Land Rover month-to-month, and I believe it was fueled by the recent release of the all new Jaguar XJ sedan. Hyundai, of course, is just continuing its meteoric rise, owing to the new 2011 Sonata sedan and Tucson SUV.

Meanwhile, the current Big Three, namely GM, Ford and Toyota, in that order, each had over 20,000 less sales in June than they had in March. The troubling part is that it wasn’t their luxury brands which lost out, but the bread-and-butter brands of Chevrolet, Ford and Toyota, respectively.

Sales in June were down a little over 119,000, and only 2,000 higher than sales in April. This is disconcerting, especially as I hear that our economy is supposed to be flat or improving. It makes sense when the number of unemployment applications went up 13,000 last month. People are scared to spend new-car kind of money right now, which does not bode well for the automotive industry this year. Hopefully things will start to improve in July and August, because if they don’t, there are gonna be a TON of 2010 models sitting on dealer lots when the 2011s start arriving in force this fall.

Year-to-Date, GM continues to lead, but only by 100,000 vehicles over 2nd-place Ford. Honda and Chrysler are battling it out for 3rd place, with Honda in the lead by almost 70,000 cars. Nissan and Hyundai are within spitting distance of each other, and they have a huge gap over Volkswagen and everyone else.

by John Suit

Cadillac and Lincoln: Free Maintenance Packages

admin — Mon, 21 Jun 2010 19:49:32 +0000

2011 Lincoln MKX

If you’re going to play in the luxury car arena, you might want to look at how things are done by BMW. The German luxury car manufacturer gives new-car buyers free maintenance for 4 years/50,000 miles. Now, two domestic luxury brands are joining in, albeit in slightly different ways. Cadillac will give you free maintenance for 4 yrs/50,000 miles on any 2011 model, whereas Lincoln gives you the same length of time and mileage, but only on 2010 and 2011 models sold during this summer.

2011 Cadillac CTS Coupe

It appears that the Cadillac plan, while it may apply to more vehicles, is more limited than the Lincoln plan, but both are better than nothing, and may sway some of you into either buying earlier than you previously planned, or buying a Cadillac or Lincoln when you may have bought something else. Either way, they’re both good marketing tools, and for Lincoln, at least, is a way to get people into their cars as Mercury is being shuttered and its new models are making their way to market.

by John Suit

Source: Ford, GM

Sales Figures: May, 2010

admin — Mon, 14 Jun 2010 20:53:06 +0000

The sales figures are in for May, and they’re quite interesting! GM had a good lead over crosstown rival Ford, but Toyota, surprisingly, wasn’t far behind. Nissan flipped spots with Hyundai, selling more than the Korean automaker, but both were below Chrysler. Sales for BMW and Mercedes-Benz were mostly flat over April’s, and both were under 25,000 vehicles sold for the month.

While luxury car sales were flat or down a bit, so were the bread-and-butter Japanese cars from Toyota and Honda. Meanwhile, domestic rivals Ford and GM were both up significant amounts, as were less popular Japanese brands Mazda and Nissan. It’s hard to say what caused this turn of events, although Toyota’s sales will be an enigma for some time due to their recent recall issues.

More surprising was Nissan’s jump, which is almost back up to March’s sales level. With the 2011 Mustang and Heavy Duty F-Series trucks, Ford is bound to have a good summer, and on GM’s side, their heavy duty trucks were recently unveiled, which can only help as truck sales are rebounding faster than many other segments.

All in all, May was a good month for the new-car business, with just over 1.1-million vehicles sold, a sharp rise from April, and even above March’s numbers, which until now were the year’s best. With 4.6-million vehicles sold already in 2010, I predict that we’ll see a total of 9 to 11 million sales.

Stay tuned to Road Reality for an update next month with June’s sales.

by John Suit

Breaking News: Ford confirms rumors of Mercury shutdown

admin — Wed, 02 Jun 2010 20:20:03 +0000

In a press conference this afternoon with Ford’s president of the Americas, Mark Fields, it was announced that the Mercury brand, in existence for the past 71 years, will be shuttered at the end of this calendar year. According to Ford, this allows them to enhance the Lincoln brand, with Lincoln-specific powertrains and vehicles, without straining the resources of the Ford brand itself, which has seen major growth in sales, customer satisfaction, and reliability over the past few years. Read on for more details.

2009 Lincoln MKS

Lincoln is reportedly going to be offering EcoBoost engines in every vehicle in its lineup, from the Navigator on down. EcoBoost is Ford’s name for an engine technology which allows them to use smaller engines in place of bigger ones, leading to better fuel economy without sacrificing power. Lincoln is also said to be in the process of creating or releasing 7 all-new or redesigned vehicles, including a small car previewed by the Lincoln C concept car late last year.

2011 Lincoln MKZ Hybrid

Ford is positioning Lincoln to be a true luxury competitor, whereas in recent years its vehicles have been perceived as superior trim levels to what Ford and Mercury offered. With the MKS and MKZ sedans growing Lincoln’s business in the past few years, it looks like Ford’s luxury brand will stay around, and with the demise of Mercury, Ford will have the resources to do with Lincoln what GM did with Cadillac, albeit several years behind their cross-town rivals.

It’s no surprise that Mercury is being killed off, but at least Ford is going to be putting the extra resources into making Lincoln a real threat to Cadillac, Lexus and Mercedes-Benz.

If you’re worried about your current Mercury vehicle, or any Mercury vehicle you may purchase until they run out, don’t be. Ford says it is standing behind all Mercury vehicles currently on the road, and that you’ll be able to get them serviced at any Ford or Lincoln dealership.

Looks like another good choice by Ford’s executives, now let’s see if they can follow through to give Cadillac a real domestic rival.

by John Suit

Source: Ford

Report suggests Ford planning to shutter Mercury

admin — Thu, 27 May 2010 21:06:36 +0000

Since it’s sales are down 74% since 2000, it’s no surprise that Ford would want to shut down its Mercury brand. Bloomberg has reported that 2 inside sources close to the plan have told them about the probable closing. For some years now, the impression consumers have of Mercury is that its vehicles merely represent another trim level for Fords. In the same vein as what got GM into a lot of trouble, most Mercurys are badge-engineered Fords, with slightly better interiors and some different exterior colors and parts. It’ll be a shame to see such a long-running marque disappear. If it’s shut down, Mercury would join Pontiac, Hummer, Oldsmobile and Saturn in the annals of history, and sales would wind down over the next 4 years or so. Keep your browser tuned here for updates to this story.

by John Suit

Source: Bloomberg