Breaking News: Japanese car brands are alive and well in the U.S.

Newly assembled 2013 Ford Escapes sit on plant lots ready to be shipped out to dealers at the newly transformed Louisville Assembly Plant in LouisvilleSo Japanese brands are back in the U.S. auto market. I wasn’t aware they ever left.

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Japanese brands gained during crisis, but overall have been stable.

Sure, the past two years have given us production upsets from a tsunami, the Tsunami and a hyper strengthening of the yen all while the US auto market has bounced back from historic lows during the financial crisis. Japanese brand market share peaked in 2 Continue reading

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2012 US SAAR – Strong year, decent behavior, I was wrong

Early in 2012 I went out on a limb with a low-ball forecast for the US market of 13.5 million, I was way low.  2012 sales hit 14,49 million, 1 million higher than I saw coming.  Great news for automakers and particularly dealers — maybe some tough news for buyers looking for a deal.

Main underestimation:

  • Easier access to credit with all major OEM’s reaching back into sub-prime.
  • Increased consumer confidence with a steady increase in SAAR rate including a strong push at year-end.
  • Continued deals as GM and Ford fought to keep the volume if not the market share they gained in 2011 when the Japanese were hamstrung. Continue reading

Q2 2012 Global Auto Earnings: four not so obvious thoughts

While everyone is laser focused on the imploding European auto industry and we ponder the sustainability of the US volume recovery, there are a few things to keep an eye on that may not be top-of-mind:

1) Latin America: The meteoric growth of the Brazilian market has slowed to standstill and surrounding markets have stalled as well.  While the industry has expected the flattening market, a steep rise in  low-cost imports has created pricing pressure.  Companies like Fiat, GM and VW who had been enjoying the tailwinds of strong double-digit margins over the past decade will feel Continue reading

Used cars in China: risks but VER¥ BIG opportunities

No, I don’t speak the language, but I do recognize that the development of the used cars (Èrshǒu chē) market marks a milestone in the maturity of the Chinese auto sector. In 2011. China passed the US as the largest new car market with 14.5 million passenger vehicle sales and from 2007-2011 the market saw more than 50 million new cars sold.

Going forward, the market may slow, but will remain at least in the 20 million range with foreign brands growing faster and more consistently than the overall market. During the first quarter of 2012, domestic brands fell 8.1% while foreign brands picked up 3.2 pts of market share, now accounting for 42.9% of total sales.

This trend could push the development of a local used car market as international brands work to import their experience in managing used car markets in the US, Japan and European markets. Among other pressures on the demand side are tightening emissions restrictions. Wholesale buyers are avoiding older, low-end units in favor or more recent mid-to-high-end and luxury cars. While there is currently a net oversupply of used vehicles in Beijing, luxury models such a used Mercedes have seen double-digit growth in China.

The steady growth has built a considerable park of existing vehicles in China. While there is no solidly reliable data on how long a first buyer (and more than two-thirds of buyers today are first time buyers) hold onto a car, we are seeing a burgeoning used car market. In 2009, the state had already begun efforts to reform the used market including standards for city and regional used car exchanges. Today, market participants are waiting for additional reforms to establish a uniform system on pricing, terms of sales as well as  protection and guarantees for consumers. These reforms should bolster the opportunity for dealers, supporting higher prices that would allow buyers to feel more confident in paying for the pricier non domestic used cars.

This foreshadows a tremendous opportunity and risk for foreign brands in China. If they can corral the used car market, Continue reading

May US SAAR continues subdued growth

US Sales were up 16% for May 2012. SAAR comes  out at around 13.8 million for the month, which  threw some cool water on analysts expecting the 14+ million pace to continue. What is worrisome is that too many analysts took their numbers up on a strong April that clearly showed some flattening signs as did May. Whenever I see mid-month weakness in the numbers followed by an ultra-strong close, I see slowing demand. Jan – Apr tracked at a 14.5 million pace, and May has pulled that down to 14.3 million. While bulls had rushed to push some numbers up around 15 million, more experienced market watchers have held closer to 14 million forecasts. Why does it matter? Continue reading

April US sales take a breather. Not to worry. Well, not too much.

US auto sales are in today and the results are pretty interesting at first glance:  At the moment, we have sales +3%, not worrying as last April was a big month and Q1 was solid as we end the first 4 months up 10%.  

While I‘ll probably eat my over my low-end forecast for the year (13.5 million), April appears to be throwing some luke-warm water on those calling for 15 million this year and 16-17 soon after.  As I’ve said all along, replacement demand is not linear, and the spike in recent buying is Continue reading

China 2012 Auto market, another two tiered year.

When I saw that China Q1 2012 auto sales were down 1.2%, I wondered was this the “soft landing” or just the beginning. After growing 32% in 2010, the market slowed to a “modest” 5.4% uptick for 2011, Q1 may be disheartening; however, March sales were “up a tad.” Well, I had the chance last week to spend some time last week with executives from the Chinese auto retail sector and looked a little deeper with a front-line perspective.

Following some takeaways from my listening:

  • The PV market is and has been bifurcated. The 2010 incentives to spur growth of local brands accelerated the spread versus global brands. This explains why Continue reading