December 17, 2009

Japan Car Lobby Fears U.S. Market Won't Reach 11 Million in 2010
The head of Japan's auto-making lobby said today he feared that the U.S. market would remain weak and would not reach total sales of 11 million vehicles next year. According to Automotive News, U.S. auto sales edged higher in November, confirming the industry is on the mend after a deep four-year downturn, but analysts cautioned that sales are coming back from historically low levels. Click here for AIADA's coverage of November auto sales figures. "I expect the U.S. market would be slightly better than this year, but there are fears that it won't reach 11 million," said Satoshi Aoki, chairman of the Japan Automobile Manufacturers Association, as well as Honda Motor Co. told a news conference. U.S. auto sales are expected to end with an annual sales rate of about 10.5 million units, the lowest level since the early 1980s. Many analysts and industry executives have forecast a modest rebound next year into the 11 million to 12 million unit range. The U.S. auto market has suffered a turbulent year, thanks in part to dealership closures brought on by financial troubles at GM and Chrysler. According to Automotive News, through October, 1,467 U.S. dealerships have closed, which leaves 18,617 stores, and another 200 or so are likely to shut down before the year is over. Click here for more on Japan's outlook on the U.S. auto market. Click here for more on how dealership closures have affected the landscape of the auto retail industry.

Obama's Signature Kicks off Arbitration Process for Rejected GM, Chrysler Dealers
President Barack Obama signed legislation that would give rejected General Motors Co. and Chrysler Group dealers access to neutral arbitration if they want to be reinstated, kicking off a a six-and-a-half months arbitration process. According to Automotive News, GM and Chrysler now have 30 days to send letters to the owners of about 2,150 rejected dealerships informing them of their rights under the new law and spelling out the reasons that their franchise agreements were terminated. With Obama's signature, the eliminated dealerships have 40 days to give notice that they intend to seek arbitration. Arbitration must be completed within six months, and dealerships that win must receive a letter of intent from the automakers within another 14 business days. The legislation that Obama signed was a $446 billion spending bill that contained the dealer-arbitration provisions spearheaded by Rep. Steny Hoyer (D-Md.) the House majority leader, and Sen. Dick Durbin (D-Ill.) the assistant Senate majority leader. Hoyer and Durbin acted this month after GM and Chrysler broke off settlement talks and announced plans to create neutral arbitration applying the original criteria they used to mark dealerships for termination. The new law contains criteria more favorable to dealers than those envisioned by GM and Chrysler. Click here for more on what dealers can expect from recently-signed arbitration legislation.

2 Companies Take Different Roads to Revival
Japanese share of the U.S. auto market has shot up from 26 percent in 2000 to 40 percent this year. But Mitsubishi's market penetration dipped sharply in that period, and Suzuki has lost the momentum it had at mid-decade. According to Automotive News, to get back on track, the two are adjusting their product lineups - and taking different approaches. Mitsubishi, oriented more toward SUVs and large sedans, wants to shrink with global small cars. Suzuki, noted for its small-car competence, is rolling out the Kizashi mid-sized sedan, a risky attempt to go upmarket. Click here for a photo of the Kizashi. Mitsubishi's new product push starts next fall with U.S. arrival of a small crossover based on the Lancer platform. Mitsubishi follows that in 2012 with a small global car that also may come in a plug-in hybrid or all-electric version in 2013. In the meantime, Mitsubishi's four-seat i-MiEV electric car is due in mid-2011. Click here for a photo of the i-MiEV. Both Mitsubishi and Suzuki say they are committed to staying in the United States. But a big hurdle is simply getting on people's shopping lists, analysts say. For more on Mitsubishi and Suzuki's road to U.S. auto market recovery, click here.

How Mercedes Survived the Auto Industry Squeeze
For Mercedes, like everyone else, 2009 "started off extremely bad," according to the company's president, Ernst Lieb. Daimler AG, the luxury automaker and ex-partner of Chrysler in Auburn Hills, told Lieb not to spend any money. According to the Detroit Free Press, it was a smart move, too, as revenues for Mercedes in America plummeted 18 percent through September, and as the luxury market registered more severe declines than the rest of the auto market. However, Lieb says, "In a year like this, you just have to get the basics right. We stayed our course." Among the basics: staying focused on great customer service, improving dealerships, holding on to the customers you do have, and executing new product launches perfectly. He says 140 of Mercedes' 357 U.S. dealerships have been remodeled or rebuilt, with another 150 planned for updates next year. That means consumers will be pampered in style when they are ready to live a little after this drawn-out recession. Mercedes has also achieved a 67 percent retention rate among its customers, a high that has never been achieved before. The company's dealers - including its largest, AutoNation Inc. - helped achieve that even as they cut cost in the recession to remain as profitable as possible. Click here for more from Ernst Lieb on what Mercedes-Benz has done to lessen the impact of the recession.

Study Says Big Impact of the Plug-In Hybrid Will Be Decades Away
Despite recent excitement about plug-in hybrids, such vehicles are unlikely to arrive in meaningful numbers for a few more decades, according to new analysis by the National Research Council. According to the New York Times, the study also found that the next generation of plug-in hybrids could require hundreds of billions of dollars in government subsidies to take off. Even then, plug-in hybrids would not have a significant impact on the nation's oil consumption or carbon emissions before 2030. Savings in oil imports would also be modest, according to the report, which was financed by the Energy Department. The report found that plug-in electric vehicles could number 40 million by 2030 - provided that rapid progress was made in battery technology, and that the government provided large subsidies and incentives. However, the study suggested that a "more realistic" number would be closer to 13 million vehicles. That would represent 4 percent of the 300 million vehicles projected to be on the road by then. The main reason for the slow rollout is the potential cost of batteries. More recharging outlets, as well as other infrastructure improvements, must also be in place for plug-in hybrids to reach large numbers of American households, the report said. Click here for more on the expected future impact of the plug-in hybrid.

Opinion: Small Engine Shift Signals Big Changes for Buyers
According to John McCormick at the Detroit News, it's time to think small. Small engines, that is. As tough as it may be for some U.S. consumers to accept, the world's automakers - including those selling cars in the United States - are switching their emphasis to smaller, more efficient engines. As we move into 2010, this means car buyers will find distinct changes in the nature and selection of engines being offered in showrooms. This sea change is affecting not just subcompact vehicles but larger models as well. Case in point: Hyundai's new midsize 2011 Sonata sedan and the 2010 Tucson crossover will both soon come to market with only four-cylinder engines. For European high-volume automakers, powerful small-displacement engines have been the name of the game for years. Now that American consumers have had an uncomfortable taste of high fuel prices and continue to suffer the effects of a recession, companies like Volkswagen are wondering if U.S. buyers will accept even smaller, yet still powerful, four-cylinder engines. At the lower end of the market, automakers are hoping that Americans' newfound frugality will translate into strong sales for a wave of new small cars. To read more on small engines hitting the U.S. market in coming years, click here.

How Can You Enhance Customer Satisfaction while Reducing Costs?
Providing rental cars as service loaners can help increase customer satisfaction, but it also can present administrative challenges for your dealership. By streamlining the rental process, dealers not only reduce costs by an average of 13 percent, but also enhance customer service. AIADA's Affinity Partner Enterprise Rent-A-Car has been saving dealerships time and money through their Automated Rental Management System (ARMS®) application - available free to dealerships. The ARMS application produces a single invoice and analysis to save you time and allow you to focus on revenue-producing activities, rather than cumbersome statements. The ARMS application allows service advisors to create an electronic purchase order for a rental car at the same time they are initiating a repair order for service, so the rental car is ready when the customer arrives for the appointment. No matter what management systems your dealership uses, it can easily be enhanced by the ARMS application. To learn more about the ARMS application, click here to listen to our recorded webinar/product demonstration. Want to get started? Contact Jeff Morrell, VP of Business Development, at 314-512-3902 or email dealercontact@enterprise.com. Click here if you'd prefer to be contacted by Enterprise.