January 14, 2010
Russ off the Cuff: Optimism Reigns at the Detroit Auto Show
AIADA Chairman Russ Darrow writes that shortly before becoming Chairman of AIADA last year, he attended the 2009 North American International Auto Show in Detroit with AIADA President Cody Lusk and then-Chairman Jim Hudson. The experience was demoralizing. The crowd at the Cobo Center was a fraction of what it had been in past years. Conversations on the show floor were hushed and grim. We were an industry waiting for the other shoe to drop. What a difference a year makes. This year's show had top executives from all over the world in attendance. The floor was packed, the volume was deafening, and some of the cars on display were cool enough to give you goose bumps. The people who build and sell cars are re-energized. After the year we've had, every dealer deserves a taste of the optimism Russ found in Detroit. Do yourself a favor and come to NADA's annual convention, held this February in Orlando. See firsthand where our industry is headed, and who is leading the charge. You can register for AIADA's 40th annual meeting and luncheon, featuring Hyundai's John Krafcik as the keynote speaker, by clicking here. Click here for Darrow's complete commentary on the optimism he experienced at this week's Detroit auto show.
Luxury-Car Makers Push Function More Than Flash
U.S. luxury-car sales, once considered resistant to recessions, have plunged 40 percent over the past two years, compared with the overall market's 35 percent drop. Click here for a chart demonstrating luxury car sales in recent years. Now, high-end car makers are preparing for a rebound that promises to be just as unconventional. Click here for a slideshow of luxury vehicles at this week's show. According to the Wall Street Journal, the sales plunge prompted by the recession has been so steep that consumers may be redefining what they want in a luxury vehicle. "Affluent people will still choose to reward themselves," said Audi of America's chief, Johann de Nysschen. "But it will continue to be less about conspicuous consumption" and more about exclusivity and fuel efficient performance. Traditional premium-car brands also face increasing competition from mass-market manufacturers offering many of the same high-tech features as well as from unexpected upstarts. That is pushing luxury makers to reposition themselves on multiple fronts: deploying smaller, cheaper, and more fuel-thrifty engines, tending to used-car sales and tweaking their marketing messages to target consumers who may begin to spend more but remain in an austere frame of mind. For more on what luxury auto makers are doing to revamp their sales figures, click here.
Honda's John Mendel: Established Auto Makers Should Lead Retail Changes
Change at the retail automotive level is inevitable, and the established players should be the ones to change it, said John Mendel, executive vice president for automobile sales at American Honda Motor Co. Otherwise, new entrants from emerging markets such as India and China, with a burning desire to prove themselves on the world stage, will change it for them, he warned in remarks at the Automotive News World Congress. "We need to create a new sales and service environment that the customer doesn't simply tolerate but desires," Mendel said. According to Automotive News, Mendel said the sales process at the dealership level has to change. Honda has already started to brainstorm with its Acura dealer network about ways to add value for consumers at the point of purchase. "It's going to change; somebody is going to change it," Mendel said. "It might as well be us." Mendel also said he believes that the industry has taken steps toward stability but cautioned that it is a mistake to believe that an improved market will solve the industry's problems. Areas such as energy sustainability, energy security, and greenhouse gas reduction must be addressed. Click here for more on Mendel's remarks on what auto makers must do to lead the way in the future of the auto industry.
Auto Makers Try to Forget Nightmarish 2009
For all the focus on new products at the 2010 North American International Auto Show, the "reveals" ultimately seemed to fade into the background. According to MSNBC, the real chit-chat among most of those attending was the health of an industry that came perilously close to collapse last year. Even the most bitter competitors were comparing war wounds and projections for what most assume will be at least a moderately better year than 2009. "Cautiously optimistic" was echoed over and over again as more than 4,000 journalists from around the world cornered executives with their questions. While there are a few observers who contend recovery will come to the U.S. quickly, the general consensus is that it will be a slow and painful slog. David Cole of the Center for Automotive Research, or CAR, in Ann Arbor, Mich., anticipates 2010 sales of 11.8 million, but the center's data suggests the numbers could run as low as 10.8 million and as high as 12.4 million. With all the variables at play, one thing seems certain for 2010 and beyond: The U.S. market will remain one of the world's most competitive. Click here to read more on leading auto makers' thoughts at the 2010 North American International Auto Show.
Auto Makers' Favorite Cars
Ever wonder what leading auto executives dream of driving? Dream no more. Forbes surveyed several executives for their favorite selection of wheels. Don Esmond, the senior vice president for Toyota USA, loves the Lexus LS 400 and Toyota Prius for more than just aesthetics and heart. He was head of sales at Lexus when the LS launched, giving the car sentimental value for him. He loves the Prius, though, because it proved all the hybrid naysayers wrong. Other auto makers are a bit more European in their preferences, naturally. Ernst Leib, president and CEO of Mercedes-Benz USA, is practically salivating for when the convertible version of the Benz SLS AMG arrives (it's not yet in production). Until then, he'll settle with anything from the 2010 SL-Class line. Like the $135,000 SL63. "If I was going to take a drive to get coffee on a Sunday morning, the SL is what I'd take," he says. "It's a dream to drive." And Christophe Georges, the French-born president and COO of Bentley North America, has dual fantasies about the iconic, 1950s-era R-Type Bentley and the Bentley Mulsanne. He says the Mulsanne is the culmination of Bentley's nearly 100-year history - a bridge between painstaking craftsmanship and modernity. Click here to view the slideshow of auto makers' favorite cars.
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