January 15, 2010

Burned Auto Makers Bank on Slow U.S. Rebound
According to Automotive News, auto makers, burned by a 4-year sales downturn that blindsided Detroit, are hewing to modest U.S. growth forecasts for 2010 as the economic recovery remains uncertain. Auto makers' unwillingness to count on more than near-10 percent U.S. sales growth, after the 27-year low hit last year, is an abrupt about-face for an industry criticized for unrealistic forecasts before the failure of General Motors and Chrysler in 2009. The result: GM this week joined Toyota Motor Corp. and Honda Motor Co. in saying it is looking to add U.S. production capacity. Beyond the gradual recovery, the industry is grasping for a normal rate of annual sales that would produce a healthy bottom line. For 2010, most automakers forecast industry sales of about 11.5 million. Mazda Motor Corp. North America chief Jim O'Sullivan called the industry mood "guardedly optimistic." Influential forecasters J.D. Power and Associates and IHS Global Insight also expect U.S. auto sales of about 11.5 million vehicles, though analysts point to pent-up demand as possibly pushing that result higher. IHS Global Insight believes U.S. sales should reach about 11.5 million in 2010, with an upside just under 12 million if there is a boost to the economy. Click here for more on the auto industry outlook for 2010.

Toyota is Tops, According to New Consumer Reports Survey
According to Consumer Reports, Toyota again earned the highest score in its annual brand perception survey. Despite experiencing one of the most turbulent years ever in the automotive market, Chevrolet, Ford, and Subaru have benefited from a dramatic increase in overall brand perception among car owners. According to the survey, all three saw at least a 30-point increase in their overall perception scores over last year's scores. The scores reflect how consumers perceive each brand in seven categories: Safety, quality, value, performance, design/style, technology/innovation, and environmentally friendly/green. Toyota maintained its number one spot. Subaru's 39-point increase, which was the largest of any brand and almost double its 2009 score, boosted the brand to ninth place, from last year's 18th position. At the other end of the spectrum, the two lowest-scoring brands were Hummer and Saab. Luxury brands saw the greatest decreases in overall scores, with Porsche (-13 points), Lexus (-15), Cadillac (-15), Infiniti (-21), and Lincoln (-25) moving in the wrong direction. Click here to read Consumer Reports' entire run down of its latest brand perception survey.

Small Cars Dominate Amid Changing Demographics
If there was one thing conspicuously absent in the launches and unveilings at this year's North American International Auto Show, it was trucks. According to The Detroit News, for many automakers, the big news this year was small cars. A number of factors are driving this push toward smaller vehicles: changing demographics, a weak economy, fear of oil price volatility, and new government regulations. But with so many placing big bets on small cars, some analysts wonder whether automakers are chasing the market or getting ahead of it. While research shows that Americans are increasingly interested in smaller, more fuel-efficient vehicles, demographics are also changing. The two biggest customer groups today are baby boomers, many of whom are downsizing, and young people who do not yet need the hauling capacity of a larger vehicle. David Cole, chairman of the Center for Automotive Research, said it is important not to read too much into the prevalence of smaller cars at this year's show. "Next year, I don't think it will be about small cars. It may be about midsized cars or even large cars. Because the intent of the law is not to force people into small cars, but to have all cars become more fuel efficient." Click here for more on how small cars are dominating this year's Detroit auto show.

Toyota's Inaba Says Japan's Clunkers Program Should be Open to U.S. Cars
According to Automotive News, Toyota Motor Corp.'s top North American executive said Japan should open its Cash for Clunkers program to U.S. automakers - potentially adding pressure on the Japanese government to change a program that so far has left U.S. companies on the sidelines. "We support that it will be allowed," Yoshi Inaba, 63, president of Toyota Motor North America Inc., told the Automotive News World Congress Tuesday night in response to a question about opening up Japan's program. Inaba added, though, that he would leave the issue to the U.S. and Japanese officials who have been in talks on the topic for several weeks. Sen. Debbie Stabenow (D-Mich.) introduced a bill last week that requires continuing negotiations between the U.S. Trade Representative and the Japanese until the Cash for Clunkers program is opened to U.S. auto makers. If the Japanese do not yield, the bill calls for the U.S. Trade Representative to consider filing a lawsuit alleging violations of World Trade Organization rules. On January 21, the House Ways and Means Subcommittee will also take up the issue of Japanese and South Korean trade barriers during a hearing. Click here for more on Toyota President Yoshi Inaba's remarks concerning the Japanese Cash for Clunkers program.

$2,500 Tata Nano Shows 'Frugal Engineering'
According to the Detroit Free Press, the Tata Nano may be the cheapest car in the world. But if you ask the engineers who worked on it, the $2,500 car holds some clever details they like to call "frugal engineering" to make it so inexpensive. Click here for a photo gallery of the Tata Nano at the North American International Auto Show this week. Tata Motors, part of the Indian conglomerate the Tata Group, started designing the Nano from the ground up, instead of stripping down an existing vehicle, to meet the price. The Nano has no glove compartment. Instead there are wells for storage in the dash in front of the steering wheel and the passenger seat. The 2-cylinder-engine sits in a back compartment. A spare tire sits in a front trunk, and the jack sits snug under the passenger seat. At one point, engineers considered using bars instead of doors. But Tata Chairman Ratan Tata insisted the Nano look and feel like a car. Tata built the Nano as an alternative for those traveling on scooters. Tata brought the Nano to the United States for the first time this week to show the work Tata Technologies, which is in Novi, has done on the milestone vehicle. Click here to read more about the innovative engineering features that went into making the Tata Nano the cheapest car in the world.