August 26, 2010

BMW Aims for Small Luxuries
According to The Detroit News, BMW AG is thinking small in a bid to claim a bigger chunk of the growing global luxury vehicle market. "We have all these opportunities around the world," said Jim O'Donnell, president of BMW of North America. But to tap into them, BMW's future vehicles and the engines in them must be smaller, lighter, more fuel-efficient, and represent better value. "Premium is no longer defined by the size of the vehicle or the number of (engine) cylinders," O'Donnell said in a recent interview. BMW, he said, is prepared to make the necessary investment in plants and products, as it strives to keep competitive with such brands as Mercedes-Benz and Lexus. While BMW is extending its reach to emerging markets like China and India, O'Donnell said it has no intention of giving up ground in Europe or North America. He expects sales of premium vehicles to grow 10 percent in the United States over the next two years. Classic vehicles like the 7-Series will continue to have a future in BMW's lineup, but the portfolio must evolve into smaller vehicles to meet changing global needs. BMW may add an X1 crossover next year, and future vehicles could be slotted below its 1-Series. For more on BMW's plans to meet changing luxury needs and expectations, click here.

Carmakers Initiating More Recalls Voluntarily
Most vehicle recalls used to happen only after long, drawn-out government inquiries had identified safety defects and required the car companies to fix them. But according to the New York Times, in the wake of Toyota's extensive recalls, automakers are initiating more themselves rather than waiting for government regulators to step in. The new mind-set has produced a flood of recalls, some occurring in reaction to just a few complaints from car owners, or maybe only one. The numbers underscore the sudden shift. Two times as many cars and trucks have been recalled in the last 12 months than have been sold, although many of the recalled cars were from previous years. More than 22.4 million recall notices were sent to consumers in that period, including 10 million from Toyota and 428 from the luxury sports car-maker Lamborghini. By comparison, the industry has sold a little more than 11 million new cars and trucks in that time. Click here for a chart demonstrating the escalation in recalls compared to previous years. Industry analysts say that automakers in general are less insistent on disputing the need for a recall, and more aware of the harmful publicity that results from not addressing a safety problem quickly. For more on the uptick in vehicle recalls, click here.

America's Best Car Brands
Toyota has recalled more than 5.3 million vehicles in the past year and been forced to institute the most far-reaching sales program in its history in order to attract buyers. But according to several reports, the Japanese brand has maintained high levels of customer loyalty and positive perception. In fact, while recalls effectively lowered consumer loyalty 11 percent from November 2009 to February 2010, according to automotive research firm R.L. Polk, the downward trend was short-lived. From February to March of this year, loyalty ratings rose by 10 percent. "Customer loyalty among owners of recalled vehicles increased more than the loyalty of other Toyota vehicle owners - strong signs that Toyota's communication strategy and steps taken at the dealership level to maintain customer relationships worked in its favor," Polk reported in its July analysis. As a result, Toyota is among the best-loved car brands in America, according to Forbes' analysis, joining Ford and Chevrolet in a race to the top. However, higher-end international carmakers like Mercedes-Benz, BMW, and Lexus still dominate the list of brands Americans love. Click here for Forbes' slideshow of brands that fared the best in its analysis of America's best car brands. To read the accompanying report, including details on how it reached its results, click here.

The Key to Safer Roads?
The two biggest highway-safety issues right now, as far as Washington is concerned, are runaway Toyotas and distracted driving. But what if these aren't the most important factors driving the nation's annual highway death toll, which averages about 100 fatalities a day? The Wall Street Journal reports that's the view of Adrian Lund, president of the Insurance Institute for Highway Safety (IIHS), who says the U.S. Transportation Department, Congress, and the media have gotten sidetracked by issues like texting while driving, "There's nothing rational about the way we set highway safety priorities," Lund says in the Insurance Institute's Aug. 21 "Status Report" newsletter. The IIHS has been critical of the government's highway safety policies over the past few years. Lund and the Insurance Institute also say recent laws banning motorists from using mobile phones behind the wheel don't correlate with a significant reduction in accidents. As for the Toyota sudden acceleration uproar, Lund says, "a lot of this looks like it may be pedal error" - meaning human error related to design - "so it's very important that we have research on how pedals could be redesigned." Congress and the Transportation department have focused more attention on potential problems with vehicle electronics. Click here to read the complete report on IIHS' Adrian Lund's thoughts on what the government should be doing to improve highway safety.

Auto Sales Likely to Continue Slowing
The recovery in auto sales is sputtering, with forecasters expecting August sales to show a continuation of the uncertain trend seen since March. The Detroit News reports that compared with last August, when the government's Cash for Clunkers program fueled a spike in demand, monthly sales are likely to be down sharply. But some forecasters believe the selling pace may have slowed even since July, when the seasonally adjusted annualized rate of sales (SAAR) totaled 11.54 million cars and light trucks. August sales estimates range from as high as 11.8 million light vehicles to fewer than 11 million. Click here for a chart showing the lack of dramatic improvement in the SAAR since last year. Some forecasters are now trimming their annual forecasts amid growing expectations that the economy will recover very slowly. J.D. Power and Associates estimates this month's selling rate at 11.8 million vehicles, up from July. But it predicted that the retail selling rate - auto sales through dealerships, as opposed to fleet business - dropped to 8.9 million light vehicles from 9.2 million in July. Stay tuned to FirstUp for AIADA's Market Watch sales report, where we'll dissect August auto sales and their impact on the international auto retail industry in the U.S. Click here for more information on projections for August auto sales.

Protect Your Dealership from Fraud
Fraud: It's a big business, with annual losses in the United States estimated at nearly $1 trillion, or 7 percent of our nation's output. Worse yet, costs are growing at an alarming rate as the incidence of fraud escalates, with tech-savvy criminals employing increasingly sophisticated and complex schemes. So what can you do to protect your dealership? Join AIADA and our Affinity Partner KeyBank, along with consulting firm Crowe Horwath on September 22 at 2:00 p.m. EDT for a FREE webinar that will teach you internal and external controls and real-world solutions to combat fraud at your dealership. Learn the impact of fraud and threats facing dealerships today, controls to improve your dealership's security, and solutions to protect your deposit accounts against fraud. Are you doing everything you can to protect YOUR dealership from fraud? Click here to register today!

Around the Web
First Drive: BMW Z3 sDrive35is [MSN Autos]
Honda Future Vehicles [Edmunds Inside Line]
Porsche will Mail You a Piece of its Leipzig Test Track [Jalopnik]
Study: Nearly One in Ten Drove Drunk in the Past Year [TheCarConnection]