January 9, 2013

Auto Execs Discount Overcapacity, Eye New Global Investments

Automotive News reports that a growing number of global auto executives say they are planning to increase investments in factories and distribution networks as their fears of widespread overcapacity wanes. A survey released by the financial advisory firm KPMG LLP finds that auto executives are becoming more bullish about the market despite economic worries in Europe and a perceived slowdown in growth in China. The survey finds that 64 percent of automotive executives from around the world now plan on increasing plant investments in the coming five years. That's up from 55 percent of the executives questioned by KPMG one year ago. Underscoring the executives' optimism is a recent study from IHS Automotive that predicted global auto sales will surge 27 percent to 100 million vehicles in five years. Global sales are expected to top 80 million for 2012 – the first time the industry has topped that threshold, LMC Automotive predicted last month. Global overcapacity has been a perennial concern in industry forecasts. Last year 36 percent of the executives questioned by KPMG said they envisioned more than 21 percent factory overcapacity. This year the number fell to 29 percent. Click here for more on KPMG’s findings.

U.S. Luxury Market the Focus for Europeans Facing Home Sales Slump
As Europe's sales crumble, prices fall, and finances deteriorate, the booming U.S. car market presents a mouth-watering target for German and Italian manufacturers, so expect a powerful and persuasive presence at the 2013 North American International Auto Show. According to The Detroit News, luxury German brands BMW and Mercedes-Benz will slug it out again for premium leadership, with BMW probably winning again in 2013. Audi is also making a run in the outside lane, and might have a shot at taking the title in two or three year's time. GM's Cadillac will also be a powerful contender, while even Ford's Lincoln, a long-time also-ran and no-hoper in the premium sector, is gearing up with improved products. Audi's mass market parent Volkswagen is making huge progress now that its Chattanooga, Tenn., factory is cranking out Passat sedans especially designed for the U.S. market. Volkswagen sold just over 438,000 vehicles in 2012 in America, a 35 percent increase. Alec Gutierrez, analyst with Kelley Blue Book's KBB.com, reckons European market share in the U.S. will rise this year by between 0.3 and 0.5 percent, after hitting 9.2 percent in 2012 and 8.7 percent in 2011. Click here for more on what to expect from European luxury automakers.

Nissan Plans to Boost Glitz at Detroit Show Display
Nissan is planning a fancier-than-usual display for this year’s Detroit auto show, reports The Wall Street Journal. In anticipation of next week’s North American International Auto Show in Detroit, industry watchers wonder how the event will look and feel. After all, the first big car trade show of the year helps give a sense of the industry’s health and disposition. For the last decade or so many auto makers have moved toward simpler, more modest display areas aimed at highlighting vehicles and minimizing superfluous glitz. But that will change at least a little this year because Nissan Motor Co. is planning a display reminiscent of Y2K. The architecture of the company’s new global show stand will include not only an amphitheater-style stage but also a multi-level floor, soaring and floating elements and “sensory marketing” including scents designed to entice visitors. Nissan said the use of scents and sounds is a tradition in luxury hotels and retailers. The company said it will periodically release a “distinctive fragrance” into the display area and the mood-setting background music will change “with a subtly different vibe and energy for morning, mid-day and evening.” Read more about Nissan’s Detroit display here.

Audi Has Best-Ever December, Full-Year Sales in U.S.
Audi says 2012 was the best year, and December 2012 was the best month, in its history in the U.S. market. The maker, a unit of Volkswagen Group that operates independently in the U.S., said sales hit 14,841 in December, up 17.3 percent from a year earlier. That was the first time Audi topped 13,000. The most recent December was the 24th consecutive month of record sales for Audi in the U.S. Audi began recording U.S. sales in February 1970. For the full year, Audi sold 139,310 new cars and SUVs, up 18.5 percent from a year earlier. Last month, Audi's German parent, Audi AG, said it will invest $17 billion developing new models and new technologies to expand its global production capabilities through 2016. According to USA Today, the A8 and Audi A7 sedans posted their best U.S. sales since the latest versions arrived in the market. The Q5 crossover, Audi's second-best seller, had its best sales since introduction. The TDI diesels were hot. Sales of A3 TDI and Q7 TDI set a record for the year. Click here to read more about Audi’s record December.

How Franchised Dealers Can Push Used Retail Operations to Success in 2013
As Jack Anderson puts it, a dealer today can’t just be good at one thing. With slimmer profit margins throughout the dealership, each department has to be humming along for the store to find success. “The margins in an automobile dealership in any area have lessened over the years,” said Anderson, the used-vehicle director at West-Herr Automotive Group in the Buffalo, N.Y. area. “You’ve got to be running on all eight cylinders.” And that means each area of the dealership, including the used-car department. “It’s extremely important to us as a group,” Mike Barone, wholesale director at California’s Rusnak Automotive Group, said of used retail sales. “Like any dealership, it helps your service and parts and your sales bottom line.” But despite benefits of the used-car department to franchised dealers and the overall strength of the used market during 2012 – as well as expectations for a healthy used market in 2013 – dealers are not without challenges on this side of the business. Auto Remarketing will feature input from dealers on how they are ensuring 2013 is a great used sales year. Click here to read more of the preview article and check back for the full feature next week.

Join Dealers in Orlando for AIADA’s 43rd Annual Meeting and Luncheon
Each year, AIADA’s dealers gather to consider where the international nameplate auto industry stands and prepare for what the future holds. Join fellow dealers and industry insiders in Orlando, Florida on February 11, 2013 for its 43rd Annual Meeting and Luncheon. This year, we’ll discuss how the economy is Driven by the international nameplate auto industry and what dealers can do to maintain their edge. Featuring keynote remarks by Mercedes-Benz USA President and CEO Steve Cannon, the presentation of the David F. Mungenast, Sr. Lifetime Achievement Award, and the passing of the gavel from 2012 Chairman Ray Mungenast of Missouri to 2013 Chairwoman Jenell Ross of Ohio, the 43rd Annual Meeting and Luncheon is a can't-miss event for international nameplate dealers, as well as their employees. Register today by clicking here or by calling 1-800-GO-AIADA.

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