International Automakers Brace for Battles as U.S. Election Looms

First Up 02/07/12

February 7, 2012

International Automakers Brace for Battles as U.S. Election Looms
AIADA Chairman Ray Mungenast isn't as confident as others that 2012 will be a smooth year for manufacturers – at least not in Washington. Automotive News reports that as the election season kicks into high gear, the spotlight is likely to fall on the auto industry and that could mean more legislative battles ahead for the international brands, Mungenast said, speaking Monday at AIADA’s Annual Meeting and Luncheon. "If recent history is any indication, what we have ahead of us is a battle," Mungenast said. The association must continue legislative battles over taxes and labor, as well as fight increasingly stringent environmental regulations dealers, especially younger ones, must get involved to protect their business and the industry at large, Mungenast added. He has made recruiting younger dealers to AIADA a key goal of his term. He also wants to encourage dealers to build stronger relationships with their local elected officials. He replaces outgoing chairman, Jim Smail, who also spoke at the luncheon and took President Barack Obama to task for giving the international brands a cold shoulder at the Washington, D.C., auto show last week. Click here to read more about AIADA’s 2012 Chairman, Ray Mungenast. For more on AIADA’s Meeting and Luncheon in Las Vegas, click here.

Toyota's 2012 Plans Include Fuel-Efficient Avalon, 19 New Models
Toyota executives told dealers Monday there are 19 new models coming in 2012, including a new more fuel-efficient Toyota Avalon due in November. Dealers at the NADA convention in Las Vegas were shown a picture of the new Avalon that will be shown in April at the New York auto show. Executives said at the new Avalon sedan will have fuel economy as good as, or better, than a Fiat 500, which gets a combined 33 miles per gallon with a 5-speed manual transmission. According to The Detroit Free Press, dealers also saw a concept fuel cell vehicle that is about a decade from production. Bob Carter, general manager of the Toyota Motor Sales U.S.A., said 40 percent of the brand’s volume will be from new products this year compared with 7 percent last year. He said he thinks forecasts of 13.6 million in U.S. sales are low and actual sales could easily be closer to 13.8 million. Carter said he expects Toyota, Lexus, and Scion models to continue to recover and build up sales grow volumes through 2012. Click here for further coverage of Toyota’s 2012 plans.

Honda's Credit Outlook Cut to Negative by Moody's on Competition
According to The Detroit News, Honda Motor Co. and its affiliates' credit rating outlook was cut to negative from stable by Moody's Investors Service on concern the automaker faces "significant challenges" in regaining its market share. The carmaker's rating could be reduced if it is unable to restore profitability and regain market share, Moody's said in a statement Monday. Honda's senior unsecured long-term rating was maintained by Moody's at A1, four notches below the top investment grade. The automaker's rating could be cut if adjusted earnings before interest, tax, and amortization margin stay below 4 percent by the fiscal year ending March 2013. Honda estimates the Thai floods will cost the company 110 billion yen this fiscal year and the appreciation of the yen will cost about 57 billion yen. That led the company to lower its forecast for operating profit, or sales minus the cost of goods sold and administrative expenses, by 26 percent to 200 billion yen. "Although Honda still has a good reputation, the competition in the auto market is getting tougher because its rivals have improved their product quality and brand acceptance in the last several years," Moody's said. Read more about Moody’s decision to cut Honda’s credit rating here.

Auto Industry About to Go Diesel Crazy
After hyping hybrids and electrics as fuel-savers, USA Today reports that automakers will try to fire up consumers about a wave of new fuel-saving diesel models. VW, which already has diesel options for its Golf, Jetta, Passat, and Touareg models, and is about to introduce one for its new Beetle, will be joined by new entrants in the U.S. market for diesel. Diesels achieve about 30 percent better fuel economy than similar gasoline models. The latest generation of models aren’t smoky or noisy as were those of the past. But sales are being held down by diesel fuel prices, which typically top those of gasoline because of higher diesel taxes and greater global demand, and by worries about finding diesel filling stations. Still, interest is rising. Auto parts maker Bosch said its own survey found 32 percent of U.S. consumers last year said they're willing to consider a diesel, up from 12 percent in 2006. When diesel versions of models are offered, consumers will snap them up. About 85 percent of Volkswagen's Jetta SportWagen are sold in the diesel version despite it adding $1,250 to the car's $26,030 price tag. Click here for more on the proliferation of clean diesels.

What Makes Luxury Car Buyers Loyal?
Polk and recently reached out to almost 1,500 luxury vehicle owners to figure out what makes these buyers loyal to – or defectors from – a particular luxury brand. According to Auto Remarketing, what their study found is that the motivator most often cited for sticking with a luxury make is brand affinity. Almost half the respondents listed as a reason. In fact, brand affinity was mentioned by 44 percent of the respondents, 11 points higher than the No. 2 choice, quality/reliability, which was cited by a third of respondents. Driving performance was third (24 percent), followed by price/finance/value (16 percent), and styling/design (16 percent). However, the study found that the “primary” reason consumers stayed with a particular company was different from brand to brand. For example, officials noted, owners may stay loyal to Cadillac for a completely different reason than why BMW owners stay loyal to their brand. “These key insights are important because they highlight the strengths of individual brands with their audiences and shed light on where each brand can improve to increase loyalty or combat defection,” they added. For more on luxury brand loyalty, click here.

Study Shows Increase in Online Sales Leads when Dealers Provide Carfax Reports
Dealers that include Carfax Vehicle History Reports with their online listings get more sales leads per day. A joint study from and Carfax shows that dealers get 73 percent more daily customer leads by linking Carfax Reports to their listings. Giving online shoppers the information they need up front helps them buy faster and with greater confidence. and Carfax reviewed nearly five million vehicles listed on the website for the study. Beginning Aug. 1 last year, gives online shoppers free access to Carfax Reports run by dealers directly from their vehicle listings. “Consumers trust the Carfax name and look for Carfax information when making their dealer choice,” said Bill Eager, vice president of Carfax. “This study is further proof that Carfax Reports help dealers sell more cars.” Become a Carfax Advantage™ dealer or learn how Carfax can help your dealership increase online sales leads by visiting

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