Higher Gas Prices Not Hurting Auto Sales Yet

First Up 03/23/12

March 23, 2012

Higher Gas Prices Not Hurting Auto Sales Yet
U.S. consumers are on pace to buy about 1.4 million new cars and trucks in March, or about 6 percent more than in the same month last year, reports The Detroit Free Press. That would put the industry on pace to sell 14.1 million for the year, which is higher than most industry analysts expected at the start of 2012. That's lower than the 15.0 million rate for February, but would be the third-straight month above 14 million. However, the real test for the industry will come over the spring and summer, according to Jeff Schuster, senior vice president of forecasting at LMC Automotive. Gas prices will test consumer confidence and as policymakers in Europe try to contain that continent's debt crisis. Higher prices aren't hurting auto sales yet, Schuster said, but they are affecting what people are buying. Through the first 18 days of March, subcompact and compact cars accounted for approximately 23 percent of retail sales in the U.S. Over the last 18 months, almost every automaker has introduced a new or redesigned compact car, and the industry overall is offering features on those cars previously reserved for larger cars. Read more about how the auto industry is faring in the face of rising gas prices here.

UAW Steps Up Bid to Organize VW's U.S. Plant
The UAW is soliciting signatures of support from workers at Volkswagen AG's U.S. factory in Chattanooga, an escalation of its effort to establish a foothold outside the Detroit automakers. According to Automotive News, in early March, the UAW started passing out authorization cards for workers to sign in an early formal step needed for union representation. UAW President Bob King has said organizing U.S. plants run by international automakers, known in the industry as transplants, is crucial for the union's survival. After three decades of declining membership, the UAW faces a financial crunch that has been exacerbated by the U.S. economic downturn. This has forced America's richest union to sell assets and dip into its strike fund to pay for activities. For the past several months, the UAW has met informally with workers at VW's U.S. plant. King has also sought support from German union IG Metall. U.S. labor laws stipulate that a union must submit signature cards from at least 30 percent of the workers at a plant to hold a representation election. The UAW has not told the German automaker about its effort to collect signatures, a VW employee said. For the latest on the UAW’s efforts to unionize VW’s Chattanooga plant, click here.

Used Sales Approach 6 Percent Hike, Franchised Dealers Hit Price Peak
The used vehicle market is expected to climb more than 5 percent this month and eclipse 2.6 million sales, according to CNW Market Research, which has also found that used transaction prices for franchised dealers are the strongest they’ve been in a year. Overall, CNW is projecting 2.64 million used sales this month, a 5.6-percent rise compared to a used market of just less than 2.5 million sales a year ago. The biggest gains for March are likely to be in the private-party arena, which is predicted to increase 23.7 percent year-over-year at 860,000 units sold. Auto Remarketing reports that franchised dealers are projected to pull in 905,000 used sales, and independents will likely move 875,000 units. As for the hike in casual sales, CNW president Art Spinella noted that, “A willingness on the part of financial institutions to loan money on private-party transactions is the overriding reason, CNW research shows. Also, the availability of free advertising through the likes of Craigslist.com helps.” Pent-up demand has dipped from 94,000 intenders in January to 83,500 in February, with expectations for a drop to 80,500 in March. For the latest on the used car market, click here.

Kia Rio Wins Top Award for Subcompact
Don’t call the new Kia Rio sedan a “penalty box.” MSNBC reports that there was a time when that might have applied to subcompact sedans in general – and Korean-made products in particular – but a shoot-out among domestic and international small cars suggests the best of the subcompact segment delivers more than just a cheap price tag. The Rio EX, in particular, made a strong impression on the folks at Consumer Reports, the non-profit publication rating the Korean subcompact best in an otherwise impressive class of sedans. The Rio hatchback didn’t score quite as well, but still landed in the top three among a field that also includes the Honda Fit and Nissan Versa. The challenge is keeping up with a segment that has improved dramatically in recent years. “Subcompact cars were once collectively known as “penalty boxes” for their noisiness, rudimentary interiors, uncomfortable rides, and weak performance. But now improved redesigns, combined with an affordable prices and impressive fuel economy, make a number of subcompact models good all-around choices for people looking to stretch their budget,” said Consumer Reports’ chief of automotive research David Champion. For more on Consumer Reports’ take on the subcompact vehicle segment, click here.

Buy These 10 Cars New, Not Used
According to AOL Autos, these days, it pays to carefully look at the choices to determine whether it's better right now to buy a used gas sipper or a new one. That's because prices of pre-owned hybrids and compacts are on the rise. Kelley Blue Book (KBB), after crunching the numbers, found 10 vehicles that have just barely more expensive – or even cheaper – monthly payments for the new 2012 version of the vehicle versus the used 2011. Click here to see what they found. At number ten is theToyota Corolla LE, which is only $22 more per month for the 2012 versus the 2011 model. The Hyundai Elantra GLS also gets a shout out. Brand new, the compact – which was selected as the North American Car of the Year – can be had new for only $8 more per month than its 2011 counterpart. At number one, the 2012 Subaru Impreza 2.5i is a no-brainer for buyers. Subarus have long been terrific on resale value and reliability. The all-new Impreza is a better value than the used version in the previous design. Check out the rest of KBB’s picks of the best vehicles to buy new, rather than used, here.

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