Are Car Buyers Getting Used To Higher Prices?

First Up 05/04/12

May 4, 2012

Are Car Buyers Getting Used To Higher Prices?
Auto companies and dealers are succeeding in an area where other industries have failed: convincing U.S. consumers to pay more. In April, the average new light vehicle fetched $30,303, according to research firm, excluding the average $2,446 incentive dealers put on the hood. A year ago, the average price was $1,219 lower and the average incentive was $146 higher. Curiously, higher prices don’t appear to be weighing on sales, reports The Wall Street Journal. An annualized 14.4 million new light vehicles and trucks were sold in April, up 10 percent year-on-year. As for used cars, publicly held dealerships, including AutoNation, Group 1 Automotive, and Penske Automotive Group, have lately reported that first-quarter sales were well above year-earlier levels. Pent-up demand is one thing working in the car industry’s favor. A virtuous cycle also is developing: Higher used-car prices make new cars more attractive, while smaller incentives will slow the pace of depreciation on new cars, pushing resale values higher. There also appears to have been some learning following last year’s tsunami-related shortages as dealers are figuring out they don’t need to give as much away to sell cars. Click here for the full report on consumer behavior in spite of rising vehicle prices.

Infiniti Sees 2012 Sales of 200,000
Infiniti expects record global sales of more than 200,000 units this fiscal year and sees more overseas production coming to Europe and possibly the United States, according to Automotive News. That would be a 33 percent increase from the 150,000 units sold in the fiscal year ended March 31, mostly in America. Infiniti's U.S. sales in calendar 2011 were 98,461, and through March are down 6 percent. Andy Palmer, who heads Nissan Motor Co.'s Infiniti unit, said most of this year's growth will come from China. "This year we'll probably sell more than 200,000 units," Palmer said in an interview at the Beijing auto show. "That's the first time in our history. The needle's starting to move." Infiniti's goal is annual sales of half a million units by 2017. And increased capacity outside Japan is key to achieving the rest of the plan. In North America, the shift began this year with the production of the JX crossover at Nissan's Smyrna, Tenn., plant. That's the first Infiniti made outside Japan since the QX56 SUV was moved back to Japan from Canton, Miss., early last year. Read more about Infiniti’s plans to grow its sales.

Hottest New Car Features For 2013
Automakers are rolling out cutting-edge high-tech features and migrating last year’s hot new items more broadly across their model lines with increasing frequency these days. Forbes reports that with the playing field being relatively level among most comparable models with regard to performance, comfort, and quality, manufacturers are leveraging the latest technology to help their vehicles stand out in a crowded market and to help give motorists a reason to trade in their existing rides for the latest models. An impressive array of totally new convenience, connectivity, and safety features is debuting this year on model-year 2013 vehicles which Forbes is featuring in the accompanying slide show. These include such innovations as the first center-mounted airbags, a seat that “communicates” with the driver, and a power lift gate that operates by the wave of a foot under the rear bumper. Safety remains a paramount consideration among new-car buyers, with automakers continuing to develop advanced systems that leverage the latest technology and pass existing collision avoidance gear to a wider range of models. Read more and check out Forbes’ list of the hottest new car features for 2013 by clicking here.

U.S. Buyers Turn Away From High Mileage Cars
With fuel prices now showing signs of hitting their peak, are U.S. car buyers shifting focus from the high-mileage models that were quickly gaining ground earlier this year? MSNBC reports that’s one possible conclusion based on data collected by the University of Michigan showing that the fuel economy of the average new vehicle purchased in the U.S. last month dipped slightly from March. For April 2012, the University of Michigan Transportation Research Institute reports the average fuel economy based on window-sticker values of new vehicles sold in the U.S. was down 0.2 miles per gallon from March. The decline appears to reflect an increase in sales of larger and less efficient trucks and crossovers that followed the slight reduction in the price of gasoline towards the end of April. The decline reversed several months of steady improvement in the mileage figures tracked by the university. But the trend line is still aiming upward. The average rated mileage of the vehicles sold in April was 23.9 mpg – up 3.8 mpg or 19 percent from the value in October 2007 when the university began monitoring the fuel economy numbers. Read full coverage of Americans’ attitude toward high mileage cars here.

Landing a Car Loan is Getting Easier
CNN Money reports that car lending has finally returned to more-or-less normal after a few years in which auto lending went from crazy-easy to crazy-hard. Before the financial crisis, it seemed that anyone could get a car loan regardless of their credit history or income. Now, people with good credit can once again borrow money to buy a new car. Even those who've slipped up a little can get money to buy a car, providing they're willing to pay a higher interest rate. "I don't think you need to have the 800-plus FICO score that was probably necessary in 2009," said Alec Gutierrez, an industry analyst with Kelley Blue Book. Low interest rates on all types of loans are obviously part of the reason auto loans are easier and cheaper to get, said Gutierrez, but the tight market for used cars helps, too. Used cars are in short supply these days, so good used cars are worth a lot. That means even if things come out badly and the financing company has to repossess your car and sell it as a used car, they'll at least get good money for it. Click here to read more about easier car lending standards.

Find Out How to Get a 30% Drop in Property & Casualty Claims
Dealer members who implement the loss control methods presented in Federated Insurance’s Designated Risk Manager (DRM) seminar have an average 30 percent drop in loss claims within 12 months after attending the class. AIADA’s Affinity Partner, Federated is hosting the upcoming DRM seminar June 11 - 13, 2012, at Federated’s corporate headquarters in Owatonna, Minnesota. The seminar is free (valued at $2,000) for AIADA members and you do not have to be insured with Federated to attend the class (travel, lodging, and incidental meals are the responsibility of the attendee). Click here to complete the registration form. In the two-and-a-half day program, attendees are provided with the proper tools they need to assess risk, develop a risk management program, and effectively implement solutions for risk analysis and problem solving. Attendees will learn about key dealership loss categories, how an underwriter views and prices your dealership, and claims handling procedures. Attendees will receive a customized, individual loss analysis for their dealership. Register Now – space is limited and the registration deadline is May 11. For additional information, contact Royetta Spurgeon at (800) 533-0472 or

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