August 31, 2012
Consumers Gravitating to Certified Pre-Owned Vehicles
Sales of certified pre-owned vehicles, those so-called “cream-puff” used cars and trucks auto makers and dealers back with strong warranties and sometimes free maintenance schedules, are growing despite product availability restrictions and robust pricing. Larry Pryg, national manager-CPO Vehicle Operations for General Motors, tells Wards the segment should grow 5 percent this year. Toyota historically leads the segment, with Ford and Honda also posting strong results in a segment seeing more OEMs entering every year. “Our business is growing, the industry is growing,” Pryg said. “It’s a great choice. You get treated like a new-car customer, yet you are buying a used vehicle.” Auto makers and dealers want to grow their CPO business because a dependable used car, combined with a satisfactory service experience, leads to brand loyalty. CPO owners tend to return to the same dealer more often, too. Dealer profitability on a CPO product is on par with a new car or truck, says Denny Dunfield, general manager-Al Serra Auto Plaza in Grand Blanc, MI. “It’s been a successful program for us,” says Dunfield, who estimates CPO products comprise 38 percent of Serra’s used-vehicle business. Serra ranks as the No.2 CPO dealer nationally. For more on CPO vehicles, click here.
Top 10 Gas Saving Technologies for 2013
Until lately, fuel economy standards, first established in 1975, hadn’t changed much since the mid-1980s. But now the Obama Administration is ratcheting up pressure on the auto industry to dramatically increase the average miles-per-gallon of each company’s fleet. Under a rule passed in 2010, carmakers were already on the hook to achieve an average 34.1 mpg across their fleets by 2016. This week, the government raised the bar even higher, to an average 54.5 mpg by 2025. Total Car Score, a research site for auto buyers, came up with a bevy of 2013 models that already feature great fuel-saving technologies. While some technologies are not necessarily new, Forbes reports that they’re becoming more widely available, even in lower-priced cars. The 2013 Kia Rio, for instance, joins the BMW 3-series and Porsche Cayenne in offering a start-stop engine. That technology, once reserved for hybrids, saves fuel by shutting down the engine when the vehicle is stopped. Many cars, including the Mazda CX-5 and Volkswagen Golf, use variable valve timing to maximize fuel efficiency and performance. It was first seen on Acura’s exotic NSX in 1991. For a slideshow of all ten top fuel saving technologies, and the cars that feature them, click here.
China Baoxin Auto to Buy NCGA Dealership Group for $305 Million
China Baoxin Auto Group Ltd. has agreed to buy NCGA Holdings Ltd., a 12-store luxury dealership group in China operated by U.S.-based McLarty Automotive Partners. NCGA will remain a minority partner in the combined company. Baoxin said it paid $305 million for its majority stake. Automotive News reports that the deal would include the dealerships in NCGA’s Yanjun Auto, a luxury-brand chain in northern China. Baoxin, a China dealer for BMW autos, said the acquisition of NCGA would add eight BMW/Mini dealerships, two Jaguar and Land Rover dealerships, one Porsche, and one Volvo dealership to its operations. McLarty Automotive, which is chaired by Mack McLarty, operates two other international companies besides Yanjun, Caltabiano McLarty in Brazil and GDV Imports Mexico. Former Toyota and Chrysler executive Jim Press is president of McLarty’s international dealership operations. The NCGA acquisition is expected to expand Baoxin’s geographic footprint in China while generating economies of scale and additional capital to continue the company’s growth. With IPO markets closed and financing options drying up, China’s capital-intensive car dealerships have become targets for investors, including private equity firms. For more on the deal, click here.
King: Letting Japan in Trade Zone Could Cost U.S. Jobs
United Auto Workers President Bob King on Thursday said he strongly opposes entry of Japan into nine-nation free trade talks, saying it could put American jobs at risk. The Obama administration has been considering whether to allow Japan in the Trans-Pacific Partnership, and has already approved Mexico and Canada in joining the talks. The talks are aimed at creating one of the world's largest free-trade zones, including some of the fastest-growing economies in the world. "We could not be stronger in advocating that Japan should not be in," King told theDetroit News, adding there is "no realistic way to open up the markets in Japan." Click here for AIADA chairman Ray Mungenast’s counter argument to King’s claims. U.S. automakers are sharply opposed to allowing Japan into the partnership talks. A free-trade agreement could drop tariffs on Japanese vehicles entering the United States and make it more economically viable to build cars and trucks in Japan and export them to the U.S. United States Trade Representative Ron Kirk has said the administration has made no decision on whether to allow Japan to take part. For the full story, click here.
Tata Motors Finds Success in Jaguar Land Rover
Four years after being bought by an Indian company, British brands Jaguar and Land Rover are regaining some of their lost luster, racking up big sales from Shanghai to London. The New York Times reports that the success has stunned analysts and investors, many of whom had said that Tata Motors, the Indian auto company, was making an expensive mistake when it acquired Jaguar Land Rover from Ford Motor for $2.3 billion in June 2008. Analysts say Tata has done what few companies from emerging markets have been able to do — turn around and successfully run a troubled Western company. Click here for a chart showing profit growth. Tata Motors appears to have succeeded in large part because it did not seek to run Jaguar Land Rover from Tata headquarters in India. Instead, it has left day-to-day management in the hands of executives in England. It also benefited from projects started under Ford ownership, including the Evoque, which has won fans globally. In its last fiscal year, which ended in March, Jaguar Land Rover posted a 27 percent jump in retail sales, to 306,000 vehicles, and became the primary driver of growth and profit for Tata Motors. For more on Tata’s success, click here.
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