New Car Buying by Young Rises After Years of Decline

First Up 09/27/12

September 27, 2012

Safety Complaints Plague Many Popular Auto Models
Last year, the government received nearly 30,000 complaints from car owners concerned about potentially dangerous defects with their vehicle. Since 2007, the department responsible for auto safety – the U.S. National Highway Traffic Safety Administration (NHTSA) – has received more than 130,000 complaints. According to, the reports range from unintended acceleration to malfunctioning air bags. 24/7 Wall St. reviewed complaints recorded by the Traffic Safety Administration since January 2007 to identify the 10 car brands with the most safety complaints relative to the number of vehicles they sell. Click here to see the list. The effects of recalls, especially well-publicized ones, can be devastating to brand sales and perceived safety. Shaking an image of inferior quality is hard to do, according to Jeff Bartless, deputy editor for Consumer Reports, even when the problem is not related to safety. Brands that are perceived to have general, nonsafety-related mechanical problems are also more likely to be considered unsafe, Bartless explained. As a result, these cars receive complaints regardless of recalls. According to Bartless, while the Traffic Safety Administration bases recalls on safety risk, the car brands with the most complaints also develop issues that require repair unrelated to safety. Read more about today’s brands that are perceived as the most unreliable.

New Car Buying by Young Rises After Years of Decline
Young buyers are inching back into the new-vehicle market after several years on the sidelines, helped by easing credit and a slightly improving job market, reports USA Today. "Younger buyers have returned to market at a higher rate than any other age category," according to a recent report by J.D. Power and Associates' Power Information Network. The young buyer group – from teen years through age 35 – is a hefty 23 percent of so-called retail buyers, the highest since 2008, according to Power. The retail sales category excludes multiple-vehicle sales to fleet buyers, such as rental-car and taxi companies. Data from Polk, which tracks new-vehicle registrations, not sales, found a similar trend, showing buyers ages 18 through 34 are 12 percent of all new-vehicle registrations from January through July this year – the highest since 16.4 percent in 2007. Power's Thomas King, a senior director, says that high used car values could be helping younger buyers who have something to trade-in or sell. Credit is also easier to get, and "We are also seeing growth in longer-term loans, 72 months and over," which reduces monthly payments, he says. Click here to read more about rising vehicle purchase rates by young people.

Protests Force Japanese Carmakers to Cut Chinese Production More
Toyota Motor Corp., Nissan Motor Co., and Honda Motor Co. signaled Chinese production cuts may deepen this month as anti-Japanese protests flare in the world's largest vehicle market. Nissan reduced August output in China, its largest market by volume, 8.9 percent from a year earlier to 86,488 units, the Japanese carmaker said Wednesday. Chinese production at Toyota, Asia's biggest automaker, fell 18 percent to 67,625 vehicles and declined 10 percent at Honda. Officials at the Japanese automakers said sales and production are poised to worsen in September after anti-Japan protests escalated over a set of islets in the East China Sea, with some demonstrators torching auto showrooms and smashing cars. Japanese autos will lose their lead this year over German nameplates in the country for the first time since 2005, China's Passenger Car Association estimates. The Detroit News reports that Toyota, Nissan, and Honda fell in Tokyo trading Wednesday amid growing concerns over dwindling demand in China. Japanese carmakers had been increasingly reliant on China. Nissan generates about 30 percent of its profit in China, compared with 17 percent at Toyota and 15 percent at Honda, Goldman Sachs Group Inc. estimates. For coverage of how disputes with China are hampering Japanese automakers, click here.

Lexus Bows Out of Contest for Top U.S. Luxury Brand
Toyota Motor Corp. doesn’t expect its Lexus brand to make a run for the title of best-selling U.S. luxury car this year after losing the title a year ago. According to The Wall Street Journal, the unit’s sales chief said that newly redesigned versions of many of its top models as well as new sport editions of vehicles are helping Lexus close the gap with BMW AG and Daimler AG’s Mercedes-Benz brand. But the models came too late in the year. “I don’t think we have a chance this year, but we don’t care either,” Tim Morrison, vice president of Lexus sales and dealer development, said at a presentation of the new Lexus LS sedan. “If I had all these [new vehicles] on Jan. 1, it might have been a different story.” BMW and Mercedes pulled ahead of the long-reigning sales king in 2011 while Toyota production was hobbled by an earthquake in Japan that left its U.S. dealers with shortages of Lexus and other vehicles. Through August, Lexus’s U.S. sales are up 24 percent to 150,604 cars and SUVs, about 18,000 fewer than top-seller, Mercedes-Benz. For coverage of Lexus’ recovery, click here.

How an Economic Recovery Could Make Highways More Dangerous
While traffic fatalities have seen dramatic dips in recent years, researchers warn that highway deaths could be on the upswing, with – of all things – the recovering economy at fault. To be sure the nation’s roads have become safer than ever, with the National Highway Traffic Safety Administration (NHTSA) reporting that vehicle-related fatalities dropped from a peak of 43,510 in 2005 to 32,310 in 2011, which amounts to a 26 percent decrease. Conventional wisdom largely credits this reduction in vehicle-related deaths to better vehicle occupant-protection and accident-avoidance engineering, in accordance with stricter state DUI, seatbelt use and teen-driving laws. However, Forbes reports, the recession seems to have also played a critical role in saving lives, with an otherwise welcome reversal of the nation’s economic fortunes expected to concurrently cause a precipitous rise in highway fatalities. That’s according to the just-issued report, “Road Safety in the United States: Are the (Relatively) Good Times Over?” from the University of Michigan Transportation Research Institute in Ann Arbor, Mich. Click here to read the report. For more from Forbes on how an economic recovery could make roads more dangerous, click here.

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