Mercedes Sees Record U.S. Sales, Concedes Luxury Race with BMW

First Up 12/14/12

December 14, 2012

Mercedes Sees Record U.S. Sales, Concedes Luxury Race with BMW
Mercedes-Benz expects to lose its lead in the U.S. luxury market to BMW, which is expected to be aggressive in its incentive strategy this month. The automakers have been in a tight race for the top spot in the competitive U.S. luxury market, with Mercedes slightly ahead of BMW by about 2,000 vehicles through November. But, reports Automotive News, a top Mercedes executive said on Thursday that the luxury nameplate will likely fall back, even as it posts record U.S. sales of more than 270,000 for the year. "I don't think we're going to win the sales race this year," Steve Cannon, the head of Mercedes-Benz USA, said. Both automakers are expected to use incentives and special financing offers to drum up sales during the holiday season. But BMW, in particular, "pulls some very large numbers" in December, Mercedes spokeswoman Donna Boland said. In December, BMW tends to "slather on incentives like butter on toast," IHS Automotive analyst Rebecca Linland said, adding that BMW also markets its deals more aggressively than Mercedes. Through November of this year, Mercedes has sold about 246,000 vehicles, slightly ahead of BMW, which has sold about 244,000 vehicles. Click here for more on the luxury sales race.

Rearview Camera Requirement Could Boost Vehicle Costs by $200
Transportation Secretary Ray LaHood said he'll meet with White House officials in an effort to finalize a regulation that could lead to rearview cameras in all vehicles. In February, LaHood delayed proposed regulations intended to help eliminate blind zones behind vehicles that make it difficult to see pedestrians. He set a new deadline of Dec. 31. In an interview Thursday, LaHood said it is his goal to finalize regulations by year's end. Congress approved legislation in 2007 requiring the government to set rear visibility standards by February 2011, but LaHood has exercised his power to delay the rule, reports The Detroit News. The National Highway Traffic Safety Administration (NHTSA) argued in December 2010 the benefit of adding rear cameras is worth the cost, but drivers are ultimately responsible for driving safely. It wanted to set standards requiring all vehicles to have back-up cameras by 2014. NHTSA said when it issued its proposal that the regulations would cost the auto industry $1.9 billion to $2.7 billion annually. For vehicles without display screens, it put the cost at $159 to $203 per vehicle. For vehicles with display screens, cost would be $58 to $88. Click here to read more about a new backup camera mandate.

Fuel Economy of New Cars Continued to Improve in November
The Wall Street Journal reports that the average fuel economy rating of new cars keeps rising, reflecting consumers’ continued swing toward vehicles with higher fuel efficiency. said the fuel economy of vehicles sold in the U.S. in November rose to 23.2 miles per gallon compared with 22.3 mpg in November of last year. However, the average was flat compared with October. “The demand for fuel-efficient vehicles continues to be unseasonably strong as TrueMPG has remained at 23.0 MPG or above since February,” said Jesse Toprak, an analyst with TrueCar. “We expect to see TrueMPG dip in December as more consumers snap up larger SUVs and trucks.” TrueCar’s TrueMPG measurement is based on monthly average fuel economy by brand, manufacturer, origin, and vehicle segments by using actual sales data or forecasted data for the current month. According to TrueCar, European manufacturers’ average rose to 23.3 mpg from 22.2 mpg. Japanese car makers’ average fuel economy rose to 24.8 mpg from 23.9 mpg and South Korean manufacturers increased their average fuel economy for vehicles to 26.8 mpg from 26.4 mpg. Click here for more on which brands boasted the best fuel economy in November.

Dealer Demand Rises, but Used-Car Values Continue to Drop; Why?
After November’s Hurricane Sandy, dealer demand for used cars is up; so why are pre-owned values declining? According to Auto Remarketing, Kelly Blue Book’s Alec Gutierrez addressed the issue in this month’s Blue Book Market Report. Used values bumped up during the weeks following the storm, said KBB's senior market analyst of automotive insights. But after the initial rise, “values have moderated, and today, values are generally following a normal seasonal depreciation pattern.” That said, KBB says the industry is not seeing value declines as drastic as levels seen in 2011. Breaking down the numbers, in November, values declined 0.8 percent, a modest decline compared to the 1.7-percent decrease in November 2011. “Although dealer demand from the Northeast has helped to keep depreciation to a minimum, anticipate modest declines to continue through year-end,” Gutierrez said. And though used values overall saw a 0.8-percent decline last month, the segments price levels were “mixed,” Gutierrez said. The luxury and subcompact cars saw the highest declines for November, falling 2.6 percent and 1.7 percent, respectively. As for subcompacts, it seems the decline in fuel prices is making them less of a hot item for consumers. Click here to read more about what’s fueling the used car market.

Best Year-End New-Car Deals
Shopping is nothing short of a recreational sport this time of the year. While many of us are busy ferreting out the best deals on everything from tablet computers and diamond earrings to talking Furby dolls and Chia Pets, this is also the best time of the year to garner the deepest discounts on a new car or truck. Automakers are offering some of their most-generous incentives in December, especially on slow-selling models and last year’s leftover inventory, and dealers are motivated to cut their margins to reach specific year-end sales objectives set by manufacturers. Plus, automakers advertise extensively at this time of the year to help bring shoppers into dealerships, and all parties involved want to ensure those promotional dollars turn into transactions. Based on this year’s sales trends, Forbes expects large sedans and full-size SUVs and pickups will continue to boast both the deepest dealer discounts and the largest manufacturers’ incentives. On the other hand, consumers shouldn’t expect to find much in the way of bargains among smaller models on the lot. Check out Forbes’ list of the 15 most-lucrative manufacturers’ year-end sales incentives in the accompanying slideshow here. Read more about the best year-end car deals here.

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