Auto Industry's Virus Fears Shifting from Supply to Demand
Automakers and suppliers across the globe have been scrambling to keep production going after the coronavirus shuttered parts plants across China. Now, reports Bloomberg, a bigger fear is emerging: Consumers may be in no mood to buy cars and trucks. With more than 100,000 cases worldwide and new ones cropping up daily in American cities, analysts are paring back expectations for another year of near-17 million sales in the U.S. LMC Automotive cut its 2020 estimate by 300,000 units to 16.5 million, which would be the lowest for the industry since 2014. Worldwide, the researcher docked 3.5 million units from its forecast, more than half of which is attributed to China. Plunging U.S. stocks triggered a temporary halt in trading early Monday, and the S&P 500 is down about 19% from its Feb. 19 all-time high, threatening to end the record-long bull market that began 11 years ago. Fallout from the virus outbreak also raises the risk of the U.S. and Europe entering a technical recession in the first half of the year. “The real fear and concern is if we end up with a demand crunch in the U.S.,” said Kristin Dziczek, vice president of the labor and economics group at the Center for Automotive Research. “Are people going to be buying, or be nervous because their 401(k) will just have taken a huge hit?” Read more here.
Toyota Dealerships Rank No. 1 in Online Response Study
Toyota stores ranked the highest in responding to customers who visit dealership websites in the 2020 Pied Piper Prospect Satisfaction Index Internet Lead Effectiveness Benchmarking Study. "This part of the car business is as important as ever — customers grabbing their phone and looking something up is just how any kind of shopping is begun now," Pied Piper CEO Fran O'Hagan said in an email to Automotive News. According to Automotive News, Pied Piper submitted customer inquiries to websites of 5,063 dealerships between July 2019 and January 2020, asking a question about a vehicle in inventory and providing a name, email address and local phone number. Dealers were evaluated on how they responded by email, phone and text over the next 24 hours. Auto brand rankings are based on a 100-point scale Toyota toppled last year's No. 1, BMW, with a score of 64, seven points higher than its 2019 performance. Behind Toyota was Cadillac with a score of 62, up from last year's 55, and tied for third were Mini and Subaru with scores of 61. Read more here.
Finicky American Demand Changes Path for BMW's Crossover EV
BMW has iced plans to bring its first electric crossover to the U.S. for now. The BMW iX3 was scheduled to arrive in the first half of 2021, reports Automotive News. "At this time we do not have plans to bring the iX3 to the U.S. market," a spokesman confirmed to Automotive News, declining to elaborate on the reasons for the decision. BMW, like its German rival Mercedes-Benz, is grappling with the realization that the world's second-largest auto market remains half-hearted in its embrace of electric vehicles. Despite their proclamations of interest in battery-powered vehicles, few automakers other than Tesla have made much traction in the U.S. market with EVs. Complicating their calculations, regulatory pressures in Europe and China are creating urgent need for EVs in those markets. Automakers face hefty fines in Europe next year if they fail to cut their fleet CO2 emissions to an average 95 grams per kilometer. Read more here.
Toyota Says Investors Drive Growth in Green Bond Market
The Detroit News reports that bond buyers are spearheading the development of the green bond market, according to Toyota Motor Corp., which has been selling the debt through one of its units for years. “It’s really starting to be driven by investors,” said Adam Stam, director of capital markets at Toyota Motor Credit Corp., the finance arm of the Japanese car company. At a recent structured finance conference in Las Vegas, investors asked about environmental, social and governance issues in about two-thirds of the company’s meetings without being prompted, Stam said. “More and more investors are wanting to know how their money is being managed and what sort of larger environmental and societal goals those funds are having,” said Stam. Toyota is sitting out the global markets volatility, which has closed the window for new issuance. The company raised debt earlier this year and plans to revisit the green bond market. “We haven’t made a decision on which market the next green offering will be in, but we certainly intend that there will be another green offering,” said Stam. Toyota Motor Credit has issued green bonds in U.S. dollars and euros. Read more here.
Millennials Expectations Not Met by Today's New Vehicles
Once thought of as nonfactors in the automotive industry, millennials have quickly become a driving force and a new study shows that the industry hasn’t kept up with the generational group’s expectations, reports The Detroit Bureau. Born between 1981-96, the group once more interested in their phones is now showing their appreciation for cars, trucks and SUVs – like everyone else – especially when it comes to ownership. However, Cars.com recently discovered the products they’re being offered don’t match up with what they thought would be available when it was their time to buy. “Millennials had high expectations for a futuristic automotive experience by the year 2020,” said Matt Schmitz, Cars.com assistant managing editor. “But our research found that while the industry hasn’t advanced as quickly as they envisioned, millennials’ attitude toward automotive is extremely positive and they are the most excited among their generational counterparts to shop for their next vehicle.” Read more here.
Dealers Receive Over $40 Million for Participation Programs for 2019
CNA National returned $40.8 million to automobile dealers across the U.S. through its various participation programs for 2019, bringing its inception-to-date total to over $560 million. This is the fifth year in a row the company has distributed more than $40 million to its dealerships. “Our plans delivered strong results last year,” said Joe Becker, president and CEO. “We are extremely pleased with the consistency of their performance. Our retro and reinsurance options continue to offer an effective and powerful way to generate income.” Dealers can choose the structure that best meets their business and individual financial goals. The company has earned multiple awards as “Best Reinsurance Provider” in the Dealers’ Choice Awards, including first-place honors in 2011, 2012, 2013 and 2017. To learn how CNA National can help you maximize your income potential and long-term success, call (800) 345-0191 x450.
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