Automakers See Sales Rise as Interest Rates Dipped in May

First Up 06/04/19

Automakers See Sales Rise as Interest Rates Dipped in May
Several major automakers saw sales increase in May as interest rates dipped to the lowest levels of the year, reports The Detroit News. The upward trend last month, which included a 2% increase in sales for Fiat Chrysler Automobiles NV and a 3.2% increase for Toyota Motor Corp., represents a bounce-back as rising car prices and bad weather have steered drivers away from dealer lots for most of the winter and spring. Interest rates for new vehicles averaged 6.1% in May, compared to 6.27% in April, according to data provided by Edmunds. The month-over-month change can likely be attributed to an increase in zero-percent finance deals in May. Still monthly payments reached record highs — $559 a month on average — as car prices continue to rise. "These conditions are tough on shopper wallets, no matter how you look at it," said Jeremy Acevedo, an automotive analyst for Edmunds. Despite strong monthly performances, many automakers' sales are still trending down for the year as the market continues to make hefty swings month-to-month. Read more here. 

VW's Diess Discusses Mexico Tariffs with Lighthizer, Report Says
Volkswagen Group CEO Herbert Diess met on Monday with the top U.S. trade official, Robert Lighthizer, a week before new tariffs are set to hit imported Mexican vehicles, two people briefed on the matter said. Automotive News reports that last week, U.S. President Donald Trump said he would begin imposing tariffs on all Mexican made goods starting at 5 percent on June 10. The tariffs would rise from there, hitting 25 percent on Oct. 1 "unless Mexico substantially stops the illegal inflow of aliens coming through its territory," Trump said. Mexican-made vehicles accounted for nearly half of VW's U.S. sales last year. The company builds the Jetta and Tiguan among other models at its Puebla, Mexico, plant and builds engines at a plant in Silao. VW also assembles the Audi Q5, its best-selling U.S. vehicle accounting for a quarter of sales, at another plant in Mexico. "We believe that tariffs of this kind are a tax on the U.S. consumer and will result in higher prices and also threaten job growth," VW said in a statement on Monday, adding that the company "has made significant long-term investments in the United States that would be impaired by restrictive changes to trade." Read more here. 

Mercedes-Benz Expands Subscription Service to Atlanta
Mercedes-Benz is expanding its vehicle subscription program to Atlanta, a year after launching the pilot program in Nashville and Philadelphia, reports Automotive News. Mercedes-Benz Collection gives subscribers access to 30 model variants for a monthly fee. Several automakers are experimenting with subscription programs in a nod to changing realities. Rapid technological advancement in the auto industry, coupled with the emergence of affordable and abundant ride-hailing and ride-sharing services, has put pressure on the historical car-ownership model. Subscription programs, instead of forcing consumers to buy one vehicle for every driving need, allow customers to pick the vehicle for the need – an SUV for when extended family is in town, a convertible for a weekend getaway or a compact for the downtown commute, for example. Yet, results have been mixed. While Mercedes and Porsche appear to see strong interest for their programs, others have had a more wobbly start. Read more here. 

Study: Auto Industry Slow to Build Trust, But Many Brands Making Strides
Trust. It’s one of the most powerful human emotions, said global automotive marketing agency AMCI. “We are biologically wired to make our decisions based on trust,” the company said in a news release. According to Auto Remarketing, AMCI focused on trust as it released its annual “Trusted Automotive Brand Study.” According to the study, the most trusted luxury brand was Alfa-Romeo, while the most trusted non-luxury brand was Honda. Alfa-Romeo was also chosen in the category, “most trusted luxury dealers,” while Mazda won in the category of “most trusted non-luxury dealers.” Many brands “have made great strides” in the study, according to AMCI. Honda is one of those brands, as it appears the automaker has mostly “put the drag of the Takata recall behind them,” AMCI said. Mazda is the most improved of any auto brand in 2019. It is now the No. 3 non-luxury brand in addition to being tops in the non-luxury dealer category. Read more here. 

Why Cars Still Matter to Honda
In today’s CUV-crazy U.S. automotive market, you might think an auto executive in charge of car sales would be as optimistic as a fisherman casting a line in a swimming pool. But, reports WardsAuto, Henio Arcangeli Jr., American Honda’s senior vice president-automobile sales, seems upbeat about the future of cars. It helps that the No.2 and No.3 top-selling cars in the U.S. last year were, respectively, the compact Honda Civic (325,760 units, according to Wards Intelligence) and midsize Honda Accord (291,071). The midsize Toyota Camry claimed first with 343,439 deliveries. Still, unlike their dominant days, car segments account for only 30% of market share in the U.S. CUVs, SUVs, and pickups gobble up the rest. Yet despite their minority share, cars still represent about 5 million annual vehicle sales in the U.S. “That’s huge,” Arcangeli tells the Automotive Press Assn. here during a presentation largely focused on “why passenger cars matter, especially for Honda.” Read more here.

Beware of Auto Dealership Fraud Schemes
Laramie Sandquist of Federated Insurance joins AutoTalk on Tuesday, June 18th at 2:00pm EST to discuss how dealers are getting schemed on both cars and money, including some of the latest trends. He will offer some practical advice on how to prevent dealers from being a victim of fraud. To register, click here.

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