Mass-Market Brands Outperform Luxury Marques in Reliability, Power Says

Feb. 13, 2019

Mass-Market Brands Outperform Luxury Marques in Reliability, Power Says

Mass-market brands, led by Toyota, outperformed luxury brands for the first time in J.D. Power's annual study that measures the reliability of three-year old cars and light trucks. According to Automotive News, Lexus extended its reign as the top brand for long-term dependability while mass-market brands, led by Toyota, outperformed luxury brands for the first time in an annual J.D. Power study. Power said 2016 model year vehicles from mass market brands averaged 135 problems per 100 models surveyed, compared with 141 problems per 100 luxury vehicles studied. The Porsche 911 is the highest-ranked model in the 2019 study. Click here for a chart showing the top three models per segment. Lexus ranked on top for the eighth straight year even as it was tagged with more problems — 106 per 100 vehicles — than a year earlier (99 per 100). Overall, 13 brands showed improvement while 17 brands, including Porsche and Buick, had more reported problems. Hyundai's results were flat with 2018 but still above the industry average. Click here for the full story, and to see the brands that fell behind with substantially more problems.

A Record 7 Million Americans are 3 Months Behind on Their Car Payments, a Red Flag for the Economy

A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis. Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, the Washington Post reports that many Americans are struggling to pay their bills. “The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post. When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans. Auto loans surged in the past several years as car sales skyrocketed, hitting a record high in 2016 of 17.5 million vehicles sold in the United States. Fewer than 1 percent of auto loans issued by credit unions are 90 days or more late, compared with 6.5 percent of loans issued by auto finance companies. For the full story, click here.

Dealers Take a Hard Look at F&I Managers' Pay

As expenses rise and front-end margins shrink, dealers are examining some of the personnel they pay the most: finance and insurance managers. Dealership group Friendship Automotive Enterprises in Bristol, Tenn., is re-evaluating how F&I managers are compensated after a spike in F&I profitability drastically altered the status quo in the stores. "Don't get me wrong, the top producers should be compensated more than fairly, but it's just gotten out of whack a little bit," Friendship COO Dustin Walters told Automotive News. In 2017, F&I managers made $142,048 on average nationally, a 3 percent increase from the year prior. That compares with an average salary of $134,625 for sales managers and $121,918 for service managers. The only dealership position earning more on average than the F&I manager is the general manager, at $328,150. Click here for a pay chart. A drastic pay disparity between F&I managers and their management peers could disrupt the traditional career path and make dealers question the value of the F&I position. Still, slashing or minimizing F&I pay could drive away talent, particularly if managers know they can make more down the street. For more on how dealers are addressing the pay gap, click here.

Prices of Pickup Trucks Charge into Luxury-Car Territory

Pickup trucks that cost $50,000 or more were a rarity on dealer lots a decade ago. But Detroit’s auto makers, eager for new sources of income, have been steadily yanking up truck prices—and finding that buyers will pay up for better engines and more frills. According to the Wall Street Journal, Ford Motor Co., General Motors Co., and Fiat Chrysler Automobiles have in recent years introduced trucks at price points well into luxury-vehicle territory, offering plusher interiors, more powerful engines and premium options like massage seats and touch screens the size of small TVs. Some trucks are even priced above $75,000, making them more expensive than certain luxury cars. Last year, pickup buyers paid more than $44,000 on average for a full-size model, 61 percent higher than a decade earlier, according to research firm J.D. Power. By contrast, the average price for all vehicles industrywide rose 28 percent during that same stretch to about $32,500. Some analysts and executives wonder how long the frothy truck pricing can continue, as dealer lots get crowded with new pickup offerings. For more on the new and pricey truck market, click here.

BMW’s M Division Unveils Quick New X3M, X4M

BMW’s M performance-car division adds two new SUV models to its burgeoning lineup in the form of the X3M and X4M. Slated for North American delivery in July following a planned public debut at the Shanghai auto show in April, Wards reports that they are among seven new dedicated M models set to be unveiled in 2019, with the M8 Coupe, M8 Cabriolet, and M8 GranCoupe as well as the third-generation X5M and X6M all set to follow by year’s end. “The decision to produce the X3M and X4M was logical. We know how to do a fast and sporting SUV. Our philosophy from the start was to deliver an M3 and M4 driving experience, but with the added assurance of four-wheel drive and a slightly higher seating position,” says Lars Beulke, BMW M product manager. Although they have not been conceived as such, Beulke says the X3M and X4M “do amazingly well off-road. The electronic differential at the rear provides a locking effect that gives them loads of traction on loose surfaces and gravel roads.” By the end of 2019, the BMW M division lineup is planned to include up to 37 models, some 15 of which are SUVs. For more on the M series, click here.

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