Friday, 27 November 2015

Larger models leading market in retained value

Canadians are turning toward the truck and SUV market more and more when looking for their next vehicle, a trend which in turn is helping keep retained value up for these segments.
That, and of course, the ever-present reality of tight used supply.
Year-to-date data on retained value for 4-year-old vehicles provided to Auto Remarketing Canada by Canadian Black Book shows that values remain the strongest among the larger segments.
Full-size trucks, in particular, have outperformed the rest of the market this year, and Josh Bailey, Canadian Black Book editorial director, pointed out "there has been virtually no depreciation through the year" for this segment.
Here's why:
"This is the hottest U.S. export item, and used pickups are still a hot item on Canadian dealers' lots too," said Bailey.  "Without a drop in pick-up demand in the U.S. or a change in the exchange rate there is not likely going to be a change in prices soon."
The full-size pickups ended November with a retained value rate of 52.80, after starting the year at 49.29 percent.
The lowest this segment dropped has dropped this year was in March, when rates fell to 48.72 percent. From June through November, retained values stayed above 50 percent for full-size pickups. Small pickups are seeing similar price movement and finished November with retained value of 49.01 percent.
The full-size luxury SUV segment is also worth mentioning, as its value has stayed above 50 percent all year, coming in at 50.98 percent for in November.
On the other hand, many of the car segments make up the worst-performing group of segments, as far as retained value is concerned.
Full-size cars have seen some of the lowest value rates this year, bottoming out at 32.06 percent in November. The subcompact car segment is also seeing prices suffer, dropping to 34.63 percent in November after starting the year off with retained value of 41.90 percent.
Similar trends also show up in RVI's Used Vehicle Price Index forecast. RVI expects the full-size SUV segment to end the year with prices elevated 11.9 percent over 2014 rates, while small SUVs are expected to see a 14.5-percent year-over-year spike. And small pickup prices are expected to end the year with prices elevated by 19.7 percent year-over-year.

Friday, 20 November 2015

J.D. Power Study On Auto Bells And Whistles

Cars are becoming wearable devices. Smartphones are pretty much annealed into car consoles at this point, and automakers are figuring out how much more functionality they can add before the display looks like the control panel of the Millennium Falcon.
Maybe what is missing is the need-to-know: which devices and apps are car drivers actually using? Not a lot of them, if J.D. Power's new 2015 Driver Interactive Vehicle Experience is correct. And the not-great news for automakers like GM, which invested a lot in its 4G LTE WiFi deal with ATT, is that so far, in-car routers and concierge services aren't on that must-have list.
The report, which looks through a 90-day ownership window to gauge who is using what, found that 20% of new-vehicle owners have never used 16 of the 33 technology features that the firm measured. The five features owners most commonly report that they "never use" are in-vehicle concierge (43%); mobile routers (38%); automatic parking systems (35%); head-up display (33%); and built-in apps (32%).
The study also found that there are 14 technology features that 20% or more of owners do not want in their next vehicle. Among them are Apple CarPlay and Google Android Auto, in-vehicle concierge services and in-vehicle voice texting. Among Gen Y, the number of features unwanted by at least 20% of owners increases to 23, specifically technologies related to entertainment and connectivity systems.
"In many cases, owners simply prefer to use their smartphone or tablet because it meets their needs; they're familiar with the device and it's accurate," said Kristin Kolodge, executive director of driver interaction & HMI research at J.D. Power, in a statement. "In-vehicle connectivity technology that's not used results in millions of dollars of lost value for both consumers and the manufacturers."
When owners said they didn't want a feature, it was mostly the simple fact that they didn't find it useful in their current vehicle. And they hadn't chosen it in the first place, since they averred that "it came as part of a package on my current vehicle and I did not want it."
The study also suggests that if dealers knew more about the technology themselves and were adept at explaining it there would be a higher likelihood there might be a higher chance that customers would use it. And if the features aren't activated when the customer drives off the lot, they may not know they even have it. But, said Kolodge, "while dealers are expected to play a key role in explaining the technology to consumers, the onus should be on automakers to design the technology to be intuitive for consumers." She said automakers should do more to explain the technology to dealership staff and train them on how to demonstrate it to owners.
On the other hand, the study found that the technologies owners most often want are those that enhance the driving experience and safety, available as a built-in feature. What they said they are most interested in are vehicle health diagnostics, blind-spot warning and detection, and adaptive cruise control. "The first 30 days are critical. That first-time experience with the technology is the make-it-or-break-it stage," said Kolodge. "Automakers need to get it right the first time, or owners will simply use their own mobile device instead of the in-vehicle technology."

by Marketing Daily

J.D. Power Study on Auto Bells and Whistles.....................................................

Friday, 13 November 2015

$968 billion in open auto loans

Outstanding car loans hit a high point in the third quarter and have climbed more than 53 percent in the last five years, which appear to be good signs for the industry. As does the increase in car sales that has come with this rebound in auto finance. However, Experian's Melinda Zabritksi says, whether these rosy times continue hinges largely on consumers continuing to make their payments.
And for the most part, they have done so.
According to the State of the Automotive Finance Market report from Experian Automotive, 30-day delinquencies fell from 2.7 percent in the third quarter of 2014 to 2.5 percent in Q3 2015.
Likewise, 60-day delinquencies showed a similar decline, moving from 0.74 percent to 0.73 percent.
Overall, outstanding auto loan balances were at $968 billion in the third quarter, which Experian said was its highest level.  A year ago, total open balances were at $870 billion. The year before, $784 billion.
Perhaps most important, the Q3 2015 figure is more than 53 percent higher than the post-recession trough.
"Continued growth in the automotive finance market is a clear sign of improved consumer confidence over the past few years," Zabritski, Experian's senior director of automotive finance, said in the company's news release accompanying the study results.
"Since bottoming out in the recession, automotive sales have rebounded steadily, which is a good sign for consumers, automotive manufacturers, lending organizations and the overall economy. What's critical to this success is that consumers stay on top of their payments," she added. "If they can continue to manage their financial obligations and make timely payments, the automotive industry can continue to flourish and grow for quite some time."
Breaking down the credit tiers of open loans
  • 20.82 percent of open loans were super prime.
  • 40.36 percent were prime.
  • 18.42 percent were nonprime.
  • 16.61 percent were subprime.
  • 3.79 percent were deep subprime.
Experian said in its news release for the study that "the distribution of open loans by risk segment remains relatively unchanged, demonstrating that the surge in outstanding automotive financing is driven by consumers across the board, not a specific segment of the market."
The super prime category had the biggest year-over-year jump in open loan volume (up 8.34 percent), but subprime (up 7.8 percent) and nonprime (up 7.7 percent) weren't far behind.

by: AutoRemarketing

968 Billion in Open Auto

Friday, 6 November 2015

Made in China Quality Is Not Good Enough, Lexus Says

An employee inspects the paint finish of a Lexus NX SUV at the Miyata plant in Fukuoka Prefecture. Lexus has long prided itself for home-grown craftsmanship, with artisans on Japan assembly lines donning white gloves and honing years of factory experience before being entrusted to handle final inspections.

Car buyers in China may have to wait decades before Toyota Motor Corp. begins producing Lexus luxury cars locally, as the world's largest automaker wagers they'll favor made-in-Japan vehicles as a guarantee of quality.
While BMW, Mercedes-Benz and Audi all manufacture in China, Lexus has stuck to shipping finished models from Japan, incurring import taxes that make its offerings more costly. The brand remains a holdout from building locally despite indications of significant improvement in China's auto manufacturing credentials.
"There's too much quality risk in China to produce there," Takashi Yamamoto, executive vice president of Lexus International and an engineer who's worked at Toyota for 33 years. The company also still has to improve the brand's awareness and standing among consumers. "When that difficulty is gone, maybe local production is likely to be launched in China, maybe several decades later," he said.
As long as Lexus continues to resist building vehicles in China, it prolongs pricing disadvantages relative to locally produced German luxury cars. Import duties help push up the starting price of the Lexus IS sedan to about 369,000 yuan ($58,200). That's a premium of about 30 percent over BMW's 3-Series, and 35 percent more than Audi's A4, according to auto-pricing website Autohome.
Toyota rose 1.4 percent to 7,482 yen at 9:51 a.m. in Tokyo trading, matching the gain for the benchmark Topix index.
The hesitation by Lexus contrasts with data that show the quality of vehicles made in China has improved over the years to rival those in developed markets. Standards have risen as international automakers set up plants in the country and shared expertise and manufacturing processes with their local joint venture partners.
The 5 Series cars produced at BMW's plant in Shenyang in northeastern China have won top ranking in J.D. Power & Associates' quality award for the past four years. The same plant has also helped a South African factory raise efficiency and reduce defect rates at its paint shop.
New-vehicle owners reported105 poblems per 100 vehicles in J.D. Power's China initial quality study, released last week. The number of problems reported has fallen from 168 in 2010, and was lower than the 112 industry average for the U.S. market this year.
"It doesn't necessarily mean that China vehicles have better quality, but it shows the competitiveness of the China-produced vehicles," Geoff Broderick, an automotive analyst for J.D. Power, wrote in an e-mail. More experienced production line workers, increased automation and more use of standardized quality-control processes have improved the quality of vehicles built in China, he said.
Lexus has long prided itself for home-grown craftsmanship, with artisans on Japan assembly lines donning white gloves and honing years of factory experience before being entrusted to handle final inspections. Toyota's view that quality can be better controlled from its home market contributed to the 26-year lag between Lexus first beginning sales in the U.S. and starting production in the country.
Toyota's Kentucky factory began assembling Lexus ES sedans last month, joining a plant in Ontario, Canada, as the luxury brand's only production sites outside Japan.

'Common Ground'

"Americans and Canadians have a tradition, a history of building and manufacturing automobiles, so mentality-wise we have some common ground," Yamamoto, 57, said in an interview last week at the Tokyo Motor Show. "Chinese people, their history of building automobiles is rather short, so it's so difficult to locally build a high-quality car there."
Higher prices have held back Lexus sales in a market that has been a source of explosive growth for BMW AG, Volkswagen AG's Audi and Daimler AG's Mercedes-Benz. While Lexus set an annual global sales record of 583,000 vehicles last year, less than 15 percent of deliveries were in China. BMW sold more vehicles in China than Lexus did worldwide in 2014.
Exposure to China's auto market has been a detriment to some automakers' share prices this year, as slower sales growth has led some companies to discount their vehicles. Lexus can better control its pricing by importing than the German companies producing millions of vehicles in China, Yamamoto said.
"Made-in-Japan guarantees quality," he said. "If you shift to made-in-China, there could be some peripheral issues accompanied with this."

By Bloomberg Business

Made in China Quality is Not Good Enough, Lexus Says.....................