ON THE TABLE
Tuesday, July 7, 2009 at 07:49PM July 8, 2009
Automotive News. Let's get this straight, you guys are calling Sergio Marchionne the "Industry Leader of the Year" - ? Hmmm, uh, we don't know about that. What has Sergio done, exactly? Let's review, shall we? 1.) He talks a good game. Check. 2.) He has really been good at talking someone else (usually government leaders) into financing his global "vision" for the auto industry. Check. 3.) He reconfigured the marketing department of the "new" Chrysler into an organizational structure that, to put it kindly, is a head scratcher. Check. So, we could see "Industry Shit Disturber of the Year" or "Smoke and Mirrors Practitioner of the Year" but, "Leader of the Year?" Not. So. Much.
Smart. Before you line up for Smart's new lease deal of $99 per month for 36 months and use your $4500 check from the U.S. cash-for-guzzlers program, check out that fine print boys and girls. There's a $6,667 balloon payment due at the end of the lease term. D'oh!
Honda. The Crap-tastic Design Revolution is on! According to a report by Mark Rechtin for Automotive News, Honda is following Toyota with a Venza fighter based on the Accord, except that it looks eerily like the BMW 5-series GT. The Accord Crosstour will make its debut this fall. That means a horde of BMW 5-series GT-type vehicles will be littering the American landscape in no time. Have a super day, everybody!
American Drivers. The Texas Transportation Institutes's 2009 Mobility Report is in, and here are the top ten worst cities in America for congestion: L.A. (duh), Washington, Atlanta, Houston, San Francisco-Oakland, Dallas-Fort Worth, San Jose, Orlando, Detroit (huh?) and San Diego. We buy everything but Detroit. The congestion here isn't caused by traffic, it's caused by the unending road construction. But beyond that, ask anyone around here and they'll tell you traffic is down because too many people are simply out of work, and commuting is way down.
Dan Knott. Publisher's Note: The new head of vehicle engineering for Chrysler is a talented engineer and a good man. We wish Dan all the best. - PMD
Autoextremist.com. Our website is currently being blocked by Chinese government censors. The "Bare-Knuckled, Unvarnished, High-Octane Truth" doesn't play well over there, apparently.
Scott Wilbur. The New York Times reported that Wilbur bought a silver V-8 Camaro in June. Why is this news? The 40-year-old elementary school principal had not purchased a G.M. vehicle in a decade, and traded in his Honda Civic hybrid to buy the Camaro. The Times said that Wilbur "...even gave up his California-issued sticker to drive in hybrid-only carpool lanes to get behind the wheel of his new muscle car." Wilbur has such a good impression of GM because of the Camaro that he has put a deposit down on a Chevrolet Volt. "I might not be as environmentally friendly, but at this point I don’t mind waiting in traffic to drive this,” he said. And that's our AE Quote of the Week.
Publisher's Note: Greg Martin has more than three decades of auto retail experience in a variety of capacities including new cars, used cars and leasing. He presently heads The Private Client Group, serving clients acquired over the years and acts as a "market maker" by providing new car dealers with trade-in figures. Greg's next project is Autosports of Atlanta, a boutique used car dealership set to open in the coming months. We thought our readers would enjoy Greg's take on the current state of the used car business, now and into the future. - PMD
The Great Used Car Boom of 2012. It is coming, the numbers make it a certainty. Consider that U.S. new car sales are expected to be in the region of 9.5 million this year and are projected to be 10 to 11 million units next year. In addition, 12.5 million units have been coming off the road by various means consistently for the past several years. DMV data estimates that approximately three million new driver's licenses are issued annually. The average car on U.S. roads is 9.4 years old. You see where this is going: Pent-up demand is at an all-time high, while supply is shrinking. But wait, there's more! New vehicle prices are poised for a big increase. Recently mandated emissions and MPG standards are soon to add $1300 to the cost of a new vehicle according to the manufacturers, although some other estimates are much higher. The bankruptcy of two-thirds of the domestic industry has accelerated the loss of capacity, even while import manufacturers have been shuttering plants. Although excess capacity still exists, it is likely to be largely absorbed by the expected rebound in sales the next couple years. The inevitable result is something the car companies haven't had in a long time: Pricing Power. So now we have painted a picture where demand is mushrooming, prices are skyrocketing, and the days of "any warm body qualifies" financing and sub-vented leases are pipe dreams of the past. So what choice does the beleaguered American consumer have? Buy used! Signs of this trend have already begun to appear. Although YTD new cars are off by 41%, used cars are up by 3%. Compounding the imbalance of supply and demand is a shortage of used cars, due in large part to a lack of trade-ins. Future supply is due to further constrict as the number of off-lease cars begins to dwindle. Rental car companies are also extending the useful life of their fleets almost exponentially. By 2012 we can look back on this market as the "good ol' days" when by comparison used cars were bargain priced. What does all of this portend for the dealers? The consumer? Insightful consumers should view the November-December-January time period as a buying opportunity. Historically, the used car market weakens at the end of the calendar year as demand softens and a flurry of trades come in on the new models. I anticipate this year should be no exception, but do not expect prices to approach the depressed levels of last year. Most late-model cars are now worth at least the same and in many cases significantly more than what they sold for last winter. By next spring the used car market will be gathering momentum like a runaway train, and if you haven't bought your ticket your chances for a good buy will be rapidly vanishing. The opportunities for inexpensive auto ownership (little depreciation) will be great, particularly in the luxury segment. Focus should be on cars that will be in shortest supply in the coming years. Generally this would include later model, lower mileage cars of current body styles, ideally with a least one and at most two years of depreciation realized. I'll have more next time... Greg Martin, The Private Client Group, Roswell, Georgia. gregmartin123@bellsouth.net
See another live episode of "Autoline After Hours" hosted by Autoline Detroit's John McElroy, with Peter De Lorenzo and friends this Thursday evening, July 9, at 7:00PM EDT at www.autolinedetroit.tv. By the way, if you'd like to subscribe to the Autoline After Hours podcasts, click on the following links:
Subscribe via iTunes: http://itunes.apple.com/WebObjects/MZStore.woa/wa/viewPodcast?id=311421319 http://www.autolinedetroit.tv/podcasts/feeds/afterhours-audio.xml
Subscribe via RSS:
