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Best auto sales in years

lmorris — Wed, 07 Mar 2012 14:42:34 +0000

NEW YORK (CNNMoney) — Consumers flocked to auto dealerships in February at the strongest pace in four years, hungry to buy fuel-efficient vehicles and to upgrade to newer trucks.

Industrywide U.S. sales rose 15.7%, according to sales tracker Autodata, which puts the annual pace of sales at 15.1 million vehicles when adjusted for seasonal factors. That’s a big jump from the 14.1 million annual sales rate in January and the best pace of sales since February of 2008.

Print CommentGeneral Motors (GM, Fortune 500), Ford Motor (F, Fortune 500) and Chrysler Group all reported improved monthly sales with strong demand for both fuel-efficient models and big trucks. Toyota Motor (TM), the Japanese automaker known for the fuel economy of its offerings, posted its best gain in sales in a year.

The strong sales came in the face of high gas prices, which climbed steadily throughout the month and are about 33 cents a gallon higher than a year ago.

Buying new trucks can be a good strategy for truck owners dealing with high gas prices, since newer trucks typically get better mileage than the older versions on the road.

But typically gas price spikes lead to sharp drops in truck purchases, as potential buyers don’t want to commit to a loan payment until they see how much they’ll have to pay at the pump. For example, in May and June of 2008, as gas prices approached and hit $4 a gallon for the first time, truck sales fell by more than 20% compared to a year earlier.

Special report: Gas prices
Experts said the U.S. automakers are far better prepared for the current gas price spike than they were four years ago, with far more high-mileage offerings.

“What a difference four years and a change in product lines make,” said Michelle Krebs, senior analyst with Edmunds.com.

But U.S. automakers still sell more far more trucks than fuel efficient cars, and overall sales would have be far weaker without strong demand for trucks, which typically take a sales hit with gas price spikes.

“Clearly this month is beyond anyone’s expectations,” said analyst Jesse Toprak of TrueCar.com. “People feel more comfortable making a big ticket purchase today than they have in the last several years.”

GM attributed the strong demand to an improved jobs picture and better credit availability, coupled with improvement in the housing market and consumer confidence helped to lift demand even in the face of higher gas prices.

“The underlying economy is probably the biggest factor,” said Don Johnson, GM’s vice president of U.S. sales.

One big advantage for pickup truck sales was a boost in home building. The construction industry and its workers are a prime market for pickup sales, and many in the industry have been delaying truck purchases in recent years due to depression-like conditions in that market.

But government figures show builders started more homes in the three months ended in January than any other three-month period since late 2008.

Michigan’s real winners: GM & Ford
Sales at GM were up only 1.1%, but that was far better than the forecast decline at the No. 1 automaker. The comparisons were also to a particularly strong sales month a year ago for GM.

The plug-in electric Chevrolet Volt, the company’s highest profile high-mileage car, enjoyed a 70% jump from January’s sales total, and more than tripled year-earlier sales when the model was still in the process of being rolled out.

But the company also reported increases of between 20% and 28% for its heavy-duty pickup models.

Ford, the No. 2 automaker in terms of U.S. sales, reported a 14.4% increase in sales.

It was helped by a 114% jump in sales of the compact Focus, the company’s key fuel-efficient offering. But truck sales also posted a 20.6% rise, led by a 25.9% increase in sales for the full-size F-series pickup truck.

Ford spokesman Erich Merkle said demand for more fuel-efficient models picked up as the month progressed. He said that the company also saw strong demand for the more fuel-efficient offerings within each model, such as a six-cylinder version of the F-150 pickup rather than the eight-cylinder model.

Chrysler Group reported its best February sales since 2008, up 40% compared to a year ago. The Fiat 500 subcompact car, the company’s most fuel-efficient offering, had its best sales month since the relaunch of the brand last year.

But it also reported good sales for its Jeep and Ram truck brands, with sales of the Jeep Grand Cherokee SUV jumping 47%, while the full-size Ram pick-up truck posted a 22% gain.

Toyota reported a 12.4% rise in sales, helped mostly by its fuel-efficient models. U.S. sales of the Prius, the world’s best-selling hybrid model, jumped 52%, and sales at its compact Scion brand rose 25%.

But it had a harder time bringing in truck buyers, as sales of the Tundra, its full-sized pickup, fell nearly 10%, and its minivan and SUV sales also declined.

All Signs Point to a Big Year for Car Sales: New Cars, Used Cars, You Name It

lmorris — Thu, 16 Feb 2012 21:06:44 +0000

Brad Tuttle, TIME – After years in which tons of dealerships closed, auto brands disappeared, natural disasters caused vehicle production disruptions, and consumers just didn’t have the money or desire to drop big bucks on cars, 2012 looks to be a return to good times for the auto industry.
Last year was a decent one for car sales: Dealerships sold 12.8 million new cars last year, up from 10.4 million in 2010. This year is expected to be even better for dealerships, and the auto industry as a whole.
Reporting from the annual auto dealership convention over the weekend—held, wouldn’t ya know, in Las Vegas to coincide with the Super Bowl—the Detroit Free Press rounds up all the signs and insights that indicate a terrific 2012 is in the works. After drastically trimming the number of dealerships during the worst days of the recession, automakers’ sales forces are leaner and more apt to make profits. The recession also forced dealerships to cut marketing costs—mostly by turning to the web, which is much cheaper than traditional advertising—and they seem to be keeping these cost-saving strategies in effect even as the economy rebounds. (Based on how many automakers advertised during the Super Bowl, though, it doesn’t look like they’re scaling back that much on traditional advertising.)
Perhaps most importantly, automakers and dealerships are optimistic about 2012 because the unemployment rate has declined to a three-year low, measuring at 8.3% recently. Lower unemployment obviously helps car sellers because when more people have jobs, more people can afford cars, but also because a decreasing unemployment rate tends to make consumers more confident in the economy—and more likely to feel OK about buying a big-ticket item like a new car.
Though 2012 is barely more than a month old, it’s already shaping up as a strong year for car sales. Americans bought more than 900,000 new cars in January 2012, an increase of 11.4% from the previous January.
It’s not just sales of new cars, but used cars as well, that are expected to have an outstanding 2012. The National Automobile Dealers Association anticipates strong demand for used cars in 2012, and with that comes higher prices. When adjusted for inflation, used car prices rose 3% in 2011, hitting all-time highs in the summer. This year, used vehicle prices are expected to increase again—by 1.8% by the end of 2012, on a seasonally adjusted basis, according to NADA.
Given the current high cost of gas, prices for fuel-efficient used compact and midsize cars are expected to rise more than average, by 2.7% and 2.1% respectively. That’s the scenario if fuel prices continue to hover around $3.50. If gas prices soar above $4, or even $6, which some experts say is a possibility, then demand (and prices) for gas sippers will surely skyrocket right alongside them.
In more potentially bad news for consumers, prices of new cars may rise significantly as well. SmartMoney reports that GM, in its quest to raise profits, is planning to raise prices on cars. Currently, it’s profit margin is 6%; it wants to raise them to 10%.
Finally, Bloomberg points to one more factor driving the strong pace of car sales. Lenders such as Capital One are once again approving car loans within 30 seconds, which was unheard of during the heyday of the recession.
Faster loan approval obviously bodes well for speedier, and just plain more, car sales. That’s good news for automakers and car dealerships. As for the drivers taking out those loans, well, some of them wind up wishing that process was slowed down a bit.

Is CPO right for you?

lmorris — Fri, 13 Jan 2012 14:17:04 +0000

Yahoo! Autos – So you’re all ready to buy another car. You’ve done your research and you know the make and model you want to take home. Perhaps you’ve decided to buy a new car right from the dealership. Or maybe you’ve been scouring the used car lots and classified sections to find a previously-owned vehicle. But if you haven’t done so already, it might be in your best interest to look into buying a certified pre-owned (CPO) vehicle. If you don’t, you might just be missing out on one incredible deal.

New Car Condition at a Used Car Price
You assume a certain amount of risk when you buy a used car. You don’t know who has driven it before you or how the car was treated. Hopefully, the seller will tell you what needs to be done before you drive away, but this isn’t always the case.

When you buy a certified pre-owned vehicle, you are getting a reasonably new car with low mileage. Qualified technicians have placed it through an elaborate series of manufacturer-specified service checks, so all of the kinks have been ironed out before you buy. The car may have a few more miles on it than the new ones on the lot, but you would never tell by looking at it.

More Car for Your Money
Say you want to spend $25,000 on your next car. You can spend it all on this year’s new base model. Or you can put it towards a CPO vehicle that might have a few more miles on it, but comes with a ton of features and amenities that you really want but otherwise couldn’t afford.

Minimize the Effects of Depreciation
Thanks to depreciation, as soon as you drive a new car off the lot, it automatically loses upwards of thousands of dollars in value. The longer you drive the car and put miles on it, the more depreciation takes its toll. But when you buy a CPO vehicle, it’s as if somebody else has already paid those initial depreciation costs for you. The car is still in excellent condition, it just cost you a whole lot less.

Backed by a Manufacturer’s Warranty
When was the last time you bought a used car and got a comprehensive manufacturer’s warranty? Probably never. But when you buy a CPO vehicle, not only do you get a previously-owned vehicle in excellent condition, but it’s also backed by an unrivaled limited manufacturer’s warranty. So you get to enjoy the peace of mind that comes with knowing your investment is fully covered. And if anything were to happen to the car while it’s under warranty, you wouldn’t have to argue with a dealership or hunt down the number of the guy who sold it to you.

Lower Service Bills
A certified pre-owned vehicle comes to you in excellent condition. The manufacturer and dealership have taken a minimum of over 100 steps to make sure that this is the case. And while it may appear to cost more than finding an equivalent used car in the classifieds, it probably either balances out-or costs less-in the end.

That’s because a used car will most likely require you to plunk down some serious cash while you get it up to a desirable condition. And even then, you can’t be certain that more surprises aren’t awaiting you at any given moment. But any such problems in a CPO vehicle have already been resolved, so you save money in the long run. Plus, you also get a manufacturer’s warranty that would significantly boost the price of any used car.

All the Perks of Buying New
In an effort to draw attention to their fleet of CPO vehicles, many dealerships are offering incentives traditionally reserved for new car buyers. Among the most appealing are new car financing rates that can save you thousands of dollars over the life of the vehicle. Other incentives include service loan cars, shuttle services, roadside assistance, and free maintenance. Imagine getting a previously-owned vehicle, but enjoying all the perks of buying a new car. Each dealership is different, however, so be sure to ask what is included with the price.

By now you should have a better idea of how you want to buy your next car. You can enjoy the security and prestige of buying new, or the financial benefits of buying used. Better yet, you can buy a certified pre-owned vehicle and enjoy the benefits of both, while saving money at the same time.

FICO – White Paper 11-2011

lmorris — Fri, 02 Dec 2011 18:26:48 +0000

Thanks to Greg Cook at CUNA for forwarding the attached White Paper from FICO detailing important changes in Consumer Credit Behavior, including Smartphone usage, and Loan growth opportunities with low risk. Although Indirect is an excellent method for growing your loan portfolio it is by no means our only source. I hope you find this article useful.