The latest from USA Today suggests now is a good time to buy a Chevy Volt, if that’s what you really want. I checked in with former(?) TTAC scribe Captain Mike Solo, currently helping someone lease a Volt, and he says about the same: lease for $270 a month, with $1500 down. Which includes the government tax credit built into the residual…probably. So what does this all mean? Read More >
The Globe and Mail’s Greg Keenan explored an interesting conundrum that Canadian governmental officials are facing; is it worth subsidizing auto industry manufacturing facilities, even with austerity programs in place?
If you are thinking of buying some stock of an automaker, now could be a good time. Not because of the strong sales. Because of dropping incentives, paired with strong sales. This indicates a strong first quarter, which should drive up stock prices. Read More >
GM’s turn-around hinges on a market share above 19 percent, board member Stephen Girsky said at an industry meeting in October 2009. “The public plan is 19 percent and change. That is what everything is being based on,” Girsky said during a panel discussion at a conference at Columbia Business School. Reuters was taking notes.
In the 3rd quarter of 2009, GM had a market share of 19.5 percent. The share climbed to 21.8 percent in January 2011, and eroded ever since. Read More >
When we reported sales on Monday our conclusion was that “big is big again,” as full-sized pickups dominated growth in a surprisingly up month. So, how do you sell a ton of trucks in a month where gas was still hovering around the $3.50/gal mark? Easy: just throw some cash on the hood. Edmunds Autoobserver reports
From a low that generally occurred around April, Ford Motor Co., General Motors Co. and the Chrysler Group LLC have markedly hiked incentive spending on full-size pickups. In April, the average TCI for the full-size pickup category – which also includes the almost statistically insignificant Toyota Tundra, Nissan Titan and Honda Ridgeline – was $3,261 per vehicle. At the end of September, the average incentive for full-size pickups ballooned by more than 30 percent to $4,281 per vehicle.
Executives from the Detroit automakers insist that this was not simply an inventory-clearing move (because, by industry standards, having three times your monthly sales on the lot is “acceptable”), but manufacturers have been trimming truck production all year and with Days To Turn rising, clearing off the lots makes sense. Especially going into the traditionally slow truck sales months of October and November. Hit the jump for more September incentive and transaction price data…
The main tool for the government’s crusade to get one million plug-in cars on the road by 2015 is the “Qualified Plug-In Electric Vehicle Tax Credit,” a credit that returns between $2,500 and $7,500 to purchasers of a qualifying vehicle. To qualify for the minimum $2,500 credit, a vehicle must have a traction battery with a minimum of four kW/h, and the credit adds an additional $417 in credits for every kW/h above the minimum. Why? Well, you might think that it’s because the DOE has done its research and determined that larger battery packs deliver more social benefits… at least until the 16kW/h limit (the exact size of the Chevy Volt’s battery), where the credit tops out at $7,500. But according to new research by Carnegie Mellon’s Jeremy Michalek, that basic assumption doesn’t appear to be true at all. In fact, his latest paper argues that the government would actually be better off subsidizing smaller, not larger, battery packs.
Cash on the hood is on the rise again, says Edmunds, which keeps track of the Total Costs of Incentives (TCI.) Incentives definitely had been coming down from their January and February highs to reach a low in May (there were cars missing from Japan …), but now, manufacturer largesse is getting greater again. Read More >
GM China always had a comfortable lead over Volkswagen in China – at least on paper. More than half of GM China’s volume comes from small delivery vans, made by a three-way joint venture with SAIC and Wuling, in which GM held 34 percent. This share had been recently raised to 44 percent. The joint venture agreement allows GM to claim 100 percent of the small cars as theirs. “Whatever turns them on” (or Chinese word to that effect) say the other JV partners who happily count the cars again in their annual reports. There is one big problem with that. The “breadvan segment” (so called because the cars looks like loafs on wheels) has been shrinking and is ruining GM’s otherwise good Chinese numbers. Now, GM can’t take it anymore, and is using a familiar tactic: “GM is sacrificing profit margins to maintain market share in China, cutting prices of low-cost minivans by as much as 15 percent to offset slowing sales in the world’s largest vehicle market,” Bloomberg reports.
Read More >
Forecasting the success of game-changing technologies is like predicting the weather. Despite a mediocre success rate, it is done every day. Ask me what the weather will be in 2017, and if I want to be absolutely right, I will say: “During the summer months, we expect sun with occasional rain, whereas in the winter months, some snow can be expected.” This prediction would protect my career in any company, but it won’t get me any press.
If I want press, I need to say: “In 2017, fire and brimstone will rain from the skies, which will cause a great conflagration, because all rain will have stopped a year earlier.” These predictions can be made with little risk. Six years down the road, who will remember the nonsense I said today? That thought crosses my mind as I read studies that predict the adoption of electric vehicles. Today, we have two of those. They couldn’t be more apart. We commissioned a third one. Read More >
We didn’t want to mention it when we wrote about GM’s buy a car, get free insurance deal. If we would have said it, it would have been the nasty B-word all over again. The rest of the media showed less compunction. “The worse you drive, the bigger the deal” headlined MSN Money. The deal can be staggering under the right or wrong circumstances, says MSN Money: Read More >
The US market’s Seasonally Adjusted Annual Selling Rate (SAAR) hurdled the 12m mark towards the end of last year, and was cruising above the 13m mark for much of the first half of 2011, but after a rough May, June seems set to become the market’s second month back under the 12m mark.
So, sales are up… but what are the automakers spending in order to get those sales? And what are they getting for their cars? Step inside our incentives and transaction price tracking center for a look at the factors that play affect how sales turn into profits (or don’t). But first, take a look at the graph above showing US-market incentive spending broken out by the regions where automakers are based. As usual, the US-based OEMs put more cash on the hood than their competitors, but more importantly notice how much money is spent on sales each month: nearly $2.5b was spent last month. And despite being a serious chunk of change, Edmunds AutoObserver says that’s the lowest overall level of incentive spending since 2005. So if you’re inclined to ignore incentives when it comes to your monthly sales education, you might want to start paying some attention…
TTAC has always taken pride in its outsider status, and we’ve taken pains to cover the industry from a safe distance in order to continually bring a fresh perspective to developments. As a result, we’re not always on the same page as trends in the industry at large, which tends to be far more given to wild optimism than the average TTAC analysis. But, based on a new study by Booz & Company [PDF], it seems that the “carpocalypse” of recent years has driven the industry to a more TTAC-esque pessimism. According to responses by executives at both OEMs and suppliers, the industry generally feels that the bailout was either a missed opportunity or it didn’t do enough to address fundamental weaknesses… and as a result, executives see challenges ahead.
Speaking at the New York Auto Show today, GM CEO Dan Akerson defended his inconsistent approach to sales incentives, telling the AP [via The Washington Examiner]
I feel pretty good about that. I think we’re in pretty good shape. I don’t want to be a predictable competitor. I don’t want the other guy to know exactly what I’m doing.
For some context,
GM surprised the industry — and Wall Street — when it raised discounts by $400 per vehicle in January and February. Most automakers didn’t raise them because demand for new vehicles has been rising in line with supply…
GM pulled back on its incentives in March, spending $600 to $800 per vehicle less on the deals. But it was too late for some investors, who shied away from the company’s stock because higher rebates lower car companies’ profits.
But does Akerson’s upside, the element of surprise, outweigh the downsides of his hot-cold incentive strategy?