Tag Archives: CHEVROLET

Edmunds.com: Car Buyers Lean Towards Gas Sippers, Compact Demand Way Up, Incentives Way Down

Though gas prices continue to fall and are estimated to drop even more in the next few months through year-end, Edmunds.com data released Tuesday reflects that consumers are still more likely to purchase smaller gas sippers than take on an SUV or truck.

According to the company’s analysis, shoppers are still leaning towards compact or subcompact cars as a result of higher than average gas prices. High gasoline prices have caused a realignment of buyer priorities and almost unprecedented demand for small cars, just in time for the launch of a stable of tech- and content-rich new models,” explained Edmunds’ AutoObserver.com senior editor Bill Visnic.

Besides economic factors, Edmunds.com reports that increasing options in the small car segment are also driving consumer interest.

“More options in the small car segment are drawing in more consumers,” stated Edmunds.com analyst Jeremy Acevedo.

“The Chevy Cruze, Fiat 500, Ford Focus and Hyundai Elantra are among the small cars that are stimulating interest,” he added.

Though more options and new 2012 small-car models are becomings increasingly attractive to consumers, the bad news is “as demand goes up, inventory and incentives fall,” company officials noted.

According to Edmunds.com’s True Cost of Incentives data, the national average incentive for the compact car in August was $864, down 63 percent from $2,318 in August 2010.

Moreover, subcompact car incentives in August averaged $520 per vehicle sold, down 57 percent from $1,211 in August 2010.

However, if consumers are willing to delve into less popular segments, such as mid-range luxury cars, they may find better savings packages. Edmunds.com data reports that the national average True Cost of Incentives for this segment came in at $4,228 in August 2011.

Breaking the trend seen throughout August down further, for cities, Atlanta saw the highest rate of increase in compact car shopping as it rose 41 percent from 2010.  Subcompact car shopping also increased by 35 percent year-over-year in Georgia’s capital city. 

Boston followed close behind, with August compact car shopping rising by 28 percent versus 2010, and the rate of subcompact car shopping in rose a significant 59 percent year-over-year.

Edmunds.com listed the rate of increase in compact and subcompact car shopping across the country’s metropolitan areas, as follows:

 

Market Increase in compact car shopping vs. 2010 Increase in subcompact car shopping vs. 2010
Atlanta 41% 35%
Boston 28% 59%
Chicago 43% 43%
Dallas-Fort Worth 44% 70%

Houston

48% 44%
Los Angeles 37% 58%
New York 38% 60%
Philadelphia 34% 53%
San Francisco 25% 44%
Washington, DC 41% 47%

Compact Cars Become more Profitable

Also of note, as the compact and subcompact segments continue to gain popularity, they are also becoming more profitable for dealers and OEMs, AutoObserver.com’s Visnic reported.

For example, Hyundai Motor America’s  chief executive officer John Krafcik recently noted at a media event the new Elantra is selling for an average of $4,000 more than the previous-generation model.

Moreover, AutoObserver.com reported that Don Johnson, General Motors vice president of U.S. sales, pegged the rise in the new Chevrolet Cruze’s average transaction price at $4,000 more than the Cobalt that preceded it.

“Auto-company executives wishing for increased small-car supply in the U.S. happens about as frequently as an appearance of Hailey’s comet, but with prices reaching new highs and almost no incentives required, compact cars are the auto companies’ new BFFs,” Visnic explained. 

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Toyota looks to regain momentum with new redesigned 2012 Camry

 Toyota showed off its all-new Camry on Tuesday, aiming to recover lost sales momentum with price cuts and a high-powered ad campaign for its flagship sedan that remains America’s best-selling car.

Sales of the Camry are down 8 percent this year but it is still No. 1 in the United States despite market-share gains by mid-size rivals the Nissan Altima, Ford Fusion, Chevrolet Malibu and Hyundai Sonata.

Losing sales this year has been the Honda Accord, which has fallen to No. 4 among mid-size cars from its No. 2 position in 2010.

The launch of the new Camry comes at a time when Toyota is struggling to shake free of the damage from costly safety recalls and the more recent problems caused by production shortages after the March earthquake. The Japanese automaker has seized on the redesigned Camry as a symbol for its own return as a force in the U.S. market.

Toyota unveiled the 2012 Camry with unusual fanfare at events staged in Detroit, Los Angeles and New York that featured a live video link from a plant in Kentucky where President Akio Toyoda drove the first production vehicle off the assembly line.

Camry’s U.S. sales peaked in 2007, as Toyota extended a lead over GM in global auto sales. That was also the first year of the current generation of Camry.Some 15 million Camrys have been sold worldwide since it debuted in the U.S. market in 1983. It has been the top-selling car in the U.S. market for nine years running and 13 of the last 14 years according to Toyota.

Overall, U.S. Toyota sales fell 7 percent through July for the No. 3 spot behind GM and Ford. Most of its competitors gained, led by Hyundai with a sales increase of 23 percent.

The Camry’s reputation for worry-free reliability made it a favorite of a generation of American consumers now entering or already in their retirement years. The average age of the U.S. Camry buyer is 60, which the automaker hopes to lower with the 2012 model, the sedan’s seventh generation.

The mainline gasoline-powered sedans will begin showing up at U.S. dealers in early October, ahead of an October 17 launch of an advertising campaign that will climax during the early 2012 Super Bowl broadcast, said Carter.

Hybrid versions of the Camry will be at U.S. dealerships by December.

Among competitors, the new Chevrolet Malibu goes on sale in early 2012 followed later in 2012 by new versions of Honda’s Accord and Nissan’s Altima.

Earlier this month, General Motors said it expected Toyota and major Japanese automakers to be “back with a vengeance” in the U.S. auto market as they are able to recover from the March earthquake. A sign of that may be the pricing of the 2012 Camry lineup. Of the six versions of the Camry, five will have lower prices than their 2011 counterparts, which Toyota executives say is partly because of the intense competition in the mid-size sedan market.

While Camry prices are lower, fuel economy ratings are higher, led by the Camry Hybrid LE, the lower-priced of two hybrid offerings. It will get a combined city and highway average of 41 miles per gallon. The four-cylinder gasoline models will get a combined 28 mpg.

CORVETTE STRATEGY FOR CHEVY VOLT?

FORTUNE — The similarity between the Chevrolet Corvette and the Chevrolet Volt isn’t immediately obvious. It’s revealed in the way General Motors has used a tried-and-true marketing ploy to score a home run.

Corvette, meant to sell in limited numbers to sports car fanatics, was positioned in the day to impart a halo of sexiness and fire-breathing performance over the Chevrolet brand.

The Volt, a small gas-electric hybrid that is selling in small numbers, is winning Chevrolet a new reputation — this time for high technology, especially the sort that saves gasoline and maybe the planet.

Customers that drooled over the Corvette eventually bought an Impala or another Chevy model. Customers who admire Volt for its engineering cleverness are choosing the Cruze or Malibu. In other words: GM’s marketing for Volt is working to a T.

GM sold a mere 567 Volts in June. But the entire Chevrolet car lineup was the payoff, almost 80,000 vehicles sold for the month, up 32% over last year. The single best seller was Cruze, GM’s new small car that is positioned to compete against the new Focus from Ford (FFortune 500) and Japanese models like the Honda Civic.

It’s no coincidence that Volt and Cruze share a common architecture and resemble one another, especially when whizzing down the road.

“Most of the dealers we’ve surveyed use the Volt as a bridge to show other Chevy products,” says Art Spinella, president of CNW Research in Bandon, Ore., which specializes in automotive research. “About 80% of the people who go see it aren’t intenders, they’re just going to see what it’s like.”

They walk in to see Volt and walk out with keys to a Cruze.

GM (GMFortune 500) insists on categorizing Volt as an “extended range electric vehicle,” EREV for short. In my book it’s a hybrid, a cousin to Toyota’s Prius, except that Volt can travel a full 40 miles per gallon on battery power only. But, really, who cares? The fiercer the debate, the more attention gets paid to Volt and the more Cruzes get sold.

Thirteen years ago, when Toyota (TM) introduced its first Prius, skeptical GM executives dismissed it as a marketing exercise. They weren’t wrong, though Prius has also developed into a true mainstream product and sub-brand, as well as the No. 1 seller in Japan.

GM’s Volt, at $40,000 to purchase or $350 a month to lease (with more cost for a quick-charge setup, if desired), isn’t particularly practical or economical, in terms of energy conservation. At least not yet. Without a garage, a considerable hurdle for some city dwellers, there’s limited availability for charging the battery.

Impracticalities aside, the Volt is a car worth owning. It’s a great engineering execution that is fun to drive, especially if you believe that consuming gasoline is somehow an affront to the human condition.

GM is taking orders in all 50 states, delivering only in seven due to limited production. Production is scheduled to increase this year, expanding availability to the entire nation. Michelle Bunker, a GM spokesperson, said that when the automaker offered Volt test drives at a dealership in Anchorage, 117 people signed up.

Very few Alaskans will be driving Volts anytime soon. If it’s greater fuel-efficiency they’re looking for, more than a few could trade in their pickups for a Tahoe hybrid. To top of page

CLOSED DEALER APPEALS IN CENTRAL FLA.; HOLLER’S IN, JIMMIE VICKERS OUT, SONIC TAKES THE CASH

Last summer, 789 Chrysler and about 2,000 General Motors dealers received letters from the manufacturers saying that their services were no longer required. Both were In bankruptcy and consequently allowed to make decisive moves that might be prohibited by law otherwise. So they trimmed what they considered to be “underperforming dealers” from the rolls.

GM, at least, gave dealers until their current franchise agreements ran out, which for the vast majority is in October, to shut down. And it had an informal appeal process that allowed a few dealers to successfully plead their cases to stay open. Chrysler was much more brutal, giving the 789 terminated dealers less than a month to shut down.

In Central Florida, eight Chrysler dealers — which sold Chrysler, Jeep, Dodge or some combination — got the ax. General Motors has never released a list of terminated dealers, but the best guess is that about 15 statewide got “Dear Dealer” letters, and that does not include brands that GM is closing or selling: Saab, Hummer, Pontiac and Saturn.

That was that, until last month, when President Obama signed a bill that will allow terminated dealers a chance to plead their cases before a neutral arbitrator. The American Arbitration Association is compiling a list of arbitrators — most of them judges or attorneys with a financial background — and dealers who filed for arbitration before the deadline a week ago will have their cases heard, and decided, by the middle of June. More than 1,500 dealers paid the estimated $2,000 in filing expenses, well more than half of the terminated dealers.

In Central Florida, some dealers will fight the closing. Holler Chevrolet and Classic Chevrolet, both controlled by the Holler family, will appeal. “Our roots go deep into the Chevrolet brand, and we feel a strong sense of commitment to our Chevrolet customers. That’s why we are participating in this process,” said dealer counsel Frank Hamner. Holler has been selling GM products in Orlando since 1938.

But some dealers will not fight. “We didn’t file,” said Buddy Vickers, whose Jimmie Vickers Jeep dealership in Merritt Island lost its Jeep franchise after 38 years when Chrysler awarded it to a Dodge-Chrysler dealership a mile up the road. “The cards are stacked against a small dealer,” Vickers said, “and I don’t think we’d stand much of a chance, particularly given what it could cost.”

Vickers remains in business selling Suzukis, and performing service on Jeeps. “It still hurts,” Vickers said. “I especially feel bad for my father, who started this store nearly 40 years ago. It isn’t right, but it is what it is.”

Other dealers have already closed after being paid some negotiable termination fee by the manufacturer to essentially go away. That was the case with Massey Cadillac in Sanford, which is owned by Charlotte, N.C. -based Sonic Automotive, controlled by motorsports magnate Bruton Smith. “We lost some dealers, but we aren’t appealing any of them,” Smith said. “We just took the money and closed them up.”

Sonic still has 11 dealers in Florida.

So even if a dealer arbitrates, what are the chances of succeeding?

It depends on a lot of things, said attorney Alex Kurkin of Kurkin Forehand Brandes, a law firm in Miami. Kurkin is handling 10 arbitration cases, including some for Central Florida dealers. Kurkin said he must prove the dealership was terminated without proper cause. Three outcomes are possible: The dealership can be terminated, it can be reinstated or the manufacturer can negotiate some financial settlement to close the case.

The arbitrator will be agreed upon by both sides, and if they can’t agree, one will be appointed, Kurkin said.

“We have so much work to do between now and the June deadline,” Kurkin said. “Normally we have months to prepare a case. With this, we have weeks.”

And, unless one side can prove “gross” misconduct during the arbitration process, the decision is binding.

Kurkin could probably have more than 10 cases if he wanted, “but that’s all I want to handle right now. This is an incredibly complex, time-dependent procedure.” Total costs for a dealer? As much as $80,000, Kurkin estimated. That is especially hard on Chrysler dealers, who have not been in business since last June.

In Florida, if you have been out of business for a year, you have to re-file with the state as a brand-new business. All 789 Chrysler dealers lost their franchises last June. “That’s why this June deadline for completing arbitration is so critical for Chrysler dealers,” Kurkin said.

And one aspect of the process that makes it even tougher for Chrysler dealers, such as Jimmie Vickers Jeep. Even if the arbitrator decides in the dealer’s favor, and Chrysler must return the franchise to the dealer, there is no provision that requires Chrysler to take the franchise away from a dealer that it was awarded to last year. So even if Vickers arbitrated and prevailed, the Dodge-Chrysler dealer a mile up the road could still have its new Jeep franchise. That would then have to be resolved under state franchise laws.

It’s a mess, but at least it’s a second chance for wronged dealers to plead their cases. Chrysler and GM acted arbitrarily in many of their closings, with no concern for loyal dealers, even less concern for loyal customers. This could get interesting.