Category Archives: Automotive News

New Generation Automobile Buyers

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A trend in the automobile industry shows that the younger generation is not as interested in driving as the generation before. Not only are they buying fewer vehicles, but many don’t even have drivers license. Some reasons for this change include:

  • The younger generation are more connected through internet and iPhones making them less reliant on owning transportation.
  • Many live in urban areas where everything is at a walking distance, there is good public transportation or they have access to car sharing programs.
  • Young people are facing soaring tuition costs, and the money they’re earning in their part-time, summer and first jobs is going toward paying for school and rent. Even if they could afford to buy a car, insurance is expensive and gas prices keep rising.
  • They have grown up in an era where they have had much more exposure to environmental concerns.

Automakers have known for a while that they were going to have a problem selling vehicles to this generation but are unwilling to believe that they will not want actual cars. As a result, automakers spend more time talking about how well their cars interact with an iPhone than they do about engine performance, ride, and horsepower. Technology such as voice recognition are important to many of the younger drivers because it allows them to safely drive while still staying connected.

They are trying to attract the younger urban buyer by developing a fashionable small car that is easy to park and uses less fuel. Car makers have begun shrinking the size of engines, subtracting cylinders while adding turbochargers to maintain horsepower and acceleration. Smaller engines have become a selling point even in the United States, which would have been unthinkable a few years ago. The idea of electric vehicles has also become more widely accepted.

As these technologies become more common they will also become more affordable, hopefully attracting more buyers. While today’s young buyer seems more open toward the trend of smaller autos with more features, car makers have not abandoned the hope that as this generation gets older and becomes parents they will graduate towards roomier vehicles.

Gas Prices No Longer Affect Auto Sales

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Gas prices no longer seem to be as big of a factor when it comes to consumers purchasing vehicles as automobile manufacturers build more fuel efficient cars. August was a perfect example of this as gas prices rose and automakers reported sales also grew by almost 20%. According to analysts, the wide rang of fuel efficient, hybrid, and electric vehicles have made it easier for consumers to spend their hard earned money as the average car and truck on the road reaches over 10 years old. The biggest gains came from Toyota and Honda who experienced low sales last year in the wake of an earthquake and tsunami in Japan. Detroit automakers also showed substantial gains with the introduction of their high mileage car lineup. General Motors (GM) United States sales grew over 10%, driven by strong sales of the Chevrolet passenger cars like the Sonic subcompact and the Spark minicar. Ford also reported an almost 13% increase with the sales of the Focus compact car and the Escape, one of the smallest sub compact sport utility vehicles (SUV) on the market. According to analysts the strengthening industry has surpassed expectations and has helped automobile manufacturers keep inventories stable and sales incentives relatively low.

Europe Auto Industry Restructuring

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After a year of the lowest car sales since 1994 and factories operating at ten percent below the profit margin, European automobile manufacturers are being forced to restructure companies by cutting payrolls and closing factories just to survive. But with political resistance to cutbacks, strong unions, and strict labor laws, the question is whether companies can do it fast enough to survive.

In the 2009 recession, France and other European countries spent billions bailing out car companies. Instead of using that money to downsize factories and cut payrolls, it was used to subsidize salaries and offer consumers incentives to buy new cars. With automobile manufacturers back in the same position, they are once again turning to the government for help. But for a recovery plan to work, European leaders need to reconsider a free trade agreement with South Korea. Automobile executives say that these agreements are significantly hurting the industry by allowing Korean automakers to gain a jump in the market share.

The European automotive industry is key to the strength and competitiveness of Europe. The sector not only provides direct employment to more than 2.3 million people but also supports another 10 million jobs indirectly.

May Automobile Sales Rise

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Automobile manufacturers reported the sales of new vehicles rose 26% in May compared to last year despite the slow recovery of the American economy. Americans bought over 1.3 million new vehicles last month according to Autodata Corp., giving automobile manufacturers a reason to add jobs and increase production. Analysts say the numbers are distorted because last year major Japanese auto companies were dealing with shortages brought on by the aftermath of the tsunami and earthquake in Japan. This year they posted some of the largest gains. Industry analysts, however, had predicted an even better year over year increases, predicting the annualized sales rate would be 14 million to 15 million. Much of the higher demand for new vehicles is being blamed on the age of existing models on the road. Vehicle registration data shows the average vehicle age at 10.8 years. Better sales, combined with the deep restructurings in recent years, have also resulted in healthy profits for the car companies.

Auto makers expressed confidence the industry will remain on an upward trajectory. “I don’t believe that the employment data in and of itself will have an impact,” according to Ken Czubay, Ford’s U.S. marketing and sales chief. “The dealers are telling me that they had excellent traffic over the weekend. There is significant pent-up demand in the marketplace.”

Protection From Buy Here Pay Here Autos

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“Buy Here Pay Here” (BHPH) automobile sales are under attack by a new bill that hopes to regulate business practices of these car dealerships. A recent article in the Los Angeles Times stated that 20% of all used car purchases in the U.S. are financed with BHPH deals. Many of these dealerships are known for high purchase prices, interest rates nearly triple the national average, and aggressive repossession practices. These unregulated loans are known for taking advantage of people with poor credit histories who need a car but can’t get a loan.

Senate Bill 956 contains several important protections that will prevent these dealerships from taking advantage of California consumers. The bill hopes to:

  • Impose regulations that requires “Buy Here Pay Here” auto dealerships to obtain a California Finance Lender license.
  • Limit loans to a maximum 17 ¼ % interest rate.
  • Give consumers an eleven day “grace period” after due payments before the vehicles can be repossessed.
  • Require BHPH dealers to provide written notices to their customers informing them of their legal rights.

The Bill is expected to be reviewed within the next month.

Car To Car Networking

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David Strickland, head of the National Highway Traffic Safety Administration (NHTSA), has announced that the NHTSA is considering new regulations that they say could eliminate up to 80% of traffic accidents. The agency will be conducting a year long study involving about 3,000 vehicles to test technology that will allow car to car networking. General Motors, Ford, Toyota, Honda, Hyundai, Kia, Mercedes Benz, Nissan and Volkswagen will all be working with the NHTSA to provide support for the study.

The above video shows how interconnected sensors in vehicles will gather information about the conditions around it and will send this information through a wireless local network to surrounding vehicles. Other drivers will be alerted about slow-downs, bad weather, accidents and other road problems ahead and can safely reduce their speed. If the new technology is adopted, it could benefit Google as they talk to car companies about developing self driving cars to bring to the market within the next decade.

Paying For The Car Pool Lane Experience

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The car pool lane is a roadway reserved for vehicles with at a specified number of occupants. These high occupancy vehicle lanes (HOV) may have the appearance of being lightly traveled, but statistics show that they carry more people per lane with fewer vehicles and usually at higher speeds. Some places allow hybrid and electric vehicles to access these lanes to encourage the use of a more environmentally friendly means of transportation.

Other states are looking at the concept of putting a price on the convenience of using HOV roadways. They say that tolls would not only raise money to maintain the roads but could manage traffic congestion as well. Motorist would be allowed to “buy their way” into the express lanes using an electronic transponder that logs how long and at what time of day the driver accesses them.

While the goal of the program is to keep traffic in the restricted lane moving at a reliable pace, a coalition of local groups say allowing people to by their way into the lane is having the opposite effect, and they have petitioning to have the program suspended. The state of California has recently restricted some older hybrids from HOV lanes because they were becoming too congested.

Getting The Best Deal On Your New Car

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For many buying a new vehicle can be a daunting task, and with dealers selling vehicles at record high prices, the average consumer needs to do their research in order to get the best price. With the internet, a little research, and some luck, you should be able to find the vehicle that suits your needs at a price you can afford. Edmunds.com, for example, offers services that give true market values, predicts pricing trends, and offers calculators that let consumers do their research before setting foot on a car lot. Below are some factors that can affect the price of a new vehicle.

  • When Sales Are Slow: Car salesmen are more likely to give deeper discounts to get your business. Rainy days, holiday periods and shopping during the week, are times when a car sales person may be willing to give you an extra discount just to close the deal.
  • End Of The Month: If a sales person is short of their monthly quota to receive their sales bonuses, they may be willing to give customers discounts in order to meet the quota.
  • End Of The Year: As year end quotas approach, and new models start rolling in, dealers and manufacturers may offer discounts, cash rebates, and lower interest incentives just to get the cars off the lot.
  • Redesigned And Discontinued Models: If the manufacturer has completely redesigned one of their models, they are usually willing to offer bigger discounts and incentives to get rid of the outdated models. If the vehicles has been discontinued completely, the savings are usually even better.