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Excerpts from Wards Automotive Reports - February 13, 2012

Bush:  No Bridge-Loan Regrets

George W. Busch says he was philosophically opposed to the $17.4 billion in credit to General Motors and Chrysler, but approving those bridge loans in the waning days of his presidency was the right thing to do.

And more than three years later, he still thinks so.

“I believe the marketplace should decide (your fate).  If you make a bad decision, you ought to pay,” he says in a question-and-answer session following a short keynote speech at the close of the 2012 National Automobile Dealers Assn. convention here (Las Vegas).  “The marketplace makes us better.  The problem is, sometimes the circumstances get in the way of the philosophy.”

Bush recalls how the preceding crisis on Wall Street led to “week-end after weekend of financial hell,” for the country in the final months of his second term.  He said he expected to “ride off into the sunset.”

When the auto industry hit the ropes, his advisors, chiefly Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson, warned him that ignoring Detroit’s plight could put the economy into a second spin.

“The first question is, do you believe (the advisors)?”   Bush says of the decision process surrounding the initial financial-sector rescue.  “But if you don’t believe your advisors, why are they there?  So the next question is, do you want (to ignore their advice) and gamble?  Do you stay true to your principles?  I didn’t want to gamble.

“If not for the bridge loan, the gains we had made could have been affected and confidence in the country destroyed.”

Bush urges the dealer group here to keep pushing its political agenda and pressure Congress to start thinking longer term.  Presidents, he says, look further into the future.

Big Trucks Start Off the Year Up in the U.S.

The market for medium- and heavy-duty trucks in the U.S. lost some steam in January from December’s 40.6% rise, but nevertheless begins 2012 a healthy  35.9% ahead of year-ago, WardsAuto data shows.

Big-truck makers delivered 24,471 units during the month, compared with 18,001 prior-year.

As was the case throughout most of 2011, Class 8 trucks powered the gain, although other classes saw increased sales as well.

Class 8 deliveries rose 52.9% from like-2011, as all but Volvo Truck’s namesake brand, down 5.2%, posted gains.

January U.S. Inventory Back on Track

U.S. light-vehicle inventory resumed a more normal 67 days’ supply in January with an additional 187,552 cars and trucks reaching dealer lots, up from December’s weak 51 but less than prior year’s outsized 71.

Overall, unit stock rose to 2,541,222 in the Jan. 31 count, climbing 8.0% from the prior month and 4.5% ahead of 2,432,566 year-ago.

The increased inventory was welcomed by sellers of Japanese brands that had been struggling with a dearth of stock for the past seven to eight months as a result of last year’s natural disasters in Japan and Thailand.

However, the good news was not universal.  Five brands’ supply grew to more than 100 days,’ compared with December and prior-year counts.  Two other brands, already suffering from bloated inventory, saw their stock rise even further, not including dying Saab, whose daily inventory has fluctuated widely given its ultra-low selling rate.

The Detroit Three’s combined LV inventory increased 6.0% in January, with days’ supply moving to 86, above the 6070 range considered average.  It also was up from December’s 64 and prior-year’s 75.

Saab aside, Lincoln dealers, at 142, posted the highest January days’ supply of any brand, followed by Fiat’s 132.

For Asia/Pacific brands, an influx of 113,891 additional units nudged their collective days’ supply to 53.  While still subpar, it was well ahead of 40 at the close of December.  Hyundai and Kia, at 30, again tied for the industry’s lowest days’ supply, although it was a slight improvement from 28 in December.

However, low-volume brands Suzuki and Mitsubishi saw their January days’ supply rise to 119 and 105, respectively, from 11 and 65 in December.

European brands also showed improvement, although at 47 days’ compared with prior-month’s 42, remained well-below normal.  Ignoring Saab, days’ supply ranged from Audi’s 37 to Volvo’s 65.

Canada Big-Truck Sales Up 64.1%

Canada big-truck sales start the year on the upswing, with January deliveries soaring 64.1% over like-2011, according to WardsAuto data.

Sales of Class 4-8 trucks finished 2011 up 33%, compared with 2010.  December deliveries tracked 25.3% ahead of prior-year.

January sales totaled 2,938 units, compared with 1,790 in the year-ago period.  Class 8 sales led all segments, surging 83.6% to 2,077 units from 1,131 in like-2011.

GLOBAL ROUNDUP

The ’13 Chevrolet Corvette “is the finale for the C6 generation,” says Harlan Charles, Chevrolet’s Corvette product marketing manager.  He declines to offer details about the coming next-generation C7, other than to warn those still hoping to purchase a C6 model to act fast, especially when it comes to the 638-hp ZR1 rocket.  “The current ZR1 may be the high-water mark for Corvette for a while,” Charles tells WardsAuto on the sidelines of the Chicago auto show.  “It may be awhile before another ZR1 in the future, so if you want one, get one now.”

Cadillac unveils its new flagship, the fullsize XTS sedan, at the Chicago auto show.  But an even bigger vehicle is possible.  “Do I want something larger than XTS?  Hope so,” says Don Butler, vice president-Cadillac marketing.  “We’re exploring something more substantial, larger and grander,” he tells WardsAuto.

 

 

Excerpts from Wards Automotive Reports - January 2 and 16, 2012

January 2, 2012

World Vehicle Sales Growth Stuck in Neutral

Although Thailand’s October floods had less impact on world vehicle production than anticipated, the disaster did provide downward pressure on sales for some auto makers – particularly Honda.

Global auto makers still sold 6.52 million vehicles in November, the fourth highest monthly total in 2011.  Deliveries rose only 2.3% above year-ago, but did exceed October’s 1.3% gain.

North America continued to outperform other regions on a year-over-year basis, registering a 13.3% increase compared with like-2010.

In the U.S., the world’s second-largest vehicle market, deliveries climbed 14.6% in November for the best seasonally adjusted sales rate of the year.  Mexico deliveries grew 9.6% to 85,000 units, while Canada was up 5.2% to 125,000.

Total vehicle sales of 1.23 million units gave the North America region an 18.8% share of world vehicle sales, down from October’s 19.9%.

Markets in the Asia/Pacific region experienced wildly divergent results in November.  Japan’s sales surged 22.2% to 396,000 units, making it the third-largest market in the world.  Not surprisingly, Thailand’s deliveries plunged 67.5% from year-ago.

China’s sales in the world’s largest vehicle market continued to trail year-ago on a monthly basis, falling 2.6% in November and climbing just 3% year-to-date.

Collectively, Asia/Pacific markets inched up 0.1% over year-ago in the month to 2.81 million vehicles, accounting for 43.1% of total global vehicle sales.

Europe saw a 1.2% uptick in November with sales of 1.65 million units, for a 25.2% world market share.  Germany again led the region with 302,000 deliveries, but still dropped from the fourth largest market to the fifth behind Brazil.

Russia continued its streak of double-digit growth in November, up 26% over year-ago to 252,000 units, the second-best in Europe.  France was down 4.7%, the U.K. fell 1% and Italy rose 2.6%, rounding out Europe’s top-five vehicle markets.

Brazil’s deliveries slipped 1% to 325,000 units, equating to 5% of total vehicle sales worldwide.  Growth cooled to single-digits in Argentina, up 8.4% in the month compared with 34.9% in October.  However, South America’s overall share of global vehicle sales rose to 7.8% in November from 7.4% in October.

With 71 million deliveries through November, total world vehicle sales were tracking 4.5% above year ago for 2011.

U.S. Recalls Decline in 2011

Auto makers selling in the U.S. issued nearly 130 recall campaigns in 2011 affecting some 13 million light vehicles, according to a WardsAuto analysis of federal data.

The numbers suggest a reversal of a troubling 2-year trend that saw the industry’s defect woes approach record levels, while perennial quality leader Toyota absorbed waves of recalls that damaged its reputation.

The industry’s ugliest point remains 2000, when roughly 24.3 million vehicles were linked to safety defects.

General Motors issued the greatest number of recalls in 2011 with 21 campaigns, but they had implications for a relatively modest 455,901 cars and trucks.

The Detroit auto maker saw its 2011 totals pushed up by three campaigns that called back 231,319 units of the newly launched Chevy Cruze compact car.

Ford issued 10 recall campaigns affecting some 3.2 million cars and trucks, making it second only to Toyota in the number of vehicles brought back in 2011.

GM’s cross-town rival saw its totals raised by a pair of recalls involving the F-150 pickup, America’s overall best-selling vehicle for 29 years running.  An estimated 2.7 million of the trucks, including a handful of medium-duty models and units approaching 20 years on the road, suffer from a potential short-circuit in their airbags and possible corrosion to fuel-tank straps in cold-weather states.

Among other full-line manufacturers, Chrysler issued eight recall campaigns affecting up to 919,800 vehicles.  Two recalls brought back just over 679,000 units of its popular minivans and CUVs, while a campaign targeting more than 200,000 units of its top-selling Dodge Ram pickup accounted for most of the remainder.

Demand Strong for EcoBoost F-150

Ford is boosting production of F150 pickups equipped with its 3.5L EcoBoost V-6, as sales have outpaced the auto maker’s initial volume expectations.

The F-150with EcoBoost this week eclipsed the 100,000-unit mark just 10 months after it launched, an astonishing feat considering fullsize pickup buyers long have preferred V-8 engines.

Prior to launch “there was a fair amount of uncertainty” about the wisdom of offering the F-150 with a turbocharged, direct-injected V-6, Doug Scott, Ford’s truck marketing manager, tells WardsAuto.

SUPPLIERS

Bosch Sensor Output Hits 2 Billion

Bosch manufactures its 2 billionth micro-electro-mechanical systems sensor.

While the first billion were produced over 13 years, the 2 billion mark recently was reach after just three years.  Current annual production is nearly 500 million units – more than 1.3 million every working day.

The biggest users of Bosch’s MEMS sensors are its Automotive Electronics division and its Sensortec and Akustica consumer-electronics subsidiaries.  Bosch Automotive Electronics produces several hundred vehicle-specific varieties of micromechanical sensors that make cars cleaner, safer, more economical and more comfortable, the supplier says.

A modern car features up to 100 of these sensors for applications including injection systems in gasoline and diesel engines, airbag deployment and electronic stability control, Bosch says.  Continental unveils a flat-panel car radio without mechanically operated drives.  The radio uses only digital interfaces to play back digital audio data.  Portable storage devices such as USB, SD memory cards and MP3 players can be connected to the single-tuner digital radio for easy access to digital music.  Passengers can use the radio’s Bluetooth interface to make hands-free telephone calls, or stream digital music via the remote connection and listen to it through car speakers.  The radio is 7.1 in (18 cm) wide and 3.9 in (10 cm) high, about the size of a postcard.  Its depth of about 1.6 in (4 cm) provides interior-design engineers greater freedom.  Continental says the radio is intended as a factory-fit solution for auto makers and is ready for immediate series production.

 

January 16, 2012

NHTSA, GM Communications Break Down?

Comments from the head of the nation’s top safety regulatory earlier this week suggest a potential communications breakdown between the agency and General Motors over how the auto maker would handle fixes to Chevrolet Volts on U.S. dealer lots.

The National Highway Traffic Safety Admin. discovered the potential for fire after it severely crash-tested a Volt last May and its lithium-ion battery pack sparked several weeks after the test.  The regulator was able to reenact the problem again in November and opened a formal investigation.

However, no Volt battery fires have occurred in any of the more than 7,000 units currently on U.S. roads.

NHTSA administrator David A. Strickland may have thought otherwise.  Speaking with reporters on the eve of the North American International Auto Show, he responded with surprise at GM’s decision to keep selling Volts without the safety enhancements.

“That’s a new development,” he told reports at the time.  I’ll have to get back with you on that.”

NHTSA officials decline to clarify Strickland’s comments.  The agency typically does not comment on investigations in progress and refers WardsAuto to its statement on Jan. 5 saying the remedy proposed by GM should address the battery pack problem.

But if NHTSA believed GM would stop selling the Volt until a fix could be made, it would represent a dangerous communications breakdown between the industry and its federal safety regulator.

Big Trucks Sales End 2011 on High Note

The medium- and heavy-duty truck market, replaying the scenario common ion every month of 2011, soared in December, powered by a huge spike in Class 8 sales.

December’s 46.3% jump was the fifth-biggest monthly gain of 2011, WardsAuto data shows.

For the year, sales of big trucks in the U.S. rose 40.6%, to 306,189 units, from 2010’s 217,702.  All but Class 4 posted gains in 2011.

Class 8 grew the most for the month and the year, up a whopping 78.3% in December, and 59.9% for 2011.

U.S. December Inventory, Days’ Supply Fall

One month after posting a modest gain, U.S. new light-vehicle inventory and days’ supply fell again in December as dealers closed 2011 with relatively robust sales.

In all, there were 2,352,202 cars and light trucks on dealer lots at the end of last month, down 2.8% from 2,418,889 in November and a mere 0.8% above the 2,334,471 posted in 2010.

A relatively robust selling rate helped trim both unit stock and days’ supply, the latter slipping to a subpar 51 at the end of December from a more normal 61 at the close of November.  Dealers closed out 2010 with a 55 days’ supply on Dec. 31.

Canada Big-Truck Sales Up Double-Digits

Canada’s medium- and heavy-duty truck deliveries jumped 25.3% in December, compared with year-ago, to 3,514 units, helping push full-year big-truck volume up 33.3% to 38,234.

Class 7 was the runaway winner in the month on a percentage basis, with sales up 43.4% to a modest 341.  For the year, Class 7 notched a 13.6% gain to 3,473 units, according to WardsAuto data.

Class 8 followed, rising 30.3% in December to 2,456 units.  Sales were bolstered by PACCAR’s Kenworth brand, up 71.0%, and Peterbilt, up 61.2%.  Full-year deliveries jumped 34.9% to 25,512.