August 30, 2010

Production Flattens as Economy Starts to Slow
After a year of big gains, a new forecast shows North American production flattening in the fourth quarter. Automotive News reports that meanwhile, August sales numbers, due this week, are expected to be lackluster. It's true that retail sales of new vehicles have not snapped back nearly as much as in four previous recessions dating back to 1969. Sales and production remain on an upward track - but just barely. Growth is slowing, and analysts say a double-dip recession looks increasingly possible. Making year-on-year comparisons these days is dicey. Cash for clunkers inflated August 2009 sales, and fourth-quarter 2009 production was swelled by a rush to rebuild inventories. August's seasonally adjusted annual sales rate - projected at 11.8 million by IHS Automotive and Edmunds.com - would be the second-highest this year, topped only by May's 11.9 million. Forecasters, never particularly optimistic about this year after 2009's 10.4 million sales, are adjusting downward. This month both IHS Automotive and Power lowered 2010 forecasts a notch to 11.5 million. Jeff Schuster, J.D. Power's head of forecasting, reduced his August SAAR prediction to 11.7 million last week, from 11.8 million, because of "unexpected softness" in retail sales. IHS Automotive forecasts a modest climb in production of three percent in the fourth quarter after rising 25 percent in the third quarter and 74 percent in the second quarter. Click here for more on auto sales projections.

Nissan vs. Hyundai: The Race to No. 2 Asian Automaker is On
According to USA Today, Nissan has gained ground among Asian carmakers this year, but a U.S. sales surge by fast-moving South Korean automaker Hyundai may knock the carmaker down a notch just as it starts an ad campaign this weekend to move up. Buoyed by 10 straight months of sales gains, Nissan was making in-roads to eventually unseat Honda as the No. 2 Asian automaker on U.S. shores, but Hyundai's pitch of lower prices for midsize sedans is capturing momentum, especially when coupled with sales of the Kia brand that Hyundai also owns. Some analysts see Hyundai - combined with Kia - overtaking Nissan in market share by the end of the year based on the number of cars sold. Nissan North America unveiled an advertising campaign hat plays off what the carmaker sees as its strengths, including innovation, styling, and dependability. Click here to watch one of its ads. Hyundai, by way of comparison, has achieved its recent sales gains with value-oriented pricing, and since early last year, a program that promises to buy back any new Hyundai vehicle within a year of purchase if a customer gets laid off or becomes physically incapacitated and can no longer afford the car. Click here for a gallery of Hyundai's vehicles. For more on the race to the second spot among Asian automakers, click here.

Cars That Get Better and Cheaper for 2011
Every year, cars get better. Every year, cars get more expensive. But it doesn't always apply in a recession. The cost of the average car will almost certainly continue to climb for the foreseeable future. But a handful of automakers have bucked the trend this year, producing new, redesigned models that clearly outclass the cars they replace - but (at least when looking at MSRP) cost less. According to The Car Connection, BMW's 5-Series is one of those vehicles. The new 2011 5-Series (the F10, to die-hard BMW lovers) has already won over some doubters, with graceful exterior lines, one of the finest interiors BMW has produced yet, and a new turbocharged in-line six that is both more powerful and more efficient than last year's base engine. Yet this 5-series starts at $1,450 less than the 2010 model. The Volkswagen Jetta has also improved for 2011. The brand's best-selling car has long been due for a redesign, but it's coming for the 2011 model year. The new Jetta is larger in every dimension, creating one of the most spacious small cars in its class. Despite the list of improvements, the starting price has been slashed by a jaw-dropping $1,700. Click here for more from The Car Connection on vehicles that are improving in price and features in 2011.

Used Vehicle Demand Up, Supply Down; Prices Soar
Used car prices are climbing and the pool of available models is drying up one year after the federal Cash for Clunkers program spurred consumers to scrap old cars for new ones. Used cars are selling for the highest average price in at least seven years, according to Edmunds.com, an online auto consumer guide. Last month, the average price of a three-year-old vehicle spiked 10.3 percent, to $19,248, compared to July 2009. The Detroit News reports that supply is down because Cash for Clunkers required old vehicles to be destroyed, rather than allowing them to be resold. In addition, fewer leased vehicles are being turned in and available for sale because automakers all but abandoned leasing during the industry collapse of 2008 and 2009. Demand, meanwhile, is up as some cautious consumers choose to buy used cars, rather than expensive new ones. Prices have climbed so fast that banks are slow to recognize higher book values for some used vehicles, which complicates the financing process when consumers try to trade in used models and buy new ones, dealers say. That means larger down payments. Click here for video coverage of heightened demand for used cars. To read the complete story, click here.

Getting a Charge from Nissan's New Leaf
The 2011 Nissan Leaf is the world's first mass-market all-electric automobile, to be built in the hundreds of thousands globally/annually by Nissan beginning this winter. Not so much a game changer as a game starter, the Leaf is a five-seat, five-door passenger EV sedan sold from California to Maine, with a nice, round 100-mile estimated range; 0-60 mph acceleration of around 10 seconds; and a top speed of 90 mph. The U.S. price is $32,780 (not counting the $7,500 federal tax credit for EVs) and includes a host of value-added, segment-competitive features, such as Bluetooth, navigation, and 16-inch alloy wheels. Click here for a photo gallery. Dan Neil at the Wall Street Journal says it is one of the most daring bids for market dominance he has seen in the car business. And yet, for such a world-historical automotive event as this, the Leaf driving experience is a curious nonevent. He describes it as a "postgraduate toaster." But it's also a rock star and one of the two most exciting cars he will drive this year. Why? Every mile driven with electricity displaces a mile driven by gasoline or diesel, since in the U.S. we use almost no oil to produce electricity. Click here for video coverage of Neil's experience with the Leaf. To read his entire review, click here.

Around the Web
Lambos and Ferraris Let Loose on California Roads [Jalopnik]
Spycam: Hyundai Sonata Wagon [Motor Trend]
Undercover Cars [MSN Autos]
A Top 10 List for Our Time [AOL Autos]