Auto Sales Get Decimated In October – A Sign Of Things To Come?

The month of October was not friendly to most car manufacturers, as overall sales in the United States dropped 6%. This sharp drop can be attributed to volume sellers who saw declines that haven’t been posted in quite sometime. Is this a reason for concern moving forward? Is a slowing auto market going to be the new reality that manufacturers will face for at least the short term? New car sales have been slowing over the past few months, but October’s sudden drop in overall sales is nothing that should be taken lightly.

It should be noted that October of 2016 had two fewer selling days than October of 2015, but with some of the percentages that were posted, not even two extra selling days could change the outcome of a bleak new car market.

Fiat-Chrysler Massacre

It has not been a good year for the Fiat-Chrysler group, and October magnifies the downward trend in sales for most of the brands. Chrysler posted a decline of 44.7%, Fiat down 24.3%, Dodge -16.4%, and Jeep -6.6%. Three out of the four brands listed are down on the year for new car sales, while Jeep is still maintaining an increase of 9.7%. With Dodge ending the Dart and Chrysler no longer producing the 200, sales figures being down was to be expected, but for the auto group as a whole, there’s not much excitement for any of the brands, besides Dodge which produces the Challenger and Charger.

BMW, Volkswagen, Volvo and Land Rover Experience Sales Decline

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Volvo and Land Rover, two manufacturers who are both up on the year in new car sales in the United States, saw sharp declines in the month of October. Volvo, a brand that has been revived thanks to the all new S90 and completely redesigned XC90, experienced a 14.6% drop in sales. Land Rover saw a decline of 23.2% in October. Despite the sharp drop in sales in the United States, Volvo and Land Rover are still having a fantastic year overall, and shouldn’t be too concerned about the final quarter of the year, unless lower sales figures overall in the automotive market becomes a trend.

BMW may be the biggest surprise for lower volumes in sales, not only for October, but for the year of 2016. Down 18.4% last month, and down 9% for the year, BMW is the only brand out of the big three luxury manufacturers in Germany that has experienced declines. Mercedes Benz and Audi are still strong, and while sales were flat in October, the loss of two sales days could be a contributing factor. Volkswagen on the other hand has not recovered from Diesel Gate, and with a loss of 13.5% on the year and another double-digit loss last month, it just continues to get worse for the German auto brand.

Bentley, Jaguar, Maserati, and Porsche Have Strong October

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Not everyone is reeling from the October blues, there are car brands that had a fantastic month with Bentley, Jaguar, Maserati, and Porsche having double and even triple digit increases in sales. The British are leading the way and Jaguar’s 226% sales increase can be attributed to the F-Pace and XE, which have both taken their respective markets by storm. The F-Pace is Jaguar’s first attempt at making an SUV, and so far it has been a great success, while the XE, which is the British’s answer to the BMW 3 Series, is seeing strong sales since it’s arrival to the market earlier this year.

Bentley’s impressive gain of 158% in sales last month is all thanks to the Benteyga, which is Bentley’s first ever SUV. In October, the Benteyga contributed more than 33% of sales for the Bentley brand. While the British luxury car maker is down on the year by 6.8%, the entrance into the luxury SUV market has yielded strong sales figures, with the Benteyga making up about 50% of Bentley’s sales in the US since it’s debut on the market in August.

Maserati, much like Bentley and Jaguar, has seen strong sales numbers since entering the SUV market as well. The Levante, which also brought in about 33% of sales in October for Maserati, has received raved reviewed by journalists and consumers. Maserati has hit a home run with their luxury SUV, and that is starting to trickle down to other cars in the lineup. The Ghibli had a strong month alongside the Levante, leading to Maserati’s 11.8% increase in sales for the month of October.

Porsche had the best month out of all German brands in October, with luxury SUV’s again being the main contributor for strong sale. Up 10.7% in October and 3.2% for the year of 2016, Porsche has seen tremendous sales figures and it’s the Cayenne and Macan that is carrying the once sports car dominated lineup.

Strong sales across the board for luxury brands could be a good sign, despite the slowing of overall sales in the market. While Fiat-Chrysler, BMW, Volvo, and many others struggled in October, there’s no reason to panic just yet. If the fourth quarter of 2016 continues a downward trend and that transitions into the new year, then there would be a legitimate reason for concern. As for right now, we can only hope that October isn’t the start of a trend, and that the holiday season and the incentives that come with it could motivate consumers to buy in November and December.

Will The Ford Focus RS Bring Performance Packages To Cheaper Vehicles?

The Ford Focus RS is no doubt a game changer in the auto industry. For the first time, Ford is bringing their performance packaged Focus RS to the United States, which has also raised the question of whether we’ll see an RS version of the Fiesta. By doing this however, Ford would be awakening some sleeping giants in the auto world who are waiting for their moment to break free and start offering performance vehicles to the average consumer. This could also have an impact on Subaru’s turf as the WRX STI hasn’t had many challengers, if any since the Mitsubishi Lancer’s steep decent into irrelevancy. This may also eventually reach Volkswagen’s stake in the hatchback market if other car companies start following suit.

Toyota is already mulling over the idea of unleashing the TRD performance packages for the Camry, and one could then speculate on whether the Toyota Corolla will get the same treatment. For the past few years Ford has been going at it with Toyota and Honda to become the top dog in annual sales, and with the RS line, it’s very possible that consumers may start looking to performance. Toyota already realizes this, and are at least looking into getting in on the action.

Prior to the Focus RS’s unveiling, the Subaru WRX STI and the Volkswagen GTI were sitting comfortably in their respective markets. The GTI has always been the favorite for hatchbacks and are extremely popular, even with the Focus ST being priced in the same neighborhood. Now with an AWD Focus, Ford has some leverage to entice consumers to look at other options besides the GTI. The Subaru WRX STI on the other hand will be harder to dethrone, as car manufactures who’ve tried to compete with Subaru ultimately failed, and it will take some time for Ford to convince consumers in that market to make the switch.

In the past year or so, we’ve seen almost every car manufacturer get in on a new, emerging market. BMW and Mercedes Benz are now duking it out with the X6 and GLE in a market that could be gaining some traction. Right now it seems that performance packaged hatchbacks and compact sedans could become the latest trend in the automotive world. What we’re witnessing is an intensity in competition between automakers that really hasn’t been seen since the dawn of the muscle car. In the past, car companies would be unique and try selling based on a feature or design that no one else could offer. Now it appears that to stay alive, auto brands are continuously attempting to improve an existing design.

Up until recently, no one tried to advance on the WRX STI and the GTI’s turf, but with Ford making the bold move to bring a version of the Focus that was being sold outside the United States to America, we may see other car brands do the same. Honda will not be bringing over the Civic Type R until at least 2017, but you can believe that if Toyota starts selling TRD packaged Camry’s and Corolla’s, Honda will start feeling the pressure to sell a quality performance car.

Consumers are going to have variety in almost every market. Now it comes down to personal preference. The diehard GTI and WRX STI fans will be reluctant to switch to a different brand, but for Millennials who are starting to buy cars, they may look to new brands, and etch their own buying habits in stone.

Lower Gas Prices Are Still Not Enough For Consumers To Buy Big SUV’s

Cadillac Escalade SUV
Bruno Rs / Foter / CC BY-NC-ND

The national average for gas is below $3.00 a gallon which has affected different markets in the automotive segment of the economy. Electric and hybrid cars have seen lower sales figures since the recent nose-dive oil has taken the past few months. However, with these lower gas prices, sales figures for large SUV’s still hasn’t improved, and just as the sports car market, the bigger SUV market may never recover.

Ian Robertson, a Sales Chief for BMW said recently that the age of the sports car is coming to a close and that we’ll probably never see that market recover. While he only mentioned two-door coupes, it appears that the recession has also put another segment of the auto industry on life support. Larger SUV’s such as the Cadillac Escalade and the Chevrolet Tahoe are only maintaining a 7% share of the market, which that number has flatlined since 2009. Not even lower gas prices are helping this segment. Since the recession and the days of $3.00 a gallon, car companies have had to adapt to a new economy, one in which the consumer is very careful about spending and expenses.

The crossover SUV’s have taken a bite out of the traditional SUV’s market share which could explain why we’re not seeing improving sales figures. Crossovers and small SUV’s such as the Volkswagen Tiguan, BMW X1 and X3, Mazda CX-5, Audi Q3 and Q5, Ford Escape, Volvo XC60, and Honda CR-V, are all eating away at the sales figures of their bigger siblings. Car companies aren’t just stopping there, they’re continuing to grow the crossover segment as Mazda already has a CX-3 in the works, and seeing the competitiveness of the Germans, who knows what they’ll think of next.

Consumers have also adapted to the new economy that we’ve lived in for the past seven years. They’re learning that they don’t need a huge SUV to get around and that even with a smaller vehicle, they can still carry their groceries, drive their kids to school, and while doing that, saving money at the pump. Smaller SUV’s and crossovers have become the new practical. While Americans won’t admit it, they’ve become more like Europeans since the recession, as Europe has been living with high gas prices way before the economy had it’s downturn.

We live in a new world. The economy may or may not have recovered, or some sectors have while others are still lagging behind. But one thing is for sure, the auto market will not change the direction it’s heading in unless there is a major swing in the markets and on Main Street. In 5-10 years, we may look back on the recession as the killer of the big SUV and sports car markets as we once knew them.

Are Sports Cars Becoming A Thing Of The Past?

Er hat bestimmt eine tolle Klimaanlage.
ingrid eulenfan / Foter / CC BY-NC-SA

As we’re heading into the fifteenth year of the new millennium, the automotive world has changed quite a bit from twenty years ago. Sedans have more powerful engines, which means more horsepower, smaller SUV’s and crossovers can be found in almost every car manufacturer lineup, and technology in both the engine and the interiors of vehicles have now taken precedence over power. When it comes to the traditional sports car, is their time coming to and end? BMW’s Sales Chief Ian Robertson thinks so.

“The sports car market is roughly half of what it used to be,” Robertson told Bloomberg. “Post-2008, it just collapsed—I’m not so sure it’ll ever fully recover.”

To keep his comment in context, he’s not referring to the exotic luxury sports car market that includes Ferrari and other premium brands. Two-door coupes in general have been waning, and to take their place, sedans which used to be seen as for the average adult, now have sports packages that certainly would make a consumer question the long term value of buying a coupe.

Two-door coupes really aren’t that practical for families, or young adults who want to drive their friends around town. There’s less carrying capacity for both people and groceries which could definitely be a hassle if you’re moving into a dorm or shop frequently. Looking at how the automotive world has evolved over the past decade there are certainly better options out there for the average consumer.

Hatchbacks and sedans today offer everything the car enthusiast and everyday driver wants from a car. Cargo space, seating capacity, and more importantly stronger engines with more horsepower. While some would say sports car have a better center of gravity and can take turns better, how important is that to people who just want to get from Point A to Point B?

Sports cars have been on the downward trend. However, while the sports car market is slowing down for automakers, Ford, GM, and Dodge have re-introduced the muscle car to the American driver. Ford’s new Mustang that has the body style of the 1960’s, Dodge’s Charger and Challenger Hellcats that pack a whopping 707 horses, and Chevy’s Camaro are all grabbing the attention of sports car drivers. But other than the Americans, many car companies have turned their focus to serving the consumer who wants a four-door.

Even Porsche has slightly strayed from their identity as they’ve come out with to SUV’s and the four-door Panamera. Volkswagen is discontinuing their Eos, Volvo stopped producing the C30 and C70, Mazda has no plans to remake an RX-8, Chrysler is putting more focus on the 200 sedan rather than the coupe which they do offer, BMW is adding a four door to their 4series, and Audi has released sketches of a four-door TT. The trend in the automotive market is moving towards sedans and SUV’s, and whether that has anything to do with the fact that they’re more practical, or manual transmissions (which are usually found on sports cars) are becoming a thing of the past, we can’t lie to ourselves and think that Ian Robertson is wrong.

As I said before, he wasn’t saying anything about the exotic sports car market which is seeing strong sales numbers; he’s referring to the market that BMW is in. Consumers want smaller four-door cars, and that’s what we’re seeing car companies building. While Ian Robertson might be right about the sports car market, the four-door sedans of today have that sports car identity built in them that makes the Dodge Charger, Chrysler 200S, Audi S4, and the Lexus IS-F very popular cars.

More Car Buyers Are Leasing and That’s Good For You

The percentage of Americans leasing cars has boomed to 20% over the past few years. Rough economic times, better leasing offers, and car manufacturers creating better vehicles has helped spur the growing number of consumers leasing instead of buying new. Some car dealers may prefer that most consumers would much rather buy, and that leaves the opportunity for those who buy certified pre-owned vehicles with an endless array of quality cars at reasonable prices. As with most trends in the economy, there is always an opportunity for someone to walk away with a great deal, and right now it’s time to take advantage of the leasing craze that is growing across the country.

Tesla just unveiled a leasing program for their Model S, which will now make monthly payments cheaper for the consumer.

From the Wall Street Journal

With sales of its electric sedan declining in its home market, Tesla Motors Inc. this week launched U.S. incentives that cut its monthly lease price and aim to convince potential customers that buying the car is a safe financial bet.

Tesla Chief Executive Elon Musk said the Silicon Valley car maker is joining with U.S. Bank to cut monthly lease payments by as much as 25%. In a blog post on Saturday, he credited the bank’s lower cost of capital for the lease-rate cut. He also unveiled a “happiness guarantee,” promising to take back cars within the first 90 days of ownership “if you don’t like your car for any reason.” The return policy doesn’t allow a buyer to swap for another vehicle.

While some would say this is because of declining sales, this is happening across the board for most auto manufacturers. Leasing is becoming the new normal, especially with the uncertainty of the long term health of the economy. You might ask, “So where are the opportunities?”. Here are three cars that are under $25,000 and are from luxury brands that can be found on dealership lots. Best of all, they’re certified pre-owned and the mileage is below 31,000.

1) Volkswagen GTI/Wolfsburg Edition

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It’s not too uncommon to find Volkswagen Golfs, but to find multiple GTIs spanning from the years of 2011-2013 is very surprising. Even better for the consumer, there are a few Wolfsburg edition GTIs on the market that are under $25,000, one of which has only 5,000 miles on it. These are gems, and with the turbocharged engine that supplies 200 hp, you get performance and cargo room which is always a plus.

2) 2011 Lexus IS 250

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To see these under $25,000 with close to 20,000 miles is certainly an eye opener. A local Lexus dealer outside of Boston has a few of these, and even though they are the base models, they’re still fully equipped and in great condition. Navigation system and backup assist make you feel like you’re getting away with more than what you paid for, but these are the types of deals that are out there. Seeing a Lexus IS on the market in great condition and not overly driven, it makes you question why there are certified pre-owned Toyota Camry’s and Chevrolet Malibu’s in the same price range.

3) 2011 BMW 3 Series

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Just as the Lexus IS, the model year may be the only reason why these luxury cars have depreciated in value. There are BMW 328i X-drives that only have 25,000 – 30,000 miles on them and priced under or at $25,000. Once again, this is a luxury sedan that will make your mouth water because to see a BMW in unbelievable condition at that price was unheard of a few years ago.

When seeing offers and deals like this, it really makes you consider going the certified pre-owned route. The automotive market is evolving, and unlike 10-15 years ago, going used isn’t a bad thing, especially when you have three solid vehicles at reasonable prices. This is only the beginning though. Seeing that there is no reason to believe the leasing trend is going to slow down, there will be more opportunities down the road. Who knows what will be on the market a year or two from now, and maybe there will be better offers than there are right now.

Using CarFax Alone Isn’t Going to Guarantee Finding a Quality Car

Volkswagen Golf 6 2008 26
Janitors / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

CarFax is a great tool for the 21st Century car buyer who is looking for a Certified Pre-owned or used vehicle that is still in good condition. However, there is still no guarantee that you’ll find the perfect car that has years and thousands of miles left in it’s lifetime. There are multiple factors that come into play, such as the previous owner’s driving habits, the car’s seasonal wear and tear, and more importantly where the vehicle was manufactured. The country(s) in which the car was manufactured can be the difference between buying a quality vehicle and a lemon.

To dig deeper into this, think about your favorite automotive brand, or even the current car you own and drive on a daily basis. Where was the car manufactured? Shockingly, some of your favorite everyday purpose cars may not be built where you think they are, even if it has a reputation of being an American, German, or Japanese car.

Volvo has just announced that their new S60L which is manufactured in China will be sold in the United States. With this story being only a few weeks old, it’s already stirred up controversy as the company’s reputation of being a safe, reliable brand may be thrown to the gutter if Volvo plans to go through with selling a Chinese Volvo in the states, which they have every intention of doing.

Volvo’s are known to last a very long time, in fact people joke saying that they’ll outlive the owner if kept in good condition. Who knows how long the 2015 S60L will last, and there will be many questions raised by consumers when you find it in the pre-owned list on your local Volvo dealer’s website.

Another popular car brand is Volkswagen, and it might surprise some that a majority of their vehicles that are sold in the US aren’t made in Germany. Yes, the same Volkswagen who owns Audi, Porsche, and Bugatti doesn’t manufacturer all their cars in Wolfsburg. The VW Beetle, Jetta, Golf, and soon the Golf GTI are or will be made in Mexico. It wasn’t until 2005, when VW changed the appearance of the Jetta, that they started assembly and production in Mexico. Whether this changes the quality of the vehicle itself, that is still to be determined, but the perception customers have of the car is certainly different.

To make sure you’re getting a top notch used car, do extensive research on where the vehicle was manufactured. Not only is the assembly of the car different, but you’ll find that the electrical components and interiors will be substantially different. Road noise or lack thereof will be noticeable, and even the suspension and how it takes bumps on the road could determine where it really came from.

The badge on the front of the car may say it’s from Germany, Sweden, or America, but there is the possibility that it’s originally from some factory in Mexico, or China if you intend on buying the new Volvo S60L. We have no power to improve the driving habits of drivers so we get a used car in great condition, but we can research and make sure we’re getting a car that was built in a factory that has a reputation of producing quality and long-lasting vehicles.