August 26, 2015
Lexus Targets German Rivals With 4-Cyl. GS
After watching the evolving market for midsize luxury cars, Toyota’s Lexus luxury division is following its German rivals by offering a fuel-efficient 4-cyl. engine option in the refreshed ’16 GS sport sedan, on sale this fall. Click here to see it. Both Audi and BMW have reached 4-cyl. penetration rates as high as 40 percent in their A6 and 5-Series sedans, respectively, Brian Bolain, corporate manager-Lexus product marketing, tells WardsAuto at the recent unveiling here of the updated GS and LX large SUV. “We’re planning to start out in the mid-20 percent range with the 2.0L turbo, and we will see what the market calls for,” Bolain says. “We will see if we need to go up as high as (the Germans) have gone.” Until now, the GS only came with a V-6 or as a hybrid. The new 2.0L turbocharged 4-cyl. GS stacks up nicely, but the German brands offer something Lexus does not with the small engine: all-wheel drive, which could impede sales in northern climates. But the 4-cyl. GS is better positioned to compete with the Germans, says Brian Smith, Lexus vice president-marketing. “A strong small-displacement turbocharged mid-luxury sedan has represented a market opportunity that Lexus has not been able to tap until now,” he says. For more on the GS, click here.
Subprime Impact on Financing at Franchised Stores
Analysis compiled by Edmunds.com of used-vehicle financing activity during the second quarter at franchised dealerships turned up more evidence of the fuel igniting record-setting growth. According to the site’s latest Used Vehicle Market Report, the average amount financed moved 3 percent higher year-over-year to $20,732. “Loan terms are growing to offset higher prices but for the first time since pre-recession we are seeing average APRs creep higher,” Edmunds.com said about the average APR, which came in at 7.7 percent. “While nearly 60 percent of used buyers financing their vehicle obtained an APR of 5 percent of lower, many buyers have APRs in excess of 10 percent,” the site continued in its reported, which also mentioned the average used-vehicle retail prices hit a record high in Q2. According to Auto Remarketing, the average term for a used-vehicle installment contract originated at the franchised store during the second quarter climbed to 66.2 months, extending an upward march that began in 2009. All of that used-vehicle activity at franchised dealerships — subprime or not — helped to push the industry to a new record in Q2. For more auto finance news, click here.
Market Slump Casts Shadow over How U.S. Sales Will Finish August
Slumping stock markets could make it tough for dealerships to hit their August targets for U.S. new-vehicle sales, rattling consumers who might be on the fence about making a big purchase. Automotive News reports the market turbulence is badly timed for dealerships, which can close as many as 40 percent of their new-vehicle deals in the last week of a month. August results already were expected to be hindered by the fact that sales made over the long Labor Day weekend will count toward September’s tally this year. After the Dow Jones Industrial Average dropped more than 1,000 points last week, automakers and dealers said they saw little impact on traffic over the weekend. But further declines on Monday sparked more jitters that could scare off car shoppers. “August is always a big month for us. I guess we’ll be keeping our fingers crossed on this,” said Lisa Copeland, general manager of Fiat-Alfa Romeo of Austin in Texas. Luxury brands stand to feel the biggest effect because their customers tend to buy based on wants more than needs, and therefore can more easily postpone a purchase if the timing doesn’t feel right. For more on how the market could impact August sales, click here.
Foreign Automakers Brace for China Slowdown
Foreign automakers are bracing themselves for declining sales as China's economy slumps. CNN reports that BMW, Volkswagen, and Peugeot have all reported slowing sales in recent earnings reports, and Ford singled out the Chinese economy as a major risk. Sales of passenger cars fell nearly 7 percent in July to their lowest level in 17 months, while production tumbled nearly 12 percent, according to the China Association of Automobile Manufacturers. Weak sales reflected the slowdown in economic growth, according to Barclays auto analysts, and there's little sign of improvement in the short term. "We believe the sluggish auto sales will continue until at least the end of 2015 given a lack of evidence supporting economic stabilization or recovery," they wrote in a research note. Carmakers clamored to increase their footprint in China, building giant factories and striking joint ventures with local companies. But the industry has hit a rough patch this year as Chinese economic growth slumped to its slowest pace since the financial crisis. Auto companies will increasingly have to look for growth in smaller cities, where vehicle restrictions haven't yet been introduced, said Deloitte's Xu Sitao. Carmakers may also see a boost once auto financing catches on – in China, most people still buy cars with cash on hand, he said. For the full story, click here.
2017 Hyundai Elantra gets first look ahead of Los Angeles Auto Show
Hyundai is tipped to introduce a new generation of its Elantra compact sedan this November at the 2015 Los Angeles Auto Show, and a revealing teaser shot has already been released. Click here to see it. Like the current Elantra, the Christian Science Monitor reports this new one will eventually spawn an Elantra GT hatchback variant. While the new Elantra is expected to reach showrooms next year, as a 2017 model, it’s thought the hatchback variant’s arrival will be deferred until 2017 because the current model was just updated. This would likely see the new Elantra GT arrive as a 2018 model. From the spy shots and teaser, we can see that the new Elantra range is adopting a look that resembles the lines on the upmarket Genesis sedan. Noticeably, a large hexagonal grille is paired with slim and sporty headlights, while clean and refined surfaces add a touch of elegance. Click here to see the first official look at the 2017 Elantra’s interior. “The all-new Elantra captures the car’s unique design characteristics that really place this model in a class of its own,” Hyundai design chief Peter Schreyer said of the Korean firm’s new compact. For more on the Elantra, click here.
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