May 16, 2016
Mercedes Signals Flexibility on Dealer Training
New Mercedes-Benz USA CEO Dietmar Exler wants to simplify programs for dealers but won't reduce the brand's standards for dealership facilities. That's part of the message Exler will give to retailers this week at Mercedes-Benz's annual dealer meeting in Vancouver, British Columbia. And it means change is likely for some of the training requirements the brand has made for dealerships in recent years. Dealers have been pushing Mercedes to streamline those requirements. "Maybe we can find ways, by looking together, how can we make it smoother throughout the process," Exler told Automotive News. "That's something we definitely want to focus on with the dealers specifically as it looks like it's going to be a little trickier going forward in the economy. The 1 million automatic growth year over year on industry sales won't be there." But Mercedes-Benz will continue to focus on improving the customer experience and won't reduce standards, including the next-generation Autohaus2 image program that dealerships are being asked to implement, Exler said. However, brand executives "will be as reasonable as possible" about the new requirements and the timeline for completing them. For more on Exler’s plans, and how Autohaus2 updates are proceeding, click here.
Supplier Relations: GM Better, but Toyota, Honda Lead
General Motors made significant improvement in building trust, but auto suppliers again cited Toyota and Honda as the most supplier-friendly automakers, according to an annual survey on relations between manufacturers and suppliers. The Detroit Free Press reports that the study, scheduled to be released today by Planning Perspectives, was based on surveys from 647 sales personnel from 492 suppliers. It is regarded as a barometer for competitive collaboration for new technology and a mutual recognition of automakers' and suppliers' need to survive financially. The six largest automakers in the U.S. — General Motors, Ford, Toyota, Fiat Chrysler, Honda, and Nissan — are ranked on a variety of measurements that are folded into a Working Relations Index that runs between 100 and 500. Click here for their scores for this year's study with last year's scores in parentheses. Why does it matter? Because manufacturers need to establish trust and communication with auto suppliers so they can all work toward a better product. The automaker that is willing to pay a few more pennies per fastener or sensor may have a higher initial cost, but may later get access first to a new technology from that same supplier. For the full story, click here.
Toyota Braces for Plunging Profits
Seesawing foreign exchange rates are threatening to squeeze profits for Japanese automakers just as they intensify their efforts -- and their spending -- in the United States. The changing reality of yen and dollars and other world currencies is crashing a three-year profit party at Toyota Motor Corp. After leading Toyota through three straight years of record profits, Toyota President Akio Toyoda warned last week that times are changing and that the company now must brace for a big profit plunge. Automotive News reports that across the Japanese industry last week, automakers revealed a dimmer outlook for 2016 after chalking big profits, in some cases records, in the just-ended fiscal year. That will complicate life not only for Toyota, but for Nissan, Honda, Subaru, and Mazda this year: All of them are engaged in major capital spending programs in North America, expanding production footprints and entering new vehicle segments, as well as facing down a more expensive U.S. new-car market with slowing growth and rising incentive spending. The Japanese yen appreciated 6 percent against the dollar over the previous fiscal year, and it is poised to continue that spike into the current fiscal year ending March 31, 2017. For more on what impact this will have in the coming years, click here.
Back From the Dead: American Buyers Lusting for Midsize Pickups
Only a few years ago, automakers like General Motors, Ford, Fiat Chrysler, and Honda were racing for the exit, pulling the plug on their midsize trucks as sales steadily collapsed, U.S. buyers opting instead for full-size pickups. But in just a few weeks, Honda will roll an all-new version of its Ridgeline model into U.S. showrooms. GM launched two of its own new midsize models for 2016, and Ford is expected to return to the segment, as well, with an all-new Ranger pickup. NBC reports that a quarter century ago, midsize models actually dominated the pickup segment. But the situation turned upside down in the 1990s, in part due to rising prices. As a result, demand for the smaller models fell from about 1.4 million a year in 1987 to barely 200,000 earlier this decade. Going into the 2015 model-year, only two midsize trucks remained: the Toyota Tacoma, long the segment volume leader, and the Nissan Frontier. But after hitting bottom, the midsize truck market has made another sharp U-turn. U.S. sales surged 48 percent in 2015, to 356,886, and demand is up another 17 percent so far this year, even as overall American car sales have climbed a more modest 3.4 percent. For more on the demand for midsize trucks, and who else is considering building one, click here.
The Premium Plunge: Sales of the Most Popular Luxury Cars in America Are Nosediving
America’s record-breaking new vehicle sales volume in calendar year 2015 was powered in part by better-than-average growth from premium automakers. Yet after BMW, Mercedes-Benz, Acura, and Cadillac all failed to match the rate of industry-wide expansion in 2015, the first four months of 2016 have revealed that even more top-level premium brands are fading as the market for new vehicles continues to expand. Auto blog The Truth About Cars reports that Mercedes-Benz, Lexus, BMW (the three top-ranked premium auto brands), Acura, Cadillac, and Infiniti posted declining sales in the first-third of 2016. Click here for a chart ranking the 15 most rapidly declining premium brand autos in the United States through the first four months of 2016. Largely at fault are the passenger car divisions at each brand, but a number of high-volume SUVs/crossovers that are failing to match last year’s first-third sales pace, as well. Supply issues, recalls, and significant overhauls all work together, sometimes in concert with changing consumer tastes, to bring certain models down. In 2016, so great are their declines that premium brands have lost market share thanks to a modest sector-wide decline in sales. For more on what this means for the auto industry, click here.
Around the Web
Five Things You Need To Know About The Chinese Car Market [Forbes]
Vroom Is Elbowing Out the Used-Car Salesman [Bloomberg]
Why Front Bench Seats Went Away [Jalopnik]
BMW Takes In-Car Gesturing to a New Level in 7 Series [Cars.com]