The August 31 Edition of "The Wall Street Journal" (page B1) includes an article describing a proposed new labeling for passenger vehicles sold in the United States. On the proposed new window stickers, every new vehicle would include a prominently-displayed letter grade reflecting its fuel economy, emissions and estimated annual fuel costs.
There is a general consensus across the industry and among consumers that the current window sticker is not as reader-friendly as it could be; a new sticker that is simpler and easier to understand would therefore seem to face little opposition. However, an argument can be made that the proposed letter-grade change is going too far. Even though the letter grade would apply only to fuel economy and emissions, in my opinion there is no question that the consumer would perceive the letter grade as an overall assessment of the vehicle. The contractor who needs a fullsize pickup, and cannot adequately do his job with anything else, will be forced to buy a vehicle graded "C" or below. Similarly, buyers of large SUVs or midsize vehicles will be purchasing vehicles with a B or C grade. In contrast, a Volt, Leaf or Prius customer would be buying a "superior" vehicle because his car got an "A." To me it's clear this is saying to all that want to listen (and the Volt buyer hopes everyone is listening) that the Volt is "better" than the F-Series. Should the government be in this business? For that matter, should anyone be saying, even though indirectly, that one vehicle is superior to another? Again, even though an EPA spokesman may respond that the grade applies only to fuel economy and emissions, over time it is virtually inevitable that the grade will come to reflect a broader assessment of the car or light truck.
It's fair to say that the proposed letter grades are intended at least partially to move the consumer towards fuel-efficient hybrid, diesel or all-electric vehicles. However, these vehicles - in total - account for just 5% (3% hybrid, 2% diesel) of all retail new vehicle sales June 2010 CYTD. Therefore consumers are being urged to buy vehicles they currently are not buying. A simpler way to move the buying public towards more fuel-efficient vehicles, requiring no legislation restricting production or sales of any vehicle category whatsoever, would be to let gas prices rise.
However, if higher gas prices are not politically realistic, there is another solution, mentioned in the same Wall Street Journal article. It makes sense to compare vehicles within the same category, since by definition these vehicles are similar to one another on several factors including size. This type of assessment would accomplish the goals of moving the consumer towards higher-rated, more fuel-efficient vehicles while still allowing him to purchase a vehicle in his desired category with the specifications and features he wants.
Lastly, politically the proposed letter-grade change to new vehicle stickers plays right into the hands of the Tea Party and the conservative wing of the Republican Party. These two groups could not have asked for a better example of government intrusion in the individual's life and decision-making. Given this political situation, it is hard to see how the proposed changes (with the letter grade) will see the light of day.
Posted by Tom Libby, PolkInsight Advisor, Polk (09.01.2010)
I have to admit it, I'm kind of a news junkie especially during my morning commute. So I listened with interest the other day about Volkswagen creating a "Hybrid" Radio that enables users to create a personalized playlist including just about everything from news to music. From what I can see, the new Volkswagen system will automatically switch back and forth among radio stations according to a pre-defined playlist and times. Interest you? For a guy like me that is constantly changing channels when I'm in my car, it's perfect.
On my daily commute I am doing everything to beat the traffic as I drive into the Detroit suburbs. Being able to have a hybrid radio that switches between stations based on my preferences would be exactly what I need. For example, I could catch the WWJ Radio traffic report at 6:48 AM, listen to the top news stories on WJR at 7:00 AM and automatically flip to W4 Country to catch Breakfast with Bubba for the remainder of the commute. Simple. Easy. No fuss.
I've read
Volkswagen is testing the system in 2011. Bring it on OEMs, I'm waiting. What do you think?
Posted by Greg Hathaway, Manager, Communications, Polk (08.06.2010)
Picture yourself driving a vehicle. The details of your vehicle will differ from person to person depending on the types of vehicles you own (or desire). But certain things are common. If you're driving in the U.S., you're sitting in the front left corner of the passenger cabin (aka, the driver's seat). You have one or both hands on a steering wheel. There is a gear shift, either on the steering wheel or the floor. The brake pedal is on the left and the accelerator is on the right.
Does it have to be that way? We're still using the same basic design for vehicles that Henry Ford used in his first cars more than a hundred years ago. It will be difficult to make quantum leaps in fuel efficiency, including hybrids and electric vehicles, without a fundamental change in our mental picture of a vehicle.
Consider the sub-compact segment, which includes cars like the Ford Fiesta, Toyota Yaris and Honda Fit. There's reasonable concern that these vehicles won't gain wide acceptance in the U.S. market, with comfort and safety being a major concern. Probably the most common use for these cars will be as a commuter car -- a car occupied only by a driver who uses it to commute to and from work with no passengers.
Why not design a minicar for this express purpose? Scrap the traditional car design and start over. Put a single seat in the middle of a small car, leaving open space around it for comfort and safety. Ditch the steering wheel – it takes up too much space and is a danger in crashes. Combine the functions of the steering wheel, gear shift and brake and accelerator pedals into a joystick instead. Borrow ideas from the space program to design a comfortable seat with the latest in safety restraints. Make it comfortable and safe, with really good fuel economy yet with sufficient power to drive on the freeway. And make it economical enough to justify buying and insuring a car strictly for commuting while leaving the SUV in the driveway for other uses. And fun to drive, of course - gotta love a joystick!
I'm no engineer, so I don’t even know if what I suggest is feasible. I describe it only as an example of what we might be able to come up with if we stop using the same basic design and completely reinvent the car.
Now picture yourself driving a vehicle. What does it look like?
Posted by Barbara Keys, Analytic Consultant, Polk (08.02.2010)
Lincoln caught my attention. Again.
In an earlier
post, I shared some thoughts about how this American brand was making a visible comeback.
Recent news tells me they are on a tear!
Most of us know that it's a premium to get a hybrid version of many existing nameplates, yet the new MKZ hybrid will be the same price as its gas-only counterpart. Read for yourself, but this is not a low-risk move. Why?
- It could imply to shoppers that they have an inferior hybrid technology inside it.
- It could create price depressions among other hybrids if competitors follow suit to Lincoln's move.
- It could cannibalize dollars from those intending to buy other Ford products with higher margins on each sale.
The upside?
- This gets people to try a hybrid and feel they're not paying more than what it's worth to them. Simply put: it gives us one more easy choice.
- It tells the competition they're serious about driving business (and hitting sales targets) for this nameplate, regardless of the powertrain used in the MKZ.
- It implies Lincoln is taking risks to grow Ford Motor Company's overall business. Investors like that!
Either way you look at it, I think it's a classy move.
No premium for a premium brand. Very nice.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.26.2010)
A wise neighbor once told me, "Everyone wants to get a house in the best neighborhood, but then they don't want anyone else to get in." The same may apply to the luxury vehicle market. Everyone would like to drive a Mercedes-Benz, Lexus, BMW, or similar vehicle, but then once we have it, we would prefer that no else is able to get one. This speaks to exclusivity, a core attribute of luxury products. If a car, jewel, piece of clothing, or whatever, is commonplace, it has little inherent attraction. A Rolls-Royce is much more valuable, much more craved, than a Mercedes-Benz, in part because you rarely see a Rolls on the road but Mercedes-Benz vehicles are much more prevalent.
Managers of luxury makes are always trying to balance this need for exclusivity with the need for volume. They know that exclusivity – and the accompanying image - are hugely important, but the management teams at several luxury makes – including Lexus, BMW and Mercedes-Benz – also know that being the most popular luxury marque is a valuable talking point too.
Luxury management teams are continually making decisions about how much volume to strive for, and what impact these efforts will have on their makes' images and exclusivity. Lexus has achieved leading retail volumes in the U.S. through frequent re-designs, leadership positions in new trends such as crossovers and hybrids, and a reputation for unequalled quality and reliability. Lexus has not resorted – so far – to moving downstream in price below the RX and ES/IS products. BMW has used different methods to become one of the three luxury volume leaders. It has split the U.S. luxury market into mini-segments and offered products in each of these, including the X6 and the 5-Series Gran Turismo. BMW arguably has moved downstream in price as well, marketing the 1-Series and soon bringing in a vehicle slotted under the X3.
Mercedes-Benz has stayed close to its rivals on retail volume by offering a wide array of series and powertrains within most models. Today the C-Class is the lowest-priced car available at a Mercedes-Benz store, and the brand is viewing the lower end cautiously after struggling with the C230 hatchback several years. Other luxury brands have also put their toes in the waters of low-priced luxury, including Volvo with the Mitsubishi-designed S40, Jaguar with the X-Type, Cadillac notoriously with the Cimmaron, BMW with the 318ti, and Acura with the RSX.
We have witnessed their victories and struggles as the luxury managers deal with the challenge of balancing exclusivity and image with volume. This delicate maneuvering is likely to continue.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.19.2010)
There are over 25 different hybrid (gas/electric) cars and trucks sold in the U.S right now (and more if you count some of the discontinued models you can still buy off of a dealer's lot). With so much talk about the forthcoming "onslaught" of electric vehicles, many have wondered what happened to the good 'ol hybrid vehicle segment. It's hanging on and actually doing better than last year.
Fact #1: For the first 5 months of this year, we saw over 106,000 new hybrid units enter the U.S. roadways. Our friends at HybridCars.com show just over 109,000 units for the same time period. Short story: the segment is up over 5 percent on a year-over-year basis based on new registrations.
Fact #2: California is still THE hybrid state. Better than 1 in 5 hybrids are registered in this state. A few years ago, California represented over 25% of the hybrid segment. Now they represent just over 20%. From a dealer network view or someone pulling together a regional automotive forecast on hybrids, you'd be a fool to ignore California. Buyers there are incented to "think green." Although one thing that really shocked me about their current legislation is that hybrids are disqualified from using high occupancy vehicle (HOV) lanes...yikes!
Fact #3: Prius is still king. Over half of all hybrids sold new are the Prius. Last year they accounted for 44% in the first five months; for the same time this year, they account for one of every two sold new. Good luck to the rest who merely want market share in this segment.
Prediction: Looking at the results for May and June of this year, our light vehicle forecast for the hybrid segment is between 254,000 to 260,000 new sales in the U.S. This would put us back at the levels we saw in 2006 (we saw 254,000 that year) and definitely below last year's 2009 total of around 290,000 units.
Go green! And if you're in California, enjoy your single occupant HOV lane privileges while they last.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (07.16.2010)
The "pecking order" of the premium makes, based on retail registrations (to individual consumers), has remained remarkably consistent over the past 5+ years. From 2005 through this past April, the same five luxury market brands have occupied the top five spots every year. Further, the top three - Lexus, BMW and Mercedes-Benz - have ranked one, two and three each and every full year, and the fourth and fifth place finishers, Acura and Cadillac, have also occupied one or another of those spots every year. These five premium brands together have accounted for more than two thirds of all luxury market retail registrations every year as well.
From 2005 through 2009, Lexus, BMW and Mercedes-Benz ranked one, two and three, respectively, but through the first four months of this year, Mercedes-Benz is edging out its German rival to claim the number two spot. However, Mercedes-Benz was number two at this time a year ago as well, but finished the year in third place.
Among the top three marques, each has its own traditional area of strength, with BMW being strong in small cars, Mercedes-Benz doing well in the midsize premium sedan segment, and Lexus prevailing in the crossover market. But Lexus's superior crossover results (40% of the brand’s total April 2010 retail registrations, more than double the registrations of both X Series models combined and close to double the registrations of the ML and GLK combined) have given it a leadership position that seems unassailable. The Lexus RX benefits from having been on the market since 1998 and therefore having a large pool of potential re-purchasers, frequent styling updates, a hybrid version, and a reputation for stellar quality, reliability and customer service.
Posted by Tom Libby, PolkInsight Advisor, Polk (07.14.2010)
A little experiential automotive marketing for you today: watch a recent online movie titled "Lexus Dark Ride" promoting the Lexus CT200h. It's for their forthcoming hybrid hatchback due February 2011.
While I'm not a movie critic, as someone that falls within their target audience (according to Automotive News, they want 16-44 year olds, a.k.a. "Gen XY"), I'd say the motivation to stay engaged with the film needs more work. Get meaner villians. Hire Jerry Bruckheimer for richer action scenes. And show a little more of the car's interior. While it is a "dark ride", I would love to experience more of the instrument panel and seating. What I could glean was enticing. Show me more insides while escaping from the bad guys of Los Angeles.
Maybe Lexus is onto something here: Hybrids. Action. Green. Starting in 2011, "green" hopefully means the dollars you and I may spend on a nifty hatchback.
Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (06.07.2010)
At the American Truck Dealers Conference (ATD) there is revelry, exhibiting and palm pushing in an exhaustive 4-day event that covers all things a truck dealer could possibly be concerned with. This offshoot of the National Automobile Dealers Association (NADA) event boasts 'make' meetings, industry workshops and transportation industry banter.
This year, we found ourselves in sunny Orlando where the weather was hot, and so was the competition for
truck of the year. All entrants were worthy contenders, creating a heated competition. All of the entries are great trucks, so picking a winner is kind of like choosing between strawberry and chocolate ice cream. I say just go with Neopolitan! But my diplomatic ways have no pull with the ATD judging committee.
The medium duty truck competition was stiff. Kenworth entered the T-370 Diesel-Electric Hybrid which can boost emissions and fuel economy by up to 50%. Hino entered their market share machine, the 268, with Selective Catalytic Reduction (SCR) engine choices new for 2011. Freightliner entered its first ever gas-powered vehicle, the M2 112. Finally, Peterbilt rounded out the competition with its flagship 337 model truck. Given the amount of attention being paid to fuel economy and 2010 emissions standards, I was surprised the Kenworth T-370 Diesel Hybrid wasn't declared the winner.
Instead, the Hino 268 won. The Heavy Duty competition was also fierce. Kenworth entered the T660 Extended day cab, which does well with regional hub-and-spoke haulers while extending the day cab market for Kenworth. Peterbilt put its 384 model in this category - it is a leader in clean platform technology. The last truck in this segment was the Freightliner Coronado, a beast of a truck with optional front axle ratings of up to 22K lbs and rear axles of up to 70K lbs.
The Heavy Duty choice was the Peterbilt 384. The technology from the LNG and CNG power platforms - designed by Wesport - were recognized as fuel efficient and friendly by the Environmental Protection Agency (EPA). The distinction is great but the technology only makes the truck 2007 emissions compliant. Although it can use biofuel and natural gas, it is not 2010 ready. I can't help but think that it would be nice to award the Freightliner Coronado which is 2010 emissions compliant.
All of the trucks are of the highest quality, but I personally would have liked to see the judging committee reward the most energy efficient models, given the current state of the vehicle climate and need for fostering innovation to keep costs down for carriers.
Those are my thoughts. What are yours?
Posted by Therran Oliphant, Account Representative, Commercial Vehicle Market, Polk (04.29.2010)
The 13 most popular luxury makes collectively are showing a 6% rise in retail registrations through the first two months of this year when compared to the same period a year ago. This increase is more than seven percentage points ahead of the entire U.S. retail industry, which is down 2% overall. While the luxury sales trends are encouraging, they are still down 31% versus two years ago before the economic recession. Four of the 13 luxury makes have enjoyed double-digit improvements compared to a year ago, with the luxury leader, Audi, far outpacing its nearest competitors. Audi's registrations are up almost 39%, more than double the improvement for luxury runner-up, Volvo. In fact, Audi's year-over-year gain is the greatest in the entire light vehicle industry, luxury or non-luxury.
Audi's success results mostly from the effective launches of its all-new or redesigned models in growth segments. The all-new Q5, which competes in the flourishing compact luxury crossover category, had just been launched a year ago, so its registrations this year were almost all incremental. The A5 and S5 were recently launched as well, and the A4 and S4 were redesigned for the 2009 model year.
The second and third best-performing luxury makes, Volvo and Lexus, also benefited from customer acceptance of new products. Volvo's all-new XC60, another small luxury crossover, gave Volvo more than 1,000 incremental registrations in two months. Lexus's hybrid-only HS250h, the only such model in the luxury arena, provided Lexus with almost 1,800 additional registrations.
At the other end of the luxury market, Saab, Jaguar, and Lincoln lag furthest behind their competitors. Saab is suffering from a well-publicized change in ownership that included a "near-death" experience. Jaguar has been operating for several months with virtually no availability of its flagship XJ model, while the all-new 2011 version ramps up, leaving it with just the XF and the low-volume XK. Lincoln is hurt by the discontinuation of the Mark LT pickup, a decline in volume of the aging Town Car, and an alarming drop in registrations of its bread-and-butter MKS and MKX models.
Posted by Tom Libby, PolkInsight Advisor, Polk (04.15.2010)
Mass produced hybrids have come a long way since 2001 when the Prius was first launched in Japan. In 2009, 35 different hybrid models were offered accounting for just over 1 percent of the global market share. One percent (1.28% to be exact) may not seem like a big deal, but the emergence of hybrids is more than a vehicle purchase. It's a culture change. Hybrid sales are a direct results of multiple forces within a market coming together to drive a change in automotive purchase behavior.
These forces encourage consumers to include hybrids into their consideration set and ultimately buy a hybrid:
- High retail fuel prices
- Availability of hybrid supporting infrastructure (i.e. dealerships and service facilities)
- Consumer range and reliability confidence
- Government incentives
These hybrid selling forces have only been seen in more established markets such as Japan or the U.S., which represent 84% of the global hybrid market share. But will this continue with the emergence of new technology such as electric vehicles?
These topics and more are discussed in a new Polk View titled "Asia Pacific Region Propels Growth of Hybrid Market." I invite you to read the article and let me know your thoughts on the future of global hybrid sales including the adoption of hybrids within emerging markets and if Japan can sustain the hybrid sales trend growth experienced in 2009.
Posted by Margaret Zewatsky, Product Strategist, Polk (03.31.2010)
After the EuroCar Seminar on 20 January 2010, we posted the
top ten questions asked by OEM and OES delegates in attendance. Today I will be answering the last few questions. I hope you have found all of our answers helpful. If you missed the answers to the previous questions, don’t forget to read the answers posted by
Norm Marks regarding marketing and
Thomas Mawick regarding hybrids.
Can you share with us where or from whom dealer network planning can be most improved?All manufacturers in all countries have room for improvement... I believe that in Europe, German networks need restructuring most urgently. Surprisingly, importers suffer most; even if they had better possibilities to align locations strategically, they need to improve dealer performance and network efficiency. The focus of network planning should be on the key metro markets.
Besides the saturated markets, there will be a lot of network planning potential in the eastern European countries, especially Russia.
Do you have a view about the demise of block exemption and the impact this will have? Motor Vehicle Block Exemption Regulation ("BER") is the legislative framework for motor vehicle distribution and servicing agreements in the EU. In place since 2002, current regulation No. 1400/2002 was meant to pave the way for efficient competition within the European markets and caused some significant changes in dealer networks such as discontinuation of location clause or multi-franchising trends.
With the current regulation expiring in a couple of months, the question is valid whether we have to expect further significant changes. The European Commission has not yet approved any new regulation so it's hard to say what the impact will be in detail. But from the recent drafts seen, here are a couple of issues:
- New BER is anticipated in June for service but for sales there will be a transition time until 2013. In my opinion, we must not separate regulations for new vehicle sales and aftersales business. I have outlined how important integrated sales and service functions are for both dealers and manufacturers – Vertical BER does not help this way.
- Vertical BER allows brand exclusivity contracts for up to a 5 year contract period, while automotive BER does not. Multi-brand dealerships are on average underperforming, therefore I have no doubt that manufacturers will make use of this exclusivity option. For many multi-franchise businesses this could mean that recent investments will not pay for themselves.
- And finally a legal issue: the principle of legal certainty is not given for those manufacturers and/or dealers which exceed 30% market share.
Is the decrease in the Japanese dealer network an indication of the direction European dealer networks are going? Indeed we could see some dealer terminations recently and domestic manufacturers already cut their networks in Japan or plan to do so. But it is not quite the same downsizing trend as in Europe or North America; dealer networks in Japan are relatively stable. The reason why we might see a decline in dealer contracts is different from Europe and the US. There are two market characteristics which make Japanese networks unique: first, Japan has a broader range of models in the market and second, dealerships and showrooms are commonly very small. As a result, many manufacturers sell different models through different sales channels. A large domestic OEM used to have two channels. But when they got into financial trouble in the early 2000s they reduced the number of models and scaled back the workforce. Hence both dealers, channel 1 and 2, were in fact close to each other selling the same models. Polk supported a network reduction (consolidation) project in 2005 to identify optimally located channel 1 or channel 2 dealers that could be expanded to handle the sales capacity of two former showrooms.
We hope that our answers have helped you. Feel free to comment if there’s anything you feel we've overlooked or if you have any comments.
If you could not attend the UK seminar,
click here to find out about the upcoming Global Network Planning Trends Webinar.
Posted by Tanja Linken, Team Lead Network Management, Europe, Polk (02.10.10)
Global hybrid sales trends have continued to increase despite the declining global light vehicle market. Some of the fastest growing light vehicle markets in the world are BRIC nations with China, India and Brazil experiencing light vehicle growth in 2009.
Despite the overall automotive growth in these emerging markets, hybrids have declined. And not just declined, but not sold. In China from January - October of 2009, only 303 vehicles out of nearly 9.7 million sold, were hybrids. For this same time period, India had 61 hybrid sales out of nearly 1.7 million vehicles. And Brazil didn't have a single hybrid vehicle sold during this time period.
So why don't hybrids sell in these otherwise fast growing markets? My best answer for this is a combination of activities including relatively low retail gas prices, no financial incentives from the government to buy "greener" cars that would compensate for the higher sticker price and also the possibility of limited availability due to OEM distribution strategies.
I'm currently working on a global hybrid Polk View analysis that will be published soon and would like to hear your thoughts on why hybrids aren't selling in emerging markets.
Posted by Margaret Zewatsky, Global Market Analyst, Polk (02.09.10)
After the EuroCar Seminar on 20 January 2010, we posted the
top ten questions asked by OEM and OES delegates in attendance. Today I will be answering questions pertaining to hybrids. If you missed Norm Marks answers to the Marketing questions, you can find them
here. Tanja Linken will be answering questions aboout Network Planning in the next blog entry.
With regard to CO2 emissions, hybrids and zero emission vehicles, do you have any insight into vehicle whole life costs?This question targets the cost of vehicle construction, battery cost including disposal and the vehicle running costs. The variety of calculations regarding life costs is still quite large. While it is not yet clear whether the retail prices for hybrid vehicles allow for a financial break-even to occur, in some premium models the hybrid drive is extremely expensive which can prevent a break-even from happening. The highest costs in car driving appear to be the loss in value on the one hand and the running costs (mainly fuel). So very much depends on the residual values for alternative cars and their general acceptance and the price relationship between the different fuel types in the future. The term "zero emission vehicles" is also a bit misleading as EVs (electric vehicles) do not emit while driving, but they still need energy for battery recharging. Dependent on the energy mix used in the production process, EVs might emit more CO2 than small diesel or petrol engines.
Is the development of fuel efficient vehicles dependent on the oil price going to $600 a barrel?There are different scenarios regarding the future oil price development. Polk expects a price of ~$130 towards 2020, others expect $300 or even $600 per barrel. During 2008, oil became quite expensive with almost $150/barrel by the middle of that year. The pressure to develop alternative drives for cars increased. New regulations (e.g., those related to fleet consumption and CO2 emissions) force the public to reduce the fuel consumption of their vehicles. We expect to see both an improvement in conventional combustion technology by engine downsizing, optimized engines, start-stop systems, etc., as well as an expanded model offer in advanced technologies like hybrid or EV. With higher oil prices, there will be higher pressure to develop new technologies as well as pressure to reach financial break-even points for alternative energies.
What is the difference between plug-in hybrids, pure full hybrids and mild hybrids?A plug-in hybrid vehicle is similar to a conventional full hybrid vehicle—both use a combustion engine as well as an electric motor. However, a plug-in hybrid uses larger battery packs that can be recharged by connecting to common household electricity. In full hybrid vehicles, the electric motor and the internal combustion engine are installed so that they can both individually or jointly power the vehicle. For shorter distances the vehicle can be propelled in its EV mode solely, which eliminates emissions. Mild hybrids use a generally compact electric motor to give extra output during the acceleration, and to generate on the deceleration phase. With mild hybrids, the vehicle cannot be powered by the electric motor exclusively.
Do you have any evidence that customers are driving shorter distances as a result of economic conditions?At the moment we don't have any evidence for this development. The tightening of economic conditions has affected all kinds of industries dealing with transportation. Nevertheless private mobility is of common interest. With the overall trend of rising costs of ownership, the private driving behaviour might change and result in decreasing mileage, but this depends on the development of the costs of alternative means of transportation.
Thank you for taking the time to read my blog entry. If I left anything out that you would like answered, please submit a comment and I will be happy to address it!
Posted by Thomas Mawick, Manager, Automotive Studies, Europe, Polk (02.08.10)
After the EuroCar Seminar on 20 January 2010, we posted the
top ten questions asked by OEM and OES delegates in attendance. Today I will answer the three marketing questions. The remaining questions will be answered by Tanja Linken and Thomas Mawick.
1. If you could only do one thing with respect to marketing in this environment, what would it be or in what area would you focus?We must optimize automotive marketing both for new vehicle sales and aftersales. That said, aftersales marketing has been an area that in my opinion has not received an appropriate level of attention. There are numerous opportunities to better communicate effectively with customers during their ownership period. These efforts have strong impacts on the customer experience at both a OE and dealer brand level.
2. You have covered a great deal of ground, what type of automotive marketing has been most effective/impactful?Programmes that focus on customer loyalty and retention with demonstrable ROI are perhaps the most effective marketing initiatives given the efficient use of precious marketing resources. In a difficult sales environment, long term loyalty really matters.
3. Are there any other marketing challenges that ‘keep you awake at night’?One marketing challenge that keeps me awake at night is the reliance on incentives in order to sell new vehicles. This poses a dilemma when incentives aren't always available yet sales targets need to be met. By and large, OEMs
recognize this challenge, yet many struggle with breaking the cycle of providing generous incentives.
I hope this answers your questions. Feel free to comment on this blog if you have anymore questions or insights. Watch the blog for the upcoming responses to the network planning and hybrid related questions in the next few days.
Posted by Norm Marks, Vice President, Sales & Client Services; Managing Director Northern Europe, Polk (02.04.10)
Last week I attended the AAIA Car Care Council—Women’s Board 2010 Winter Meeting at the Rio Hotel & Casino in Las Vegas. I was also honored to participate in a Hybrid Technology Panel to discuss the future of hybrid vehicles and how they will affect the automotive aftermarket industry.
Through the discussion, it became very clear that while hybrids are talked about a lot, they are still very, very young. As of July 1, 2009, hybrids represented less than 1% of the vehicles in operation. However, while currently not that significant, it is clearly viewed as the technology of the future. And, new technologies bring new challenges and that means new opportunities for the aftermarket.
The training available for technicians at this time is still very limited to only maintenance work and since these vehicles are still so new, it is too soon to determine what types of service issues they may be prone to.
All in all, the aftermarket needs to keep an eye on this small, but growing segment. Hybrids don’t appear to be going away, so we need to embrace and prepare for a very promising future.
Posted by Heidy Herrera, Account Representative, Aftermarket, Polk (01.26.10)
What were the top 10 questions from the OEM and OES delegates attending the Polk EuroCar Seminar in the UK on 20 January 2010?
- If you could only do one thing with respect to marketing in this environment, what would it be or in what area would you focus?
- You have covered a great deal of ground, what type of marketing has been most effective / impactful?
- Are there any other challenges that 'keep you awake at night'?
- Can you share with us where or from whom dealer network planning can be most improved?
- Do you have a view about the demise of block exemption and the impact this will have?
- Is the decrease in the Japan dealer network an indication of the direction European dealer networks are going?
- With regard to CO2 emissions, hybrids and zero emission vehicles, do you have any insight into vehicle whole life costs?
- Is the development of fuel efficient vehicles dependant on the oil price going to $600 a barrel?
- What is the difference between plug-in hybrids, pure full hybrids and mild hybrids?
- Do you have any evidence that customers are driving shorter distances as a result of economic conditions?
These questions are an indication of the themes foremost in delegate's minds. Watch the blog for answers to these questions.
Posted by Marcus Richardson, PolkConnect Programme Manager, Polk's Europe Operations (01.21.2010)
I'm at the Detroit Auto Show today and there are hybrids and electric vehicles galore. I came to the show with an interest in super small cars and wanted to see and touch the cars I wrote about in my
Will Super Small Cars Generate Super Big Sales analysis. I had the opportunity to see the Chevy Spark (I was sorry to see the clam shell doors were replaced by a traditional rear passenger door), the Fiat 500 and the Toyota FT-EVII concept that sits four, but not much more.
I also had the opportunity to test drive a super small eZone from CT&T. CT&T is a Korean OEM with a fleet of electric vehicles that they are introducing to the U.S. market. This was my first test drive of an electric vehicle other than a golf cart. When I sat in the car I was surprised that I didn't feel cramped, but there wasn't room for my big auto show bag so the CT&T co-pilot held it at his feet. I sat down, was told to go slow and then reached for the gear shifter, but all I found was a button with D and R. I pushed the D for drive, stepped on the petal and away I silently went. You couldn't really tell the acceleration of the car in the basement of the Expo hall, but I don't think you'd win any races. It could be an ideal car for the urban commuter that has the opportunity to plug in or the golf cart community member looking for something different. What do you think? Is there a market for these super small electric vehicles in the U.S.?
Posted by Margaret Zewatsky, Global Market Analyst, Polk (1.12.2010)
If you're like me, you're probably wondering why Ford has come out with a new product in the Medium Duty Commercial Vehicle Market segment this fiscal year, when industry sales are expected to be weaker than original forecasts. If you did wonder, then you haven't seen the Ford Transit Connect. An unabashed, small (don't dare call it mini) van that promises to be the vehicle version of a multi-tasking child that is watching television, playing a computer game, and text messaging their friends all at the same time.
The six-foot six-inch height is surprising and creates a roomy, if not downright capacious space for whatever application the owner can imagine. Plus, Edmunds lists the vehicle with a 23 mpg fuel rating and 135 cu. ft. of cargo space all at a price tag of $20.8K - welcome specs for the small business owner looking to save, in all areas of their business, without sacrificing quality. If you need power, though, then this vehicle may not be for you. The 4 cylinder engine is only putting out 128 lbs. ft. of torque at 4750 rpm. The horsepower story isn't much better with 136 hp at 6300 rpm.
I still think this vehicle has the opportunity to be a game-changing crossover in the commercial and consumer vehicle markets alike. The large space gives contractors, small business owners and shuttle services the opportunity to use a smaller, more fuel efficient vehicle with enough room to handle all of their needs. For the consumer, the Transit Connect has an optional three-across bench style second row seat. This could mean a multitude of uses for drivers with wheelchairs, families with an active lifestyle, small bands and folks who simply dig the quirkiness of the vehicle.
Ford has also reached out to the earth friendly crowd - they will be happy to know that Consumer Reports mentioned Ford's plans to come out with a battery-electric hybrid version this year. It seems as though the hits just keep on coming for Ford as they add to the ever-popular Mustang muscle car and F-Series trucks with the Connect, redesigned Fusion and Taurus. Suddenly Ford's vehicle lineup is looking quite strong and attractive. They may even prompt me to take the, "Have you driven a Ford lately" challenge to heart, and actually drive one instead of simply answering, "No."
I am excited to start seeing these vehicles on the road here in the U.S. instead of pictures from Europe but I'm even more excited to see what effect the vehicle will have on the industry trend to produce larger - more powerful and roomy - but less efficient vehicles. What effect do you think the new Ford Transit Connect will have on the market?
Posted by Therran Oliphant, Account Representative, Commercial Vehicle Truck Group, Polk (01.05.2010)
Hybrid sales trends are down 23% comparing January through August 2009 to the same time period in 2008. But seven new hybrid models have hit the road in 2009. Most of these new hybrids have a traditional gasoline engine counterpart, but the Honda Insight is available only as a hybrid. All of the new models have a tough challenge ahead since Toyota Prius leads the hybrid segment with a 49% command of sales CYTD thru August 2009.
The Toyota Prius and Honda Insight are available strictly as hybrids, but both Toyota and Honda also have models with traditional gasoline and hybrid options (e.g., Toyota Camry and Honda Civic). Ford, on the other hand, has three hybrid models (Focus, Fusion and Escape) in the market, all of which are also on the market as traditional gasoline only vehicles.
So to my question: What is the right hybrid strategy? Positioning a model as an exclusive hybrid with distinctive styling like the Toyota Prius and Honda Insight or offering a hybrid option to an existing gasoline powered model like the Ford Fusion? Does the general public want to drive a distinctly styled hybrid that proudly displays their eco-friendliness or do people simply want better fuel economy on existing popular models?
It is interesting to think about which strategy will be the best, especially with the highly publicized Chevy Volt and Nissan Leaf launching soon. What do you think?
Posted by Margaret Zewatsky, Global Market Analyst, Polk (10.16.2009)
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