The Polk Blog

For the first five months of this year, the production of cars in Germany rose by a remarkable 26%. It was just a few months ago that the German OEMs reported a 10% decline in their production volumes for 2009 due to strong export reductions (-17%). Only the European scrappage schemes prevented the automakers from an even sharper downturn. These trends intrigued me, so I took a closer look at the significant comeback the German auto industry is making so far in 2010.

Given the German OEMs were impacted by the worldwide economic crisis, especially between the fourth quarter of 2008 and the second quarter of 2009, it is difficult to make a direct comparison with past car production trends. Nevertheless, the output of the first five months of 2010 is only 6% below the record car production level seen in 2007. As for the exports, the May YTD figure shows a 50% increase over last year. While this is a large increase, exports were extremely low during the first few months in 2009.

Exports are currently the only component to give impetus to the production in Germany. The domestic car demand is expected to fall 25% this year due to the expiration of government incentives. For 2010, we expect that 77% of the cars produced in Germany will be exported, as opposed to a 69% export rate in 2009. Incoming orders from foreign markets make the industry look quite optimistic in the medium term. Polk predicts that exports will reach 4.25 million cars in 2010, the second best year ever. Production is currently expected to be 5.5 million units, which would make 2010 the third best year in history — not bad for the first year after the most severe automotive industry challenges ever faced.

Click here to see the latest forecast for German Passenger Vehicle Sales.

Posted by Thomas Mawick, Manager, Automotive Studies, Polk, Essen, Germany (07.09.10)

I am currently attending the 10th Annual Telematics Detroit 2010. I left the first day with three main points: keep it simple, location services are key and telematics are not just for the luxury market.

1. Keep it simple. There's an app for everything these days available on mobile devices, but this isn't the best strategy for apps appropriate for moving vehicles. Customer retention and conquest sales will depend on an OEM's ability to balance the consumers' increasing desire to incorporate media seamlessly into the driving experience while maintaining vehicle safety. Simple apps designed for automotive use that engage the user, while improving the driving experience, will help win business.
2. Location Services. The first speaker of the conference, Thilo Koslowski from Gartner, revealed the top three applications consumers want. These include mapping, traffic, and weather updates. Seems obvious right? But most drivers are interested in getting from point A to point B in the fastest possible way. So focusing on delivering user location-based information services is key. The challenge will be differentiating vehicle mapping, traffic, and weather functionality from mobile device functionality already available.
3. Not just for the Luxury Market. Luxury vehicles will be the first to market with integrated telematics. But the real numbers start to hit when you incorporate telematics into volume vehicles. Ford is doing this today with their Sync system as is GM with OnStar, but the general consensus at today's Telematics conference was by 2016 industrialized nations will provide telematics on volume vehicles. Not too far away when you consider the automotive development timeframe.

Today's conference has really got me thinking about changes the connected car will bring to consumers and OEMs. Many questions are running through my mind that I'd like your perspective on. Is the key to monetizing telematics in vehicles differentiation or integration with mobile devices? Will regulation stop telematics in its tracks or can regulation even prevent media availability in cars and trucks?

Your opinion matters and I appreciate you sharing it.

Posted by Margaret Zewatsky, Product Strategist, Polk (06.09.10)

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)

Last week I had the pleasure of visiting Tesla's headquarters in Palo Alto, CA with a couple of colleagues. Personally, it was the highlight of my week-long business trip in California. To see individuals talking about and planning for the emergence of electric vehicles was very motivating and stimulating. The team we met was engaging, smart, and well-read on the market.

Tesla, for those who don't know much about them, is about building electric vehicles for today and tomorrow. And not golf carts, mind you. Really fast and attractive EVs. Right now, they have a Roadster which is one fun ride (see pic of a couple being "juiced up" - we rode in the orange one in the back of the line - too fun!). Later, they are planning for their Model S Sedan which will be built in the former NUUMI plant where Toyota and GM previously built vehicles.

As Tesla refines their technology to apply it to a global marketplace, their outreach efforts will grow. I've no doubt this enthusiastic company can delight owners and hopefully work the magic of social media, lead management to drive online and offline traffic to their dealer network. And once driven to a store, we understand owners will drive these models like no other vehicle they've had in their driveway. Can anyone say, "Yes I'll pay north of $100k for a plug-in!"?? They sell what they produce. Demand is good. Let's keep watching.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (06.04.2010)

Since the Cash for Clunker government incentive program concluded in the summer of 2009, leasing has been on the rise, but why? The captive finance arms of the manufacturers, especially the domestic brands, nearly lost their shirts when the finance market fell apart in 2008. GM and Chrysler had to claim bankruptcy and now GM wants to buy back GMAC from the Government and Chrysler is partnering up with outside finance companies to capture the sub-prime market. Is it genius or madness???

Domestic and import OEMs have either pulled back or pushed leasing in different ways. The domestic OEMs all but pulled out of leasing while going through bankruptcy proceedings, while the imports continued to lease through 2008 and into 2009.

Either way you look at it, the Cash for Clunkers incentive program appears to have jump-started leasing again for both import and domestic OEMs.

Several OEMs have been using "leasing to drive" incentive programs in recent months. Honda ran its "BIG THING" lease event in 2010 and really pushed leasing as a finance option. Their lease number reached 30% during March 2010, a 24-month high for Honda. Toyota used leasing as an attractive finance option to help overcome its recall issues, and it appears to be working. Nissan has stayed the course on leasing, while VW/Audi have pulled back a bit.

The domestics appear to be on their way back to leasing again, based on industry trends. The question is, "Will domestic OEMs get back to a 20-25% lease rate or will they be more controlled about using leasing as an incentive tool to draw in a new wave of ready-made repeat buyers for the future?"

Only time will tell…

Posted by Mike Dixon, Product Release Specialist, Polk (06.03.2010)

Raise your hand if you recall the classic MTV video by the Buggles titled "Video Killed the Radio Star."

In an Ad Age article, they discuss a similar effect of obsolescence for the auto industry. In a nutshell, its premise is that cars are less relevant to younger Americans due to a higher level of attention on the "digital world." Possible translation: younger folks won't buy as many cars tomorrow. The article focuses only on the U.S. Did anyone tell them about booming markets like China?

With or without the Internet or other digital marketing assets in their face, Chinese consumers are buying autos. Between now and 2015, China's light vehicle auto market will be 17.5 million big based on our light vehicle forecast (and this is nearly 10 million more than what was selling there in 2008). China overtook the U.S. in national sales in 2009 and we are not seeing a change of ranking any time soon.

My point? While the U.S. economy supports a fantastically diverse consumer base (that still doesn't save as much as it probably should), autos are a fact of life to all age groups. AND you should look at other emerging nations before concluding that autos are absent from one's psyche. Tell me - how will tomorrow's youth pay for their technology fix? Despite fewer jobs for an inexperienced labor force, Gen-Y/Millenials/whatever demographic cohort you choose, they still have to earn money. And getting to a job takes wheels.

I'd argue a better video for tomorrow's auto market might be Sammy Hagar's classic "I Can't Drive 55." While younger buyers aren't the ones dropping coin on Mustangs, Porsches or even more affordable Chargers, speedy and trendy small cars like the Ford Fiesta will get younger buyers to the Apple store pretty fast...with gas money left over for their iAccessories.

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (06.02.2010)

I want to extend my personal congratulations to Tenneco, Inc., winner of the 2010 Polk Inventory Efficiency Award. The Polk Inventory Efficiency Award recognizes and rewards outstanding automotive aftermarket companies for process improvements relative to inventory efficiency. This year’s award was presented at the recent Global Automotive Aftermarket Symposium (GAAS).

Tenneco, headquartered in Lake Forest, Illinois, was honored for the development and implementation of INVision™, its Inventory Analysis and Optimization Solution. Tenneco was able to automate the stock adjustment process by utilizing sales intelligence and developing a much more efficient process for responding to lost sales opportunities and recapturing sales.

For those who weren't able to attend GAAS this year, here is a video showing some of the previous Polk Inventory Efficiency Award recipients followed by Tenneco's achievement. I hope you enjoy it.

Posted by Stephen Polk, Chairman/CEO, Polk (06.01.2010)

Last week in LA, a few of us attended the 2010 Automotive News Marketing Seminar. It was essentially an extended luncheon with top CMOs from the auto industry. In the most earnest manner, each presenter showed off their brand and desired key messages in hopes of selling more metal. My favorite snippet (even though it's been out for a while): The Ford Mustang - watch an enthusiastic Mustang customer get the ride of a lifetime! Talk about building customer retention among a hardcore fan base!

Posted by Lonnie Miller, Vice President, Marketing & Industry Analysis, Polk (06.01.2010)

Traffic. Me. Ugh.

Like most people, I believe time is a precious commodity. Very precious indeed. And if I can save a minute or two here or there, I'll do it in a heartbeat – especially when it comes to beating the ever-present traffic jam.

I live in southeastern Michigan and my daily commute is around 100 miles round-trip. Certainly not a really long daily commute compared to many, but certainly a bit longer than the average drive. And nothing frustrates me more than to be stuck in traffic. Especially in the summer-time, when it's say 90 degrees or so and muggy outside. Add in the fact that it's a Friday, a Friday before a long holiday weekend and I'll do just about anything to get home on-time. Maybe it's just me, but have you ever noticed how the Friday before a long holiday weekend seems to bring out certain crazies on the road who will eventually wind-up in a traffic incident? Lucky us.  

Sure, I try to do my homework before I leave in the early morning and again in the late afternoon or early evening before I head home. I check the traffic reports on radio or television if they are available. I even check the skies and carefully listen for the rumble of a traffic helicopter nearby. Show me a traffic helicopter circling in the area and you'll see me headed in the opposite direction. And quickly.

But the techniques I've used in the past are probably considered "old school" to say the least. Lately, I've been using 'Beat the Traffic', an iPad app that shows traffic conditions around major cities. I really like the look and feel of it and how it shows the roadwork, incidents and highway speeds on the local expressways in the Detroit area. It works well for me and I especially like the forecast feature. I'd like to see something similar become an optional telematic feature in an average priced vehicle. Hopefully one day the OEMs will make this happen.

My colleague, Cenk Hepaktan, has blogged about telematic features. Be sure to check them out, but in the meantime, help me understand, how do you beat the traffic?

1. Write a letter to a soldier
2. Take it to a Ram dealer
3. Receive the free CD

The April YTD data shows that increased demand in Asia and the NAFTA region helped push global automotive sales.

• Automotive sales increased approximately 13% year-over-year in April due to several incentives and an improving economy
• All regions had a significant (double digits) sales increase for the first four months except for Central and Eastern Europe
• For the rest of the year, the growth rates are forecasted to decline based on the expiration of several scrappage programs in Western Europe and lower overall demand

Find out more by downloading the free Global Passenger Vehicle Market Monthly Forecast Report.

Click here for the latest analysis and predictions for select markets around the world. Polk's Global Automotive Forecasting Dashboards are updated regularly. Be sure to check back often to ensure you have the most updated information. You can also click here to subscribe to receive our Knowledge Center and Forecasting updates.

Posted by Ulrich Winzen, Chief Analyst, Polk, Essen, Germany (05.27.2010)

• John Watt of Petro-Canada provided an interesting insight into why aftermarket service providers leave billions of unperformed maintenance on the table. It seems there is a lot of unsold business that can be corrected with just scheduling appointments regularly and consistently. 
• A  Shop Owner Panel followed and was moderated by Bill Haas, Vice President – Educational and Training, ASA. This panel provided an informative look at how connecting a driver with their vehicle, other vehicles and the roadside infrastructure will impact aftermarket companies.
• Jeff Henning of Ernst & Young discussed the impact of the OEMs on the aftermarket. It seems car dealers will look at doing more business in the aftermarket because of profitability concerns and lack of warranty work. 
• Tony Cristello of BB&T Capital Markets provided a detailed look at the economy and the aftermarket. He commented on the strength of the aftermarket and how the aftermarket stocks outperformed the general stock market.  The economy is still in recovery mode and the forecast is optimistic for the aftermarket.