The modern transformation of the historic US auto industry is gaining steam.
General Motors announced last week that the federal loans that sustained it during the severe economic downturn had been paid in full, early, and with interest. Still a majority of General Motors is owned by the federal government and will continue to be until an expected IPO is announced later this year. General Motor’s early return to profitability provides an impressive indication of how quickly the company, and indeed the industry, can bounce back once the economic climate begins to improve. Extremely popular new models and amazing new technologies are enabling GM to return to car buyer’s short lists. The improvement has been so strong that inventories are low or almost non-existent on several of the most popular models.
Chrysler is increasing sales and expects to hit a 20 percent improvement over 2009 this month (April sales). Additionally, Chrysler has several new model re-designs that are about to hit showrooms, which will add to Chrysler’s popularity among consumers. Those include the release of the new market-leader Jeep Grand Cherokee followed by the new Chrysler 300 and Dodge Charger expected later this year.
All of this improvement in financial condition has occurred during a time period in which Ford Motor Company was demonstrating impressive and continuous month-over-month successive improvements in sales along with positive financial results. Ford has won numerous awards for many of its new model releases and sales have been strong in several categories as well as overall.
While the Detroit Three continue to improve both financially and with stronger products, the international nameplate manufacturers haven’t been standing still. Three brands – Hyundai, Kia and Subaru – were the only mass-produced nameplates that defied economic trends and actually grew sales in 2009, arguably the most challenged period financially since that of the Great Depression. Toyota, despite some recent bumps, has more than held its own in customer dedication and satisfaction. Defying news headlines, Toyota significantly grew sales in both February and March. Strong long term brand recognition has enabled Toyota to stabilize as it moves beyond recent issues and returns to traditional marketing and popularity.
Honda, Nissan and Mazda have gradually improved sales results, month-in and month-out. Each has been bolstered by strong and popular product line-ups, brand loyalty and recognition.
Volkswagen has posted some of the best sales numbers of the industry. While relocating its US headquarters and preparing to open its US assembly operation, VW has continued to lead with consumer-attractive products. VW has heavily invested in the new clean diesel technology and has been growing that segment as a share of the fuel efficiency crowd.
The higher end brands of Mercedes Benz, BMW, Lexus, Audi, Infiniti, Lincoln and Cadillac, while not as dramatic and in smaller volumes, have also demonstrated month-over-month improvements as the economy rebounds and consumer confidence improves.
Consumer confidence is the single most important consumer factor in new car sales. Consumer confidence hit all-time lows during the depths of the recession, yet has steadily improved over the past six to seven months.
Another important factor to consider today, for those interested in a new vehicle, is that of consumer interest rates. Incentives, driven largely by captive lenders connected with the auto manufacturers, have never been better. It is surprising how low new car interest rate offers have been lately, some as low as zero percent.
This remains the best time ever for consumers to buy a new car. Significant product quality, new technology, broad-range choices, affordable finance and economic stability have teamed up to trigger the next new car purchase decision for many as a “Yes.”
Tim Jackson serves as president of the Colorado Automobile Dealers Association.