By Craig Trudell
Liz Doll, a real estate agent in
Connecticut, had little interest in the highly rated Hyundai
Elantra when shopping for a new car this year. She instead went
with a Volkswagen Passat (PSAT) that has drawn mixed reviews.
“The handles on the Hyundai felt cheesy and cheap,” said
Doll, a 37-year-old mother of three. “Everything you touched
felt like it was going to fall off. I didn’t have that
experience with the Passat.”
Models such as Volkswagen AG (VOW)’s Passat and Honda Motor Co.’s
Civic, which lost Consumer Reports’ coveted recommended status
in August 2011, are among some of the biggest gainers in the U.S.
auto market this year. The disconnect shows that buyers can be
more forgiving in showrooms than testers are in labs as
industrywide quality gains bring automakers closer to parity.
“The overall competitive set from all manufacturers has
become so good that, for some of us so-called experts in the
industry, perhaps our expectations have gotten almost impossible
to reach,” Alec Gutierrez, an analyst for researcher Kelley
Blue Book in Irvine, California, said in a telephone interview.
Increased demand for models such as Passat and Civic
probably helped spur a 12 percent increase in U.S. deliveries of
cars and light trucks last month, the average estimate of nine
analysts surveyed by Bloomberg. That gain would keep the
industry near September’s rate, the fastest U.S. sales pace in 4
1/2 years.
Preceding Sandy
Most analysts issued their sales estimates before Hurricane
Sandy slammed major auto markets including New York, Washington
and Philadelphia. The storm, which churned through an area that
generates about 25 percent of U.S. auto sales, disrupted dealers
at the month’s end, when car buying tends to accelerate.
Deliveries of Volkswagen’s Passat have soared to 83,662
this year through September, from just 4,893 a year earlier,
according to Autodata Corp. The Wolfsburg, Germany-based
automaker surpassed its previous annual sales record for Passat
in less than nine months, according to a Sept. 18 statement.
Volkswagen, which is targeting more than 500,000 vehicle
sales in the U.S. this year, may have joined Toyota Motor Corp. (7203)
in posting the biggest sales increase in October from a year
earlier. Combined Volkswagen and Audi brand deliveries probably
climbed 26 percent, the average of four analysts’ estimates.
Toyota may match that gain, according to the average of eight
estimates.
Industry Pace
U.S. light-vehicle deliveries probably rose 12 percent in
October to 1.15 million, according to the nine analysts surveyed
by Bloomberg. The annualized industry sales rate, which is
adjusted for seasonality, may accelerate to 14.8 million, the
average estimate of 16 analysts.
The industry sales pace was 13.3 million in October 2011
and 14.9 million in September, the best since March 2008,
according to researcher Autodata in Woodcliff Lake, New Jersey.
Consumer Reports said the Passat “lost some of the
sharpness of its predecessors” in its initial review of the
model for the Yonkers, New York-based magazine’s October 2011
issue.
“The last-generation Passat was a better car overall, with
agile handling” and a “well-finished interior,” Consumer
Reports said after complete testing in a Dec. 28 post on its
website. “But a high price and so-so reliability, plus a lack
of marketing, kept it off the radar for many buyers.”
In addition to pricing and marketing, consumers also will
snap up models with average or below-average reviews because of
loyalty and perceptions of quality that are slow to budge,
Kelley Blue Book’s Gutierrez said.
Civic Criticism
The Civic, which Consumer Reports said in August 2011 felt
like an “insubstantial” ride, with long stopping distances and
loud road noise, has been the sixth best-selling vehicle in the
U.S. this year.
“Civic got hammered last year when that 2012 redesign was
first unveiled: cheaper interior, less-quality materials, de-
contented on the entry-level trims, not enough of a step forward
to compete,” Gutierrez said.
Despite the criticisms, Civic deliveries surged 40 percent
through September to 234,029. The model is on pace to retake the
compact car segment lead this year after dropping to No. 3
behind Toyota’s Corolla and
General Motors Co. (GM)’s Cruze in 2011.
The sales gain for Tokyo-based Honda in October may trail
only Volkswagen’s and Toyota’s. The average estimate of eight
analysts is for a 16 percent increase. Honda and Toyota City,
Japan-based Toyota both are rebounding from last year’s supply
shortages caused by a tsunami in their home country.
‘No Headaches’
“Honda still delivered a sedan that’s going to leave
consumers with little to no headaches whatsoever,” Gutierrez
said. “It just gets the job done. Honda and Toyota buyers
especially are fierce brand loyalists and that’s just what they
stick with.”
Chrysler Group LLC, which has steadily gained U.S. market
share since 2010, has made quality gains and yet many of its
brands and models remain below average in tests and surveys by
the likes of Consumer Reports and J.D. Power & Associates.
The automaker majority-owned by Fiat SpA (F) may have boosted
sales in October by 15 percent, the average estimate of 11
analysts, to extend its streak of monthly increases from a year
earlier to 31 consecutive months.
Chrysler claimed four of the 10 worst-performing brands in
Consumer Reports’ annual reliability survey, which was released
this week. The magazine, which boosts its own objectivity by
buying every vehicle it tests and forgoing advertising, has
praised redesigned models such as the Chrysler 300 sedan and
Jeep Grand Cherokee sport-utility vehicle.
Minivan Split
Chrysler’s Dodge Grand Caravan and Chrysler Town & Country
minivans illustrate some of the ways the automaker has managed
to outpace other automakers’ sales gains as it continues to
overhaul its lineup.
The two vans, which rank No. 1 and No. 3 in the U.S.
minivan segment, respectively, are cheaper than the second-
ranked Toyota Sienna and Honda’s Odyssey, and the U.S. models
are offered with warranties of as much as five years and 100,000
miles (161,000 kilometers).
Minivans are subject to “one-size-fits all” evaluations
by testers such as Consumer Reports that can hurt their scores,
Doug Betts, the global quality chief for Chrysler and Turin,
Italy-based Fiat, said in an interview.
“The No. 1 reason people buy our minivans is because of
those stow-and-go seats, for their flexibility and the
utility,” said Betts, who pointed to the feature as a reason
the models get dinged for poor seat comfort. The minivans also
perform poorly on a slalom track, which is unlikely to matter to
buyers in the segment, he said.
New Reality
In criticizing Honda for its disappointing Civic redesign,
Consumer Reports said in an August 2011 post on its website that
the automaker is under pressure because “old assumptions are
becoming blurred.” Automakers such as
Ford Motor Co. (F), Hyundai
Motor Co. (005380) and Kia Motors Corp. (000270) are now making better cars.
“A Ford Fusion is more reliable than the Accord, not to
mention quieter and nicer to drive,” a tester for the magazine
wrote in the post titled, “Honda redesigns: Is the automaker
resting on its laurels?” “Hyundai and Kia are building fuel-
efficient and well-equipped cars at aggressive prices, and they
often drive like Hondas used to.”
Ford, which has struggled with nagging problems plaguing
its electronics systems, may report a 3.2 percent increase in
October U.S. sales, the average of 11 estimates. The Dearborn,
Michigan-based automaker’s brands dropped in Consumer Reports’
reliability and J.D. Power’s Initial Quality Study surveys this
year in part because of its MyFord Touch and MyLincoln Touch
control systems.
Buyer’s Regret
Doll, the Connecticut real estate agent who bought the
Volkswagen Passat, said she was motivated to buy a new car
because of poor fuel economy with her 2007 Honda Pilot. While
she is happy with features she didn’t have previously such as a
Bluetooth wireless technology and navigation, she regrets not
waiting for Ford to begin selling its C-Max hybrid that gets 47
mpg.
“Buyer’s remorse has really kicked in,” she said. “If I
had just waited a month, I probably would have bought the C-Max.
Now I’m like, maybe I’ll trade in the Passat next year. Maybe
I’ll be one of those new-car people.”
GM, whose Cadillac line led gains by all four of the
Detroit-based automaker’s brands in Consumer Reports’
reliability survey, probably boosted sales by 7.8 percent in
October, the average of 11 estimates.
Sales for Nissan Motor Co., the only Japanese automaker to
have below-average reliability in the Consumer Reports survey,
may have risen 4.6 percent in October, the average of eight
estimates. Models such as the Versa small car and Armada were
drags on Yokohama, Japan-based Nissan.
South Korea’s Hyundai and Kia, which are both based in
Seoul, may combine to sell 13 percent more vehicles in October
than a year earlier, the average of six analysts’ estimates.
The following table shows estimates for car and light-truck
sales in the U.S. Estimates for companies are a percentage
change from October 2011. Forecasts for the seasonally adjusted
annualized rate, or SAAR, are in millions of light vehicles.
October had 26 selling days, the same as the year-earlier
period.
GM Ford Chrysler SAAR
Rod Lache 6% 1% 10% 14.6
(Deutsche Bank)
Peter Nesvold 8.8% 3.0% 15% 14.8
(Jefferies)
Patrick Archambault 7% 2% 19% 14.8
(Goldman Sachs)
Joseph Spak 8.1% 2.4% 9.3% 15.0
(RBC)
Chris Ceraso 6% 5% 15% 14.9
(Credit Suisse)
Emmanuel Rosner 11% 2.7% 18% 15.0
(CLSA)
Brian Johnson 8.2% 1.6% 15% 14.9
(Barclays)
Ryan Brinkman NA NA NA 14.7
(JPMorgan)
Itay Michaeli NA NA NA 14.7
(Citigroup)
John Sousanis 9.7% 5.4% 19% 15.0
(Ward’s)
George Magliano NA NA NA 14.6
(IHS Automotive)
Jeff Schuster NA NA NA 14.8
(LMC Automotive)
Alan Baum NA NA NA 14.8
(Baum & Associates)
Jessica Caldwell 4.7% 3.5% 13% 14.8
(Edmunds.com)
Jesse Toprak 7.3% 5.3% 15% 14.9
(TrueCar.com)
Alec Gutierrez 8.8% 3.2% 16% 14.7
(Kelley Blue Book)
Average 7.8% 3.2% 15% 14.8
Source;
http://www.businessweek.com/
