Episode 900 – Used-car Prices Fall, Another Chinese Ripoff, Town & Country Dropped in U.S.

May 30th, 2012 at 11:51am

Runtime: 7:59

The National Auto Dealers Association says prices for used compact and midsize cars will drop by as much as 5 percent in June. Another day, another Chinese ripoff. This time it’s Dongfeng copying the Cadillac SRX. Chrysler plans to keep the Dodge version of its popular minivans while discontinuing the Town & Country. All that and more, plus guest host Michelle Krebs from Edmunds.com tells us what to expect for this month’s car sales.

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I’m Michelle Krebs from Edmunds.com. Welcome to another episode of Autoline Daily. It’s Wednesday the 30th of May, 2012 and here’s the top news from the world of the automobile.

USED-CAR PRICES DECLINE
Prices for fuel-efficient used-cars have skyrocketed the last several years but that’s about to change. The National Auto Dealers Association says prices for used compact and midsize cars will drop by as much as 5 percent in June and continue to drop throughout the summer due to falling gas prices and the normal seasonal slowdown. For example, a used 2011 Toyota Prius is expected to decline by $900 in value next month. Overall, used-car values will decline 2 percent in June.

CALIFORNIA CREDITS FOR SALE
Beginning this year the state of California is requiring automakers to sell more hybrids and electric vehicles. To add incentive, the state gives credits to carmakers for selling them. The credits can be used to avoid fines or can be sold to other automakers looking to avoid penalties. According to Bloomberg, Nissan says it may sell credits earned from Leaf sales. Two years ago, Tesla sold $13 million worth of credits to Honda and another unnamed automaker. The quotas automakers must meet are based on market share in California, so in other words the larger the automaker, the more EVs and hybrids it must sell.

ANOTHER CHINESE RIPOFF
Another day, another Chinese ripoff. This time it’s Dongfeng copying the Cadillac SRX. As you can see it incorporates many styling cues from the Caddy. According to Car News China, the unnamed vehicle will go on sale next year with a starting price around $12,500. But that’s a bargain compared to the SRX, which costs close to $68,000 in China.

ITALY EARTHQUAKE STOPS PRODUCTION
A second earthquake has rocked Northern Italy. The 5.8 magnitude temblor came just nine days after the first quake struck earlier this month. According to Bloomberg, the death toll from both events has reached 16. More than 14,000 people have been evacuated from their homes. Also, several vehicle assembly plants have been closed because of the natural disasters, mostly so workers can be with their families. Maserati’s factory in Modena HAS been damaged. How badly is not known right now.

TOWN & COUNTRY DROPPED IN U.S.
Is it a car? Is it a van? No, it’s Caravan, and it’s sticking around for the long haul. The Detroit News reports Chrysler plans to keep the Dodge version of its popular minivans while discontinuing the Town & Country. Previously CEO Sergio Marchionne had hinted the Caravan was getting scuttled in 2014 but that’s no longer the case. Apparently he changed his mind because the Dodge variant was the company’s first minivan, and because it was introduced by former chairman Lee Iacocca. The Chrysler Town & Country will be replaced by a crossover vehicle.

LINCOLN’S NEW INTERIOR DESIGN CHIEF
Lincoln is getting a new interior-design manager. WardsAuto.com reports Peter Jones will start working in Dearborn next month. He’s been with Ford of Australia for seven years. Some of the creations to his credit include the interior of the new global Ranger as well as the exterior design of the FG Falcon Ute pickup. Interesting choice – a truck man for Lincoln. You know, I wonder if automakers have to pay any tariffs on imported designers.

After the break, the skinny on May sales. Are they as fat as everyone’s hoping? Find out next!

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MAY SALES FORECAST
May traditionally is the biggest month of the year for car sales, and we at Edmunds.com expect a strong May when automakers report sales on Friday.

Our official May sales forecast is for the industry to sell just shy of 1.4 million cars and trucks. That would be 31 percent more than year-ago May and nearly 18 percent more than April for a Seasonally Adjusted Annual Rate – or SAAR – of 14.4 million vehicles.

Watch for May’s stand-out performance to come from Toyota. We’re projecting Toyota will post as much as a 90 percent sales increase over last May when vehicle production by Toyota and other Japanese automakers was slowed to a trickle by the March earthquake and tsunami. If our forecast holds, Toyota’s depressed market share will climb 4.5 percentage points from a year ago (at the expense of General Motors and Ford which will have lower share). The result could be that Toyota retakes the No. 2 sales position in the United States from Ford.

In addition to the recovery of the Japanese and a gradually improving U.S. economy, we see two primary factors driving continued strong car sales right now: pent-up demand and credit availability.

It’s no secret that the cars and trucks on American roadways are old. R. L. Polk puts the average age of cars in operation at just shy of 11 years old; the typical truck is even older. People simply have to buy a new vehicle, and used-car prices are high so that makes buying new a more attractive option.

The second factor supporting the release of pent-up demand is the significantly deeper and wider availability of credit, an indicator we have been watching closely for months. In fact, on Tuesday, Experian Automotive reported average credit scores for consumers buying a vehicle have dropped to near pre-recession levels. You’ll recall only the very best credit risks could get a car loan during the recession.

Indeed, our data further supports the fact that many more people are able to obtain car loans than had before, and many are those with older vehicles. Our data shows that for this year so far, consumers are trading in vehicles on a new-car purchase more than ever, and they are trading in the oldest we’ve seen since we started tracking such data a decade ago. The typical trade-in is about 6 years old. And while that number may pop up in a month here or there, we’ve never seen it be consistent for five months in a row as we have of late.

We are also seeing so-called subprime borrowers obtaining car loans in numbers we haven’t seen since before the recession. In fact, Chrysler has tapped into that market, which has helped generate some of the automaker’s big sales numbers of late. Subprime had always been a good market for Chrysler (as it is for Kia, Suzuki and Mitsubishi) but the Auburn Hills automaker was frozen out of that segment before now.

Barring something unforeseen that jolts the overall economy or disrupts the availability of credit, we see this pent-up demand continuing to release for the next year or two. We recently upped our forecast for full-year 2012 to 14.4 million vehicles, and we think a return to 15 and 16 million sales a year is on the horizon.

Again, I’m Michelle Krebs from Edmunds.com. Thanks for watching – or listening to today’s program – I’ll see you next time.

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22 Comments to “Episode 900 – Used-car Prices Fall, Another Chinese Ripoff, Town & Country Dropped in U.S.”

  1. Chuck Grenci Says:

    Good move by Chrysler to revive the Grand Caravan name (in lieu of the previous decision to escalate the Town and Country as soul model name); perhaps, though, they should reserve the Town and Country moniker for their top of the line trim level for the Caravan (now that makes sense, at least to me).

  2. john 878 Says:

    Toyota sales increased dramatically for last month! When will Americans get smart and start buying cars from American car companies? I sincerely believe American cars are better or just as good and yet this happens. That would never happen in Japan, but in Japan, they don’t have the media tearing up their car companies like we do here in America.

  3. Gavin Smith Says:

    Glad to see the all wise, all seeing Sergio woke up and didn’t make the mistake he made in branding Ram as separate from Dodge. The Grand Caravan is the senior member and sole domestic survivor of the minivan set and should be left as is.
    Town and Country should be reserved for a more upscale and aspirational product.

  4. jesse Says:

    CALIFORNIA SHOULD STAY OUT OF THE CAR BUSINESS.They can’t handle their own finances and yet they give away money just for buying a car that nobody really wants other then Californians.Idiots.

  5. Kit Gerhart Says:

    #2,
    The biggest piece of Toyota’s sales will be Camry, which is MUCH MORE AMERICAN than Fusion. Let’s face it. There are no longer American car companies, or Japanese, or European. All of them are multinational.

    I’m glad they are keeping the Grand Caravan name, but now, they should revive the non-grand Caravan. My ’89 Caravan is about the same size as today’s Mazda 5, a nice size, especially if you don’t need a third row of seats.

  6. cwolf Says:

    I can only say Lincolns new interior-design chief must have been desperate for a job and bought at discount prices because the brand is going nowhere! Pretty sad when 50% of sales are MKZ’s. A new car manager told me Lincoln is requesting that the dealer up-date the building and show room at a cost of $1M. He said the owner wrote,in a reply,”Give us more new products that sell and fewer false promises and we’ll talk in a few years.” I doubt Lincoln has much of a future.

  7. cwolf Says:

    Californians never cease to amaze me. They act like dictators but don’t have a pot to pis$ in! I wonder how the state would react if the major auto players just stopped selling cars to them? Just a thought.

  8. Jim Haines Says:

    So with all the Leaf sales Nissan should be able use all the tax credit sales to buy two hot dogs at a 7 Eleven of their choice.

  9. cwolf Says:

    Sales are great for now,but predicting beyond a year is simply over optomistic. As more and more reported monies are being invested in long term treasuries that don’t account for inflation,many of these new car buyers are financing their auto up to 6+ % interest!! Think about it! Like I said before,as long as the US and Canada keep spending,we will do better longer than most. But China is turning inward and if a unified Euro is adopted,Germany could down-slide significantly. In short,buy stuff made here and,better yet,US owned! I think ther is a good chance that exporting will become more difficult if no other countries are in a buying situation,esp. as our dollar increases in value as compared to others.

  10. cwolf Says:

    Also,according to Bloomnburg, China reversed course on its “cash for clunkers” statement made yesterday. Guess they thought they could stimulate their economy by hiring the same women our US agents had a fling with!

  11. Jim Thykeson Says:

    Sub-prime car buyers are going to be the norm, with employers & ‘union-busters’ kicking the hell outta’ workers average wages! You can’t expect workers to be prime-time when their wages have been rescinded back to 85′ levels. Just like in the housing market, the full-prime 20%-ers are gone. Creative financing packages and leases are going to be the new norm.

  12. cwolf Says:

    #11
    Jim,though your comment was politicaly pointed,there may be equal truth to it. Since wages have declined,will sub-prime numbers be re-adjusted? Or will the new standard of average wage earner be charged a higher rate,just as “colored folk” were 2-3 decades ago? Don’t take this racially,my word choice is only reflective of the era and my age, Auto Line! Rather good stimulating comment.

  13. Marsh Says:

    Both the Chrysler and Dodge minivans should stay, they serve very different consumers. They should be vastly UPDATED and marketed properly. Too bad Chrysler is no longer an American brand, having sold their soul to Fiat.

  14. aliisdad Says:

    #2.. I wish I could agree with you, but we have had both domestic and foreign brands (including currrent model years), and there is no comparison…The reliability and quality is soooo much better with the non-domestics that is is no contest…This is true of foreign nameplates built in the US as well…Hopefully, that will change, but we will never buy another domestic…This is too bad since the domestics now have some really great designs and our workers need jobs…Oh, but wait, they are not even loyal enough to our workers/economy to build many of them in the United States…
    Again, I sincerely do hope this changes and we will again build world-class cars as we once did..and in the US!!

  15. Bob Kinnee Says:

    # 14 hate to differ with you but I feel the domestics GM & Ford make a great product on par with any of the foreign competition, I own a Chevy Malibu 2LT with 65K trouble free miles, runs like I just bought it ! Quality,fit, & finish are excellent…I see no reason to buy foreign..just sayin’ buy USA owned vehicles !

  16. kevin m Says:

    GOOD MOVE CHRYSLER THE SELL WAY MORE DODGE CARAVANS THEN THEY DO TOWN AND COUNTRY”S . HOW MANY DO YOU SEE DRIVING DOWN THE ROAD ? ALMOST NONE AT ALL FROM WHAT I SEE . THE DAYS OF TELLING THEM BOTH APART ARE JUST ABOUT OVER . BUT I BET PLYMOUTH IS ROLLING OVER IN IT’S GRAVE NOW TO SEE ONLY ONE MINIVAN LIVES ON IN THE CHRYSLER GROUP FROM NOW ON.

  17. Mike Says:

    I agree with Post #2. Ford does, too. Ford found that if they hide the Blue Oval, people have a completely different reaction to their products. Prejudice exists, even when deciding which brand of vehicle you wan to buy! That’s not difficult to see if your eyes are open.

  18. bob e k Says:

    I agree with you #2 & disagree with #14 I feel American based & owned companies GM & Ford is on par with any foreign auto maker, I own A 2010 Chevy NMalibu 2LT with 65K of flawless miles…not a single problem…fit & finish are excellent…I feel that GM & Ford produce GREAT vehicles…start buying American owned products where ever they are assembled does not matter

  19. Kit Gerhart Says:

    I agree that GM, Ford, and Chrysler are making some good ptoducts. I don’t feel, however, that buying a Fusion is “better for America” than buying a Camry, the production of which provides a lot more middle income jobs in the U.S.

  20. Bob e K Says:

    I live in Flat Rock MI where the Ford Mustang & the new Ford Fusion will be built…Mazda is moving to Mexico…you can buy your over rated Camry I will stick to American owned..alway’s

  21. Lex Says:

    I am very glad that CEO Sergio Marchionne has decided to keep the iconic “Caravan” nameplate. The Town & Country nameplate just does not appeal to me. Chrysler/Dodge needs both a regular “Caravan” and long wheel base “Grand Caravan” with optional AWD in my opinion. The “Stow and Go” seating is one huge advantage Chrysler has over it’s competitors!

    I have written / suggested in the past to fellow auto manufacturer Hyundai/Kia that they may only need one variant of a vehicle. The Sedona should have been a Hyundai since the names Sedona is more akin to the Santa Fe and Tucson nameplates. The previous Hyundai “Entourage” minivan was simple a miscalculation of what would sell in the American Market. Now that Hyundai/Kia has improved quality and styling it may be the time for Hyundai/Kia to reinvent they “Sedona” minivan to North America. I would offer it in both FWD and AWD. The other option is to reintroduce the Veracruz nameplate as a minivan for Hyundai with an AWD option to compete against the Toyota Sienna. Honda has missed out on these sales by not offering an AWD Odyssey.

    I have to give Honda credit for realizing that one vehicle can replace two when they dropped the Element. Their original Element target group were young adults with active outdoors life styles. What they attracted were empty nesters who wanted more cargo room for antique and garage sales or to start a post retirement family business. The New CR-V combines attributes from the previous generation CR-V with more utility to attract former Element owners.

  22. Kit Gerhart Says:

    #20,
    Fusion production may eventually move to Flat Rock, but for now, it will be in Mexico, as the old Fusion.