December 2009 Sales Increase Likely

When the December selling period for US car sales comes to a close on January 4, 2010, there should be some good news to report. In fact, if J.D. Power and Associates projections are correct, a 7 percent month over month gain is possible. The company is a global marketing information services business whose services include market research, customer satisfaction, and forecasting.

Cash For Clunkers

Keep in mind that December 2008 was one of the worst months for car sales over the past few years. Sales cratered as the full brunt of the recession was being felt with consumers clamping their wallets and pocketbooks shut. For most of 2009 sales were truly abysmal, but they began to pick up again following the summer’s CARS or cash for clunkers program.

“The market is continuing to improve, with the relative strength of December sales supporting a year-end rally,” said Gary Dilts, senior vice president of global automotive operations at J.D. Power and Associates. “The December selling rate is tracking at 11.2 million units-up nearly 1 million units from one year ago-which sets up 2010 for further recovery.”

If these prediction ring true then December could be the turning point that automakers have been seeking. Sales began to dip in late 2007 and continued to drop off in 2008, before collapsing following the financial crisis of September 2008. Most analysts believe that the low point was reached in March 2009, with a gradual recovery beginning soon thereafter.

A Brighter 2010

Total sales should hit 10.4 million units for the year, with 8.7 million units being retail sales. The difference, of course, is fleet sales. For 2011, J.D. Power and Associates believes automakers will sell 11.5 million units, a far cry from the 17 million units sold earlier this decade, but a market improvement over 2008 and 2009.

Importantly, automakers are learning how to turn a profit with fewer vehicles sold by reducing incentives and upping content. That can help sustain automakers in the years ahead as consumers carefully weigh jumping back into the market.

Source: J.D. Power and Associates

Photo Credit: Chrysler Group, LLC

New Hyundai Warranty Program Is A Winner

It has been ten years since Hyundai first rolled out their 10 year, 100,000 mile warranty covering the powertrain, a step that allowed the South Korean automaker to raise the bar for all cars sold in the US. Until then, no car manufacturer offered such a generous warranty, a move Hyundai made to help convince consumers that the automaker’s quality problems were a thing of the past.

Indeed, current quality surveys from J.D. Power & Associates as well as other industry benchmarking groups has put Hyundai vehicles at or near the top in quality, something that consumers are now beginning to appreciate. That move has allowed Hyundai and its sister company, Kia, to grab additional market share pushing the combined Hyundai Kia Automotive Group into the fifth position among the world’s largest automobile manufacturers.

Hyundai isn’t resting on its laurels and, in celebration of the tenth anniversary of its groundbreaking extended warranty, the automaker has rolled out the Hyundai Assurance Program which is a complimentary vehicle return program for the first year on every new Hyundai that is financed or leased for owners who experience an involuntary loss of income within 12 months of the purchase date.

“We understand consumers’ hesitance to commit to large purchases in today’s economic environment,” said John Krafcik, acting president and CEO, Hyundai Motor America. “Ten years ago, Hyundai’s industry-leading warranty provided peace of mind to consumers about Hyundai’s quality and reliability. Today we’re extending that peace of mind to cover consumers’ employment status and personal finances.”

This first of a kind program will protect consumers who have made at least two loan or lease payments and are affected by one of the following life scenarios:

• Involuntary unemployment
• Physical disability
• Loss of driver’s license due to medical impairment
• International employment transfer
• Self-employed personal bankruptcy
• Accidental death

Consumers must be current on all payments in order to participate in the program which covers negative equity up to $7500. Once the Hyundai administrator approves the return and the consumer pays any outstanding balance, then the car can be returned to the dealer without any additional financial obligation or a hit to his credit record. At that point the dealer will be able to resell the car.

So will this program help Hyundai win new customers? I believe so. With the credit markets being tight and consumers showing uncertainty about making any large purchase, buying a Hyundai can remove or at least limit some of that risk, resulting in a sales increase for the Korean manufacturer.

I don’t expect other car companies to follow suit, but it is an intriguing offer nonetheless. In a tight economy thinking outside of the box matters so it looks like Hyundai has a winning program on their hands.

Source: Hyundai Motor America