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Around this time last year, rental car companies found themselves selling off a fair amount of their inventory as the COVID-19 pandemic devastated the travel industry. With travel starting to bounce back, rental car companies now find themselves with a new problem - a shortage of vehicles to rent. Usually, they would turn to automakers and buy up a batch of new cars to shore up inventory. But the on-going semiconductor shortage has automakers cutting back on production, and causing rental companies to look at used cars. “You would never go into auction to buy routine sedans and SUVs. These are special circumstances. There is a shortage of cars,” said Maryann Keller, an independent consultant. Bloomberg reports that rental car companies do buy a small amount of used cars in the event of an sudden rise in demand, but not to fully outfit their fleet. New car production has been hampered since last year as plants were shut down to stop the spread of the COVID-19 virus. Production was starting to climb back up later in the year only to be hampered again by another crisis, the lack of semiconductors and chips needed for various systems. In their first-quarter earnings call, Ford reported production was down 17 percent and could fall as much as 50 percent in the second quarter. Other automakers are making similar statements. “Our fleet acquisition team is working hard to secure additional vehicles -- both new and low-mileage used vehicles -- through all channels to meet the ongoing increase in demand.Overall, though, both new and used car inventory remain low. Our teams will continue to do everything we can to help customers with their transportation needs,” Enterprise spokeswoman Lisa Martini said via email. There is a silver lining for rental car companies as they'll be able to charge higher rates as many people begin to take vacations after spending a lot of time at home. For example, the average rate at Avis increased 3 percent in the fourth quarter, to $59.43 a day according to Hamzah Mazari, an analyst with Jefferies & Co. He expects that number to rise to $60.00 when Avis reports their first quarter results. Source: Bloomberg (Subscription Required) -
Around this time last year, rental car companies found themselves selling off a fair amount of their inventory as the COVID-19 pandemic devastated the travel industry. With travel starting to bounce back, rental car companies now find themselves with a new problem - a shortage of vehicles to rent. Usually, they would turn to automakers and buy up a batch of new cars to shore up inventory. But the on-going semiconductor shortage has automakers cutting back on production, and causing rental companies to look at used cars. “You would never go into auction to buy routine sedans and SUVs. These are special circumstances. There is a shortage of cars,” said Maryann Keller, an independent consultant. Bloomberg reports that rental car companies do buy a small amount of used cars in the event of an sudden rise in demand, but not to fully outfit their fleet. New car production has been hampered since last year as plants were shut down to stop the spread of the COVID-19 virus. Production was starting to climb back up later in the year only to be hampered again by another crisis, the lack of semiconductors and chips needed for various systems. In their first-quarter earnings call, Ford reported production was down 17 percent and could fall as much as 50 percent in the second quarter. Other automakers are making similar statements. “Our fleet acquisition team is working hard to secure additional vehicles -- both new and low-mileage used vehicles -- through all channels to meet the ongoing increase in demand.Overall, though, both new and used car inventory remain low. Our teams will continue to do everything we can to help customers with their transportation needs,” Enterprise spokeswoman Lisa Martini said via email. There is a silver lining for rental car companies as they'll be able to charge higher rates as many people begin to take vacations after spending a lot of time at home. For example, the average rate at Avis increased 3 percent in the fourth quarter, to $59.43 a day according to Hamzah Mazari, an analyst with Jefferies & Co. He expects that number to rise to $60.00 when Avis reports their first quarter results. Source: Bloomberg (Subscription Required) View full article -
Like most mainstream automakers, Honda is raking in the cash with their lineup of crossovers. But Honda is also doing quite well when it comes to cars, a bit surprising since the news is flooded with automakers deciding to cut back on their lineup - though we should note that Honda is planning on slimming down their lineup, both in trims and models in the coming years. "What's perhaps more unusual and important for us, however, is our cars. We all know the narrative: Cars are dead and dying. That's certainly true for some, but not for us. Our story is a little different," said Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co. How is that story different at Honda? It comes down to certain groups of buyers. "But cars really matter for another fundamental reason: the future. Cars play a crucial role for Honda in attracting and retaining new buyers, particularly young buyers, millennials and Gen Z," said Arcangeli. Data gathered by the company revealed more than half of first-time buyers of news are choosing cars, not trucks or utility vehicles. We have to wonder if the lower prices of new cars play a key role in this. "So, we're dominating the front door with new buyers, with cars playing a critical role. Gen Z today is still a relatively small share of the market, but it's growing daily, and Honda is in the early lead." Source: Automotive News (Subscription Required) View full article
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Like most mainstream automakers, Honda is raking in the cash with their lineup of crossovers. But Honda is also doing quite well when it comes to cars, a bit surprising since the news is flooded with automakers deciding to cut back on their lineup - though we should note that Honda is planning on slimming down their lineup, both in trims and models in the coming years. "What's perhaps more unusual and important for us, however, is our cars. We all know the narrative: Cars are dead and dying. That's certainly true for some, but not for us. Our story is a little different," said Henio Arcangeli Jr., senior vice president of the automobile division of American Honda Motor Co. How is that story different at Honda? It comes down to certain groups of buyers. "But cars really matter for another fundamental reason: the future. Cars play a crucial role for Honda in attracting and retaining new buyers, particularly young buyers, millennials and Gen Z," said Arcangeli. Data gathered by the company revealed more than half of first-time buyers of news are choosing cars, not trucks or utility vehicles. We have to wonder if the lower prices of new cars play a key role in this. "So, we're dominating the front door with new buyers, with cars playing a critical role. Gen Z today is still a relatively small share of the market, but it's growing daily, and Honda is in the early lead." Source: Automotive News (Subscription Required) -
Sales of new cars in the U.S. have been dropping in the past three months and analysts believe April's sales results will be much the same. But why are sales falling? It comes down to prices of new cars going up and up. According to data from ALG True Car, the average new-car price rose two percent when compared to last year. Kelly Blue Book reports that the average transaction price in March increased 1.7 percent to $34,342 when compared to the same time last year. There are a number of factors as to why consumers are balking at larger prices; credit not being as easy to attain, younger buyers being saddled with debt, and inflation. “It’s not just the price of the cars -- it’s the price of everything else. The price of things like health care, shelter -- all of that is fighting for the budget,” said Michelle Krebs, a senior analyst with Cox Automotive. Automakers are trying to stem this decline by increasing the amount of incentives available. J.D. Power reports incentive spending reached a new high in the first half of April with an average of $3,499. Source: Bloomberg View full article
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Sales of new cars in the U.S. have been dropping in the past three months and analysts believe April's sales results will be much the same. But why are sales falling? It comes down to prices of new cars going up and up. According to data from ALG True Car, the average new-car price rose two percent when compared to last year. Kelly Blue Book reports that the average transaction price in March increased 1.7 percent to $34,342 when compared to the same time last year. There are a number of factors as to why consumers are balking at larger prices; credit not being as easy to attain, younger buyers being saddled with debt, and inflation. “It’s not just the price of the cars -- it’s the price of everything else. The price of things like health care, shelter -- all of that is fighting for the budget,” said Michelle Krebs, a senior analyst with Cox Automotive. Automakers are trying to stem this decline by increasing the amount of incentives available. J.D. Power reports incentive spending reached a new high in the first half of April with an average of $3,499. Source: Bloomberg -
Sales of new cars have been reaching all-time highs and part of the reason comes down leases. The Detroit News reports that nearly one in three vehicles built for the U.S. is leased. Data from Edmunds shows 2.2 million vehicles were leased in the first half of 2016. Not only is this up 13 percent from the same time year, it is double the volume from 2011. Steven Szakaly, chief economist for the National Automobile Dealers Association tells the Detroit News there is plenty of space for more leases. “I think this could easily be 40 percent of the market,” said Sazkaly. Why have leases become popular? It comes down to the monthly payment. Compared with payments for auto loans, lease payments are on average 23 percent less. Leasing is also a popular option for younger folks. Jessica Caldwell, analyst for Edmunds says the reason is leasing is like a cell phone contract; low monthly payments and knowing that you can get into a new car in a few years. But while leasing is helping new car sales, some analysts are worried this could cause used car prices to go down. Why? A glut of turned in leased vehicles will flood the used car market, causing prices to be slashed to move metal. “They’ll swamp the market, they’ll force residuals down,” said Sean McAlinden, chief economist for the Center for Automotive Research. The increase in leasing is already having an effect on used car values. Tom Webb, chief economist for Cox Automotive Inc., said 2.55 million vehicles came off lease last year. That number will increase to 3.1 million this year. Automakers are now figuring out ways to sell this glut of vehicles while keeping values up. Source: The Detroit News View full article
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Leasing Reaches Record High, Could Grow Further
William Maley posted an article in Automotive Industry
Sales of new cars have been reaching all-time highs and part of the reason comes down leases. The Detroit News reports that nearly one in three vehicles built for the U.S. is leased. Data from Edmunds shows 2.2 million vehicles were leased in the first half of 2016. Not only is this up 13 percent from the same time year, it is double the volume from 2011. Steven Szakaly, chief economist for the National Automobile Dealers Association tells the Detroit News there is plenty of space for more leases. “I think this could easily be 40 percent of the market,” said Sazkaly. Why have leases become popular? It comes down to the monthly payment. Compared with payments for auto loans, lease payments are on average 23 percent less. Leasing is also a popular option for younger folks. Jessica Caldwell, analyst for Edmunds says the reason is leasing is like a cell phone contract; low monthly payments and knowing that you can get into a new car in a few years. But while leasing is helping new car sales, some analysts are worried this could cause used car prices to go down. Why? A glut of turned in leased vehicles will flood the used car market, causing prices to be slashed to move metal. “They’ll swamp the market, they’ll force residuals down,” said Sean McAlinden, chief economist for the Center for Automotive Research. The increase in leasing is already having an effect on used car values. Tom Webb, chief economist for Cox Automotive Inc., said 2.55 million vehicles came off lease last year. That number will increase to 3.1 million this year. Automakers are now figuring out ways to sell this glut of vehicles while keeping values up. Source: The Detroit News -
G. David Felt Alternative Fuels & Propulsion writer www.CheersandGears.com 15 New Car Auto's to Avoid Forbes published their 2015 list of 15 cars to Avoid. #15 - Smart ForTwo - due to premium fuel, under powered and lack of space #14 - Scion iQ - oddly aligned seeting for 3, lack of room, poor quality, etc. #13 - Nissan Titan - Outclassed in every way by US trucks and worst values. #12 - Nissan Armada - Poor reliability, ownership cost, fuel economy and quality #11 - Mitsubishi Mirage - Sluggish engine, performance, quality, value #10 - Mitsubishi iMiEV - Rock bottom residual value, lowest performance score for EV's #9 - Lincoln MKT - Below average quality, reliability and depreciation #8 - Lincoln MKS - Below average performance, quality, value and residual value #7 - Jeep Wrangler - Poor passenger comfort, harsh ride and handling, noise, value & quality #6 - Jeep Patriot - poor performance, reliability and below average residual value #5 - Jeep Compass - poor performance, reliability and below average residual value #4 - Fiat 500L - poor quality, performance, reliability and below average resale value #3 - Dodge Journey - poor quality, performance, reliability short and long term. #2 - Cadillac XTS - Poor Value, Quality, performance and resale value #1 - BMW 7 Series - Poor Handling, Highest Operating cost, worst value and below average performance Forbes compiled this list based on ratings from consumers reports and JD power. They looked at these models compared to like models in the same segment in coming up with these top 15 versions to avoid. An interesting observation is that all of these auto's are also known to have electronic issues according to their research making them more expensive than normal to fix once out of warranty. Now that you have Forbes top 15 autos's to avoid for the 2015 model year, what are your top 15 cars to avoid in the coming new year?
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Buying and selling vehicles in Cuba is an interesting proposition. If you own or want to buy a vehicle before 1959 (the year when Cuba underwent a revolution and became a communist nation), you don't have to ask the government for permission. If the vehicle built after 1959, then you would have to obtain a special permit from the government which allows you to buy that vehicle. But buying a vehicle in Cuba in the near future will become a much easier affair. The Cuban Government announced last week that it will eliminate the permit as a way to open up the marketplace to more people. “It’s become clear that while private sales of cars between individuals has developed smoothly, the sale of cars using ‘authorization cards’ has been inadequate and obsolete. The card, apart from being overly bureaucratic, became a source of speculation and illicit self-enrichment,” said the Communist Party newspaper Granma. The paper went onto say the “steps will be taken to eliminate restrictions that lost their reason for being with the passage of time. Administrative shackles that created opportunities for illegal activity will also disappear.” Even with this change, buying a new vehicle in Cuba might be a difficult task still. New models might carry a 100 percent sales tax, meant to fund Cuba's public transport system. Source: Associated Press via The Detroit News William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. View full article
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Cuba Lifts Restriction On Buying New Vehicles
William Maley posted an article in Automotive Industry
Buying and selling vehicles in Cuba is an interesting proposition. If you own or want to buy a vehicle before 1959 (the year when Cuba underwent a revolution and became a communist nation), you don't have to ask the government for permission. If the vehicle built after 1959, then you would have to obtain a special permit from the government which allows you to buy that vehicle. But buying a vehicle in Cuba in the near future will become a much easier affair. The Cuban Government announced last week that it will eliminate the permit as a way to open up the marketplace to more people. “It’s become clear that while private sales of cars between individuals has developed smoothly, the sale of cars using ‘authorization cards’ has been inadequate and obsolete. The card, apart from being overly bureaucratic, became a source of speculation and illicit self-enrichment,” said the Communist Party newspaper Granma. The paper went onto say the “steps will be taken to eliminate restrictions that lost their reason for being with the passage of time. Administrative shackles that created opportunities for illegal activity will also disappear.” Even with this change, buying a new vehicle in Cuba might be a difficult task still. New models might carry a 100 percent sales tax, meant to fund Cuba's public transport system. Source: Associated Press via The Detroit News William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.
