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News and Industry Trends
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Consumer prices up 0.3 percent in October
New and used car price increases cited
Consumer prices edged up faster than expected in October, driven higher by another increase in energy prices and the biggest jump in new car prices in 28 years, The Associated Press reports today. Still, prices are lower than they were a year ago and inflation is expected to remain subdued amid a slow economic recovery. The Labor Department said Wednesday that consumer prices rose 0.3 percent in October, a bit more than the 0.2 percent economists had expected. Core inflation, which excludes energy and food, rose 0.2 percent, compared with analysts' expectation for a 0.1 percent rise. Outside of food and energy, a 1.6 percent surge in the cost of new autos drove the 0.2 percent rise in core inflation. The price of used cars and trucks also rose sharply, increased 3.4 percent in October, the biggest rise since September 1980. Analysts said the jump in used car prices partially reflected the government's Cash for Clunkers program, which has reduced the stockpile of used vehicles since cars which qualified for that program were junked and therefore not available for resale. The advance in both new and used car prices accounted for 90 percent of the increase in core inflation last month, government analysts said.
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Ford leads in top safety picks
Ford led automakers in Top Safety Picks from the Insurance Institute for Highway Safety, which released its annual list of safest passenger vehicles Wednesday, The New York Times reports. Ford and its subsidiary Volvo earned six Top Safety Picks. Subaru and Volkswagen, including Audi, were second with five picks each. And Chrysler, which went through bankruptcy protection this year, had four. But the more interesting news comes from the automaker that was shut out: Toyota. Last year, Toyota (including Lexus and Scion) boasted 11 top picks. This year, however, the I.I.H.S. raised the bar for qualifying for its Top Safety Pick. For the first time, a Good performance in a roof strength test to measure rollover protection is a requirement. The Insurance Institute conducted its first roof strength tests for its rollover ratings earlier this year. Consequently, the number of Top Safety Picks dropped from 94 vehicles last year to only 27 this year. The Honda Accord, which was a Top Safety Pick the previous two years, didn’t make it for 2010.
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Madoff’s pre-owned M-B helps fetch $3 Million for victims
In less than a week, the U.S. Marshals Service has raised $3 million for the victims of Bernard L. Madoff, selling off his personal assets including a teak-accented yacht, diamond earrings, N.Y. Mets jacket and Mercedes-Benz, Bloomberg News reports. The agency plans to hold two or three more sales, though they haven’t been scheduled yet. All the proceeds are to go to victims of Madoff’s $65 billion Ponzi scheme. Yesterday, his three powerboats and a Mercedes-Benz fetched $1.1 million at an auction in Fort Lauderdale, Florida. Last weekend dozens of items owned by Madoff and his wife Ruth, including her diamond earrings and his Mets sports jacket, raised more than $900,000 in Manhattan. “All of these auctions are exceeding our expectations,” Barry Golden, deputy U.S. Marshals public information officer, said in a telephone interview yesterday. “Every dollar counts.”
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Auto leasing returns as U.S. used-car prices rebound
Auto leasing, once a cheap way to drive an expensive car, is making a comeback, Bloomberg News reports today. General Motors Co. and Chrysler Group LLC resumed offering leases to buyers in August and September through their shared financing arm, GMAC Financial Services, after halting the practice as car demand fell in 2008. Ford Motor Co. plans more leasing promotions this year, while Toyota Motor Corp. makes it part of a $1 billion fourth-quarter marketing push. Automakers and finance companies are returning to leasing as it becomes profitable. U.S. used-car prices surged to a record this year as fewer vehicles were traded in at dealerships, letting automakers get better prices for models turned in when leases end. The return of leasing may boost new- car sales after demand fell to an almost three-decade low. “Leasing is coming back,” Jeremy Anwyl, chief executive officer of researcher Edmunds.com of Santa Monica, California, said in an interview yesterday. He predicts the practice will soon account for 20 percent of U.S. auto sales, more than doubling from the first half of 2009. Increased used-car values are “making leasing more attractive,” he said.
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America's Car-Mart is showing strength
America's Car-Mart and giant retailer Wal-Mart have one common theme: They sell consumer products at the lowest price possible, BusinessWeek writes in a profile this week. Both are based in Bentonville, Ark., but America's Car-Mart sells used cars through 96 car dealerships in the Southern and Central states, including Texas, Mississippi, and Oklahoma. Some 50% of its sales come from Arkansas. For a company operating in the recession-crunched car business, Car-Mart's shares are performing admirably, rising to 22 a share on Nov. 17. A year ago the stock was in the cellar, trading as low as 6.88. "Amazingly, Car-Mart continues to beat analysts' earnings forecasts," says Nikolai D. Fisken, director of research at investment bank Stephens, although the company caters to buyers who have either damaged credit histories or no credit scores at all.
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Mercedes-Benz Financial expands link with Manheim
For the first time, late-model, pre-owned Mercedes-Benz vehicles remarketed by Mercedes-Benz Financial are exclusively available to buyers through Manheim San Francisco Bay. The Hayward, CA, Manheim location, which already hosts year-round highline vehicle auctions, announced its newest partnership following a series of successful pilot sales events. Mercedes-Benz Financial selected to move its business to Manheim after "test driving" the company's San Francisco area facility for three months.
[FULL STORY]
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kbb.com adds CPO value tool to site
Kelley Blue Book Tuesday said it is adding a Certified Pre-Owned (CPO) Value to its Web site beginning next month "to educate consumers on the benefits and value of CPO vehicle programs."
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Feds buy green cars, auction rejects
If you missed out on Washington's cash incentive program to trade in your old clunker, Uncle Sam still has a deal for you: The government will sell you rejects from its own fleet, even as it makes dealers scrap all those old cars that were collected from the public, The Associated Press reports. The sale of the federal castoffs at auction is nothing new; deals for the consumer mean income for the government. But in swapping out old government cars for new models under the economic stimulus package, officials also are claiming environmental benefits that don't add up. The General Services Administration used stimulus money to buy 17,246 new vehicles, including more than 3,000 hybrids, for an impressive 40 percent improvement in fuel efficiency over the old models, the agency says. It said that translates into a decline of 334 million pounds of greenhouse gases in the atmosphere over the next seven years, the difference between the emission levels of the old cars and their replacements. There's no question the federal fleet is greener. But the environmental claim doesn't take into account that most of the old wheels still will be on the roads, driven by people who bought them at auction.
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In Dealer magazine
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How long has ‘Certified’ really been around?
by Tim Deese
This .jpg?i=111809111517) is going to be an interesting article. When you look at this picture of the pre-owned vehicles sitting in the showroom in 1929, you will notice a chalkboard to the left of them. The board in this photo says “certified used cars.” This is not something new that we have come up with in the last eight to 10 years. This is not something that consulting companies need to be patting themselves on the back for taking to manufacturers. What we should do is look back in time and learn from history.I had the opportunity to be involved with Lexus during the foundation from which the Lexus Certified Program was adopted. At that time, we researched as far back as we could, which took us to the mid-’50s with OK Used Cars and A-l Used Cars. Since the Lexus program, I have been privileged to work with seven other certified programs, including the inception of Volkswagen and BMW. In looking at certified today versus certified yesterday, nothing has really changed. There is a reason for it, and the primary reason being the loss of customer confidence in pre-owned vehicles by the new car dealer. The manufacturer’s primary concern, and a successful certified program is the work of the residual value of the vehicle. The text below is from an article written in 1929 and I think is probably one of the most unbelievable pieces of work that we have found from the automotive archives of our industry. Read more
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Dealer Pre-Owned
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