Autoblog

J.D. Power and Associates have lowered their U.S. sales light-vehicle forecast for 2008 to just 14.2 million units. This is the third time the global information services company have updated their numbers. In March, they announced that sales would not hit their initial 15.7 million estimate, instead they would come in at about 14.95 million units. Now, the company is estimating sales at 14.2 million units (the industry sold 16.2 million units in 2007). J.D. Power is citing the prolonged credit crisis, deteriorating economic conditions, and the high cost of fuel as reasons consumers are holding off on purchasing new vehicles. Not helping the matter, fleet sales (a common way for the automakers to boost sales in the past) are also down 21 percent from last year.

[Source: Automotive News, subs. req'd]

If you ever wanted to put an Ford F-150 in your driveway, this summer may be the best time to make your move. As the new 2009 F-150 nears production, Ford is increasing its plant's output of the 2008 F-150 to ensure enough supply remains during July and August when plant production will be transitioning to the all-new model. The last time Ford took such measures was back in 2003, when it sold the F-150 "Heritage" alongside its replacement. Things have changed, however, as there are now only two plants producing the F-150 (compared to four in 2003), and the economy isn't nearly as strong.

There is a fair amount of risk involved during a model change-over for a vehicle with such high sales and production numbers (Ford sold about 414,000 F-150s in 2007). On one hand, Ford needs to keep dealers from drying out during the production slow-down. On the other, the last thing dealers need is a surplus of 2008 models just as the 2009 models arrive. It is a delicate balancing game between supply and demand.

With production ramping, supplies are already up. As of March 1st, Ford had an inventory of 200,000 F-series pickups (a 96-day supply). Last year at this time, it had 176,200. Inventory isn't the only thing on the rise. In a move that will benefit consumers, financial incentives are skyrocketing. Compared to this time last year, incentives are up by $733 to a whopping $4,514 per truck. Nothing sounds sweeter to consumers than high inventory levels combined with substantial incentives -- if you are in the market for a new F-150, this is music to your ears.

[Source: Automotive News, subs. req'd, Photo by Tim Boyle/Getty]

If a company is going to have a problem, this is the kind of problem it wants to have -- even though it's still... a problem. Mitsubishi expected the mid-level Lancer ES to account for the bulk of Stateside sales. Buyers, though, are all about the $18,115 Lancer GTS, making them 60% of sales. The GTS rides above the ES with bigger wheels and brakes and a sport suspension, as well as body mods that make it look faster, if nothing else.

Total Lancer sales through July of this year were 20,816, which included the last of the previous generation. After launching sales of the new Lancer in the US, it is also now being sold in Russia and Japan. In response to the demand for the GTS model, Mitsubishi has actually canceled 1,700 orders for the GTS placed by US dealers. The only option left for dealers until the end of November: order an ES and get a GTS later, which doesn't seem like much of an option for dealers or buyers.

[Source: Auto News, Sub Req'd]

When even deep discounts aren't getting the job done, sometimes you've got to bend the rules. Normally, a Chrysler dealer must use a car as a loaner for three months before designating it a used car. Still wondering what to do with a "glut" of 2006 vehicles in June of 2007, Chrysler has told dealers if they use a car as a loaner for just one day, they can consider it a used car and move it off the new car lot. Dealers also get an additional $2,000 discount as an incentive to use the program.

Instead of making fewer cars in 2006, Chrysler built more than dealers wanted and simply parked them around Detroit. Incentives helped move some, but the incentive program was to end May 31 of this year and dealers still had more 2006 cars sitting on lots than they wanted. Chrysler decided it wanted to finish strongly, so it eased the loaner requirements, a move dealers had been asking for. Chrysler still counts the cars as retail sales (even though they're just being moved to the used car lot), but the cars won't distract buyers who are looking at Chrysler's 2007 product. At one dealer in New Mexico, a 2006 Dodge Ram went from $33,000 to $26,000 in one day. An '06 Durango could be reduced by $11,500 after one day. Could be time to run a daily patrol around your local Chrysler dealership...

[Source: Detroit News]

Toyota's learning that in the case of the Tundra, American buyers won't just pick from the selection of trucks the dealer has left. It's a role reversal for the automaker used to people accepting whatever Camry they can get.

Former VP of Marketing Jim Farley said Tundra buyers "have a build-to-order mentality that we are not used to at Toyota." Whereas a Ford truck dealer often has an inventory that looks like the factory shipping yard, or has a dealer nearby who does, Toyota doesn't keep nearly as much inventory on hand. But truck buyers want what they want, and they don't want to pay for it until they see it. Toyota and its dealers are having to adjust. The company is using a vehicle pool, swapping Tundras between regions, and letting dealers modify orders. But as Toyota gets to know more of the American car buyer, it will find out just how many hurdles domestic makers often have to jump through to make a sale. It's not easy being number one -- just ask GM.

[Source: Autoweek]

In this day and age it's a sin to still have 2006 models sitting on your dealer lot. Unfortunately for dealers under The Chrysler Group umbrella, their lots are teaming with '06 metal. The Detroit News quotes analyst John Casesa of Casesa Shapiro LLC as saying, "To have a third of your inventory in old models when you're two months into the (2007) model year, that's heavy." Heavy indeed, John.

Chrysler has put into effect two campaigns that it hopes will start clearing out the lots of last year's inventory. The first is aimed at the dealers themselves and involves about $500 million in dealer cash incentives to sell 2006 models. Dealers will earn an additional $2,500 to $7,000 for every 2006 model they sell. The easiest to sell models like the Dodge Charger and Chrysler 300 will earn dealers $2,500 unit per unit, while the tough sell trucks and SUVs like the Ram pickup and Durango will fetch a hard-earned $7,000 per unit. Consumers will be happy to know that on average Chrysler passes 85% of that money on to consumers.

In addition to lower transaction prices from the dealer cash Chrysler's shelling out, more than 3 million consumers are receiving coupons worth $1,000 that can be used towards the purchase of most 2006 and 2007 models. These coupons can be added on top of any existing incentive offers, as well. The only vehicles excluded are the 2007 Chrysler Sebring sedan; Dodge Viper sports car, Nitro, and Sprinter van; Jeep Wrangler, Patriot, and 2006/07 Grand Cherokee SRT-8.

The coupon mailing is the largest ever sent about Chrysler, and while the dealer cash is not being advertised to the public, you heard it here that these double discounts are in effect and now might be the best time to pick up that 300C you've had your eye on.

[Source: The Detroit News]

Up from the prior offer of $400 in dealer cash to reduce its massive inventory of 2006 models, beginning today DCX is now offering its 3,400 US dealers cash incentives of $2500 to $7000 on every 2006 model sold.

These numbers really give dealers an incentive to take the remaining 2006 inventory from the sales bank. The dealer cash can be applied in any way the dealer deems necessary to any 2006 model, which means models that were previously excluded, such as the SRT models are now part of the potential discount frenzy. One dealer stated that with incentives like these, he would sell every '06 model he has in 30 days or less, and might consider taking some more.

These unprecedented incentives are applicable to the nearly 164,000 remaining 2006 models in inventory and will total nearly $500 million dollars. This is in addition to the $1000 coupons sent to 3.4 million consumers in a direct-mail campaign that also includes some '07 models. They will also adjust lease rates in leasing markets to help finish strong in '06.

[Source: Detroit News]

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Struggling Chrysler Corp. is pulling out all of the stops to reduce its massively overbuilt inventory of vehicles. Lease incentives, 0% financing, begging and pleading, whatever it takes. Consumers have typically been the targeted recipients of these incentives, until now.

In a webcast to its dealers on Wednesday, Chrysler announced that it would pay dealers $200 for each 2007 model they took as long as they took their entire allocation for the months of November and December. If they take a 2006 model from the sales bank, they get $400. The dealers are free to use the cash however they want, including passing it on to the customer to move the vehicles from their already bloated inventories. Chrysler also promised dealers that they would begin building vehicles to suit demand to prevent further inventory issues in the future.

Dealer's reaction to the announcement was rather unenthusiastic. As they struggle to clear 2006 models from the lot, they are very hesitant to take more 2007's. Sometimes it's not just the financials, as many dealers are having difficulty with the physical space limitations of bringing more vehicles into inventory. One dealer, speaking on condition of anonymity, said that despite the manufacturers offer, he doesn't plan to take any more vehicles than necessary. "Our allocation isn't that high", the dealer said, "we just don't need anymore vehicles."

[Source: The Detroit News]

Porsche CEO Peter Schwarzenbauer is about to open up his special brand of wup ass over the heavy incentive spending of the Big 2 and the Chrysler Group. He says the U.S. auto industry is "trapped in a death spiral" because of its dependence on incentives, and blames large automakers like General Motors, Ford and the Chrysler Group for not being able to better forecast the market and the manage supply and demand of their inventories. Large remaining inventories of last year's models are usually what spark incentive spending, as older vehicles need to be sold to make room for new ones. In the past few years at least, the Big 2 and Chrysler have overestimated demand for their vehicles and turned to crafty incentive deals to clear their lots.

Porsche, however, has a no-incentives policy, which it can maintain since it sells a much smaller number of vehicles. Schwarzenbauer admits his company's size is an advantage, but still won't let the rest of the industry off the hook. He forecasts that the entire industry will be damaged by heaving incentive spending eventually, but doesn't go into exactly how.

Edmunds reports that incentives spending actually went down last month by 15% compared to July. Porsche shows up as spending the second lowest amount on incentives per vehicle, around $538, since Edmunds records all types of incentives. Scion spends the least at $74, and you could almost buy a second car with the amount that Jaguar, the biggest incentives spender, shells out per vehicle: $8,447.

[Source: Ward's Auto]

Chrysler summer-long Employee Pricing incentive ends today and is being replaced by a good old fashion Zero Percent Financing deal. The new deal applies to all 2006 models, which means Chrysler is eager to reduce the inventory of its dealers to make room for a flood of new products it plans on introducing this year, including the Chrysler Sebring and Aspen that were given prices today by the company.

Chrysler now falls in line with Ford that announced last week it was going back to zero percent financing for six years as an incentive to lure customers back into the showroom. While Ford is willing to offer the deal to people with borderline credit, Chrysler is only offering its promotion to well qualified customers. For its part, GM is offering anywhere from $500 to $1,500 cash back on most of its models right now.

Both incentive deals by Ford and GM end after the upcoming Labor Day weekend, while Chrysler new zero percent financing deal will go on until Sept. 30th.

[Source: The Detroit News]