Studies Say Car Buyers Want to Stay Connected

Photo Courtesy of Infiniti

Two new studies by Cisco and J.D. Power and Associates show what car buyers want from their next vehicle.
J.D. Power and Associates’ 2013 U.S. Automotive Emerging Technologies Study received responses from 16,758 vehicle owners, which show that car owners are interested in applications for phone pairing, wireless internet, better voice recognition and other features that would improve vehicle infotainment systems. Of those listed above, J.D. Power and Associates noticed that vehicle owners tended to be more interested and willing to purchase features like a fuel economy indicator and active shutter grille vents. Active shutter grille vents close at higher speeds to help maximize fuel economy. This technology has been available on a few vehicles from domestic automakers, including the 2013 Chevrolet Cruze Eco, Ford Focus SFE and Dodge Dart Aero.
“Vehicle owners are continually aware of rising fuel costs and the need for better fuel economy,” says Mike VanNieuwkuyk, executive director of global automotive at J.D. Power and Associates. He adds that car shoppers have become more tech-savvy, and that they’re interested in new technology that helps them save money on fuel.
While there is some interest in autonomous driving, the J.D. Power study finds that vehicle owners are more interested in semi-autonomous functions like emergency braking and steering and automatic park assist. Smartphone integration is also important. The study shows that 82 percent of car owners with smartphones were attracted to vehicles that allow them to pair their phones with a vehicle's infotainment system.
The Cisco Customer Experience Report is a global study that gathers research from more than 1,500 consumers in 10 countries. The report shows 65 percent of respondents would share personal information, like height, weight and what type of entertainment they enjoy, if it meant they could customize their vehicle and driving experience. In addition, 60 percent of those surveyed said they would be willing to provide “biometric information such as fingerprints and DNA samples in return for personalized security or car security.” Cisco says that 83 percent of those surveyed said they research the vehicles they’re considering online, while 17 percent go straight to a dealership.
Cisco says that consumers want to see technology that enhances safety, as well as improvements that save time and money. The survey shows that 52 percent want to track gas prices with in-car tech features. Additionally, 46 percent of respondents said they’d like to be able to track insurance prices, while tracking roadside assistance availability and recall information was important to 35 and 32 percent, respectively.
The Detroit News reports that in-vehicle technology is an “essential selling feature for an automobile,” and that automakers will spend $240 billion on vehicle technology by 2020. “Some of the drivers are government safety mandates for things like improved electronic stability control.”

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NEMPA/MIT Conference Looks at Fuel Economy and Vehicle Weight

The challenge of balancing vehicle weight with fuel economy was the central topic at a New England Motor Press Association and Massachusetts Institute of Technology conference last Thursday. Panelists representing auto manufacturers, academia and government affairs spoke about the impact of increased fuel economy standards on new car construction, materials and price.

The Cadillac ATS uses aluminum to save weight and fuel. Graphic courtesy of General Motors.

Over the past 30 years, cars have become heavier. A 1983 Honda Accord has a curb weight of 2,300 pounds. The 2013 LX sedan model with an automatic transmission weighs 3,254 pounds. The growth in vehicle weight comes as a result of demand for larger cars with more entertainment and safety equipment.
While everyone likes a safe, comfortable car, automakers are facing the fact that increasing vehicle weight decreases fuel economy. In 2012, the federal government mandated that all automakers must reach a corporate average fuel economy (CAFE) standard of 54.5 mpg for cars and light trucks by 2025. That means that the average fuel economy for all cars and light trucks that an automaker sells must be54.5 mpg or more. Automakers must now find a way to meet the fuel economy standards while still building safe cars that have the features consumers expect at a price they can afford.
Dave Leone, executive chief engineer, GM Global Performance Luxury Cars, said that while General Motors and other automakers are working to reduce vehicle weight and improve fuel economy, the result is that vehicle costs are rising. He pointed out that roughly 4 percent of the new car market is made up of hybrid and electric car sales, on which most car companies lose money. "We can afford to do that because of [profit] margins on other products," he said. However, shrinking profit margins on all cars means that prices will rise. "Cost will go up," as a result of higher fuel economy standards, he added.
Mike Stanton, president and CEO of Global Automakers, an industry lobbying group, agreed, but pointed out that the increased fuel economy standards would lower total ownership costs. "The initial purchase price is growing, but the total cost of ownership is going down, particularly as cars last longer," he said. His concern is that with higher purchase prices, not all consumers would be able to qualify for new car financing, since car loans don't take total ownership costs into account.
Anders Tylman-Mikiewicz, general manager, Volvo Monitoring & Concept Center, U.S., said that Volvo is working to reduce its costs by creating interchangeable platforms for its entire model line. By reusing engines and platforms for different models, Volvo says it will be able to reduce research and development costs and pass those savings on to consumers.
While automakers are working with lighter materials, such as aluminum and carbon fiber, and saving research dollars, they are also developing alternative fuel powertrains to help meet the vehicle standards. Professor Tomasz Wierzbicki, director of MIT's Impact and Crashworthiness Lab, said that the new fuel economy standards are "ambitious, but achievable." Two major factors in helping automakers reach the new CAFE standards, he said, are hybrid and electric cars. However, he pointed out that battery technology can be quite heavy and brings additional safety concerns. Today's lithium-ion batteries, he said, need to be able to "accept more abuse." He said that because there has been no "spectacular accident" in an electric car, the battery industry has been slow to build batteries that can handle being in a crash with little risk for short circuit or fire.
The panelists agreed that meeting the new CAFE standards is possible.  However, the new technology and materials needed to build lightweight, fuel-efficient cars that are safe, will cost more, and those costs will be passed on to consumers. The panel estimated that the new CAFE standards will result in new car price increases of anywhere from $1,800 to $4,000 per model. However, they also agreed that the long-term savings in fuel and other ownership costs should help consumers offset the higher sticker price.

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Luxury Car Market Hits Six-Year High

Mercedes-Benz CLA-Class/Image Courtesy of Mercedes-Benz

Almost 400,000 new luxury vehicles were sold during the first quarter of 2013. This is the highest sales volume of luxury vehicles since 2007, Kelley Blue Book announced Thursday. In its New-Car Market Report, KBB.com says the average price luxury buyers paid for their new vehicle also increased.
Alec Gutierrez, senior market analyst, automotive insights for Kelley Blue Book, says, “The luxury crossover segment improved 26.4 percent in the first quarter, thanks to new models such as the Infiniti JX and BMW X1. In addition, the recently redesigned Acura RDX helped as sales more than tripled from last year in March.”
The report also showed that Cadillac had significant gains in the first quarter. The brand had a 38-percent gain in sales over the previous year, which Kelley Blue Book attributes to the new Cadillac ATS and XTS. Cadillac says in a statement that both luxury vehicles posted their best sales month in March.
Even though Cadillac showed the largest increase in the luxury market, Mercedes-Benz still holds the largest portion of the market and had its largest first quarter sales thus far. Kelley Blue Book predicts that Mercedes-Benz has a good chance of keeping its lead because of its impending CLA-Class that will start at less than $30,000, as well as the redesigned E-Class.
According to KBB.com’s report, luxury car shoppers are paying more for a new vehicle. In March, they paid an average of $47,791, compared with $46,629 the same time a year ago. Kelley Blue Books says, “New and improved introductions combined with healthy demand have allowed manufacturers to increase both sales and prices.” All the positive growth in the luxury vehicle market means that luxury shoppers looking for a good deal may not find one.

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Cell Phone Use While Driving Could Cost You

Photo Courtesy of Ford Motor Company

Depending on the state you’re driving in, you could pay up to a $10,000 fine and spend a year in prison if caught using your cell phone while driving. According to a study released last Tuesday by Online Auto Insurance, “Texting while driving has become an epidemic in America that has led 39 states and the District of Columbia to ban all drivers from engaging in the practice.”
The strictest state, based on the Online Auto Insurance results, is Alaska where you can serve up to a year in jail and pay a fine up to $10,000. Utah has the second harshest penalty for drivers who use their cell phones while driving. In Utah, a driver caught texting can face a fine of $750 plus serve a 90-day sentence in prison.  Tweeting while driving through Maine will cost you between $250 and $500. Driving and checking Facebook in Wisconsin can cost you as much as as $400. In addition, you will have four demerit points tacked onto your license, which may lead your insurer to increase your payments. New York adds three points along with a fine of $235 to the driver’s license if caught reading a text while driving.
Virginia, Iowa, Indiana, Delaware and Pennsylvania are among the states that have the weakest penalties based on the Online Auto Insurance study. The fines there vary from $20 to $50, though local laws in these states could tack on penalties or higher fines. A complete list of penalties by state is located in the study results. If a driver gets into an accident or causes serious injury to anyone while using their phone and driving in any state, the maximum penalty increases and the driver can face felony charges.
In an interview with USA Today, John Ulczycki of the National Safety Council says, “Texting while driving is not just a teen problem. … You’re looking at around 10 million teen drivers, but about 180 million other adult drivers.”
The Huffington Post has found some apps available on smartphones to stop texting or looking at your cell phone while driving. DriveSafe.ly reads emails and text messages out loud so the driver doesn’t have to look at his/her phone, but they can still keep up-to-date on incoming messages. For those drivers who have a tendency to look at their phone when an alert goes off, the Huffington Post says Driveoff, iZUP and Textecution apps all lock the phone when it detects that the phone is moving more than 10 mph. It will also stop all incoming phone calls. Similar apps, like DriveMode and tXtBlocker, will identify when the phone is moving faster than 25 mph and automatically respond to incoming texts or calls with a standard message saying that the person is driving and they cannot respond right now.
Some of the apps mentioned require a purchase or monthly payment. If that is too much money for you or you don’t have a smartphone, the Huffington Post recommends putting your phone on airplane mode before driving. It will block incoming texts and emails until you turn off the mode on your phone.
In the end, ignoring incoming messages, sending text messages, surfing the web and looking on Facebook or Twitter while driving will not only help you avoid accidents, but it could also help you avoid a hefty fine.

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Big Auto Sales Mean Small Discounts in March

March auto sales numbers are trickling in with good news for most automakers, but bad news for consumers hoping to get a deal on a new car.

Ford reports a 6 percent sales increase compared with March 2012. The Ford Fusion sold more than 30,000 units in March, which Ford says is a record for the model. The Ford Escape also broke its best monthly sales record, selling 28 percent more models than in March 2012. Ford also says that sales of the Ford Explorer are up 33 percent compared with a year ago.
Ford isn't the only brand with record sales, however. In its sales report, Chrysler Group LLC says that it had its best sales month since December 2007. March marks the company's 36 consecutive month of sales gains, year over year. Overall, Chrysler Group sold 171,606 cars, SUVs, trucks and vans in March, which is a 5 percent increase over March 2012. The Ram Truck brand posted a 24 percent sales gain, the Chrysler brand saw sales increase 35 percent compared to March 2012 and Dodge sales were up 15 percent compared to last year. One dark spot in Chrysler's news is the Jeep brand: Jeep sales were down 13 percent compared to March 2012. Chrysler says the drop is due to the end of the Jeep Liberty and ongoing product launches. Though Jeep sales were down compared to last year, March Jeep sales were 27 percent better than February Jeep sales.
Volkswagen reported a 3.1 percent increase in March sales compared to last year. The German automaker says they've had the best sales year so far since 1973. More than 22 percent of VW sales in March were of diesel models, indicating that high-mileage diesel engines are gaining traction with U.S. consumers.
As auto sales surge, analysts are revising their sales forecasts for the year. Edmunds now estimates that 15.5 million cars, trucks, SUVs and vans will be sold in the U.S. in 2013. That's an increase of half a million sales from their earlier prediction. They attribute the surge to "... car shopper resilience in the face of continued fiscal issues at home, and more recently, flare-ups of fiscal drama in Europe. Buyers are also feeling wealthier thanks to rising home prices and the strong stock market, and refinancing home mortgages as well as an improving labor market have put additional cash in some buyers' pockets. Meanwhile, pent-up demand continues to release, thanks to the aging fleet and more widely available credit."
In an email to reporters, Edmunds says that industry spending on incentives is falling as sales rise. Compared to last month, automakers spent nearly 2 percent less on incentives and discounts in March. That tracks with U.S. News Best Cars' best car deals research. Because sales are strong, automakers don't need to tempt shoppers with deep discounts. According to Edmunds, on average, automakers offered $2,357 in discounts in March. GM was the biggest spender on incentives, offering an average of $3,472 off its vehicles. Though that's a big discount, it's less than what the company offered in February. On the other hand, Honda offered an average of just $963 off its vehicles. That's almost 8 percent more than the company offered in February, but nearly 3 percent less than the discounts the company offered in March 2012. If you're looking for a new car, it makes sense to buy now, before incentive spending drops further.

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