The J.D. Power and Associates Roundtable sessions have begun with an optimistic future for the auto industry. John Humphrey, Sr. V.P., Global Automotive, JDPA, ran through the numbers saying emerging markets are continuing to grow and making a larger contribution to global sales, gaining from an under 20% percent consumption rate between 2000 - 2005, to 51% in 2010 to an expected 55% in 2015. The 2012 prediction is for a global increase of 5% to 79.2 million vehicles. North America will grow 8% to 16.4 million, Brazil 16%, China 9% this year. Humphrey says China could sell 19.7 million this year increasing to 35 million by 2020.
Vehicle prices are up to $28,341 on average while incentives are down to $2,680 per vehicle. The optimistic forecast is tied to the boost in new product introductions, redesigns or facelifts, a rebound in leasing to pre-crisis levels, credit history improvement and the age of the average vehicle knocking on 11 years on the road. Having said that, Humphrey says there are risks like the price of oil, the Euro-crisis, job recovery, a China bubble burst and the infrastructure, namely roads and highways, in emerging markets being able to support the new vehicles hitting the streets.
Humphrey described Retail 3.0 which encompasses younger buyers being more difficult to satisfy, different applications and sites, increased cross-shopping, innovations in consumer engagement, etc. He says by 2015, 40% of car buyers will be Gen X or Gen Y and now 81% of people go online for pricing (24% on mobile devices, 19% on tablets). Maybe not too surprising, reasons consumers reject buying a specific vehicle is 24% dealer treatment compared with 29% brand and 23% price, 12% inventory.
Vehicle quality is narrowing among all brands so the dealership experience becomes the competitive edge and very critical as the JDPA numbers clearly illustrate. Humphrey forecasts global light vehicle sales to hit 99 million by 2015 up from the expected 2012 level of 79.2 million - that's optimistic and music to dealers' ears.
