LUXURY BRANDS

Audi Seeks to Close the Luxury Brand Gap

May 6, 2013 by admin Leave a Comment

In Mexico for the ground breaking of Audi’s first manufacturing plant in North America. Pictured from from left to the right: Frank Dreves, Audi Board Member for Production, Ildefonso Guajarda Villarreal, Mexican Economics Minister, Rupert Stadler, Chairman of the Board of Management of AUDI AG, Rafael Moreno Valle, Governor of the State of Puebla, and Filogonio Vargas Torres, Mayor of San José Chiapa.

Audi, the German luxury marque, is on a roll. Three times since Dec. 2012 its sales have topped 13,000 units, putting it on a path that it expects will one day enable it to overtake market leading BMW.

Luxury Market Competitors

Audi will also have to overtake Mercedes-Benz, Lexus and Acura a long the way and hold off surging Cadillac, but it does have an ace in its sleeve that will be pulled out in a few years: a Mexican factory with a build capacity of 150,000 units. This past weekend executives from Audi broke ground for its San Jose Chaipa facility, the first Audi manufacturing plant in North America. Likely, most of the production capacity for the Mexican plant will serve the US market.

Audi is on pace to sell 150,000 vehicles this year after topping the 100,000 unit mark in 2010. Even if Audi doesn’t grow for a few years, which is highly unlikely, it will sell at least 300,000 models in 2016 with the addition of the Mexican plant. Based on 2012 figures, that number would put it in first place ahead of the pack.

Monetary Fluctuations

Building Audis in North America will put the brand on a level playing field with its German rivals. Both BMW and Mercedes-Benz have long built vehicles in the United States while Audi has had to rely exclusively on imports. The vagaries of foreign exchange markets also means that Audi has to weather monetary fluctuations that often work against European manufacturers. With a sizable part of its capacity coming from lower wage Mexico, the money pressure will be eased considerably.

The Audi Q5 is the model slated for the Mexican plant with additional crossover SUVs possibly in the works reports Bloomberg. By 2020, Audi expects to sell more than 2 million units worldwide, with the brand providing a significant amount of the funding its parent Volkswagen Group is relying upon to further its growth. Volkswagen manages 12 brands with the eponymous Volkswagen brand outselling the other brands combined. Asia and North America are providing the best growth opportunities for this automaker.

Audi: King of the World

In 2008, Volkswagen announced that it was aiming to take over the top car manufacturing position in the world, held by Toyota and General Motors most recently. Group sales continue to rise rapidly and the company may move on top by 2014 if not 2013. The A4 and current Q5 are its strongest sellers with significant growth coming from other models including A5, A6, A8 and Q7 models.

Photo courtesy of Audi of America, Inc.

Cadillac ATS at the Heart of Brand Revival

February 7, 2013 by admin 1 Comment

GM has made much progress in recent years to elevate its Cadillac brand back into luxury segment relevancy. Those changes began to kick in as far back as 2007 when the second-generation CTS made its debut. That sedan was followed by wagon and coupe body styles, a new SRX crossover and, most recently, the ATS sedan.

Cadillac ATS

The Cadillac ATS is a shining star for the brand, much in the same way that the CTS has always been. Last November, Auto Trends reported that the compact luxury sedans conquest rate was 70 percent, meaning seven out of 10 ATS buyers were new to Cadillac.

At the beginning of this month as GM released its Jan. 2013 US sales data, we learned that Cadillac ATS sales rose by 47 percent over December. Moreover, in January Cadillac had its best retail sales month in 23 years. GM also estimates that Cadillac market share increased by 3 points, for the largest increase of any luxury make.

See Also — Introducing the All-New Cadillac CT4

Retail Sales

Key for Cadillac is that it is relying much less on fleet sales and much more on customer sales. Fleet sales can push up the volume while also pushing down profits. Some 94 percent of Cadillacs sold last month went to individuals, just the sort of change GM has been striving to achieve for years.

Also selling well for Cadillac is its SRX crossover, a second-generation model that was refreshed and gained technological updates for the 2013 model year. This small crossover has been a delightful surprise for Cadillac, in a segment that continues to grow by leaps and bounds. Indeed, that is the reason why Lincoln fielded the MKC Concept this year: Ford wants in on the fastest-growing luxury vehicle segment.

New Cadillac Models

Two new models are slated to be released later this year and early next year. The third-generation CTS will arrive in the fall, a sedan. When pressed recently by this writer to reveal what plans that the brand has for the CTS line, a Cadillac spokesman was expectantly tight-lipped. However, Auto Trends believes that the Cadillac CTS will lose either its coupe or wagon body styles, with the ATS gaining at least one of these models in subsequent years.

The second model to be released this year will be the Cadillac ELR, a spectacular looking plug-in hybrid electric coupe that may prove to be the surprise halo product for the Cadillac brand. GM may only sell a few thousand copies annually, but then that alone may be enough.

Brand Analysis

With Cadillac selling more cars and therefore proving more profitable, GM is proving that its over-reliance on full-size pickup trucks will continue to shrink. Cadillac is adding new models and with an updated Escalade and a larger crossover in the works, GM will have Cadillac better positioned to take on Mercedes-Benz, Lexus, BMW and Audi, brands that will pose the biggest challenge for it through the remainder of this decade.

Last Minute Year-End Car Buying Tips

December 30, 2012 by admin 1 Comment

The calendar is winding down and come late tomorrow night we will be singing “Auld Lang Syne” as 2012 gives way to 2013. If you are shopping for a new car, however, you have through next Wednesday to buy a car and have that car counted toward 2012 sales. So, what is the big deal about that? Well, first you have more time on your hands to look for a better deal. Second, you can take advantage of industry competition and play these companies off of each other — that is if you are not brand loyal.

Basics

The auto industry’s selling periods do not follow the calendar precisely. That is because dealers want to even out the number of selling days each month although this year those days ranged from 24 days in April to 28 days in March.

Dealers are typically closed on Sundays and those days are not counted in the monthly mix, even if a dealer is open on this weekend day. National holidays are not counted as selling days either. Expect that some dealers that normally are closed on Sunday will be open today and those sales will be counted on Monday.

December Sales

December’s selling period always extends into January. That’s because the number of national holidays late in the year to early the following year is three and some balance must be struck to gauge sales. December sales began to be counted on the Dec. 1, but with five Sundays in the month plus Christmas followed by New Year’s Day, Jan. 2 is the last day that 2012 sales will be counted.

Just as some dealers will be open today, some will also be open on New Year’s Day — maybe not at 9 a.m. to allow late-night party-goers to regroup, but by 12 noon and perhaps well into the evening. On Wednesday, some dealers will open early and close late, in a bid to get in that final sale before the books are closed on the year.

Year-End Deals

Earlier this year in “Black Friday and New Car Deals,” we examined how consumers could save money on a new car purchase on the day after Thanksgiving. Although we stick with our guns to say that this day still offers some very good bargains, we did notice that some dealers were holding “Black Friday Sales,” making us wonder just how good those sales really were. New car dealer managers are not dumb, just annoying — wink, wink — and can just as easily read as you can, knowing that consumers are looking for bargains.

As the sales year comes to an end, there is a tussle going on between manufacturers for bragging rights. Last year, we saw BMW and Mercedes-Benz battling for the top as tsunami-battered Lexus lost ground. That battle between two premier German brands also became a source of irritation for industry analyst as both companies held back final sales data for a full day to see who won. BMW ended up winning top luxury brand honors as Lexus’ 11-year reign came to an end. For shoppers of both German brands, incentives helped close many sales.

The big battle this year will once again be on the luxury front although you can look at some vehicle segments and guess that the deals will be flowing. Toyota’s Camry looks as if it will retain its position as the best-selling midsize model, indeed, the best-selling passenger vehicle model in the U.S. for another year. Ford has a lock on standard pickup trucks, so look for some movement in other categories including compact SUVs, minivans and perhaps among mini cars.

Ready. Set. Shop.

Are you in the market for a car? Well, contact several local dealers and find out what there hours are from today through Wednesday. If you have some time on your hand, you may find it beneficial to eat your supper on Wed., head to the dealership and prepare to negotiate. You may have the sales staff on pins and needles as they wonder whether you will agree to a deal and how much that deal will cost them.

It will cost them plenty if you deal wisely.

See Also — How to Lease a Demo Car

Photo courtesy of Billy Alexander.