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Quality Issues, Higher Prices Make New Car Buyers Cranky in 2014

Better vehicles don’t equate to happy customers, survey shows.

by on Aug.31, 2015

Lexus finished atop the most recent American Customer Satisfaction Index beating Mercedes.

Despite the fact that new vehicles have more convenience and safety features than ever – equipment expected by new vehicle buyers – those same people are growing tired of the quality issues and higher prices that often come with those add-ons.

Car buyer satisfaction fell 3.7% in 2014, the third year in a row, to 79 on a scale of 100, according to the American Customer Satisfaction Index. The slide isn’t entirely unexpected as the industry recalled more than 60 million vehicles last year.

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Owners reported a 40% increase in recalls in the second quarter of last year, the ACSI reported. Many of the actions were related to the electronics and safety options that are supposed to make driving safer and more enjoyable. (more…)

Auto Sales Soar – But So Does Auto Loan Debt

Sub-prime lending and delinquencies raise concerns.

by on Aug.20, 2014

Sub-prime lending has sharply increased - though it remains lower than before the recession.

Car sales may be soaring to their highest levels since the depths of the recession but, in the process, U.S. motorists are running up record auto loan debts.

The combination of rising car prices and a negligible growth in wages has only compounded the problem, buyers going deeper into debt to drive off showroom lots. Outstanding auto loans hit an all-time record of $839.1 billion during the second quarter, a whopping 11.7% year-over-year increase, according to debt tracking service Experian Automotive.

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It marks the 13th consecutive quarter auto loan has increased, according to a separate report by the Federal Reserve Bank of New York. Overall, outstanding household debt was essentially flat, the Fed noted.

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Rising Consumer Confidence Driving Surge in Car Sales

2013 set to end as best year since recession began.

by on Dec.26, 2013

Consumers are feeling more upbeat about buying a car as the economy continues to improve.

With the New Year fast approaching, there are new signs the auto industry will finish 2013 with a flourish as consumer sentiment continues to improve along with the job market.

Sales for 2013 are certain to be the best in six years, according to industry analysts who continue to debate just how much more upside potential there is for 2014 and beyond.

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“We expect December to finish strong,” said Larry Dominique, President of ALG and Executive Vice President of TrueCar.com. ”Consumers are taking advantage of low lease rates and inexpensive financing, which continues a shift from buying used to buying new.”

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Tax Season A Blessing for Auto Industry

Refunds finance surge in sales.

by on Apr.11, 2013

Auto showrooms - especially used car outlets - are especially busy at tax refund time this year.

While you may be scraping together the cash needed to cover the tax bill due by next week, millions of other Americans have been claiming or already receiving big refund checks – and that’s good news for automakers and auto dealers.

While there are no hard statistics that indicate precisely how many taxpayers take their refund checks over to the local showroom, industry experts say that’s helped fuel strong sales of both new and used vehicles in recent weeks, though the surge will likely soon wind down.

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The year began a little more slowly than Ricky Beggs, senior editor of the used car pricing guide, The Black Book, had expected, but began to surge in March and he says, “I think this has been tax-driven.”

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Social Media, Web Review Sites Strongly Influence Satisfaction with Car Buying Process

Nearly 80% of all buyers now go online to help chose their next vehicle, according to new Power study.

by on Nov.28, 2012

The new study makes it clear car buyers want dealers to listen and help them make the right decision.

How satisfied you are with the process of purchasing your next vehicle will likely be influenced by whether – and where – you do your research online, according to a new study.

Among the various brands, Lexus achieved the highest level of satisfaction among luxury brands but Mini wasn’t very far behind.

Nearly 80% of all American car buyers go online during at least some part of the purchase process, according to the latest annual Sales Satisfaction Index from J.D. Power and Associates.  And about a third of all shoppers rely on ratings and review sites to help them pick a dealer.  But buyers who consult social networking sites, such as Facebook, tend to be more satisfied.

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“For years, new-vehicle buyers have accessed the Internet to research model information, vehicle features, configurations and pricing,” said Chris Sutton, senior director of the Automotive Retail Practice at J.D. Power and Associates. “Now, neutral online ratings/review sites are playing a key role in dealer selection. Whether the online reviews are positive or negative, they impact buyers’ willingness to visit a dealer.”

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Lenders Loosen Up Car Loans

Sub-prime lending returns – for those willing to pay the price.

by on May.31, 2012

Lenders are returning to the automotive market, according to a new study.

Even in the depths of the Great Recession there were plenty of folks willing and seemingly able to buy new cars.  The problem for many was a lack of loans.  Banks and other lenders all but shut off the spigot, refusing to do business, in some cases, with even the most credit-worthy customers.

While financing still isn’t quite as readily available as it was during the bubble years – when some lenders were willing to offer so-called NINJA loans, for those with no income, no jobs or assets – consumers are once again beginning to find credit easing up, according to a survey by Experian Automotive.

The good news for both new and used car shoppers is that loans are not only more readily available they’re also being offered at lower rates.  Experian’s latest survey also found lenders beginning to wade back into the waters of sub-prime lending – though shoppers with risky credit histories are paying substantially higher rates.

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“During the first quarter of 2012, car shoppers definitely found more favorable conditions for their vehicle loans,” said Melinda Zabritski, director of automotive credit for Experian, which tracks lending and credit. “A reduction in average credit scores, lower interest rates and a lengthening of loan terms are all very good signs for the market and offer great opportunities for consumers looking to make a deal on a new or used vehicle.”

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Growing Number of Buyers Steer Clear of Imports

“Conventional wisdom,” rather than latest quality data, often a factor in brand selection, says new J.D. Power study.

by on Jan.26, 2012

Makers like Ford -- its new 2013 Fusion shown here -- and Hyundai have to overcome negative quality perceptions that lag reality, according to a new study.

Word-of-mouth is typically a critical factor in the choice a car buyer makes, yet “conventional wisdom” about which brands have the best quality may be sorely out of date, notes a new study by J.D. Power and Associates. Nonetheless, 40% of buyers say they steered clear of one brand or another because of what they’ve heard about quality, rather than actually checking for the latest data.

Meanwhile, though Detroit automakers have long abandoned their “Buy American” campaigns, the public’s interest in bringing more manufacturing jobs back to the U.S. seems to be paying off.  Power’s latest annual “Avoider Study” finds that that nearly one in seven buyers has steered clear of a foreign-badged product precisely because of where it was made.

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The 2012 Avoider Study also found that fuel economy is now the most influential factor in choosing – or avoiding – a product, though factors like price and styling are also strongly influential.

“The fact that so many new-vehicle buyers may be basing their opinions about quality and reliability on pre-conceived notions, rather than concrete information or data, demonstrates how important it is for automakers to promote the quality and reliability of their models,” said Jon Osborn, research director at J.D. Power and Associates.

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TrueCar Acquiring Industry Bible ALG

Deal another move to make new web service an industry powerhouse.

by on Aug.22, 2011

TrueCar is acquiring ALG for $83 million.

Internet start-up TrueCar.com will invest $83 million to acquire ALG, a data service that is the gold standard for the automotive industry when it comes to establishing such things as what a car is expected to be worth at trade-in or when its lease expires.

The acquisition of what was originally known as the Automotive Lease Guide is expected to significantly enhance the capabilities and credibility of TrueCar, an upstart website and service that has challenged the traditional online method of both providing consumers with automotive pricing and helping dealers and manufacturers connect with buyers in the final stage of picking a new vehicle.

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“We’re committed, first and foremost, to transparency when it comes to accurate market data,” said TrueCar CEO and founder Scott Painter, and he expects that the extensive research capabilities of ALG will continue to improve TrueCar’s own services.

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Detroit Makers Still Struggling to Win Young Buyers

But there are some surprises among the brands Millennials want most.

by on Jul.07, 2011

Scion's tC is the most popular model with Millennials.

Conventional wisdom suggests that young buyers will turn away from the products their parents drove – potentially good news for Detroit’s Big Three who collectively lost the big Baby Boom generation to the imports.

New models, such as the Ford Fiesta, are specifically targeting Generation-Y, and the success of those products could determine whether Detroit reverses decades of market share losses, particularly in trendy coastal regions, such as California, where domestic brands account for barely one in four current car sales.  (Click Here to find out which are the most “patriotic” automotive markets.)

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Unfortunately for the Motor City, a new study suggests that while Gen-Y might be turning away from some traditionally strong Japanese marques, like Toyota and Honda, those young buyers are continuing to focus on Asian, rather than American, automakers.

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A McBlog Sidebar

The worst of time (can be) the best of times.

by on May.16, 2011

Storm clouds on the horizon? Buying some cars, like the Prius, can be a challenge right now.

Buying a car, these days, can test the patience of Job, columnist Denise McCluggage noted in her latest McBlog, yet the worst of times can turn into the best of times…with a little help. Here’s a sidebar to her column.

Fred Vang is a personal consultant to car shoppers. He lives in Santa Fe NM but his clients come from anywhere. He helps them gel their amorphous thoughts about acquiring a new car into something he can actually search for. He negotiates the deal, he handles the documentation and registration and arranges all the delivery details. In short he drains the tension out of acquiring a new vehicle and enhances the pleasures.

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In the current market that’s hard to do but his long-held connections still leave the door ajar.

Fred sees a bright spot even in a market with new models in limited supply and used cars tagged with extremely high prices. “The worst of times can be the best of times for a few,” he says. And those few are people just coming off a lease.

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