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: Gap widens between average price of U.S. car and foreign-built auto

10-20-2011, 11:36 AM

Gap widens between average price of U.S. car and foreign-built auto

By Zach Bowman Posted Oct 20th 2011 10:28AM

Automotive News reports that domestic automakers are gaining market share thanks in part to the weak dollar. Import vehicles are currently selling at the highest price premium in 12 years compared to their domestic counterparts.

Whereas imports sold for an average of $31,636 in August, domestic vehicles left the lot for an average of $23,922. That's a difference of over $7,000, and the largest gap since 1999. That fact has helped Chrysler, Ford and General Motors pick up some market share. In addition, the earthquake and tsunami activity in Japan earlier this year resulted in tight supply of some Japanese vehicles, further pushing buyers into the waiting arms of domestic automakers.

The report says that total domestic light-vehicle deliveries increased by 10 percent from this time last year. That pushed GM to gain a full point of market share and Ford to pull an extra tenth of a percentage point.

10-21-2011, 12:24 PM
Weak USD Makes Small Car Imports Expensive, American Buyers Turn to Domestic Brands

Is a weak dollar a good thing? If you’re asking the U.S. car industry, it most definitely is. Imported car prices have reached their highest point in the last 12 years, thus driving some of their prospective buyers away.

According to the U.S. Bureau of Economic Analysis, in August the average price of an imported car reached a record high of $31,536. That makes the price difference between a comparable domestic-made car $7,614, which is the largest since December 1999.

Add to that the severe supply issues faced by the Japanese manufacturers, who are only now starting to recover from the aftermath of the March 11 earthquake, and it’s easy to see why more and more American car buyers are choosing domestic brands instead.

This trend is very popular in more affordable cars, where the yen’s strength compared to the US dollar diminishes profits for Japanese carmakers, which in turn, limit their sales.

“It’s very hard to import small cars right now, especially from Asia, because of where the dollar is”, said chief economist for Nationwide Mutual Insurance Co. in Columbus, Ohio. Yesterday, the yen rose less than 0.1%, to 76.84 per dollar.

Another reason for the increased popularity of US-made cars in their home market is the fact that local manufacturers have minimized the difference in quality between their products and those of their Japanese rivals.

A 2009 J.D. Power study found that the difference in the numbers of problems owners of Toyota, Chevrolet and Ford cars was “statistically insignificant.”

Consequently, in the first nine months of 2011 GM’s US market share has risen to 20% and Ford’s to 16.7%, while U.S. light-truck sales have increased by 10% compared to last year.

The sales drop and the rising yen are also making discounts almost impossible to Japanese carmakers, which are losing their last weapon in their effort to reclaim their lost share. IHS stated that it is “not expecting the usual year-end clearance promotions” from Toyota and Honda.

The only solution, as first adopted by Nissan’s CEO Carlos Ghosn, is cost-cutting. Honda has already decided to halve its domestic production, while Toyota is taking more drastic measures, like retooling old assembly machines, pushing its suppliers to lower their prices, and for the first time, manufacturing hybrids outside Japan.

In the meanwhile, models like the Chevrolet Cruze will continue to benefit from its competitors’ troubles gaining market share against the Corollas and the Civics and increasing U.S. carmakers’ profits.

Story References: AutoNews

10-30-2011, 09:28 AM
When we talk of foreign competition, we generally talk about the Japanese. I think we are overlooking a sleeping giant. Korea is doing to the Japanese what the Japanese did to America. They are building better cars at a better price and the dealers are treating customers better than the Toyota and Honda dealers.

I shopped for a new family car for weeks and compared Ford, GM, Toyota, Honda, Hyundai and Kia. My heart wanted to buy a Ford Fusion but my wallet wanted a Kia Optima because of the price and the options not available on any of the other cars along with the warranty. My wallet won the battle and I deserted the US auto makers for the first time in my life. I havee features, a longer warranty, and far more power while saving $3,000-$5,000 over all of the other contenders. None of the other cars even offered heated and cooled front seats, heated rear seats, heated steering wheel, memory drivers seat, panoramic sun roof and several other features at any price. It does seem odd to see a Kia sitting next to my Escape and F-150.