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January 13, 2009
Automotive Report: Why Aren't We Buying?
Global automotive sales are down, and nearly half of Americans say they are going to delay a new car purchase. Why are so many of us not buying a new car? Perhaps because there is nothing wrong with the old one.
Automotive sales in the United States alone dropped 18 percent in 2008. That is the lowest level since 1992 and the steepest decline in 29 years.
This year isn't expected to be much better, and the trouble has spread throughout the world: CSM Worldwide, IHS Global Insight and other automotive analysts have forecast that global vehicle sales will fall anywhere between 8 percent and 13 percent in 2009.
There have been plenty of theories about why consumers abruptly stopped buying cars — and not American cars only, but all kinds of cars: poor fuel economy, lack of available financing, credit crunch and deepening recession.
However, a new survey has found that the most popular reason for not buying a new car is that there's nothing wrong with the old one.
Consumer Reports has found that about half of the country says they're going to delay a new car purchase. The top five reasons for holding off:
- The existing vehicle is still in good shape (39 percent);
- Vehicles have become too expensive (30 percent);
- General concern for the weak economy (30 percent);
- Waiting for fuel-saving technologies to become more affordable (18 percent); and
- Interest rates for vehicle financing are too high (18 percent).
Among the results that suggest further challenges lay ahead for the beleaguered auto industry, 13 percent of respondents said they couldn't get financing.
Consumer Reports' 2009 Auto Brand Perception Survey focused on seven categories for consumers' perceptions of brand leadership: 1) design/style; 2) performance; 3) quality; 4) environmental friendliness/green; 5) safety; 6) technology/innovation; and 7) value.
In rank order, Toyota, Honda, Ford, Cadillac and Mercedes-Benz dominated overall scores for brand perception.
"Value" — here considered by car buyers as "the most bang for their buck" — was considered a leading factor by 49 percent of the survey's respondents.
Moreover, 21 percent of the respondents cited "quality" as a most significant factor in choosing a new vehicle, as this factor speaks to not just its initial fit-and-finish impression, but to how well the model will hold up over time.
"Given that about half of the respondents said that they have owned their current model longer than initially planned, that longevity might be more important to them than ever," according to Consumer Reports' findings.
However, of the seven factors in the survey, "safety" stood out as the most important to consumers when shopping for a new vehicle; it was rated No. 1 by a quarter of respondents.
"Driven by market competition and increasingly tough safety standards, automakers in general have been making improvements to vehicle structures, air bags and safety systems over time," according to the Consumers Union publication.
"But not all cars provide comparable protection," Consumer Reports warns.
Consumers overwhelmingly (71 percent) consider Volvo to be the leading brand in safety, followed by Ford (19 percent), Honda (18 percent), Toyota (16 percent) and Mercedes-Benz (15 Percent).
In the Institute for Highway Safety's 2009 Top Safety Pick awards, Ford and its subsidiary Volvo had 16 winners, followed by Honda with 13 vehicles, the latter having been awarded at least one Top Safety Pick in every vehicle class in which it competed.
Over the latter half of the past year or so, we've seen the U.S. market for automobile sales nearly collapse and almost take the nation's domestic auto industry with it. In these tough economic times, providing car buyers — all consumers, in fact — with the most for their money is crucial.
The bottom line, according to Consumer Reports: "While some brands earn a deserved reputation over time, others may influence their perception through design and marketing. Perception is not reality... ."
So, why aren't you buying a new car? Do these new findings match your own experience?
Resources
Consumer Reports Car Brand Perceptions Survey
Consumer Reports, Jan. 8, 2009
Nearly Half of Americans Have Delayed Purchasing a New Car
Consumer Reports, Jan. 8, 2009
2009 Top Safety Pick Awards
Insurance Institute for Highway Safety, Nov. 25, 2008
By the Numbers - 2008: Phew! Glad That's Over Edition
by John Neff
AutoBlog, Jan. 5, 2009
Winners and Losers - 12 Months 2008
Automotive News, January 2009
... Global Light Vehicle Sales will Rebound in 2010; Strongest Gains Will be in North America
CSM Worldwide, Jan. 12, 2009
Automakers Put on Brave Face at Tense Detroit Auto Show
Agence France Press, Jan. 12, 2009
U.S. 2009 Auto Sales Seen at 27-year Low
by Nick Carey and David Bailey
Reuters, Jan. 13, 2009
Analyst: Auto Industry Facing Extended Weak Demand
by Ken Thomas
The Associated Press / Forbes, Jan. 13, 2009
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Comment
9 CommentsThe math rarely works out for a new car. I have a paid-for 1996 pickup. It gets 20MPG +/- 1. It has 205,000 miles and runs like a top.
Lately, I drive 10k miles per year or less
10,000 / 20 = 500 gallons of gas
500 * $4 = $2000 per year for gas
10,000 / 35 = 285.7 gallons of gas
285 * $4 = $1140 per year for gas
It would take 17 years to pay for a $15,000 car. Actually much longer because of the higher insurance cost and any loan interest.
Just my opinion on the subject.
January 13, 2009 2:39 PMWHY COMPUTERS BECOME BETTER AND BETTER AND CHEAPER AND CHEAPER AND CARS BECOME BETTER BUT NOT CHEAPER?
January 13, 2009 2:47 PMAlso, don't forget, it could be that the five and even six year financing Zero down options have left people with cars they are still paying for, with financing that means that, even in year five, the payoff is worth more than the car.
January 13, 2009 2:57 PMI think that is time to go back to basics.
The new cars have more and more new features, that cost more money. All we really need is basic transportation that is economical to run. All those extra features are not really necessary. Remember the Volkswagen Beetle! It did not change style for many years.
January 13, 2009 4:43 PMPeople are not buying cars because they are afraid that they might not have a job to pay for them. Just like why they are not buying houses, even though this is the best buyers market in years. It's all about the money flow.
What I really wonder is, when the money starts flowing again, are we going to be the same type of consumers or will we be "gun" shy? Will we have a values shift?
January 13, 2009 4:49 PMI think that is a good time for saving money and for helping the environment with electric cars and hydrogen cars.We have given enough money to the oil companies during all this years and the Bush's family. We need to change the way of the lifestyle.
January 13, 2009 6:40 PMMiguel: Have you had much experience handling hydrogen? Those tiny molecules are very difficult to contain.To store a reasonable amount of hydrogen in a space compatible with an automobile, you will need to use very high-pressure flasks or bottles. Most people will be happy to have a missile or two mounted in their trunk. How efficient or green really is that electric car? Here in the U.S., 50% of our electricity comes from good ol' clean coal. Oh, right, more solar and wind power. Sure. Probably not in our lifetimes in any meaningful way. Wait a minute, our government shall decree it, and it will happen. Sure. Like it or not, market forces in conjunction with achievable technology is what brings about change. Gov't edicts and whining about global warming ain't gonna do it.
January 28, 2009 3:29 PMCars today are loaded with features that many of us do not need or want. Leather seats, Moon-roofs, 17 inch wheels, On-Star, Satelite radio, GPS, Heated Seats, Auto Temperature Controls, 4 wheel drive, all are nice gadgets, but add a huge amount of cost. Try to buy without these and you end up with a stripped-down vehicle.
It's as if the auto manufacturers are only trying to keep the price high by giving us stuff many of us could live without.
January 28, 2009 3:57 PMI would like to buy a small, high gas mileage truck right now, but the US carmakers DO NOT MAKE ONE. Unfortunately, I can't afford to go to Europe and bring one home. Chevy does not even offer a small truck with manual transmission (for better fuel economy). It's hard to feel sorry for Detroit when they just don't build what people want. If FORD made a 2008 or 2009 base model Ranger with 2WD and flex fuel E85, I would buy one tomorrow. Good luck finding any. Everything available, even used, are 4WD, big engines, lots of useless features, and subsequent big price tags.
I also agree that people are not buying because they don't know what tomorrow brings on the employment front.
January 29, 2009 10:53 AM
