Last summer during a discussion with senior Hyundai management in Seoul, I asked “When can we expect to see a third plant for Hyundai and or Kia in the United States?” The response was “A third plant will be necessary when Hyundai and Kia sell 900,000 per year in the USA.”
In 2010, Hyundai sold 538,228 cars and light trucks in the USA and Kia sold 356,496 cars and light trucks. That is a total of 874,496 cars and light trucks for these two fast-growing brands. That number is also close enough for us to hypothesize that an announcement for a third Hyundai or Kia plant in the USA should be forthcoming.
Two USA Plants Already at or Above Capacity: Clearly, Hyundai is pushing the capacity of their Montgomery, Alabama plant. With the Sonata Mid-Size Sedan setting all-time sales records and the newly launched Elantra promising to sell very well, Hyundai Motor Manufacturing Alabama is out of capacity even at its increased capacity planning volume of 400,000 units. Hyundai has announced it is importing Elantras from Korea to meet extraordinary demand in the USA. Kia is adding a third shift to its West Point, Georgia plant producing Kia Sorento and Hyundai Santa Fe crossover sport utility vehicles.
Rumor – Mississippi Hyundai-Kia has likely squeezed as many concessions as possible from Alabama and Georgia to support its two plants there. A logical next choice still within range of Hyundai and Kia suppliers is Mississippi. With a third plant in the offing, any state would be willing to offer substantial concessions for the investment dollars and jobs a large scale plant inevitably generates.
Earlier this week Jeep invited us to join them at the base of the snow covered Grand Tetons in Jackson Hole Wyoming. Our mission was to test drive the entire 2011 Jeep lineup in their element – on and off-road in the snow. Something you wouldn’t want to attempt in just any vehicle.
For 2011 there is big news! Sergio Marchionne has rattled the Jeep cage and it is definitely beginning to show in their products. All vehicles received attention; the Patriot, Compass, Liberty, Wrangler and of course the all-new Grand Cherokee.
It’s been said that Sergio loathes incentives and believes that they erode profitability and brand equity. So, instead of building vehicles to a particular price-point with the understanding that they would eventually be the least expensive, highest incentivized option for consumers – it was time to draw a line in the sand and build vehicles that people see real value in. Jeep has decided to build vehicles that consumers want to buy based on product attributes not lowest common denominator. Game on!
It may come as little surprise that many manufacturers are continuing to wave the green flag here at the 2010 LA Auto Show. For the American manufacturers going green seems to mean direct injection and turbo-charging smaller displacement gasoline engines. For the German manufacturers who had hoped to sway Americans into diesels some have reluctantly decided that they should offer hybrids. While the Japanese manufacturers who have been beating the hybrid drum for so long seem to be moving on to ‘pure electrics’. With a few small EV companies really trying hard to make a name for themselves as the electric vehicle market tries to launch yet again (this time at $3.00/gallon gas).
It is interesting to see who is getting credit for what, who isn’t getting credit – and why. For some manufactures getting credit may be as simple as branding a technology that has been around for years and used by many manufacturers (e.g. Ford’s ‘EcoBoost’). Other manufacturers may not receive credit for great products simply because most Americans aren’t familiar with the newer technology or don’t really understand the benefits (e.g. VW TDI)
So let’s take a walk around the LA Auto Show…
Nissan is poised to launch a full electric vehicle, LEAF (Leading, Environmentally friendly, Affordable, Family car), in the United States that it plans to sell in very high volumes. Does the product stand up to its high volume plans?
Styling Just Short of Weird Nissan North America Director of Product Planning, Mark Perry responded to a question concerning the styling of the new Nissan LEAF as “unusual without being weird. Our stylists wanted a distinctive car but not one that was so weird looking it would put off people.” Finally, a company admits that people driving an alternative fuel vehicle want to be noticed. They want for their friends and neighbors to give them credit for being on the cutting edge, being environmentally conscious and taking an innovative risk.
Huge Pricing Incentives to Stimulate Sales Offsetting the risk is the price of the LEAF. Starting at around $32,500, early buyers qualify for a government tax credit of $7,500. If you lease the LEAF (more on that later), the tax credit goes to the lessor and effectively becomes a cap cost reduction. If you buy the LEAF, you get your tax credit the next time you file your income taxes. If you live in any one of several states, you get a tax rebate. In California, for instance, you get a $5,000 rebate – they’ll send you a check in the mail. If you are lucky enough to live in Fresno, you can get another $4,000. That brings the price of the down to around $16,000 – about the price of an equipped Versa. You end up getting the battery system, navigation system, etc essentially for FREE.
VehicleVoice got a sneak peek on Wednesday before the Thursday world debut of four Chevrolet Vehicles at the Paris Auto Show: the Cruze Hatchback, Orlando MPV, Captiva SUV, and Aveo compact. The Aveo captured most of our attention, since it is the only one of the foursome that we will see here on US roads. The new Aveo will be built in Orion Township, Michigan, utilizing the global Gamma platform.
The outside The Aveo RS show car was shown at Detroit and Geneva earlier this year. We like the fact that the production model shown here in Paris and due in US showrooms next summer carries a lot of the concept with it. Unlike historical Chevrolet small cars, the Aveo has a pretty bold stance with large headlamps that don’t look cute, a rising beltline and short overhands. While the c-pillar door handles aren’t novel, we like the way it cleans up the overall look of the vehicle.
The inside The new Aveo is longer and wider than the current model, giving it a fairly spacious interior. In recent years, General Motors has proven that it is more than capable of delivering nice interiors. We’ll give our final opinions when we get some seat time, but he overall look of the vehicle here is Paris was nice. Better materials, fit and finish than the current model, which is pretty nice in its segment. The interior of the Aveo incorporates a motorcycle-inspired instrument binnacle with an analogue tachometer and a digital speedometer. The interior includes blue backlighting, a nicely styled center stack with a symmetrical appearance and easy to read and understand controls. A dual cockpit setup gives it a sporty feel. The audio system incorporates USB, aux-in and Bluetooth functionality.
How will it drive? While we have yet to get behind the wheel, Chevrolet promises an improved experience, as the new Aveo has been engineered to provide better handling with improved torsional rigidity. Chevrolet claims the new Aveo will be among the stiffest in the small car segment. Electronic power steering (EPS), Electronic stability control (ESC) and ABS brakes will be standard.
Under the Hood We expect the U.S. Aveo to be offered (at least initially) with a 1.6L gasoline engine and most of those to be equipped with a six-speed automatic. A 138HP 1.4L turbo may be offered later as a performance model. Electronic power steering and stability control are expected to be standard.
The Challenge Chevrolet hopes the Aveo will appeal to younger customers with its sporty hot-hatch look. AutoPacific data show that the current model has median age of 58, which is 6 years older than Honda Fit, Toyota Yaris, Nissan Versa and Honda Civic. In addition, the current Aveo buyer has a median household income of $50,000, which is a full $20,0000 less than the Fit. Improving both of these key metrics will be an important role for the Aveo. We’d agree that a smartly priced Aveo could be compelling the US market. Now it’s up to Joel Ewanick and Chris Perry to get the word out.
Last Thursday we were invited to attend what was called ‘The Porsche Aircraft Experience’. The event was held at an airport in Carlsbad California and was sponsored by private aviation companies and a local Porsche Dealership. Truth be told, we were not there to admire any overhead storage bins or lavatories in any aircraft and we don’t exactly have the funds to go out and purchase a new 911. But who would pass up the opportunity to indulge in Porsche road going machines? This was an experience not offered up to automotive journalists or analysts very often. So we jumped at the chance.
Nissan has today announced U.S. LEAF pricing. On the eve of the New York show, they have successfully caused a near-unanimous “WOW” across the industry with an amazingly low price for high-technology system. Profit per vehicle is not something automakers are happy to talk about in any situation, but the expectation is that Nissan may not make any profit on the LEAF for many, many years. Still, the combination of an affordable price and the years of deep legwork Nissan has done in preparing consumers and communities for the product, the LEAF is the biggest step yet in advancing the cause of electric vehicles. What does this mean for the success of LEAF? Here’s my first reaction…
$32,380 ($25,280 after $7500 Federal tax credit)
$349/month for 36-month lease (Nissan takes the credit to enable that price)
$2200–AeroVironment home-charging dock and installation (also eligible for tax credit)
$99 Registration fee, refundable (www.nissanusa.com)
Women owning HUMMERs have a strong affinity for ten consumer brands in the USA.
AutoPacific’s Research Suite database that annually collects the opinions of over 30,000 buyers of new cars and light trucks asked which of 27 brands a new owner would buy from. The results from AutoPacific’s Consumer Brands Study clearly show the interrelationship between owners of auto brands and buyers of twenty-seven consumer brands like Walmart, Lowe’s, Apple, Sony, Hugo Boss, Costco, McDonalds and more.
What the study shows is that you likely won’t find a Porsche driven by a woman in a Walmart parking lot, but you are likely to find a Land Rover driven by a woman at an Apple Store. Using these data AutoPacific can develop clear profiles of the dynamics between these auto brands and consumer brands.
Looking only at female buyers, HUMMER buyers were most likely to shop at Lowe’s, Old Navy, The Gap, Walmart and to buy Coca Cola, Levi’s, Axe, LG, HP and Hugo Boss.
The only other brand that came close to HUMMER gals was Land Rover. They were tops in Polo, Methoc, Sony, Gucci, Hugo Boss and HP. They were also in the top five among Trader Joe’s, Whole Foods, Apple, Starbucks, Costco and Louis Vuitton shoppers.
Interest in Small Cars, Hybrids
Declines Despite Fuel Price Increase
TUSTIN, Calif. (February 11, 2010) – AutoPacific regularly tracks the impact of fuel prices on the type of vehicles Americans will consider buying. The results for the just-completed Fuel Price Impact Survey show very surprising results.
Governmental mandates and consumer desires appear to be moving at cross-purposes. At a time when Congress and the Obama Administration are mandating more fuel efficiency, fuel price increases have moderated. Consumer preferences are swinging in the direction opposite what the government desires. Consideration for small cars and hybrids, the most fuel efficient vehicles, is down dramatically, while consideration for pickups and SUVs is up dramatically. Over 1,000 respondents completed AutoPacific’s January 2010 wave of its Fuel Price Impact Study.