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State of the Automotive Industry - US - July 2009

This report explores the automotive market in the U.S. It provides insight into the external and internal factors affecting car and truck sales and consumer trends, and what they mean for future sales, promotional campaigns and industry innovations. Specific questions that are answered in this report include, but are not limited to, the following:

  • What effects do rising gasoline costs and the economic downturn have on the overall market?
  • How has the market share changed among domestic and foreign automakers and what companies are benefiting?
  • How have the bankruptcy filings of General Motors and Chrysler affected those long-time U.S. giants and how they sell cars into the future?
  • What is being done to innovate the ways cars are marketed and sold to the public, and how can others learn from these examples?
  • How are new federal regulations on fuel efficiency going to affect how cars are produced and marketed into the future?
  • What is the status of so-called “dead brands,” or those that have been either sold or shuttered by the major automakers?
  • How have automakers failed to connect to women car buyers and what can be done to increase sales?
  • What media are industry leaders using to deliver effective marketing campaigns, and what actions need to be taken to improve visibility?

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Consumer survey data
            • Advertising creative
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Domestic new car unit sales losing ground to imports
                      • Federal regulations, programs forcing U.S. automakers to change
                        • Cash for Clunkers
                          • Climate change legislation
                            • Push for electric vehicles
                              • After gradual declines, dealership revenues plummet starting in 2008
                                • U.S. dealership units in continual freefall over the past 21 years
                                  • Advertising budgets suffering from federal regulation, declining sales
                                  • Insights and Opportunities

                                    • Turning green messages into personal advocacy can speak to recession
                                      • Target gay, lesbian car buyers who are proven to be brand-agnostic
                                          • Figure 1: Top 10 dealer locator brand searches, gaywheels.com, January-April 2009
                                        • Create incentives that speak to specific realities of the current recession
                                            • Figure 2: Consumer attitudes regarding new car retailers and incentives, by gender, February 2009
                                        • Federal Regulatory Measures: How They will Shape Selling Cars into the Future

                                          • Overview
                                            • Cash for Clunkers
                                              • What it means
                                                • Climate change bill to double federal loans for plug-in electrics
                                                  • What it means for electrics and hybrids
                                                    • New proposals to address tire fuel efficiency
                                                      • What it means
                                                      • Market Size

                                                        • Key points
                                                          • Domestic new car unit sales losing ground to imports
                                                            • Figure 3: Total U.S. unit car sales, by domestic and import, 2003-08
                                                            • Figure 4: Total U.S. car unit sales, 2003-08
                                                        • Imports Versus Domestics

                                                          • Key points
                                                            • Import production volume to increase while domestic slowing by 2012
                                                              • By mid-2009, domestics losing market share to foreign automakers
                                                                • Figure 5: U.S. unit sales of light vehicles, January-June 2008 and 2009
                                                            • Domestics—General Motors Corporation

                                                              • Key points
                                                                • Overview
                                                                  • Dealing with an image problem
                                                                    • Renewed focus on hybrids, electrics
                                                                      • North American GM sales fell 23% in 2008
                                                                        • Figure 6: GM total North America automotive sales revenue, 2006-08
                                                                        • Figure 7: GM North America vehicle unit sales, by car and truck, 2006-08
                                                                    • Domestics—Chrysler LLC

                                                                      • Key points
                                                                        • Overview
                                                                          • Sales down 46% in Q1 2009
                                                                            • Incentives include employee pricing, 0% financing
                                                                              • New vehicles stunted for 2009, but new model launches for late 2010
                                                                                • Figure 8: Chrysler U.S. vehicle unit sales, 2005-08
                                                                            • Domestics—Ford Motor Company

                                                                              • Key points
                                                                                • Overview
                                                                                  • Mounting debt forcing company to pursue more innovative vehicles
                                                                                    • Ford dealerships launch campaigns to rectify consumer perception
                                                                                      • Ford revenues drop nearly 24% in 2008 from previous year
                                                                                        • Figure 9: Ford total North America automotive sales revenue, 2006-08
                                                                                        • Figure 10: Ford U.S. vehicle unit sales, 2005-08
                                                                                    • American Pride: Patriotism in a Recession

                                                                                      • Key points
                                                                                        • Who are consumers with American Pride?
                                                                                          • American Pride is reflected the most by large trucks, SUVs, not compacts
                                                                                              • Figure 11: Vehicle ownership, by American Pride, February 2009
                                                                                            • American Pride respondents more influenced by personal recommenders
                                                                                              • Figure 12: Research preference, by American Pride, February 2009
                                                                                            • Economy fears translate mainly to sticker price, less to fuel economy
                                                                                              • Figure 13: Vehicle feature preference, by American Pride, February 2009
                                                                                          • Imports

                                                                                            • Key points
                                                                                              • Import unit sales rising while domestic sales on the decline
                                                                                                • U.S. luxury market threatened by small, crossover imports
                                                                                                  • Toyota Motor Co.
                                                                                                    • A leader in hybrid technology, design
                                                                                                      • Toyota’s unit car sales in U.S. increased 5.3% in 2008 from four years prior
                                                                                                        • Figure 14: Toyota Motor Sales U.S.A.’s U.S. vehicle unit sales, 2005-08
                                                                                                      • Honda Motor Co.
                                                                                                        • Competing against Toyota’s Prius with the Insight
                                                                                                          • Honda’s unit car sales in U.S. increased 4.7% in 2008 from four years prior
                                                                                                            • Figure 15: Honda’s U.S. vehicle unit sales, 2005-08
                                                                                                          • Nissan Motor Co.
                                                                                                            • Nissan planning to mass-market electric cars
                                                                                                              • New Cube marketed to young drivers
                                                                                                                • Unit car sales in U.S. increased 3.7% in 2008 from four years prior
                                                                                                                  • Figure 16: Nissan North America’s U.S. vehicle unit sales, 2005-08
                                                                                                                • Hyundai Motor Co.
                                                                                                                  • A push for hybrids, electrics
                                                                                                                    • Figure 17: Hyundai U.S. vehicle unit sales, 2005-08
                                                                                                                • Retail Distribution

                                                                                                                  • Key points
                                                                                                                    • After gradual declines, dealership revenues plummet starting in 2008
                                                                                                                      • Figure 18: Total sales at new car dealerships, at current prices, 2003-09
                                                                                                                      • Figure 19: Total sales at new car dealership, at inflation-adjusted prices, 2003-09
                                                                                                                    • U.S. dealership units in continual freefall over the past 21 years
                                                                                                                      • Figure 20: U.S. new car dealerships, 1987-2008
                                                                                                                    • New vehicle sales dominate, but losing slight market share to used
                                                                                                                      • Figure 21: U.S. sales at new car dealerships, by segment, 2005 and 2007
                                                                                                                    • Where consumers are buying cars now
                                                                                                                        • Figure 22: Source of last new vehicle purchased, by gender, February 2009
                                                                                                                      • Younger consumers more open to non-traditional channels
                                                                                                                        • Figure 23: Source of last new vehicle purchased, by age, February 2009
                                                                                                                      • Highest household incomes prefer brand dealerships
                                                                                                                        • Figure 24: Source of last new vehicle purchased, by household income, February 2009
                                                                                                                      • Exclusive brand dealerships rated highest among all groups
                                                                                                                        • Figure 25: New vehicle retail preference, by race/Hispanic origin, February 2009
                                                                                                                    • Dead Automotive Brands: Where Are They Now?

                                                                                                                      • Overview
                                                                                                                        • Hummer
                                                                                                                          • Pontiac
                                                                                                                            • Porsche
                                                                                                                              • Saab
                                                                                                                                • Saturn
                                                                                                                                • Innovations and Innovators

                                                                                                                                  • Parts suppliers rate domestics far behind imports in product innovation
                                                                                                                                    • Figure 26: Automotive parts supplier ranking of automaker innovations, 2009
                                                                                                                                  • Kia finds opportunity in chaotic Saturn closings to widen brand’s territories
                                                                                                                                    • Hyundai uses bartering to its advantage to avoid losses from liquidation
                                                                                                                                      • Toyota combines television product placement, text message interaction
                                                                                                                                        • Ford creates program to help consumers navigate CARS program
                                                                                                                                          • Online research site targets women car buyers through tailored features
                                                                                                                                            • Dealership website launched to help stem consumer financing fears
                                                                                                                                            • Advertising and Promotion

                                                                                                                                              • Advertising budgets suffering from federal regulation, declining sales
                                                                                                                                                  • Figure 27: Automaker and auto dealership adspend on U.S. media, 2003-08
                                                                                                                                                • GM, Chrysler scale back adspend considerably due to bankruptcies, debt
                                                                                                                                                  • Digital media investment stable, source of creative marketing endeavors
                                                                                                                                                      • Figure 28: Online advertising by the U.S. automotive industry, 2007-12
                                                                                                                                                    • GM, Chrysler forced to tone down advertising to address bankruptcies
                                                                                                                                                    • Mintel Asks the Experts: How to Sell Cars Now

                                                                                                                                                      • Overview
                                                                                                                                                        • Where do automakers start to address the crisis that is slamming their industry?
                                                                                                                                                          • How does this affect General Motors and Chrysler in particular?
                                                                                                                                                            • Is the difficulty these companies are having limited to domestics and not foreign makers?
                                                                                                                                                              • Can foreign car companies play on the difficulties that domestics are having?
                                                                                                                                                                • What messages will resonate with consumers during this downturn?
                                                                                                                                                                  • How much is consumer fear a factor in the buying process right now?
                                                                                                                                                                    • Is time a factor here? Are automakers moving too slowly to change?
                                                                                                                                                                    • Mintel Asks the Experts: What Women Car Buyers Want

                                                                                                                                                                      • Overview
                                                                                                                                                                        • What are women looking for when they are interested in buying a new car?
                                                                                                                                                                          • How are dealerships missing the boat then in creating that confidence and trust?
                                                                                                                                                                            • Besides the sales approach, do they need to address how their dealerships are designed?
                                                                                                                                                                              • What amenities are lacking at dealerships but would impress women buyers?
                                                                                                                                                                              • Mintel Asks the Experts: How Future Cars Will Connect

                                                                                                                                                                                • Overview
                                                                                                                                                                                  • What factors go into shaping new vehicles for the future?
                                                                                                                                                                                    • How can congestion be addressed by new vehicle technology?
                                                                                                                                                                                      • What would it take in the infrastructure of making cars for this to take place?
                                                                                                                                                                                        • How can advertisers participate in this technology?
                                                                                                                                                                                          • For this to take hold, do partnerships need to take place between automakers?
                                                                                                                                                                                            • What segment of the driving population would be a good place to start?
                                                                                                                                                                                              • Micros like the GM’s PUMA are often used for commercial fleets. What are their advantages?
                                                                                                                                                                                                • What will it take for these vehicles to gain momentum here?
                                                                                                                                                                                                • Appendix: Trade Associations

                                                                                                                                                                                                  Companies Covered

                                                                                                                                                                                                  • American Eagle Outfitters Inc
                                                                                                                                                                                                  • American Honda Motor Co., Inc.
                                                                                                                                                                                                  • American Suzuki Motor Corporation
                                                                                                                                                                                                  • Audi of America Inc
                                                                                                                                                                                                  • Automotive Industry Action Group (AIAG)
                                                                                                                                                                                                  • BMW of North America, LLC
                                                                                                                                                                                                  • Chrysler LLC
                                                                                                                                                                                                  • Facebook, Inc.
                                                                                                                                                                                                  • Ferrari S.p.A.
                                                                                                                                                                                                  • Ford Motor Company (USA)
                                                                                                                                                                                                  • General Motors Corporation
                                                                                                                                                                                                  • Hyundai Motor America
                                                                                                                                                                                                  • Interpublic Group of Companies, Inc. (The)
                                                                                                                                                                                                  • Jaguar Cars North America
                                                                                                                                                                                                  • Kia Motors America, Inc.
                                                                                                                                                                                                  • Leo Burnett Worldwide, Inc.
                                                                                                                                                                                                  • Mazda North American Operations
                                                                                                                                                                                                  • Mercedes-Benz UK
                                                                                                                                                                                                  • Mitsubishi Motors North America, Inc.
                                                                                                                                                                                                  • National Automobile Dealers Association (NADA)
                                                                                                                                                                                                  • National Highway Traffic Safety Association (NHTSA)
                                                                                                                                                                                                  • Nissan North America, Inc.
                                                                                                                                                                                                  • Omnicom Group Inc.
                                                                                                                                                                                                  • Penske Automotive Group, Inc.
                                                                                                                                                                                                  • Porsche Cars North America, Inc.
                                                                                                                                                                                                  • Saab Cars North America
                                                                                                                                                                                                  • Subaru of America, Inc.
                                                                                                                                                                                                  • Toyota Motor Corporation USA
                                                                                                                                                                                                  • U.S. Bureau of Labor Statistics
                                                                                                                                                                                                  • U.S. Department of Transportation
                                                                                                                                                                                                  • Volkswagen of America, Inc.
                                                                                                                                                                                                  • YouTube, Inc.

                                                                                                                                                                                                  State of the Automotive Industry - US - July 2009

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