Posts Tagged ‘Economic Downturn’
Freddic asked:
Just as the auto industry struggles to remain afloat, so do the segments it’s made up of. And luxury car sales are no exception. Since, luxury automobiles are faced with a double whammy of being high priced and being gas-guzzling, are we to see their sales go from bad to worse?
Automobile and auto part sales have generally been affected negatively, owing to high gas prices and economic downturn, with auto stocks showing spikes only sporadically, as crude prices lower a bit. Now, when it comes to the sales of Luxury cars and trucks they’ve taken a hit of 11% year-to-date (YTD), while the auto sales throughout the US have been down by 18%.
Based on the figures above, it appears that luxury sales are much better than the rest of the industry and since they only account for for just about 10% of the industry’s sales, they won’t have much of an impact. The margins however, on all products within the segment are large, and which is what makes it valuable.
At the same time, given the shift from gas-guzzling automobiles towards smaller ones, it appears that no one would go for them, but the recent announcement by the General Motors Corp of an SUV, Cadillac Escalade Hybrid indicates that auto makers have different expectations. And it seems that they might be right because the high-end products are directed towards a different target audience altogether. The target segment for luxury vehicles shouldn’t have problems with affordability per se, including paying for high gas prices, while the need to acquire high-end products persists.
The factor, aside from the gas-guzzling ability that could affect the purchase of bigger automobiles is the perception that these vehicles are less environment friendly. Now while demand might exist, whether the big autos sell well or not seems to depend on a lot more than their uniqueness. But auto makers seem to have an answer to even this conundrum by producing hybrids, which have a better standing when it comes to eco-friendliness. The Cadillac Escalade hybrid seems to be proof enough, and perhaps other car makers like Toyota or Ford would follow suit if the experiment goes off well.
On the whole some rough weather does loom large over the luxury car segment, but given the efforts auto industry is ready to put in, luxury sales could sail through the storm, quite well.
Just as the auto industry struggles to remain afloat, so do the segments it’s made up of. And luxury car sales are no exception. Since, luxury automobiles are faced with a double whammy of being high priced and being gas-guzzling, are we to see their sales go from bad to worse?
Automobile and auto part sales have generally been affected negatively, owing to high gas prices and economic downturn, with auto stocks showing spikes only sporadically, as crude prices lower a bit. Now, when it comes to the sales of Luxury cars and trucks they’ve taken a hit of 11% year-to-date (YTD), while the auto sales throughout the US have been down by 18%.
Based on the figures above, it appears that luxury sales are much better than the rest of the industry and since they only account for for just about 10% of the industry’s sales, they won’t have much of an impact. The margins however, on all products within the segment are large, and which is what makes it valuable.
At the same time, given the shift from gas-guzzling automobiles towards smaller ones, it appears that no one would go for them, but the recent announcement by the General Motors Corp of an SUV, Cadillac Escalade Hybrid indicates that auto makers have different expectations. And it seems that they might be right because the high-end products are directed towards a different target audience altogether. The target segment for luxury vehicles shouldn’t have problems with affordability per se, including paying for high gas prices, while the need to acquire high-end products persists.
The factor, aside from the gas-guzzling ability that could affect the purchase of bigger automobiles is the perception that these vehicles are less environment friendly. Now while demand might exist, whether the big autos sell well or not seems to depend on a lot more than their uniqueness. But auto makers seem to have an answer to even this conundrum by producing hybrids, which have a better standing when it comes to eco-friendliness. The Cadillac Escalade hybrid seems to be proof enough, and perhaps other car makers like Toyota or Ford would follow suit if the experiment goes off well.
On the whole some rough weather does loom large over the luxury car segment, but given the efforts auto industry is ready to put in, luxury sales could sail through the storm, quite well.
credit plus asked:
Buying a new car is likely to be one of the biggest purchases you make other than buying a house, therefore when buying a car it is important to take many issues into consideration.
The current economic climate has left consumers struggling with cash flow. Therefore it is important for consumers to make sure they consider their own situation in terms of being able to afford certain goods. Cars, being a large cost yet important in most people lives, are available to purchase either by a lump sum payment or available on finance.
“while registrations of new cars for fleet and small business users are both expected to decline, Mintel believes that the downturn will have most impact upon sales to private individuals, which are expected to drop below 1 millions units for 2008” (Mintel 2008).
This market downturn has possible implications of increasing prices from dealers who need to maximise on each sale. The future car market is not set to recover from this for a few years yet. With no growth, and inflation increasing each year, the car market could suffer.
“Mintel forecasts difficult times ahead for the value of the total car market, with growth remaining stagnant. From 2008-2013 we expect the market to grow and decline by one percent. Without the effects of inflation on motoring this equates to a drop of 10%” (Mintel 2008).
There are some who believe that buying a car is something that consumers should consider doing whilst the country is in this downturn as dealers will become more competitive to sustain sales figures. The marketplace could be seen as an attractive proposition to those who are not as affected by the credit crunch or economic downturn as some others.
“A potential slowdown in the economy, cost of fuel and road charging are some of the factors that will make it difficult for this market to sustain growth. Furthermore competition is likely to grow strong, as people become savvier and aware of prices through searching on the web” (Mintel 2008).
Buying a car on finance is therefore an attractive option for some consumers, who are able to see through the now acclaimed recession. If the payments for a car are split to small monthly manageable payments rather than one large lump sum then it is more feasible to sustain a good cash flow for most consumers through these harder times.
The economic downturn is has a large effect on the lending market. Due to current banking conditions, banks are less willing to lend finance to consumers. The implications of which for buying a car or sourcing a car on finance for consumers means it will be harder for them to obtain finance without applying for a secured loan and or those with solid credit history.
However, it is still possible to get the finance for buying a car for those with poor credit as there are some banks, more stable than others, that are able to capitalise on the poor market environment.
Consumers seem to be less interested in the notion to buy a new car. New car sales a set to decrease by 17% but buying used cars is set to rise to 14%.
Used cars that depreciate less have become a more attractive option when looking to buy a car than buying a new car.
In the long term cars will remain essential for many, and as the economy regains strength there should be no reason why this market cannot return to strong positive growth, particular as the new concerns such as being greener impact on new car designs” (Mintel 2008)
Buying a new car is likely to be one of the biggest purchases you make other than buying a house, therefore when buying a car it is important to take many issues into consideration.
The current economic climate has left consumers struggling with cash flow. Therefore it is important for consumers to make sure they consider their own situation in terms of being able to afford certain goods. Cars, being a large cost yet important in most people lives, are available to purchase either by a lump sum payment or available on finance.
“while registrations of new cars for fleet and small business users are both expected to decline, Mintel believes that the downturn will have most impact upon sales to private individuals, which are expected to drop below 1 millions units for 2008” (Mintel 2008).
This market downturn has possible implications of increasing prices from dealers who need to maximise on each sale. The future car market is not set to recover from this for a few years yet. With no growth, and inflation increasing each year, the car market could suffer.
“Mintel forecasts difficult times ahead for the value of the total car market, with growth remaining stagnant. From 2008-2013 we expect the market to grow and decline by one percent. Without the effects of inflation on motoring this equates to a drop of 10%” (Mintel 2008).
There are some who believe that buying a car is something that consumers should consider doing whilst the country is in this downturn as dealers will become more competitive to sustain sales figures. The marketplace could be seen as an attractive proposition to those who are not as affected by the credit crunch or economic downturn as some others.
“A potential slowdown in the economy, cost of fuel and road charging are some of the factors that will make it difficult for this market to sustain growth. Furthermore competition is likely to grow strong, as people become savvier and aware of prices through searching on the web” (Mintel 2008).
Buying a car on finance is therefore an attractive option for some consumers, who are able to see through the now acclaimed recession. If the payments for a car are split to small monthly manageable payments rather than one large lump sum then it is more feasible to sustain a good cash flow for most consumers through these harder times.
The economic downturn is has a large effect on the lending market. Due to current banking conditions, banks are less willing to lend finance to consumers. The implications of which for buying a car or sourcing a car on finance for consumers means it will be harder for them to obtain finance without applying for a secured loan and or those with solid credit history.
However, it is still possible to get the finance for buying a car for those with poor credit as there are some banks, more stable than others, that are able to capitalise on the poor market environment.
Consumers seem to be less interested in the notion to buy a new car. New car sales a set to decrease by 17% but buying used cars is set to rise to 14%.
Used cars that depreciate less have become a more attractive option when looking to buy a car than buying a new car.
In the long term cars will remain essential for many, and as the economy regains strength there should be no reason why this market cannot return to strong positive growth, particular as the new concerns such as being greener impact on new car designs” (Mintel 2008)