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The Web Is Killing Car Dealerships
The web has created new customers that are educated and ready to buy. You go to Amazon.com to buy a book or a television. You can pick up a couch at Etsy.com. You can purchase an entire vacation – flights, hotels and a rental car – at Expedia.com. The opportunities to empty your wallet are but a few clicks away.
But are you willing to spend tens of thousands of dollars over the Internet on your next set of wheels? According to many recent studies, an increasing number say, bring it on. In a poll of 1,002 people in the U.S. by Edmunds.com conducted this year, 83 per cent indicated they would love to avoid the haggle associated with purchasing a car in a dealership; one in five said they would rather give up sex for a month than go through the traditional car-buying experience. Another worldwide study of 10,000 people by Capgemini (a global consulting and technology firm based in France) for Cars Online found that 44 per cent of car buyers expect to purchase their next vehicle over the Internet
While the options for purchasing a vehicle online are relatively limited, auto makers and dealerships are slowly recognizing consumers’ embrace of the Internet when it comes to making their second-largest purchase. But all of this still doesn’t mean the end of the brick-and-mortar dealership just yet.
In August, Volvo opened sales for its latest XC90 SUV model online and sold the first lot of 1,927 in just 47 hours, with 61 of those going to Canadian buyers. After paying a deposit online, the buyer was obligated to visit a local dealership to secure financing before picking up the XC90 vehicle early next year.
“In Canada, the core business of most car retailers is the service, and if you ask retailers where they sustain their business, it’s on the service side,” says Margareta Mahlstedt, vice-president of marketing with Volvo Canada. “So, for us, it’s a way of making the time invested in the upfront purchase less from a retailer’s perspective and, at the same time, increasing their car park and opportunities for service.
“We don’t want it to ever be a pure retail transaction online, at least not now because that’s not what the market is ready for.”
The internet is already a driving force for car consumers, whether they buy online or not. McKinsey Global Institute research showed that the average number of dealership visits by car buyers has dropped from five in 2005 to less than two today, a result of people visiting manufacturers’ websites and reading car reviews before actually going to see any car.
And this should be good for the car business, says Michael Hatch, chief economist for the Canadian Automobile Dealers Association (CADA). “It means that the person walking through the doors is already nearer to purchasing a car, whereas, in the past, people just came in to kick the tires and take a look.”
Still, a car is not a computer nor a pair of jeans. Most customers want to touch the leather, see the sparkle of the paint and take in that new-car smell before they lay down their money. More and more, however, Many dealers are coping with the new realities by adapting the Apple retail sales model, notably by equipping their sales reps with tablet computers, as Audi Downtown in Toronto will soon do. The car maker itself offers an interactive app, the Audi Configurator, enabling consumers to spec and price a vehicle, and point them to nearby dealers. BMW is placing product geniuses on the front line at dealerships to answer questions before handing over customers to a sales person, averting the pressure of the initial interaction. Lexus and Mercedes are developing similar models with “Lexperts” and “product concierges.”
Customers are walking through the doors with more knowledge than ever. Some websites provide prices, sales incentives and even compare deals on the same car from different dealerships. Will dealerships be able to capitalize on this new customer?
Auto Makers Unite
Normally you wouldn’t see auto makers fighting with each other but right now they are. Nineteen auto makers accounting for most of the passenger cars and trucks sold in the U.S. have signed onto a set of principles they say will protect motorists’ privacy in an era when computerized cars pass along more information about their drivers than many motorists realize.
The principles were delivered in a letter Wednesday to the Federal Trade Commission, which has the authority to force corporations to live up to their promises to consumers. Industry officials say they want to assure their customers that the information that their cars stream back to auto makers or that is downloaded from the vehicle’s computers won’t be handed over to authorities without a court order, sold to insurance companies or used to bombard them with ads for pizza parlours, gas stations or other businesses they drive past, without their permission.
The principles also commit auto makers to “implement reasonable measures” to protect personal information from unauthorized access.
Many recent-model cars and light trucks have GPS and mobile communications technology integrated into the vehicle’s computers and navigation systems. Information on where drivers have been and where they’re going is continually sent to manufacturers when the systems are in use. Consumers benefit from alerts sent by auto makers about traffic conditions and concierge services that are able to unlock car doors and route drivers around the path of a storm.
The National Highway Traffic Safety Administration is also working with auto makers on regulations that will clear the way for vehicle-to-vehicle communications. The technology uses a radio signal to continually transmit a vehicle’s position, heading, speed and other information. Similarly equipped cars and trucks would receive the same information, and their computers would alert drivers to an impending collision.
“As modern cars not only share the road but will in the not too distant future communicate with one another, vigilance over the privacy of our customers and the security of vehicle systems is an imperative,” said John Bozzella, president of Global Automakers, an industry trade association.
The auto makers’ principles leave open the possibility of deals with advertisers who want to target motorists based on their location and other personal data, but only if customers agree ahead of time that they want to receive such information, industry officials said in a briefing with reporters.
“Google may want to become an auto maker, but we don’t want to become Google,” said Mitch Bainwol, president of the Alliance of Automobile Manufacturers.
The possibility of ads popping up on the computer screens in cars while drivers are behind the wheel worries some safety advocates.
“There is going to be a huge amount of metadata that companies would like to mine to send advertisements to you in your vehicle,” said Henry Jasny of Advocates for Highway and Auto Safety. “We don’t want pop-up ads to become a distraction.”
Industry officials say they oppose federal legislation to require privacy protections, saying that would be too “prescriptive.” But Marc Rotenberg, executive director of the Electronic Privacy Information Center, said legislation is needed to ensure auto makers don’t back off the principles when they become inconvenient.
“You just don’t want your car spying on you,” he said. “That’s the practical consequence of a lot of the new technologies that are being built into cars.” What is the next step to stop this?
The New Sports Car That You’ll Be Talking About
Toyota unveils new sports car. Bayerische Motoren Werke AG and Toyota Motor Corp. are moving closer to putting jointly developed sports cars on the road.
Co-operation on the underpinnings of the vehicles “has moved on to the concept phase and is running according to plan,” Munich-based BMW said in a statement to Bloomberg News. A technical feasibility study that began in January 2013 has been “successfully completed.”
The mid-size model is the most visible project within a broader partnership the manufacturers have said will last until at least 2020. The two companies have been tight-lipped about details, including the targeted introduction date, after announcing the plan early last year. Toyota confirmed Thursday that the project has moved beyond the feasibility stage, which was initially due to be completed by the end of 2013.
Toyota, the world’s largest auto maker, needs sports cars “to put that energy back into the brand,” Europe executive vice-president Karl Schlicht said last month at the Paris Motor Show when asked about the co-operation with BMW, which this year started selling the racy i8 plug-in hybrid.
In January, Toyota showed the FT-1 coupe concept at the North American International Auto Show in Detroit. The company said the rear-wheel-drive sports car’s design drew from past models including the Supra, 2000GT and Celica.
In addition to the sports car, Toyota and the world’s biggest maker of luxury vehicles are co-operating on research into fuel cells, lightweight technology and lithium-air batteries. The two companies agreed to work together on lithium-ion batteries in 2012. Both companies declined to comment further on the new sports cars. The new sports car should be released in the new few years.
Read full article here: http://bit.ly/1v4KYeD
Mini Cooper Drops Fuel Economy Rating
Mini Cooper is forced to drop its fuel economy today after BMW AG is lowering the estimated fuel economy labels on four 2014 Mini Cooper models after tests by the U.S. EPA, the agency said today.
The EPA completed a fuel economy audit on the Mini Cooper and found actual mpg lower than the figures BMW submitted for certification, a statement said.
As a result, the EPA supervised a new round of tests by BMW. The agency also conducted its own testing of the Mini Cooper at the National Vehicle and Fuel Emissions Laboratory in Ann Arbor, Mich.
The agency is ordering BMW to relabel four 2014 Mini Cooper models — the Mini Cooper hardtop with a manual and an automatic transmission and the Mini Cooper S hardtop with a manual and an automatic transmission — that proved to have lower fuel economy than the mpg label showed.
“While this necessitates change, the 2014 MINI Hardtop still delivers outstanding fuel efficiency,” BMW said. “We have sent new labels for 2014 models in stock to our dealers.”
BMW will have all four models’ combined and city mpg ratings fall by 1 mpg, while highway estimates will drop 1 to 4 mpg depending on the model.
“Fuel economy values matter to consumers and automakers,” Christopher Grundler, director of EPA’s office of transportation and air quality, said in a statement. “To provide consumers with the most accurate, reliable and repeatable fuel economy values, we are continuing to strengthen our oversight to ensure fair competition among automakers.” How will this consumers overall evaluation of the new Mini Cooper?
The Largest Recall of The Year
Another recall by Toyota lis causing many consumers to no longer trust the car manufacture. Toyota Motor Corp. called back 1.75 million vehicles worldwide to fix braking and fuel systems flaws, the first global recall since the U.S. put the car maker under stricter safety supervision.
The Lexus IS, GS and LS luxury sedans and Toyota Auris compact hatchback are among the 10 models being called back, according to an e-mail from the Toyota City, Japan-based auto maker. The company said that it isn’t aware of any fires, crashes, injuries or fatalities resulting from the defects.
The safety campaign is Toyota’s fourth this year involving at least 1 million vehicles as the auto industry responds to scrutiny over tardy recalls. General Motors Co. has called back a record 30 million cars and trucks this year in North America, while Toyota has dealt with renewed attention to safety after recalling more than 10 million vehicles in 2009 and 2010 for defects related to unintended acceleration.
“With the lessons learned from past recalls in North America, Toyota keeps showing the attitude to proactively recall and have everything under control before any serious accident happens,” said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co. “I don’t think this recall would damage the brand image, or cause the shares to decrease, as there were no injuries, fatalities or crashes.”
Toyota’s shares pared gains to trade 0.2 per cent higher at 5,990 yen at the close in Tokyo. The Nikkei 225 Stock Average gained 0.9 per cent.
Model Recalls Toyota is calling back about 802,000 Crown, Crown Majesta, Noah and Voxy models made June 2007 to June 2012 to replace a rubber seal in the brake system that could crack and cause fluid to leak, leading to degraded performance.
The auto maker is also recalling the Crown and Crown Majesta, as well as the Mark X and iterations of the three Lexus models to repair fuel delivery pipes that could leak and increase fire risk. A third flaw involves about 190,000 Rumion and Auris cars in Japan that Toyota dealers will fix by replacing emission-control units that could cause fuel leaks and lead to greater fire risk.
Toyota first received a report of a problem that prompted the fuel delivery pipe recall in June 2010 in the U.S., said Tokyo-based spokesman Dion Corbett. The company received initial reports from Japan for the brake fix in July 2011 and the emission control units in January last year.
U.S. Monitor Today’s recall is the first major global campaign by Toyota since David Kelley, a New York-based partner at Cahill Gordon & Reindel LLP and former U.S. Attorney, was appointed by the U.S. Justice Department in August to supervise the car maker’s safety procedures.
Kelley will review Toyota’s policies and verify the accuracy of its public statements for three years as part of the automaker’s $1.2-billion settlement for the unintended– acceleration recalls.
Toyota has now recalled about 5.3 million vehicles in the U.S. market this year, according to its U.S. media website. A total count for vehicles recalled globally wasn’t immediately available, Corbett said.
The U.S. National Highway Traffic Safety Administration last month said it would renew scrutiny of claims involving unintended acceleration. As many as 1.69 million Toyota Corollas with model years from 2006 to 2010 could be subject to investigation depending on the regulator’s evaluation of an owner’s claim of unintended “low-speed surging.”
Safety Campaigns Toyota in June expanded a 14-month-old recall of more than 2 million vehicles for faulty air bags after supplier Takata Corp. told customers further fixes may be needed. The car maker added about 650,000 vehicles in Japan including Corolla cars to the safety campaign. After a year of recalls Toyota will have a lot of work ahead of them in order to regain customers trust.
Which Cars Do Canadian Want?
Many Canadians have European tastes. Volvo’s V40 hatchback smashed records in European crash tests, scoring an unprecedented 98 of 100 points. But restrictive Canadian regulations mean consumers can’t buy the sporty hatchback here.
The V40 received a five-star rating in 2012 from the European New Car Assessment Program (NCAP), a consortium of seven European governments and consumer safety organizations, which organizes crash tests for European cars. Its safety features include the world’s first pedestrian airbag.
The V40 is just one of dozens of popular European models that don’t get to this side of the Atlantic because they don’t meet Transport Canada standards. In many instances, for companies such as Volvo, Audi or Mercedes, it’s not economically feasible to retest or modify a model to fit Canadian rules. Those changes can also add anywhere from $1,000 to $5,000 to the retail price.
Volvo Canada president Marc Engelen scoffs at the barriers to the V40, which also effectively prevent the importation of the V40 Cross Country and the V60 plug-in hybrid (1.9 litres/100 km). He calls the government regulations “ridiculous.
“As a smaller company we are not prepared to do these investments,” Engelen says. “Maybe the European trade agreement can help, but there’s delay there, too and that doesn’t help the cause either. It’s not an advantage to the final customer.”
Meanwhile, Transport Canada standards prevent the sale of such models as the Volkswagen Scirocco (formerly sold in North America) and the Mercedes-Benz A-class hatchback.
This has been a hot button issue for Tim Reuss, president of Mercedes-Benz Canada, who has been outspoken about Canada’s regulations. Like other European manufacturers, his company is frustrated with little progress after months of lobbying.
While Canada and the EU have hashed out a blueprint for the Comprehensive Economic and Trade Agreement (CETA) with the European Union, expected to be final in 2016, Reuss says the company has been “lobbying and pushing hard … to at least open the door to discuss standards and regulations.” He expected the process to be slow, but sees little sign of progress.
He’s advocating for “reciprocal acceptance of each other’s standards,” because that would more quickly open Canada’s doors to more models.
As Canada harmonizes its auto regulations with the United States, that sends a mixed message to European auto makers, Reuss says.
“From my perspective, there seems to be a disconnect between, let’s call it the political government and the bureaucratic government.”
Reuss says Canada’s ongoing efforts to harmonize auto standards with the United States amounts to accepting U.S. regulations. Meanwhile, “Canada politically has made it clear that they, while maintaining a special relationship with their neighbour to the south, are opening themselves up to the rest of the world. For me, that seems to be a fundamental disconnect.”
But harmonization with the United States is critical to Canadian consumer safety and expectations, says Mark Nantais, president of the Canadian Vehicle Manufacturers Association. He says Canadian standards are more rigorous than the EU’s. He cites North American specifications as tougher than EU’s “limited” standards on things such as side and frontal impact occupant protection, roof intrusion strength, and fuel system integrity in side and rear collisions.
“Canada and U.S. standards are data-driven and have been shown to have public safety benefits which have resulted in regulations that are more stringent,” Nantais says, adding there are about 15 remaining standards to harmonize between the United States and Canada, where there were once many more.
“Keep in mind these companies are highly competitive and want to be leaders in sales … generally speaking,” he says.
Reuss, however, says nobody’s regulations are “better” – just “different.” Rather, the real issue is also letting innovative technology come to the market and giving consumers more choice.
“To say that the EU does not have stringent safety standards would be accusing the EU of negligence, because it’s the same government that approves and agrees with those vehicles being driven at top speeds on the German autobahn … so, come on, seriously.”
Canada’s regulations are also keeping cutting-edge technology from the marketplace, Reuss says. He points to intelligent light systems, which adapt to driving and seeing conditions, automatically dim and differentiate between an animal and a human on the road. Mercedes has adopted it in its S-Class models and other European auto makers have also integrated the technology.
We won’t see them here, Reuss says, because Canada’s regulations were written long before this technology was born. “I’m exaggerating a little bit, but it was written when all you could do was turn lights on and off – and that was the height of technology at the time.”
The A-class hatchback is another example of a model Canadians say they want, but Mercedes can’t import.
“We have very clear market research of what our customers want and we have clear feedback from our dealers from our salespeople,” says Reuss.
Reuss sees hope in the CETA trade agreement. He hopes Canada and the EU can use that mechanism to address the trade barriers that prevent the best technology from coming to Canada. When will these cars finally make it to Canada?
Subaru Wants to Expand Their Market
Subaru wants to expand their market with their new WRX with is greener then any of their other vehicles. Subaru hopes the redesigned WRX line will capture a wider customer base with better fuel economy and safety features after spinning off the nameplate from its Impreza stablemate.
The longer, roomier and sportier looking WRX went on sale in the U.S. in the spring and was released in Japan on Monday.
The performance car, long a staple of the rally circuits, already has a dedicated motor-fan following. But Subaru wants to cast a wider net with better fuel consumption and safety features, Takeshi Tachimori, executive vice president in charge of global marketing, said at the car’s home market debut.
“So far, the WRX was a very narrow, polarizing category, but we want to make it appeal to a wider customer base,” he said.
That’s one reason Subaru brand parent Fuji Heavy Industries, Ltd., decided to make the WRX and tuner STI variant a standalone entry after long offering it as a sub-brand of the Impreza.
That, and the goal of strengthening Subaru’s sporty lineup.
The Japan and U.S. versions of the base WRX chug less gasoline thanks to a new 2.0-liter direct-injection engine mated to a continuously variable transmission or 6-speed manual.
And both variants get a more rigid bodies and chassis set-ups, replete with more use of high-tensile steel plating, to enhance control and crash-worthiness. It gets the same reinforced frame structure used in other models that passed the new Insurance Institute for Highway Safety’s small overlap crash test.
The Japan spec car also offers the latest version of Subaru’s trademark Eyesight camera-actuated pre-crash safety system, which delivers automatic braking and active lane keep assist.
Subaru hopes adding Eyesight will attract older customers. Will this be enough to change the way the market views their brand?
GM Wants to Turn Cadillac Around With New Luxury Sedan
Cadillac announced that they will be releasing a new luxury Sedan. General Motors global product chief Mark Reuss said that a large luxury sedan being developed for Cadillac will “define its brand” and is a prerequisite to competing against rivals BMW, Mercedes-Benz, Audi and Lexus.
“If we’re a serious luxury carmaker, it’s really important to us,” Reuss said at an event here Tuesday.
“This is a car that Cadillac needs, that will define its brand in terms of innovation and excellence,” Reuss told reporters. “That’s the mission.”
Cadillac’s chief engineer, Dave Leone, told Bloomberg last week that the rear-wheel drive sedan would arrive sometime in late 2015. It was the first time a GM official has publicly given a timeframe for the long-rumored sedan, codenamed LTS for now.
Reuss declined to discuss specifics but said Cadillac’s entry in the large luxury sedan segment “has got to be a symbol of excellence.”
Engineering mules of the sedan have been spotted recently being put through the paces at GM’s proving ground in Milford, Mich. It’s expected to ride on a new rwd platform and compete against the Mercedes-Benz S class, BMW 7 series and Audi A8.
Reuss downplayed Cadillac’s sluggish U.S. sales, which have fallen 2 percent this year through July, vs. 6 percent for the luxury market and 5 percent for all light vehicle. How will this luxury Sedan change the brand of Cadillac and stop this decline in sales?
GM Settles Recall Lawsuit
GM was told to settle. A federal judge told lawyers on Monday he’ll encourage settlements in lawsuits brought on behalf of nearly 1,000 plaintiffs against General Motors for defective ignition switches.
U.S. District Judge Jesse M. Furman told dozens of lawyers at a hearing that he’ll be careful not to interfere with the work of a bankruptcy judge who is deciding if the Detroit-based automaker’s 2009 bankruptcy protects it from economic damages claims.
Furman said he wanted to be “sensitive about stepping on the toes” of the bankruptcy judge but planned to advance the litigation as much as possible nonetheless.
He made introductory remarks at an initial hearing after he was chosen to preside over more than 100 lawsuits that were consolidated in New York because of their common attributes. He said he planned “to encourage settlement as much as possible” once any potential payouts were better defined after rulings by the bankruptcy court.
Lawsuits were filed after General Motors Co. in February began recalling 2.6 million of the cars, mainly Chevrolet Cobalts and Saturn Ions. GM has acknowledged knowing that the switches in its small cars had problems since at least 2001. Federal law requires automakers to report safety defects to the government within five days of discovering them.
The ignition switches, when jostled, can shut off the engine, cutting power steering and brakes and potentially causing drivers to lose control. The problem also can disable air bags.
GM says at least 13 people have died in 54 crashes linked to the problem, while lawyers suing the company say the death toll is more than 60.
In May, federal safety regulators ordered General Motors to pay a record $35 million fine for failing to disclose the ignition switch defect in millions of cars for more than a decade.
GM attorney Richard C. Godfrey told Furman that 983 plaintiffs had filed 109 lawsuits, with about a dozen of the lawsuits making personal-injury claims while the rest were solely for economic losses.
Owners of the 2.6 million small cars that were recalled are eligible for compensation from a fund being administered by compensation expert Kenneth Feinberg on GM’s behalf. Feinberg, who handled claims for the BP Gulf Oil Spill and the Sept. 11, 2001, terrorist attacks, has said GM has placed no limit on the amount of money he can spend to compensate anyone who was injured or killed. The money won’t bring these people back, but it may help the family.
The Beauty of the Scissor Doors
There is nothing more iconic then a Lamborghini with its doors open. Finding a good Lamborghini Countach in British Columbia isn’t easy. Even in supercar-crazy Vancouver there’s maybe a half-dozen total, and most for-sale examples are in the southern U.S, says Jeff Dow. With so few available, when Dow found a red ’84 up for grabs in Calgary seven years ago, he had to have it. “For me, it was the first car that fit the definition of ‘exotic,’” he says.
Wherever Dow drives, people comment on it—and smile when its ‘scissor doors’ flip up. “When it came out, I don’t think any other car had anything besides regular doors, other than maybe the ‘gullwing’ and the Kaiser-Darrin,” Dow says. “Not only was the Countach a big wedge with a huge V12 engine right behind your ear, but on top of that, you flip the latch and the door scissors up. It’s a defining feature.”
The scissor doors: then
In October 1968 stylist Marcello Gandini of design studio Bertone introduced the world to a new way to open car doors: upward and forward.
His Tipo 33 Carabo stole the spotlight at the Paris Motor Show that year with its scissor-style doors, which Gandini incorporated to help clear the wide door sills of the Alfa Romeo racecar the Carabo concept car was based on.
The scissor doors: now
Though they’re universally referred to as “Lambo doors,” today you can find aftermarket-fitted scissor doors on everything from Plymouth Prowlers to Volvo station wagons to Geo Metro hatchbacks.
Several supercar rivals have adopted similar “vertical lift system” or “jack-knife” doors, too, but still nobody does it like Lamborghini.
“For us, the [scissor] door is something very important, very unique; in other cars, it works in a different way. We have a tradition with it,” says Filippo Perini, Lamborghini’s chief of design since 2004.
On the brand’s new Aventador, the doors open not just upward, but also outward slightly, to allow them to better seal shut, reducing road noise. Outside of engineering that change, the doors posed almost no design problems—almost.
“The only problem you face designing a car with doors like this is it is immediately compared to the Countach, and that does not make us comfortable as designers, because we have to do something better,” Perini chuckles.
“We are not allowed to do just a beautiful design—we have to do iconic design.”
The Aventador’s sharp creases and planar surfaces were very much inspired by modern stealth fighter aircraft, Perini says, and the doors fit that theme as well since they flip forward like a jet canopy.
When shortly after he was tapped by Lamborghini to work on Project 112, the Countach LP500 prototype, Gandini again went with scissor doors to work around that car’s space-frame-style chassis.
They helped make the car a hit at the 1971 Geneva Motor Show, but posed some problems during development.
The opening mechanism was simple enough: a single gas strut forced the doors to swing upward just more than 45 degrees to open 80 inches. But by autumn 1973, engineers gave up on trying to build a traditional two-piece side window into the door – they found it kept shattering – and went with a three-piece configuration instead.
The production LP400 bowed in 1974, and looked largely liked the prototype (though the NACA-style ducts in the doors were now painted black). Almost immediately the unique design of the doors made for some interesting owner experiences.
“It took a while to figure out the easiest way to get in and out,” explains Dow. “Personally I just slide in backwards, put my ass in the seat, then swing my legs in, and vice-versa getting out.”
The car’s poor rearward visibility, combined with those wide door sills, also led many drivers to try a new way of reversing into a parking spot: by opening the door, sitting on the sill, and looking backward over the top of the car’s rear.
By the time its successor, the Diablo, came out in 1990, the Countach and its scissor doors were already an icon. Including the scissor doors on the new offering cemented their status as a trademark Lamborghini design feature, and helped ensure that from then on they would widely be known as “Lambo doors.”
The Diablo’s one-piece, electrically powered side windows were a major improvement, and the door opening was slightly larger, too. In 2001, when the Murcielago debuted, it, too, featured scissor doors that opened even wider, as well as a 25-mm lower door sill. What will happen in the future for these iconic doors?