Lexus beat rivals, inventory for Q3 luxury lead

Lexus sprinted to the front of the luxury sales race in the third quarter despite having the tightest vehicle inventory among the major luxury brands.

The Japanese automaker overtook perennial front-runners Mercedes-Benz and BMW, which also struggled with lean inventories due to pandemic-related production shutdowns this spring.

But Lexus dealers had a 26-day supply of vehicles in the third quarter, compared with 34 days at BMW stores and 49 days at Mercedes retailers, according to data from Cox Automotive.

Strong demand for its hybrid crossovers lifted Lexus’ sales 2 percent to 75,285 vehicles in the third quarter. And its hybrid sales surged nearly 60 percent in September.

For the quarter, Lexus sold 29,438 RX midsize crossovers — more than twice the volume of its next-bestselling model, the NX compact crossover, at 13,204.

Bob Carter, head of sales for Toyota Motor North America, said the strong third-quarter performance from Lexus was driven by its ability to stabilize production of high-volume models, including the RX and NX and the ES sedan, and get inventory for dealers to sell.

“We knew there was business out there, and we wanted to support our dealers,” Carter said. “We’re pretty confident right now. I’m not in a race, and I’m not going to do abnormal acts to win a trophy, but we’re going to land 265,000, maybe even 270,000, Lexus sales in a really, really trying year, and that’s important for us, and it’s really important for our dealers.”

Karl Brauer, executive analyst with iSeeCars.com, says Lexus may be getting a second look from luxury buyers nervous about the security of their paycheck and the state of their stock portfolio.

“Some of the people who would have bought a Mercedes or a BMW might be saying, ‘I’m still going to buy a vehicle, but I’m going to cut back and buy something that costs less upfront,’ ” Brauer said.

Overall, U.S. luxury sales dipped 6.5 percent to 519,227 cars and light trucks in the third quarter, slightly better than the entire industry’s 9.5 percent decline.

The premium segment also outperformed the overall industry for the year to date — reporting a nine-month sales decline of 14 percent, compared with the overall industry’s 18 percent slide. More than half of the 15 luxury brands outsold the industry through September.

But uncertainty around the November presidential election and the long-term economic fallout from the pandemic will weigh on the luxe sector’s sales outlook for the remainder of 2020, said Akshay Anand, executive analyst at Kelley Blue Book.

“Going forward, the name of the game for luxury will be consumer sentiment and the economy,” Anand said. “Things seem to be humming along, but that can and may change at a moment’s notice.”

Propelled by demand for its core crossovers, Mercedes-Benz eked out a mere 61-vehicle sales lead over rival BMW in the third quarter.

Mercedes delivered 69,631 vehicles, excluding commercial vans, down 9.4 percent from a year earlier. The GLC compact crossover led the results, with 11,428 sales, followed by the GLE midsize crossover, with sales of 10,858.

BMW sold 69,570 vehicles in the third quarter, down 16 percent from a year earlier. BMW’s quarterly sales were buoyed by additions to the 2 Series and 8 Series sedan lineups.

Lexus’ inventory also benefited from a narrower portfolio of products and options packages than those of its German rivals, said Tyson Jominy, vice president of the Power Information Network at J.D. Power. The top three model lines accounted for nearly three-quarters of Lexus’ third-quarter sales, while the top three Mercedes lines delivered less than half of its sales.

“Think of how many options and customizations BMW and Mercedes offer and the additional inventory that requires,” Jominy said. “Tighter inventory may only force a Lexus customer into a second color choice or buying up one package. But it could require bigger trade-offs” for a Mercedes customer.

Among other luxury brands, Tesla saw an estimated 17 percent increase in third-quarter sales — delivering an estimated 64,000 vehicles. With an estimated 196,000 cars and crossovers sold through September, the California electric vehicle maker commanded about 14 percent of the segment, very close to market share leader Mercedes, with 14.1 percent.

Audi rounded out the top five, reporting 47,893 sales in the third quarter, down 16 percent from a year earlier. Infiniti suffered the largest sales dive in the segment, tumbling 30 percent 17,367.

Porsche Cars North America reported quarterly U.S. sales of 15,548 vehicles, a 5 percent uptick from the same time last year.

Larry P. Vellequette contributed to this report.

Audi boss predicts 2020 sales slide; seeks to recapture tech lead

Audi is benefiting from a surge in China demand, but it won’t offset losses suffered during lockdowns around the world caused by the coronavirus pandemic, CEO Markus Duesmann said. The 51-year-old executive also ruled out a move to Wolfsburg to take on a bigger role within Audi’s parent, the Volkswagen Group. He discussed these topics and more with Frank Johannsen, who is a reporter at Automotive News Europe sister publication Automobilwoche.

You started as Audi CEO in April, in the middle of the lockdowns caused by the coronavirus pandemic. After having to wait 18 months to start at Audi following your departure from BMW, did you envision a different situation?
It was spooky somehow. I took the opportunity to spend two weeks gathering information in Ingolstadt beforehand, starting in mid-March. That was exactly the point when all the plants and the entire country shut down. I was suddenly in the thick of things and could only look on with amazement. But the crisis team completed a mammoth job in cooperation with the works council. It worked out tremendously well.

How are things going now?
July, August and September look very good. September was the strongest [sales] month of the year – worldwide. Things are going especially well in China, where we even expect a small increase for the entire year. But we are not making up for the heavy losses from April and May of this year, although our sales organization has done a really good job.

When will you be back at pre-crisis levels?
That will take a while longer. Right now, there are still many countries where consumer reluctance persists. I expect it will be about two years before the normalization is complete.

You are Audi’s CEO, R&D chief and China boss, the head of R&D at Volkswagen Group, supervisory board chairman at Lamborghini and Ducati, and have leading roles at the Artemis project for a self-driving EV and the Car.Software organization. Can one person do all that?
Our plan is to breathe life into the claim Vorsprung durch Technik (German for Advancement Through Technology) and give it greater clarity. That’s why we launched the Artemis project and created the Car.Software organization at the corporate level. It makes sense that I would have responsibility for R&D. The construct fits this purpose very well and it works superbly, even if it is naturally very demanding for me to deal with all these matters well. But special times require special measures. And these are very special times for the auto industry. It’s a good thing that I have a strong team handling these issues.

You are Audi’s seventh R&D chief since 2012. How long do you intend to keep that title?
I’ll do it until I believe there a good solution to the succession issue. You cannot change the reality that the company has had turbulent times, especially in development. That was certainly not ideal. Now I will do all I can to make sure everything runs much better in the future and we show continuity again in the R&D area.

You are being considered a potential successor to VW Group CEO Herbert Diess. Is this the next step in your career?
I am clearly ruling that out. This is my dream job, and I’m as happy as can be at Audi. I’m moving from Munich to Ingolstadt right now, and I want to stay here. This is my company.

What lessons are you drawing from the pandemic? Are you making changes to your supply chain to avoid bottlenecks in the future?
I am inclined to think that the supplier structure has shown how robust it is. We hit a bump or two, but all our suppliers basically performed superbly. Everything worked amazingly well. The relaunch was relatively problem-free in this regard. I am really satisfied with the cooperation. I see no need to make any major changes.

Daimler and BMW have intensified their cost-cutting programs during the crisis. Audi says it is still only cutting the 9,500 jobs that were already agreed upon before the pandemic.  Will that be enough?
Nothing is planned beyond that. And we are sticking with the employment guarantee until 2029.

And no more short-time work in Germany despite the fact most of the momentum is coming from China, where you already have a number of factories?
Our German plants also benefit from sales in China since the volumes that Europe supplies to the country are also rising. But it is correct that the European plants mainly depend on Europe, and demand is still restrained here. Fortunately, our plants in Ingolstadt and Neckarsulm are doing well. We even added special shifts in September. We are very confident and aren’t planning any more short-time work for this year.

And for 2021?
We can only hope there isn’t another coronavirus wave. That would be bad. We are confident about next year otherwise.

There has just been a noticeable uptick in the demand for electric vehicles. So far, Audi only has the e-tron and e-tron Sportback in its lineup, with the e-tron GT and the Q4 e-tron coming in 2021. Are you too late to benefit from the boom?
A little earlier wouldn’t have been bad. The topic has picked up quite a bit of steam lately. I think we will still be on time. We will have 20 battery-electric models by mid-decade. That puts us in an excellent position.

What exactly are you planning?
We are coming out with at least one new battery-electric vehicle each year — and that’s in a range of classes and segments. We will be making offers along the entire breadth of our portfolio.

What is on the way specifically?
We aren’t talking about that yet. For now, I’m just looking forward to the e-tron GT, which will reach the market in early 2021. The car is a sensational product. It’s going to be my favorite car.

And your next company car?
Of course!

And how long will internal combustion engines survive?
I think it will be a while. The future of the internal combustion engine will ultimately be a political question, and it won’t be decided throughout the world at the same time. So, it definitely makes sense for different markets to turn to electric mobility as well as modern, highly efficient internal combustion engines.

At Audi as well?
We have a very systematic electric strategy. But for the foreseeable future, many of our customers will continue to want an internal combustion engine. So we will keep working on their efficiency. It is still our goal to be CO2 neutral by 2050 in line with the Paris climate accord. We are committed to it.

Does that also apply to diesels?
Out of all the internal combustion powertrain, diesels are by far the most efficient. But due to exhaust treatment, they have also become very expensive and are not an attractive option in every vehicle segment. But since many of our customers still love diesels, we will continue to offer them. 

What are you most looking forward to when the pandemic is over?
Greeting people with a handshake again. I am a big fan of the handshake. I miss it a lot. It’s not the same as someone just nodding at me or bowing.

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Fine-tuning new Uconnect system in crisis had upside

When drivers start up the 2021 Chrysler Pacifica and Dodge Durango this fall, they’ll be introduced to the next-generation version of Fiat Chrysler Automobiles’ heralded Uconnect infotainment system.

The latest iteration, Uconnect 5, runs on an Android-based operating system and has processing speeds five times faster than those of its predecessor. It enables two Bluetooth phones to connect simultaneously, aiding those who carry multiple phones and allowing passengers to interact with the system in addition to the driver.

Getting the system ready in time for vehicle launches became a tougher task than expected after the coronavirus pandemic forced designers to rearrange their working conditions on the fly. And the experience could leave a lasting imprint on how designers go about their duties in the future.

The crew of about 30 employees had to finish tuning Uconnect 5, which was far along in its development, using standalone prototype units in home offices. The team usually operated with a few prototypes at FCA’s suburban Detroit headquarters but suddenly needed a few dozen with everyone separated.

Vince Galante, FCA’s chief designer of user experience, said he might keep a standalone unit at home from now on — even after he eventually goes back to working at the office.

“I get software updates once a week, for sure, sometimes twice a week,” he told Automotive News. “We get on calls and we talk about it, we look at it. We update, we tweak, we get a new software download and we’ve been doing that for six, seven months now.”

The design team has been making a lot “fine adjustments” such as ensuring that the selected screen colors work and that the contrast is right so everything is easy to read.

Response time is another key piece in making Uconnect 5 intuitive. This was evident in the system’s “card-based format” that allows users to personalize and simplify display screens. Users can group features into different screens to determine how and where each is displayed.

By touching one of the cards and holding it for a second, a user can move it into different positions on the screen. Getting the timing right required a delicate balance.

“We started off with, like, 2 seconds, and that just felt too long,” Galante recalled. “We went down to half a second; it was too quick. And so we’ve been doing little adjustments like that. Really fine-tuning to make sure that all those things [are] put in there to make it really easy to use, to make sure they’re working right, exactly how they should be. Those are some of the small adjustments we’re making, but they’re really, really important for when the customer is finally using it.”

As team members made changes, Galante would get texts alerting him to try it out on his prototype. He said this is the way they have to work. Speed is critical.

In fact, working that way might even be a little quicker in some aspects, Galante said. Relaying ideas, which may have required a presentation previously, can be as simple as zipping texts back and forth.

“It would have taken a little bit of time,” Galante said. “Now that we’re so used to this really iterative, quick communication, [I] just get a text. Before, they’d have to prepare something, and now it’s like, ‘No, no, he’s there, he’s available, let’s just ask.’ ”

While the home prototypes have been invaluable to refining the system, the true proving ground is the vehicle itself. Uconnect 5 appears to be passing that test with Galante’s children, ages 9 and 6.

The youngsters jumped in a Jeep Grand Cherokee equipped with the prototype unit and learned the system within a few seconds.

“I just put it in front of them, and they’re very curious. They were making pages and changing widgets and moving things around. I didn’t have to say a thing,” Galante said. “As soon as I saw that — I mean it was 30 seconds and they had their own screens built. I said to myself, ‘OK, I think we got something here.’ ”

Galante’s mother got in on the act, too, and was able to pick up on the intricacies of the system.

Working from home, he said, has yielded an unforeseen benefit.

“Designers, when you’re more comfortable, when you’re more in your element, it’s a little easier to be even more creative, come up with new ideas and do all those things,” he said. “A nice surprise of all this has been all of us designers are in our comfort zone. I’ve actually seen an explosion of creativity that I didn’t expect.”

It’s hip to be Rolls: Evolving brand brings in younger buyers

As Rolls-Royce’s lineup has expanded via new models and redesigns, the evolving British ultraluxury brand is attracting more and younger customers.

A stately sedan to be chauffeured in? Yes, Rolls-Royce still offers the flagship Phantom, a posh behemoth that costs about half a million dollars.

But the rest of Rolls-Royce’s lineup — the Ghost sedan, Wraith coupe, Dawn convertible and Cullinan crossover — not only increased the brand’s global sales in the past decade, it has sparked a generational shift, attracting super-rich millennials.

“That’s been the biggest change,” said Kelly Wolf, CEO of IndiGO Auto Group, which includes Rolls-Royce Rancho Mirage in California and Rolls-Royce North Houston. Customers now are “a little more youthful, a little more exciting.”

“The old kind of Grey Poupon stereotype is gone,” he said, referring to the mustard commercials from the 1980s which depicted two wealthy gentlemen, each riding in the back of a Rolls, with one asking the other whether he had that brand of dijon. “The new Rolls owner is driven, is edgy and typically is very successful. That works out good for us.”

Rolls-Royce’s average customer age has dropped to 43, the automaker said in August. It was 56 prior to 2010, when the Ghost joined the lineup and started the brand’s product push beyond the Phantom.

Rolls clients represent a broad mix, said Beau Rice, general manager at Hi Tech Motor Cars in Austin, Texas, which includes Rolls-Royce Austin. The buyer could be an attorney or physician, a venture capitalist or a professional athlete.

“I’m asked all the time, ‘Hey, what is your typical Rolls-Royce customer? What’s he or she look like?’ And my answer to that is they’re not typical. That’s what they look like,” said Wolf, who also is chairman of the Rolls-Royce dealer advisory board.

“They are unlike any other customer in our portfolio. It’s hard to put a stereotype around them. Their underlying similarities is they’re all very, very successful and very confident in what they do. But other than that, they’re truly unique individuals. That’s why they’re searching out such a brand.”

Karl Brauer, ISeeCars.com executive analyst, said Rolls introducing models that are clearly meant to be driven, as opposed to being used to chauffeur people, has been much more appealing to wealthy people younger than 50.

“There’s a spectrum between old, established and staid and young, vibrant and hip,” Brauer said. “They’ve absolutely moved the needle from the one side of that spectrum towards the other side, substantially.”

After the Ghost, the Wraith launched in 2013 and the Dawn debuted in 2015. Black Badge, Rolls-Royce’s performance and style subbrand, which is aimed at younger customers, launched in 2016.

The Phantom was redesigned in 2017, the Cullinan launched a year later and the redesigned 2021 Ghost will arrive at dealerships by year end. All three models are on the brand’s aluminum architecture.

While people in their 20s and 30s would not have considered a Rolls-Royce in the past, that’s changing. “With Black Badge, the new designs and all the technology inside the cars, it’s just attracting that younger demographic,” Wolf said.

One noticeable example of Rolls’ younger customers is 23-year-old celebrity Kylie Jenner. She’s shared photos of her bespoke Cullinan — it has a black exterior with a hot-pink interior — on her Instagram account, which has 197 million followers.

The impact of a growing lineup has been significant on Rolls’ sales. In 2009, the brand sold 1,002 vehicles globally. In 2019, that figure grew to 5,152, a surge of 25 percent over 2018’s results, driven largely by the Cullinan.

“Cullinan has done very well for us,” Rice said. “It’s been fantastic. It’s an exceptional car.”

The automaker doesn’t break down sales by region but has said that North America accounts for roughly one-third of its total. It has 37 dealerships in the U.S. and seven combined in Canada, Mexico, Brazil and Chile.

The Automotive News Data Center estimates U.S. Rolls-Royce sales at 916 through September, down 30 percent.

For the brand’s dealers, their mission is clear: Identify potential customers and make the crucial introduction to the storied brand.

“Once you’ve owned Rolls-Royce, there’s nothing like it,” Rice said. “There is not a car that has that level of detail, that level of craftsmanship, that sense of arrival and that sense of experience. But it’s getting people that haven’t been in that portfolio to understand it, to experience it sooner than maybe perhaps they planned.”

That can mean meeting in a social environment away from the dealership, such as a country club or at a restaurant rooftop, Rice said. That way the conversation can be focused on a passion, such as $400,000-and-up vehicles.

“It’s really just coming up with unique concepts, as far as places to host, with an idea in mind and what we want to share,” Rice said. “And coming up with a plan that wraps that all into something that is fun and that people are going to talk about. Maybe it’s not the actual participant that we speak to that ends up buying a vehicle, but they’re so excited about what they saw, what they heard and what they experienced, that they go and share that. It broadcasts that message out for us. That’s something you just can’t buy.”

IndiGO Auto Group was awarded the Rolls-Royce North Houston franchise in 2017. Wolf said he doesn’t think the retailer has even “scraped the surface as far as the potential in Houston.”

“While there’s plenty of wealth, it’s a much more conservative market,” Wolf said. “We have been working on teaching people how to own a Rolls-Royce. I know that sounds funny, but some people, regardless of their wealth, would not even consider a Rolls.

“But when you show them how to own a car, show them how to enjoy it and teach them — and I use the word ‘teach’ for lack of better word — how to enjoy their own success when it comes to this type of vehicle, it just takes a while.”

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The new kink in automotive hiring: Amazon

As if it hasn’t been hard enough recruiting work forces over the past couple of years, with booming sales and low unemployment, before the coronavirus pandemic.

Now, as business slowly creeps back to normal, automotive companies face a new challenge: Amazon.

The online marketplace plans to recruit 100,000 hourly U.S. and Canadian workers at a starting wage of $15. That is about 20 percent more than auto parts plants typically pay to start.

It’s making auto-sector expansion a bit tougher than normal.

“Not just Amazon, but all of the employers who have done well through the pandemic while the auto industry was stalled,” said Dietmar Ostermann, U.S. automotive advisory leader for PwC, “like Home Depot, food companies, grocery chains and medical-sector companies.”

Automotive manufacturers are increasingly competing for hourly labor with these major corporations and large gig economy employers — just one of many factors in the auto industry’s struggle to expand production.

To compete with other business segments, automotive employers are getting creative and reevaluating how they procure talent. That includes dispensing with some of the traditional hiring contingencies, such as drug testing and background screening, says Keilon Ratliff, vice president and automotive lead at Kelly Professional & Industrial.

“You now have different sectors all looking for the same talent, and people are amending some of the qualifications that they have on the front end,” he said. “Companies have had to adjust those processes in order to compete.”

Auto manufacturers have been dealing with some of the lowest unemployment rates in the U.S. since World War II. Trying to recruit workers in a market in which there is little available labor has been difficult.

This year, even though thousands of American workers were laid off and coping with a recession, the task of recruiting factory workers has been exacerbated by COVID-19. People are hesitant to take a job in a factory. And the availability of unemployment benefits of up to $25 an hour is beating out the lure of lower wages to go work in the potentially dangerous close quarters of an assembly plant.

Now it’s all now coming to a head.

“There is a significant shortage of workers in the auto industry right now,” Ostermann said.

As employers try to get new hiring projects on track, or just return to previous production levels, the shortage of workers is a bottleneck. Missing just a tenth of a needed work force can hold back volumes or thwart efforts to operate a plant efficiently.

David Kalb, president at Applied Tech Industries, a Tier 2 specialized automotive coatings provider in Chesterfield, Mich., said he has not been able to find enough workers to keep up with production commitments shortly after the industry came back on line.

“We had to go to 10-hour shifts, six days a week because we couldn’t get good help, other than the people we had,” said Kalb, who services 12 auto assembly plants.

In addition to working additional hours, Kalb had to outsource some work to competitors. “Just in trying to find people, we’ve added more temp agencies,” he said. “We had to increase our pay by a couple of bucks an hour, because that’s what the market was doing at the time.”

Others have asked salaried engineers to fill gaps on assembly lines.

“There’s definitely a battle for talent,” Ratliff said. “Customers are experiencing higher turnover rates. As we’re looking to engage with the work force, there’s lower enthusiasm to go back to work due to COVID.

“The war for talent became that much more challenging.”

Some employers also are considering making their wages more competitive, and partnering with organizations that have a pipeline to the manufacturing work force.

The Texas Workforce Commission — a state agency that provides work force development services to support the state’s economic development activities — creates grant programs that aim to boost the available worker pool. The commission connects incoming or expanding companies with those workers.

Texas is awaiting the arrival of a new Tesla Gigafactory truck plant southeast of Austin, which is likely to pull in more suppliers and spur local parts companies to expand production. That will create the need for more auto workers around Austin — an area that is hardly hurting for jobs. In addition to the University of Texas and state government offices, Dell Technologies is a major local employer, and a new Apple campus there plans to hire 15,000 people.

“You can have all the great tax incentives and benefits and be a nonunion state and all these things that Texas has, but if you don’t have the work force that is ready to meet those needs, that’s going to hurt that recruitment,” said James Bernsen, deputy director of communications at the state commission. “A key input is having that work force, and that’s really been our strength.”

Phone calls take new priority in pandemic

More customers are buying cars using a computer today, but one of a dealership’s most critical tools — if not the most vital — dates back more than a century.

The telephone.

Some dealers have invested in or expanded the use of products that help shoppers do more of the transaction online — e-commerce platforms, chatbots, video tools, e-contracting — during a pandemic in which close human contact is discouraged.

Yet the phone is a technological sales tool at dealerships’ disposal. Phone calls became more important during the coronavirus outbreak, especially while physical showrooms in some states were closed to walk-in and appointment traffic this spring, several dealership phone services providers told Automotive News. And they remain an indication of how serious a vehicle shopper is about buying.

Vendors can record phone calls, offer training and coaching, track conversations and alert dealerships to follow up with customers when calls aren’t properly handled. Some dealership managers say mobile technology also has made it easier to communicate with customers through text messages, video calls and virtual vehicle walk-arounds.

“It’s easier to go online,” said Steve Barnett, CEO of dealerTEL, a Vero Beach, Fla., phone systems provider that works with about 100 dealership rooftops.

“When I break out of that mold and I’m willing to click to dial and call a dealership, I’m serious today,” Barnett said.

“If you don’t take care of me on that phone, I’m done with you, because the next dealership is one click away on the phone. I don’t need you. I’ll pick the next guy because Google gave me five dealerships here to dial from.”

When Shults Auto Group closed its showrooms in New York and Pennsylvania this spring under state coronavirus restrictions, Matthew Kahm rerouted all extensions to one phone at each store and assigned an employee to answer calls.

The Jamestown, N.Y.-based dealership group, with eight franchised rooftops and three pre-owned stores, set up a voicemail message letting customers know the group’s stores were short-staffed — between 75 and 80 percent of employees were furloughed, Kahm said — and that someone would respond as soon as possible.

Call volume fell off in the early weeks of the pandemic, so the load could be managed with fewer people, said Kahm, general manager of two of the group’s stores.

More employees were added to the phone group as the number of calls increased.

“That was the sign things were opening back up, when the phones started ringing again,” he said.

Shults Auto Group installed digital retailing tools during the pandemic at stores that didn’t have them, and employees used the phone to walk customers through the online sales process.

Kahm said callers now often want to confirm that the dealership received their online submissions.

“The customer’s already at that transactional point when they’re calling us,” he said.

“We have to continue to work on our skills as dealerships to wow the customer while they’re on the phone and make it easy,” he added, “and not have customers bouncing around all over the place.”

Phone providers say dealerships also need to improve their processes to make sure customers are well-serviced on the telephone to avoid a bad experience that sends shoppers to another store.

Lonestar Toyota in Lewisville, Texas, near Dallas, ensures sales consultants are knowledgeable about the brand’s vehicles so they can answer every question a caller might have, said General Manager Ronald Bowie.

More customers are interested in working an entire car deal over the phone prior to going into the store, something Bowie said is relatively new during the pandemic. If a customer wants to transact by phone, the deal is sent to a manager who will follow the deal through closing and work with a customer to finish the paperwork either in-store or off-site.

“If I’m talking to you, I have more of a connection with you over the phone than I do over an email,” Bowie said. “I can send something to you in an email, and then you go and you can shop me to 10 other dealerships. This is just more of a one-on-one: ‘Hey, let’s figure out a way to make you happy.’ ”

As the pandemic continues, dealerships can enhance their phone capabilities by turning voice calls into video chats, experts said. For instance, Barnett said, a sales employee could take a customer for a virtual ride from inside the vehicle he or she is interested in buying. Instead of focusing on getting a customer to go into the store, he said, sales consultants should use the phone to build rapport in whichever way a customer wants to engage.

“Treat the phone as the most valuable technology that they have,” Barnett said. “That phone will give you more return on investment than any other piece of technology that you invested in in your store if you just pay a little attention to it.”

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Infiniti QX60 will test ‘Nissan-plus' strategy to speed new models

Nissan’s latest strategy for its premium Infiniti brand has been described as less “mini-Mercedes” and more “Nissan-plus.”

Financially beleaguered Nissan Motor Co. will lean into greater collaboration between mass-market Nissan and premium Infiniti. That means Infiniti will share platforms, powertrains and assembly lines with the Nissan product line in an effort to boost product development efficiencies.

But don’t expect the next fleet of Infiniti sedans and crossovers to be spruced-up Nissans. “Rebadged cars are not the direction that we’re going,” Infiniti Americas Group Vice President Jeff Pope told Automotive News last week.

Infiniti will differentiate with design, luxury and performance.

The new strategy “allows us to do more with less,” Pope said. “What that means is getting a vehicle into the market that has all the bells and whistles we expect it to have in a luxury vehicle and still be at a price point that we feel is very realistic.”

Platform-sharing among brands is likely to help automakers offset their pricey investments in electrification and autonomous driving technologies. Nissan and Infiniti already share platforms. The Nissan Z sports car shares underpinnings with the Infiniti Q50 and Q60.

“It’s the right thing to do in the industry,” Pope said. “What you’re able to do then is spend your resources on the things that are truly going to differentiate the car and make it a luxury car, versus a mass-market car.”

The strategic pivot comes as Infiniti updates what is one of the oldest product portfolios in the industry. Infiniti will launch five vehicles globally in the next three years, starting with the all-new QX55 crossover.

The coupe version of the QX50 was planned for the second half of 2020 but was delayed until early next year because of the coronavirus pandemic. The QX55 will have a similar powertrain and sport a sloping roofline inspired by the first-generation FX performance crossover. While the new crossover shares design elements with the QX50, the front end is different and features a new grille design.

The QX55 “sets the stage for us to start to move forward,” Pope said.

That launch will be followed by a redesign of the midsize three-row QX60 crossover which should arrive in U.S. stores by summer. It will be the first product launch under the “Nissan-plus” strategy — a test to see whether the brands can share more components without sacrificing their distinct identities.

The second-generation QX60 will feature a raised hood profile, larger grille, dual 12.3-inch screens and a two-tone roof.

“You can expect the vehicle to be significantly upgraded in terms of technology and interior,” Pope said.

At launch, the QX60 is expected to be offered only with a gas engine. But, Pope left the door open for other powertrains. “We will not rule out anything in the future,” he said.

Last month, Infiniti teased elements of the next-generation QX60 crossover in a design study referred to as the QX60 Monograph.

The platinum-hued QX60 Monograph’s wide body and track revealed a more muscular look than that of the outgoing model. In the front and rear, “digital piano key” lighting delivers a futuristic feel while the rear lamps wrap around the tail in a continuous swoop.

“This design execution, yes it’s for QX60, but it also lends itself to where we might go in the future,” Pope said.

Updating the QX60 is a critical step in rejuvenating Infiniti, which has suffered a multiyear sales slide in the U.S. market. Infiniti’s U.S. sales cratered 21 percent last year, well before the hit of the coronavirus shutdown. Infiniti sales in the first nine months of this year fell 33 percent from the same time last year.

The QX60 accounted for nearly 40 percent of Infiniti’s U.S. sales last year.

“This is a key vehicle in our lineup,” Pope said. “It will make up a large portion of our sales and will drive a lot of our business as we move forward.”

The three-row crossover hits a market sweet spot in the U.S., Pope said, citing the model’s combination of utility and luxury.

He expects the new QX60 to help lift U.S. sales by drawing new customers to the brand.

“If you look at the Monograph that was shown, any vehicle that’s going to look like that is going to draw the attention of many consumers that have never driven Infiniti before,” Pope said. “Which is exactly what you want in a new model launch.”

FIXED OPS JOURNAL FORUM: Current state of the industry

Dealers face a number of service department challenges beyond the pandemic, including declining rates of customer retention and satisfaction. But there are solutions out there.

Speakers:

Eliza Johnson, Director, Carlisle & Company
Scott Doering, Vice President of Customer Service, Volvo Car USA
Nick Latino, COO, Performance Auto Group
Dawn Matthews, Service and Parts Director, David Auto Group
Scott Thompson, Senior Vice President, Business Leader, CRM and Layered Applications, CDK Global
Dave Versical, Chief of Editorial Operations, Automotive News

This conversation was originally broadcast on October 8, 2020, as the first of five conversations in the Fixed Ops Journal Forum series.

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EV improvements will still need to satisfy shoppers

Long before California Gov. Gavin Newsom ordered a 2035 ban on new gasoline-powered light vehicles in the state, the auto industry was working hard on electric vehicles. Their driving performance is now shockingly good. Their environmental benefits — while a function of how electricity is produced — are proven as well.

Mainstream automakers as well as premium and luxury brands will soon bring an unprecedented array of attractive, useful vehicles to the U.S. market. But even as prices become more competitive and charging more commonplace, automakers and dealers need one more thing: satisfied customers.

In this decade, they aren’t going to sell like Silverados and Accords — they don’t have to. But unlike the underpowered science projects of the past, these more mainstream products provide the chance to reach a bigger segment of the market and help manufacturers learn how to profitably serve these customers.

So far, electric vehicles have been little more than a highly subsidized niche market in the U.S. That’s not much of a track record for automakers as they lay out their investment plans for future EVs.

A sustainable industry — as well as a sustainable planet — requires a top-to-bottom rethink of the way vehicles are produced, marketed, sold, powered and recycled. Just as it has done with battery costs to date, the industry needs to continue to relentlessly drive down costs and improve performance. That has always been the key to increasing customer satisfaction — while making money.

Wall Street is wild about EVs now, hoping to find the next Tesla. But one thing Tesla has going for it is a large number of enthusiastic customers. Other battery-powered vehicles have not enjoyed the same kind of demand, especially not at scale.

Most automakers were dragged into the EV business. Few, if any, projected a financial return anytime soon on what would be a sizable investment. But regulations around the world — not just in California, but especially in China and Europe — forced their collective hands. So they invested, and now they have the well-crafted products to show for it.

Crucial tests await the crop of attractive EV crossovers from the likes of Ford and Volkswagen, Hyundai and Nissan, as well as the wide array of planned electric pickups.

Sonic Automotive CEO David Smith arrested on assault charges

Sonic Automotive Inc. CEO David Smith spent a night in the Mecklenburg County Jail in North Carolina after he was arrested on four charges Monday, including assault by strangulation, according to the jail.

Smith, CEO of the nation’s sixth-largest new-vehicle retailer, was arrested at about 9:45 a.m. Monday and taken to the jail later that day, according to police and the jail. He was released around 4:45 p.m. Tuesday.

He was arrested on a felony charge of assault by strangulation and misdemeanor charges of false imprisonment, assault on a female and interfering with emergency communication. Smith posted a $30,000 bond, according to the jail. He is scheduled back in court Oct. 20.

In a statement, Sonic’s board of directors said it “remains steadfast in its support” of Smith.

“We believe in David’s leadership, honesty and transparency, which he has demonstrated throughout his tenure as chief executive officer and over 20 years of service to the company,” the statement said. “David has informed the board that he is innocent of these charges and expects to be fully exonerated.”

An unidentified woman, 22, told police she was assaulted and unlawfully restrained without her consent at a home in Charlotte, N.C., according to a Charlotte-Mecklenburg Police Department report.

The woman, who is not related to Smith, had minor injuries of bruises and scratches and was treated at the scene, according to the police report. The alleged incident occurred from about 10 p.m. Sunday until about 2:30 a.m. Monday, the police report states.

Smith couldn’t immediately be reached for comment.

Smith, 46, is a son of Sonic co-founder Bruton Smith. He was named CEO of Sonic in September 2018 when Smith’s brother, Scott Smith, stepped down.

Smith’s arrest was reported by WBTV and Fox 46.

Sonic, of Charlotte, N.C., ranks No. 6 on Automotive News‘ list of the top 150 dealership groups based in the U.S., retailing 114,131 new vehicles in 2019.

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