December 23, 2011

Auto Industry Trends for 2012
After the roller coaster ride of 2011, the auto industry is due for a shift in gears. The New Year always brings a promise of change and Edmunds.com has noted a number of trends that could help the industry leave 2011 in the dust. For one, recession-weary car buyers will finally take the plunge to trade in their rambling wrecks, tempted by the latest technology and more freely flowing credit. With gas prices moderating, they won't necessarily be headed for compact cars, either. Newly designed top-sellers will draw buyers to the midsize car segment, and the compact crossover SUV segment should see some increased attention as well. Of course, 2012 won't be an entirely brave new world. Tight supply will persist for used cars, keeping prices high, and driving many would-be buyers to new cars. Uncertainty at home and economic threats from abroad will continue to constrain car sales. And America's love affair with trucks won't be ending any time soon—aging vehicles, stable gas prices, some revival of housing construction, and easing credit conditions will help shore up a steady stream of buyers. For more on what Edmunds believes 2012 holds for the car industry, click here.

Automakers Brace for Possible Meltdown of Euro Zone
If the euro zone collapses, automakers will be on the front line because of their high labor costs and political barriers to restructuring. According to Automotive News, a north-south break-up in which Italy, Spain, and Greece abandoned the currency would transform the industrial map, upending a decade of investment decisions and supply relationships based on monetary union. "If this happens, there are no winners among European car makers," said Alexander Law, Paris-based head of Xerfi Global, an economics consulting firm. "But there are different degrees of loser, and a lot hangs on the profitability of domestic production." A break-up would likely see the emergence of a stronger German currency –whether a restored deutschmark or more select euro – raising domestic production costs and eroding the competitiveness of exports like the Golf, first sold in 1974. By contrast, Fiat's 31-year-old Panda mini could become more attractively priced overseas as a new lira sagged under the weight of Italy's public debt. "The German industry would find itself operating with a re-established deutschmark and its export competitiveness crippled," Sanford C. Bernstein auto analyst Max Warburton said. For more on how European – and Asian – automakers are preparing for a euro meltdown, click here.

Best Drives of 2011 Include $400,000 Lamborghini, Audi A7 Hatch
Bloomberg’s Jason Harper has reviewed dozens of cars over the past year, and only a few have stood out from the pack. He writes that, “One crossover deserves a spot in my garage; next to that the hottest sports car that I could almost afford, and the supercar that I never will.” That crossover is the Range Rover Evoque. Other carmakers such as Acura and BMW have tried to pull off high-end, provocatively shaped crossovers. The new Evoque succeeds and is funky in all the right places. Click here for a picture. Meanwhile, if you have a half million dollars burning a hole in your Armani trousers, consider Lamborghini’s latest $393,695 flagship, the Aventador. Harper calls it the greatest Lambo ever. Unlike Lamborghinis of yore, the Aventador lives up to the promise of its scissor-door design and comic-book-color paintjob. However, if an economy car is more in your price range, you could do much worse than the Hyundai Veloster. Hyundai has gotten in the habit of over-delivering very good cars at underwhelming prices. Harper’s $22,550 test model was crammed with amenities like touch-screen navigation, automatic everything, Bluetooth, and a rear-view camera. For the full article, including Harper’s overall 2011 winner, click here.

Toyota's Credit Outlook Cut to Negative by Moody's Citing Yen
Toyota Motor Corp. and its affiliates' credit rating outlook was cut to negative from stable by Moody's Investors Service yesterday on concern gains in the yen may delay recovery in their profit margins. The automaker's rating could be reduced if it is unable to implement steps to restore profitability. Toyota's senior unsecured long-term rating was affirmed by Moody's at Aa3, three notches below the top investment grade. Toyota, poised to lose its crown as the world's biggest automaker this year to General Motors Co., said vehicle sales may rise the most in at least 12 years in 2012 as the carmaker recovers from production disruptions caused by Japan's March earthquake and Thailand's record flooding. According to Automotive News, the gain in the yen, which is cutting Toyota's export earnings, and slowing economic growth in the U.S. and China may hamper its efforts."The recovery in Toyota's profitability will be more protracted than anticipated due to the company's significant exposure to the strong yen," Moody's said. "This foreign-exchange pressure is compounded by eroding macro-economic conditions in certain core markets." Toyota is "vulnerable" to the strengthening yen because of its greater dependence on its production in Japan to support sales in markets such as the U.S. and Europe, Moody's said. Click here for more on Toyota’s outlook.

New Kia Ray is Korea's First Production EV
Kia has unveiled the automaker's very first production electric vehicle. Auto Blog reports that the Kia Ray EV will offer buyers a range of around 86 miles depending on driving conditions and will include a fast-charge option that should top off the cells in around 25 minutes. Click here for pictures. A 50 kW electric motor provides power to the front wheels, which is good enough to get the EV to 62 mph in 15.9 seconds. That may seems slow by most standards, but it’s worth noting that the internal combustion Ray with its 1.0-liter gas engine makes due with significantly less torque. Kia says that Ray EV boasts 123 pound-feet of torque, which is 77 percent more than the 1.0-liter machine. The boxy EV also uses a new type of regenerative braking system in which the electric motor generates boost for the hydraulic brake assist – just like on an internal combustion vehicle. The automaker says that the result is a linear brake that still manages to recuperate energy that would otherwise be lost during deceleration. As wonky brake feel is one of our chief sticking points with all EVs, this comes as welcome news. Click here for the full story.

AROUND THE WEB

  • Report: Chevy Volt Costing Taxpayers Up To $250K Per Vehicle [Fox News]
  • Naughty or Nice: Multimedia Systems [Cars.com]
  • What’s the Coolest Wooden Car? [Jalopnik]
  • First Chinese car imported to North America built by . . . Honda? [Auto Blog]
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