Auto Outlook: Who is buying all these cars?

AL SWANSON, United Press International
The Chrysler logo is seen at the company's display during the Chicago Auto Show at McCormick Place on February 9, 2012 in Chicago. UPI/Brian Kersey
The Chrysler logo is seen at the company's display during the Chicago Auto Show at McCormick Place on February 9, 2012 in Chicago. UPI/Brian Kersey | License Photo

With the Detroit Three, European and Japanese and South Korean automakers all posting big profits again, just who is buying all those new cars?

Sales have heated up so much both Chrysler, which is run by Italy's Fiat, and Ford Motor Co., which avoided bankruptcy in 2008, have announced plans to goose production by cutting back on traditional summer shutdowns -- usually a time of slower sales devoted to re-tooling for newer models.


Workers at four Chrysler Group LLC factories that assemble hot-selling crossover utility vehicles like the Dodge Durango will keep working through the normal two-week July break. The plants are the Toledo Supplier Park in Ohio, the Belvidere Assembly Plant in Belvidere, Ill., the Jefferson North assembly plant in Detroit and Chrysler's assembly plant in Toluca, Mexico.

Chrysler sales jumped 20.4 percent in April -- its best performance since 2008. The Belvidere plant produces the all-new 2013 Dodge Dart sedan which hit showrooms this month.

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"We recorded our 25th consecutive month of year-over-year sales growth, and we reported our strongest quarterly profit in 13 years, said Chrysler U.S. sales head Reid Bigland in a statement. "This business is all about product, and the quality and fuel efficiency of our current vehicle lineup has never been better, which is evident in our results."


Ford said Tuesday it would cut the summer shutdown to just one week from two at 13 plants, ramping up 2012 production by nearly 40,000 vehicles.

Assembly plants scheduled to take a single week off this summer are in Chicago, Michigan, Kentucky and Kansas City. Other plants will have flexible shutdowns to allow for equipment repairs and retooling.

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"We are working most of our North American plants at maximum capacity and we are adding production shifts in three of our assembly plants this month alone," Jim Tetreault, Ford's vice president of North American manufacturing, told The Detroit News. "Requiring more capacity from our plants is a good problem to have, and having the flexibility to add a week of production in our plants goes a long way toward solving it."

It's a case of striking while the iron is hot. Overall U.S. vehicles sales rose 10 percent last month to an annual rate of 14.4 million and the supply of vehicles sitting on dealer lots is below historic norms.

That's great news for carmakers, but with an average new vehicle topping $30,000 it should come as no surprise that the biggest percentage of customers are older.

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As the baby boomers' investments and 401(k) retirement accounts recover from the financial downturn, they've been dumping their old cars with a vengeance. Car buyers age 50 and older now account for 62.3 percent of new vehicle sales, AARP and auto industry watcher J.D. Power and Associates said.


Their study found 67 percent of Detroit Three sales were to boomers. Pretty good since only 10 percent of industry advertising dollars are targeted at older buyers.

Gray-hairs bought 64 percent of Chevy Cruze compacts sold last year, 62 percent of Ford Focuses and 52 percent of Ford Fiestas. And older buyers accounted for nearly 66 percent of hybrid sales.

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"The amazing thing is the retirees. They're coming in waves. They used to be cash buyers. Now we're getting them into leases so they come back in a few years," Dan Frost, owner of Cadillac of Novi (Mich.) and Chrysler-Jeep-Dodge-Ram dealerships in Southfield and Taylor, told the Detroit Free Press.

Younger Millennials between 18 and 34 bought just 13 percent of new cars, down from 24 percent in 2001 and 2002.

"Boomers can afford to buy new vehicles. Millennials cannot. The numbers don't lie," an AARP spokesman said.

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"The average price of a new vehicle is slightly over $30,000. We tend to forget that," R.L. Polk senior automotive analyst Tom Libby told the Free Press. "For a 22-year-old, that's a lot of money."

But as boomers get rid of gas guzzlers they're being snapped up by younger customers. The New York Times said some used full-size SUVs are resold even before a dealer has a chance to clean them up.


Prices of three-year old SUVs are up 6 percent, reported, and prices of five-year old SUVs are up 23 percent from last May.

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Industry analysts say families with several children still want a big sport-ute or truck that can pull a boat or tow a trailer but they don't want the big monthly payment that goes with a new vehicle along with the higher fuel cost.

Electric car sales lagging

Despite $4 a gallon gas at the pump, U.S. sales of electric cars fell in April.

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A best-ever 4,000 electrics were sold in March, but only 3,500 were sold last month.

General Motors Co. sold 1,462 plug-in hybrid Chevrolet Volts, Nissan sold just 370 all-electric Leaf compacts and Ford sold no Focus electrics, which went on sale in December.

Mitsubishi sold just 79 all-electric MiEVs, the most efficient electric vehicle currently sold in the United States.

However, Toyota nearly doubled sales of its Prius hybrid electrics with 1,654 vehicles driven off dealer lots in April.

Thailand auto production recovering

Ford Motor Co. has resumed production of its Ranger small pickup in Thailand, which was idled by last year's widespread flooding in the Southeast Asian country.


The AutoAlliance Thailand plant, a joint venture with Japan's Mazda Motors, had just begun making Rangers when the flooding caused severe parts shortages, Joe Hinrichs, president of Ford Asia Pacific and Africa, told the Free Press.

The Ranger is no longer available in the U.S. market but is still sold in every other country in which Ford sells vehicles.

Hinrichs said he expects the compact pickup to help raise Ford sales 5 percent annually in China in the next 10 years. General Motors reported a 12 percent sales increase in China in April with more than 1 million vehicles sold there so far this year.

Look Ma, no hands

At any given time about 5 percent of all drivers on the road are using a cellphone -- despite laws in many communities against phoning or texting while driving.

The Consumer Electronics Association, which represents more than 2,000 electronics companies, has sent a letter to the government opposing regulations that would ban hands-free calling from moving vehicles.

The National Transportation Safety Board in December proposed barring motorists from making even hands-free calls while driving while the electronics industry supports development of technology that disables portable electronic devices while a vehicle is moving.


Calls made using built-in vehicle communications systems like GM's OnStar or MyFordTouch, which automatically send notifications of an accident or airbag deployment, would be permitted.

"We believe that policy approaches to distracted driving must be based in well-grounded science rather than on reflexive call for bans or regulation. CEA strongly supports legislation banning the use of handheld devices for manual texting while driving, as well as laws that restrict mobile phone use for novice drivers or drivers operating under a graduated driver's license," CEA senior vice president, government and regulatory affairs Michael Petricone, told The Detroit News.

"There is no real-world evidence to support such a blanket prohibition unless one would also ban other potential distractions, such as eating, drinking, applying makeup and engaging with children while in the vehicle."

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