Auto Outlook: Toyota still king; tops GM in sales

Nov. 3, 2013 at 5:30 AM
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With its redesigned Corolla compact and RAV 4 crossover utility vehicle drawing generally favorable reviews, Toyota is on pace to repeat as the world's best selling auto brand.

Toyota sold 2.5 million vehicles in the most recent quarter to maintain its lead over General Motors and Volkswagen.

Toyota says it sold around 7.4 million vehicles worldwide during the first nine months of this year, thanks to strong sales in the United States where the brand hailed for its dependability shook off a series of confidence damaging recalls. GM sold around 7.2 million vehicles January-September -- 2.4 million in the third quarter -- and Germany's VW sold around 7 million units through September, 2.3 million in the most recent quarter.

Much of Toyota's success is credited to the monetary policies of Prime Minister Shinzo Abe, who weakened Japan's yen making Japanese exports cheaper, reported. Toyota sales have slowed in China and Thailand.

Toyota is on track to ring up $24.4 billion in operating profit for the fiscal year ending March 31, 2014, topping its previous record set in pre-recession 2008.

Toyota recovered from the "sudden acceleration" scare but now is faced with negative ratings for its Camry, RAV4 and Prius V in the Institute for Highway Safety's tough new small overlap front crash test, which simulates crashing 25 percent of the driver's side of a vehicle into a pole, tree or an oncoming car at 40 mph.

Consumer Reports last week said it would no longer recommend the three Toyotas, as well as the Audi A4, V-6 Honda Accord and the Nissan Altima, which all lost ground in the magazine's annual Auto Reliability ratings released in Detroit Monday.

Toyota said it is addressing the poor performance of the Carmy, RAV4 and Prius V on the front overlap crash test.

"We are looking at a range of solutions to achieve greater crash performance in this area," Toyota said in a statement.

The non-turbo Subaru Forester was the top-scoring vehicle on CR's predicted reliability list and the Dodge Dart was the top-rated domestic model. The Ford C-Max Energi plug-in hybrid was at the bottom in predicted reliability.

By brand, Lexus was first in predicted reliability followed by Acura, Mazda, Infiniti, Honda and Subaru. Mini was at the bottom.The Lexus ES300h hybrid was the overall best model, followed by the Toyota Prius [the plug-hybrid was the least reliable Prius], Acura TL, Audi A6 and Mazda 5.

"On the whole, Japanese brands are still more reliable than Europeans or Americans," Consumer Reports director of automotive testing Jake Fisher told The New York Times. "But we are talking about an Accord, [Nissan] Altima, Pathfinder, [Scion] FR-S and [Subaru] BRZ, all below average. That's something that's kind of new. We aren't used to seeing Japanese nameplates being that low on the list."

The biggest consumer complaint in new models was for in-car electronics, with owners expressing frustration over frozen screens, slow touch control response, faulty voice recognition and buggy Bluetooth pairing of smartphones and music players with audio, navigation and infotainment systems.

"The younger people were much more likely to say it's not working," Fisher said. "It is very possible that older people are not using these systems to the full degree."

The all-electric Tesla Model S continued to impress, earning CR's recommended rating for the first time. Predicted reliability of electrics and hybrids was good, with only the Ford Fusion Hybrid, Ford C-Max Hybrid and Ford C-Max Energi plug-in hybrid rated worse than average.

Consumer Reports bases its reliability ratings on road tests, safety tests and feedback from more than 1 million subscribers.

While Ford works to improve software for its MyFord Touch and MyLincoln Touch infotainment systems, the Dearborn, Mich., automaker scored a coup with its 2014 Fiesta.

The U.S. Environmental Protection Agency certified the fuel economy of the subcompact as 32 miles per gallon city, 45 mpg highway for a combined 37 mpg.

That makes the Fiesta equipped with the 123-horsepower, 1-liter, three-cylinder EcoBoost engine the most fuel efficient gasoline powered car when it reaches U.S. showrooms in December, beating the Honda Fit by 12 mpg and Toyota Yaris by 8 mpg. A new 1-liter Fiesta with a manual transmission will start at $16,740.

84-month car loan grows in popularity

It's probably a good thing predicted reliability of new cars has improved markedly: Experian Automotive says data indicate more new vehicle buyers are opting for car loans as long as seven years when financing a new vehicle.

On the pro side of the car-buying equation are low interest rates and higher used car values that can reduce the initial cost of a new vehicle. A longer car loan also lowers the monthly payment allowing the buyer to purchase more car.

On the con side: a car is a fast depreciating asset and some buyers will end up "upside-down" -- owing more on their long-term loan than the car is worth -- and then there's the extra cost of all the extra paid financing a longer loan.

There was a time when the 36-month loan was the industry standard. That gradually grew to 48 months and some finance companies are offering 73 to 84-month car loans -- longer than most buyers plan to keep a vehicle.

Writing of longest term loans is up 25 percent in the last year and accounts for nearly 20 percent of all new car lending, Experian said. Nearly 42 percent of all car loans are for 61 to 72 months while loans of 25 to 36 months slipped nearly 25 percent.

The average new car costs more than $30,500.

GM to shed "Government Motors" moniker

The Treasury Department's special inspector general for the Troubled Asset Relief Program disclosed last week the government stands to lose about $10 billion on its $49.5 billion bailout of General Motors.

Treasury has sold nearly all of its stake in GM, which was as high as 60.8 percent after the 2009 bankruptcy. In a report to Congress, Treasury said it had sold 811 million of the 912 million shares it once held, recording a loss of $9.7 billion.

"Because the common stock sales have all taken place below Treasury's breakeven price, Treasury has so far booked a loss of $9.7 billion on the sales," the report said.

GM may buyback a portion of Treasury's remaining shares, ending government ownership before Treasury's announced exit date of March 31, 2014, a Barclays auto analyst wrote in a research note reported by The Detroit News.

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