xcel
04-29-2006, 06:22 AM
Over the next five years, the premium luxury segment will grow at double the rate of the volume market. (http://www.detnews.com/apps/pbcs.dll/article?AID=/20060428/AUTO01/604280432/1148/AUTO01)
Dee-Ann Durbin - AP - April 28, 2006
http://www.cleanmpg.com/photos/data/501/MB_Luxury_Model_Sales_Still_Increasing.jpg
DETROIT - Rising gas prices haven't put the brakes on sales of luxury vehicles, which were up 15 percent at AutoNation retailers in the first quarter, and the company's chairman and chief executive doesn't see a slowdown coming any time soon.
"I think over the next five years, the premium luxury segment will grow at double the rate of the volume market because of demographic trends," Mike Jackson told The Associated Press in an interview Thursday. "The Baby Boom generation simply shows no signs of slowing down or retiring."
Jackson said gas prices aren't yet affecting sales but could if they remain over $3 per gallon for a sustained period. Even then, Jackson said, an actual gasoline shortage might be the only thing that would really change people's buying habits.
"There is a resistance to change that is considerable," Jackson said. "There's a lot of talk but you really have to look at behavior."
AutoNation Inc., the largest U.S. auto retailer, said Thursday its net income fell 10 percent in the January-March period, to $87.2 million from $97 million in the first quarter of 2005. That was due in part to a loss of $10.6 million because of the closure of several dealerships, Jackson said.
Overall sales were flat for the year, but revenues were up 4 percent to $4.7 billion, driven by the increase in luxury sales. The Fort Lauderdale, Fla.-based company operates 345 franchises in 17 states and is responsible for around 3.5 percent of U.S. new vehicle retail sales annually.
AutoNation defines luxury as premium foreign brands such as Mercedes-Benz, BMW, Lexus, Land Rover, Jaguar and Porsche.
AutoNation's experience mirrors the industry, which has seen a boom in luxury sales with the recent growth in household income and consumer confidence. Sales of luxury vehicles were up 6 percent in the first quarter of this year, compared to an industrywide sales increase of 1 percent, according to Tom Libby, the senior director of industry analysis at the Power Information Network, a division of J.D. Power and Associates. The Power Information Network also includes domestic luxury brands such as Cadillac and Lincoln in its totals.
But AutoNation also has more exposure in the luxury market. Jackson, the former president and chief executive of Mercedes-Benz USA Inc., has made a concerted effort to increase luxury revenues. The company is now the top U.S. seller of vehicles from BMW AG, DaimlerChrysler AG's Mercedes division and Toyota Motor Corp.'s Lexus division.
When Jackson arrived at AutoNation in 1999, foreign automakers made up 40 percent of the company's portfolio. Now, they make up 60 percent. Twenty-two percent of AutoNation's revenues came from luxury sales in the first quarter, up from 11 percent in 2000.
"The product is coming and the purchasing power is coming," Jackson said. "We are developing a portfolio to take advantage of that opportunity."
Mike Maroone, AutoNation's president and chief operating officer, said Mercedes was responsible for much of the increase in the first quarter. Sales of its redesigned S-Class flagship sedan, which starts at $86,175, more than doubled over last year, he said.
"That drove tremendous traffic to our stores," Maroone said.
Jackson said luxury sales were particularly strong in California, the Houston area, Florida, Las Vegas and Phoenix, but they weren't down in any of the markets where AutoNation has outlets.
Not everyone is upbeat about the industry's prospects. In a note to investors Thursday, Morgan Stanley auto analyst Jonathan Steinmetz revised his full-year U.S. sales forecast downward, from 16.7 million vehicles to 16.6 million, saying U.S. automakers could be especially hurt by high gas prices since their customers have lower median incomes.
"The duration of this gas spike matters," Steinmetz said.
But Jackson isn't convinced. He pointed to sales of the redesigned Chevrolet Tahoe sport utility vehicle, which were up 37 percent in the first quarter, and said he believes full-year sales could reach 17 million despite gas prices and higher interest rates.
"The American consumer is not about to give up their SUVs entirely," Jackson said. "There will be a gradual shift, but I don't see a stampede in one direction or another."
AutoNation shares fell 19 cents to close at $22 on the New York Stock Exchange.
Dee-Ann Durbin - AP - April 28, 2006
http://www.cleanmpg.com/photos/data/501/MB_Luxury_Model_Sales_Still_Increasing.jpg
DETROIT - Rising gas prices haven't put the brakes on sales of luxury vehicles, which were up 15 percent at AutoNation retailers in the first quarter, and the company's chairman and chief executive doesn't see a slowdown coming any time soon.
"I think over the next five years, the premium luxury segment will grow at double the rate of the volume market because of demographic trends," Mike Jackson told The Associated Press in an interview Thursday. "The Baby Boom generation simply shows no signs of slowing down or retiring."
Jackson said gas prices aren't yet affecting sales but could if they remain over $3 per gallon for a sustained period. Even then, Jackson said, an actual gasoline shortage might be the only thing that would really change people's buying habits.
"There is a resistance to change that is considerable," Jackson said. "There's a lot of talk but you really have to look at behavior."
AutoNation Inc., the largest U.S. auto retailer, said Thursday its net income fell 10 percent in the January-March period, to $87.2 million from $97 million in the first quarter of 2005. That was due in part to a loss of $10.6 million because of the closure of several dealerships, Jackson said.
Overall sales were flat for the year, but revenues were up 4 percent to $4.7 billion, driven by the increase in luxury sales. The Fort Lauderdale, Fla.-based company operates 345 franchises in 17 states and is responsible for around 3.5 percent of U.S. new vehicle retail sales annually.
AutoNation defines luxury as premium foreign brands such as Mercedes-Benz, BMW, Lexus, Land Rover, Jaguar and Porsche.
AutoNation's experience mirrors the industry, which has seen a boom in luxury sales with the recent growth in household income and consumer confidence. Sales of luxury vehicles were up 6 percent in the first quarter of this year, compared to an industrywide sales increase of 1 percent, according to Tom Libby, the senior director of industry analysis at the Power Information Network, a division of J.D. Power and Associates. The Power Information Network also includes domestic luxury brands such as Cadillac and Lincoln in its totals.
But AutoNation also has more exposure in the luxury market. Jackson, the former president and chief executive of Mercedes-Benz USA Inc., has made a concerted effort to increase luxury revenues. The company is now the top U.S. seller of vehicles from BMW AG, DaimlerChrysler AG's Mercedes division and Toyota Motor Corp.'s Lexus division.
When Jackson arrived at AutoNation in 1999, foreign automakers made up 40 percent of the company's portfolio. Now, they make up 60 percent. Twenty-two percent of AutoNation's revenues came from luxury sales in the first quarter, up from 11 percent in 2000.
"The product is coming and the purchasing power is coming," Jackson said. "We are developing a portfolio to take advantage of that opportunity."
Mike Maroone, AutoNation's president and chief operating officer, said Mercedes was responsible for much of the increase in the first quarter. Sales of its redesigned S-Class flagship sedan, which starts at $86,175, more than doubled over last year, he said.
"That drove tremendous traffic to our stores," Maroone said.
Jackson said luxury sales were particularly strong in California, the Houston area, Florida, Las Vegas and Phoenix, but they weren't down in any of the markets where AutoNation has outlets.
Not everyone is upbeat about the industry's prospects. In a note to investors Thursday, Morgan Stanley auto analyst Jonathan Steinmetz revised his full-year U.S. sales forecast downward, from 16.7 million vehicles to 16.6 million, saying U.S. automakers could be especially hurt by high gas prices since their customers have lower median incomes.
"The duration of this gas spike matters," Steinmetz said.
But Jackson isn't convinced. He pointed to sales of the redesigned Chevrolet Tahoe sport utility vehicle, which were up 37 percent in the first quarter, and said he believes full-year sales could reach 17 million despite gas prices and higher interest rates.
"The American consumer is not about to give up their SUVs entirely," Jackson said. "There will be a gradual shift, but I don't see a stampede in one direction or another."
AutoNation shares fell 19 cents to close at $22 on the New York Stock Exchange.