The annual JD Power Initial Quality Survey is always a big deal. The research looks at how buyers view problems with their cars during the first 90 days they own them. The results get picked up in almost every newspaper, internet news outlet and TV station in the US.

In this year's poll, GM (NYSE: GM) and Ford (NYSE: F) picked up ground. Toyota (NYSE: TM) and Honda (NYSE: HMC) lost a little. But according to The Wall Street Journal, "It can take a while for improved scores to change consumer perceptions. Despite improvements in vehicle-quality ratings in recent years, the U.S. auto makers continue struggling to overcome the assumption among many American buyers that foreign companies produce better products."

Unfortunately for Detroit, the results may do little or nothing for the U.S. car companies. That is not just because they are losing money from relying too heavily in the past on pick-ups and SUVs, which use too much gas.

The fact of the matter is that it's because most brands are better at building cars, all get relatively good scores. Mercedes, No.4 in the survey, had 104 complaints per 100 vehicles. Cadillac, in spot No. 10 had 113 complaints based on the same measurement.

As quality becomes a given, style, handling and features, like navigation systems, are more important. When no one has a big edge, incentives, which cost the car companies hundreds, if not thousands, of dollars are critical in making buying decisions. That cost all of the companies money.

Douglas A. McIntyre is an editor at 247wallst.com.

Quality of Detroit cars improves, won't make a bit of difference originally appeared on BloggingStocks on Thu, 05 Jun 2008 10:49:00 EST. Please see our terms for use of feeds.

March is expected to be another bad month for US car sales. Domestic manufacturers are likely to have the worst of it. According to Reuters, "A sharp decline in March sales could also heighten concerns that the world's largest market for cars and trucks is on track for its weakest year since 1994." JD Power and other analysts now expect US car sales to be below 15 million units, well short of the 16.1 million sold last year. If the recession deepens, the number could move toward 14.5 million.

A very sharp drop in units sales could take $40 billion in vehicle sales out of the market compared to last year if the average car costs $25,000. For Detroit, which now only has about 50% of the US market, that would be a disaster.

Despite money taken out of the car companies through factory closings, layoffs, and a new UAW contract, the Big Three are still not set up for an extremely sharp drop in revenue. Ford (NYSE:F) and GM (NYSE:GM) trade about where they did just over two years ago when there were rumors of bankruptcies.

Those rumors will start again, and for good reason.

Douglas A. McIntyre is an editor at 247wallst.com.

A bad March for car sales, more pressure on US firms originally appeared on BloggingStocks on Tue, 01 Apr 2008 09:44:00 EST. Please see our terms for use of feeds.

Consumer Reports magazine sent some bad news to Tokyo. According to The New York Times, "bug-ridden redesigns" caused the Japanese car company Toyota (NYSE: TM) to drop from No. 1 last year to No. 3 this year in the magazine's reliability survey.

"Consumer Reports removed high-end versions of three Toyota models - the Camry and Lexus GS sedans and the Tundra pickup truck - from its list of recommended vehicles and said it would stop recommending new or redesigned Toyota vehicles without data showing that past years' versions were reliable," the newspaper wrote. Honda (NYSE: HMC) and Subaru picked up the top two spots.

The big winner was Ford (NYSE: F). The company may not be able to sell many cars, but the magazine said that 93% of its US models ranked as average or better for reliability.

It is easy to say that it is just a survey, but the study by the magazine and the JD Power annual report on initial customer satisfaction are carefully watched by car buyers. It has been broadly assumed that Toyota's reputation has been a big part of its ability to pick up sales and market share from US car companies over the last two decades.

Toyota's stock has been trading near its 52-week low. No wonder.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Toyota loses its claim as most reliable car originally appeared on BloggingStocks on Wed, 17 Oct 2007 07:23:00 EST. Please see our terms for use of feeds.

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Cellphone companies and their tricky ways to get extra fees out of consumers originally appeared on BloggingStocks on Mon, 12 Mar 2007 14:55:00 EST. Please see our terms for use of feeds.

CarMax Inc. (NYSE:KMX) had a profit in its latest quarter. A big one. The company even moved up its forecast for the next fiscal year.

CarMax made a profit of $45 million, up from $23 million in the same quarter last year. Revenue rose 24% to $1.77 billion. Gross profit on the used cars sold by CarMax is well above the gross profit on new cars: $1,898 versus $1,108.

The company said that Internet traffic, luxury car demand, and a return of SUV buyers as gas prices dropped helped increase sales. CarMax stock hit a record high of $52.77.

But, that's all yesterday's news. What does it mean?

CarMax is the largest retailer of used cars in the U.S. Oddly enough, the small new vehicle business at CarMax has dropped 3% to $110 million, while the used-car revenue rose 27% to $1.378 billion.

Another clue is that Detroit says that the average price that it's getting per vehicle is dropping. Incentives for some DaimlerChrysler's (NYSE:DCX) Chrysler models are over $4,000 a car, and General Motors Corp. (NYSE:GM) and Ford Motor Co. (NYSE:F) are not doing much better.

Consumers do not want to pay retail prices or anywhere near it for a car. Perhaps it's concern about the economy. Perhaps it's concern about the value of their homes. Perhaps research and Internet initiatives like Consumer Reports and JP Powers have convinced buyers that the right used car is virtually as good as most new ones.

CarMax results are not good for Detroit. When people buy used, new cars pile up.

Douglas A. McIntyre is a partner at 24/7 Wall St.

At least someone is making money selling cars originally appeared on BloggingStocks on Thu, 21 Dec 2006 09:45:00 EST. Please see our terms for use of feeds.