Wednesday, January 25, 2012

The Consumer Electronics Sweet Spot in the Economy

Dealerscope
January 25, 2012
From News

Consumer confidence in the overall economy in January 2012, according to the latest Consumer Electronics Association Index, reached its highest point since February 2008. Consumer confidence in technology spending fell in January 2012, which CEA said is consistent with previous post-holiday results.

CEA's measures consumer expectations about the broader economy, the Index of Consumer Expectations (ICE), was 177.3 in January 2012, up from 170.7 in December 2011. It is also up from 175.7 in January 2011, which was the highest point for the index.

Twice a year CEA assesses the state of the industry - where it is and where it's going - with our industry forecasts. At the mid-point of 2011, we saw further evidence that mobile connected devices were an inextricable part of our contemporary lifestyles. The question was whether the momentum would build and by how much? With the results from our winter forecast tabulated, we can confirm that this story has only gotten bigger … and better.

The two major products that dominate the industry and marketplace right now are smartphones and tablets. More than 87 million units of Smartphones shipped in 2011, up 62 percent from 2010. The category generated $27.5 billion, a 57 percent increase from one year ago. About 29.4 million tablets shipped in 2011, up 185 percent from 2010, generating $15.9 billion, a 138 percent increase year-over-year. This explosive growth can largely be attributed to the natural -and typically gradual- interval between initial adoption and eventual ubiquity.

Simply put, consumers now expect to control and use their content wherever they happen to be, whether it's at home, during the commute or on vacation. Needless to say, the industry will pay continued attention to the successful formula of portable plus dynamic.

Tuesday, January 24, 2012

Too many TV Stations are Leaving Millions in Annual Revenue on the Table

Local-direct advertisers almost always enjoy affordable media marketing. When daytime and prime TV is too expensive in medium and large markets, subchannels which connect to specific target demographics can mean stronger response levels in concert with traditional media advertising and build additional value to station budget attainment. Philip Jay LeNoble, Ph.D. Publisher

Even in small markets, broadcasters are generating up to $1 million in annual revenue with a single subchannel, according to panelists at a NATPE session on multicasting.

By Staff

TVNewsCheck, January 24, 2012 7:02 AM EST


Too many TV stations are leaving millions in annual revenue on the table by not multicasting, according to three broadcasters who are not only airing digital subchannels but distributing them as well.

“We have a station in a market ranked between 75 and 80 that’s generating nearly $1 million in local revenue annually,” said Sean Compton, president of programming at the Tribune Co., which distributes classic-TV network Antenna TV. “There is money to be made.”


Story continues after the ad



Agreeing with his take was Emily Barr, president-GM of ABC-owned WLS Chicago, who said her station and others, including WFAA Dallas, have been boosting revenue and ratings on ABC’s Live Well network by airing some of the channel’s programs on their main channels on the weekend. “We realized we were picking up a lot of syndicated programming to use as filler on the weekend,” she said, “but if you can do a couple of rating points on a Saturday or Sunday with a show from Live Well, you can promote the network and at the same time, bring in an advertiser on both sides” with a package of spots running on both the main channel and the subchannel.

Ratings are growing at all of Live Well’s stations, but especially at those pursuing this weekend strategy on their main channels, Barr said.

“We possess the single best promotional vehicle: our main channel,” Barr said. “We aren’t doing enough to promote our other channels with it.”

Neal Sabin, president of content and networks at ME-TV and Weigel Broadcasting, suggested that subchannels “are duopolies, only you don’t have to get permission from the FCC to have one.”

Multicasting is also local broadcasting’s “best answer to local cable,” Barr said. “There’s a lot of money tied up in local cable that none of us used to see. We can sell [subchannels] to advertisers who aren’t interested in the main channel because of the cost.”

Barr and Sabin both argued that stations don’t need to pass on multicasting in order to reserve spectrum for mobile DTV. Weigel runs four SD channels and one HD channel in Chicago, and ABC stations run both their main channels and Live Well in HD without a problem. “We’re going to get to the point where spectrum is more efficient,” Barr said, “so there will be room to do it all.”

Asked whether their subchannels would always rely on direct response advertising, Barr said Live Well is “already doing some national business and properly-placed product integration because we are doing original production.

“We did a big promotion with Walgreens,” she added. “We are seeing DR, but as we see the ratings go up we are seeing more interest from other advertisers.”

Sabin said Me-TV’s advertising is “100% DR right now. When we get more distribution we’ll take a look at Nielsen and see whether we can go [the other route],” he said. “We need to decide if going after other business is worth it when the DR business is burgeoning."

Thursday, January 12, 2012

In Praise of Sales Women of "a Certain Age"

CBS Money Watch
January 11, 2011
ByTom Searcy

"Are there any really good roles for women of 'a certain age?'"

Ageist? Yes. Sexist? Sure. It's hard to miss the disparaging statement so thinly veiled in this faux question.

You don't often hear the phrase, "of a certain age," applied to men. Our society has created this dubious category. We can deny it, argue about, or declare its injustice. For today, I choose to celebrate it.

I have the privilege of working with many sales women of this loosely defined category, and I want to write a short list of the fantastic qualities of this elite group.

Arguably, these qualities are not unique to women or to any age. Most good sales people have some of these attributes. But the successful sales women "of a certain age" I know have mastered these skills:


Laugh well and often. Too often a sense of humor is a comment on being funny. Some of the women in my sample are a riot. Some never say anything funny. But every one of them laughs. They break the tension, make friends and change the direction of a conversation by laughing. It seems that they look for opportunities to laugh.

Set boundaries. Specifically, these women have a well-developed sense of what is right, fair and tolerable. You cross that line at your own personal peril. However, if you correct your slight, you are forgiven and can move forward. Usually, these clear lines are set early in sales relationships and the lessons don't have to be taught twice. Of course, this applies internally with their companies, as well as with prospects and customers.

Listen like cellophane. For a study in relaxed concentration and active calculation, watch one of these pros listen. There is a lot worth unpacking in discussing this skill. For now, what I notice most frequently is the clarifying questions they ask. The quality I notice is in the seeking of understanding and precision. The speaker is flattered and the information is better. And we all know that higher engagement leads to good things in the sales process.

Invest in people one by one. Connecting the dots seems to be a consistent skill among these pros. From people to people, to articles, to ideas, to places to vacation, to associations to join -- the list is long. This capacity to discover the interests of people and then facilitate an important connection is frequently a key to their success.

Know it cold. These pros know their business cold. They have stories, examples and case studies that are bang on-point, and come right off the tops of their heads. Sure, lots of people can do that -- but what makes these women more effective is their willingness to declare what will and won't work with absolute confidence based upon their knowledge.

Again, this list is not only found in women "of a certain age." The challenge stands for everyone who sells. From my short, celebratory list, how many of these qualities do you have?

Wednesday, January 11, 2012

Analyst: CBS Corp., Sinclair, Lin Media Best Positioned for Election Ad Windfall

The Hollywood Reporter

"Of the diversified media companies, CBS has the most TV and radio revenue exposure to the contentious political races of 2012," says Wells Fargo's Marci Ryvicker, who expects political advertising to reach $4.9 billion this year.


NEW YORK - CBS Corp. and TV station owners Sinclair Broadcast Group and Lin Media are among the media companies that have the biggest exposure to markets with hotly contested political races this election year, Wells Fargo analyst Marci Ryvicker said in a report on Thursday.


Analyst Sees 2012 Political Ad Spending Handily Exceeding 2008 Levels

Michele Bachmann Quits GOP Campaign After Iowa Loss, Her Eyelashes Need Rest (Poll)

"As we leave the volatile year (in terms of both the economic and advertising climates) of 2011 behind us, investors are seemingly focused on potential catalysts for 2012," she said in explaining the importance of her research that focused on highly contested governor races, as well as key Senate and House races and presidential swing states.

"Of the diversified media companies, CBS has the most TV and radio revenue exposure to the contentious political races of 2012," she wrote. "CBS has the most TV revenue exposure (at 28 percent) and radio revenue exposure (at 27 percent)." She estimates that CBS could attract $160 million in political TV station ad revenue this year, or 10 percent of her estimated TV station revenue for the company, compared with $155 million in 2010 and $115 million in 2008. The company could also get $53 million in radio spending, she added.

Other entertainment conglomerates have "significant segment-specific revenue exposure to the most hotly contested political races (with Disney/ABC at 24 percent, News Corp./Fox at 22 percent, Comcast/NBC at 19 percent of each of their TV revenue)," but political ad revenue "does not typically have a material impact on consolidated results given the companies' size."

Among other media firms, Lin and Sinclair are "best positioned" for the 2012 elections as they have the most TV revenue exposure to hotly contested races at about 40 percent, Ryvicker concluded.

Of the radio companies that she covers, Saga Communications and Entercom have the most revenue exposure to the hotly contested races, at 36 percent and 28 percent, respectively, according to the analyst.

In broader observations, Ryvicker said that "broadcast TV has historically garnered the greatest share of the political ad pie - roughly 50 percent to 60 percent - but we also included companies with radio assets as any incremental spending in this medium (no matter how small) is likely to have a significant contribution to year-over-year growth."

She also forecast 2012 political advertising to reach $4.9 billion, with $2.8 billion allocated to broadcast TV, up 16 percent over 2010 and 27 percent over the 2008 election year. Ryvicker also expects $256 million in political ad spending on radio.

"We consider our forecast to be conservative primarily due to the slow start to fundraising, which we attribute to the fact that no clear Republican party leader has emerged thus far," she said.
The Federal Reserve sketched a bright picture in a survey released Wednesday. It said in the final weeks of 2011, consumers spent more freely, factories made more goods, Americans stepped up travel and the auto industry enjoyed its best stretch of the year.

TV NewsCheck
By Martin Crustinger

Associated Press, January 11, 2012 2:38 PM EST
WASHINGTON (AP) - The final weeks of 2011 were the economy's strongest since it appeared to be slipping toward recession in late spring.

Consumers spent more freely, factories made more goods, Americans stepped up travel and the auto industry enjoyed its best stretch of the year.

That's the bright picture the Federal Reserve sketched in a survey released Wednesday. It said all but one of its 12 banking districts experienced some growth from late November through the end of the year.

The Fed noted that some sectors of the economy, notably housing, remain weak.

But overall, the message was encouraging. It comes just six months after the economy nearly stalled under the weight of high food and gas prices and supply disruptions out of Japan that slowed U.S. manufacturing.

The economy and the job market have both picked up since then. And December may end up being the strongest month last year, an optimistic sign for the economy in 2012.

Employers added 200,000 net jobs last month, and the unemployment rate fell to 8.5 percent - the lowest rate in nearly three years.

Consumer confidence rose. U.S. automakers reported having their two best months of sales for 2011 in November and December. And U.S. factories ended the year with their strongest month of growth since late spring, according to a closely watched gauge of the industry.

Most economists are predicting that the economy grew at an annual rate of 3 percent in the final three months of last year. That would be an improvement from the summer, when the economy expanded just 1.8 percent, and much better than the 0.9 percent growth in the first half of the year.

Still, the modest recovery is vulnerable to setbacks. Europe's debt crisis could lower demand for U.S. exports. Consumers could pull back on spending, especially if they continue to see little growth in wages.

And Congress could decide not to extend the Social Security tax cut or long-term unemployment benefits, both of which expire at the end of February. That would leave many households with less income, which would slow spending.

Consumer spending is important because it drives 70 percent of economic activity.

The Fed announced no new actions after its Dec. 13 meeting. But in the minutes from the meeting that were released last week, the Fed said it will start this month announcing four times a year how long it plans to keep short-term interest rates at existing levels.

The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.

Tuesday, January 10, 2012

Newsosaur: Daily Paper Going the Way of the Milkman

Editor & Publisher
Posted: 1/10/2012 | By: Alan D. Mutter

Daily newspaper delivery will go the way of the milkman in a growing number of communities in 2012 and beyond.

Barring a miraculous turnaround in the economy, a sea change in the thinking of media buyers, or a late-breaking proclivity for print in the sub-geezer population, publishers in ever more communities are likely to reduce the number of days they provide home delivery — or print a newspaper altogether.

Nowhere else is the demise of daily delivery more dramatic than in Michigan, where more than two-thirds of households will be unable get seven-day service after the end of January.

The rationing began with a bang in 2009, when the two Detroit dailies, the Free Press and the News, stunned the industry by cutting home delivery to just Thursday, Friday, and Sunday. Although the Motown metros continue to print every day of the week, anyone wanting a paper on non-delivery days has to fetch one at a retail location.

Unsurprisingly, the Monday-through- Friday circulation of both Detroit papers plunged between March 2008 and March 2011, according to the Audit Bureau of Circulations. The daily circulation of the Free Press in the period fell 54.7 percent to 168,985, and daily sales of the News tumbled 51.7 percent to 90,914. Even though Sunday home delivery continued without interruption, the circulation of the Freep (the only title publishing on that day) is down 21.6 percent at 475,543. The Freep, which is owned by Gannett, and the News, which is owned by MediaNews Group, are partners in a joint operating agreement.

The daily drought is scheduled to widen to other Michigan communities in February, when the Grand Rapids Press, Kalamazoo Gazette, Muskegon Chronicle, and Jackson Citizen Patriot reduce home delivery to Tuesday, Thursday, and Sunday from their current seven-day schedules. Just as in Detroit, single copies of each newspaper — all of which are owned by Advance Newspapers — will be available to consumers who take the trouble to track them down. In cutting back home delivery, Advance emphasized the intention to attract more traffic to its statewide digital portal, MLive.com.

While determined readers for the time being can still buy a daily paper in Detroit and Grand Rapids, there has been no such option since mid-2009 in Ann Arbor. That’s where Advance replaced its seven-day Ann Arbor News with an “online digital media company” called AnnArbor.com, which puts out print editions just Thursday and Sunday. Since the change, daily circulation for the print product has slid by 30.8 percent to 30,422, according to ABC.

If Michigan is ground zero for the un-dailying of newspapers, it is far from alone. Journal Register Co. knocked two days off the seven-day print cycle of some of its titles in Upstate New York. Media General cut the publication of its smaller seven-day papers in North Carolina to three days a week. GateHouse Media did the same in Kansas.

Anecdotally, we know there are many more cases across the country. We just don’t know how many. Although you would think that ABC, the industry-supported group that audits circulation, and the Newspaper Association of America, the industry’s principal trade group, would want to keep an accurate count of something as important as the dwindling number of daily newspapers, they profess not to know.

There is no doubt, however, why publishers are throttling their once-prized print products:

A relentless decline in newspaper advertising sales has halved industry revenues since a record $49.4 billion was collected in 2005. Although final ad figures remain to be calculated for 2011, projections based on year-to-date performance suggest that sales last year probably didn’t top $24 billion. This has been catastrophic for publishers historically accustomed to hefty, double-digital bottom lines.

In five-plus years of ever more vigorous retrenchment to salvage some degree of profitability, publishers have trimmed staff, crimped newsholes, and outsourced everything from call centers and accounting to production and delivery. With scant behind-the-scenes economies left, publishers now are being forced to make the most conspicuous cut of all: reducing the number of days they publish or deliver papers.

The good news, given the increasing shift of consumers to digital media consumption, is that de-emphasizing print necessarily forces publishers to focus on their Web, mobile, and social efforts. The bad news is that most of them to date have not made impressive strides.

On average, the industry reaps less than 14 percent of its ad revenues from digital media, according to the NAA. That’s not nearly enough to keep publishing companies healthy if print revenues continue shrinking, as they seem likely to do in the immediate future.

Publishers cutting daily delivery realize the strategy works only if they can build their digital divisions faster than their print businesses shrink. While publishers know this is risky business, the smart ones know there is no Plan B.

Break down a sales presentation like an ESPN analyst

CBS Money Watch:Sales Machine
January 9, 2012 11:31 AM

By Tom Searcy Topics Marketing .Add Comment

This pre-game analysis approach is very similar to what a sales leader should be doing as he or she gets ready for an important meeting. By taking the time and doing the analysis and discussion as a team, you can improve the outcome.

Here are a few techniques of sports-show analysts you can use in your own pre-meeting preparation:

1) Do the match-up analysis. When you are preparing for your meetings, take the five minutes necessary to look at the LinkedIn and Facebook profiles of each attendee. Whenever possible, match up your team members to theirs based on position, background and interests.

2) Know the stats. Your side will need to complete a basic company profile, problem analysis and the prospect's industry overview. The better sales teams use a template dossier to capture a thorough picture of the prospect company that they then update throughout the sales process.

3 )Identify the 1-2 things to win. While your prospect ultimately needs you for a long list of reasons, their decisions usually come down to just a few key issues. You need to analyze the circumstances and have a good idea of what will tilt the field in your favor.

4) Calculate the risks. While there are only a few things that can create an opportunity to win, there are also two or three key reasons that can cause you to lose. What are the prospect's biggest fears and concerns? These are what will stall or kill a sale in the last few minutes of the game.

5) Understand the game-changers. There are key players who make all the difference in the game ... Kobe, Tom Brady, Manning... They're the game-changers. Assess the game-changers on the prospect's team. Selling differs from other "sports" because sometimes the game-changer is not the franchise player but a strong influencer who can derail the whole process and change the whole game of your deal.

Some of the most successful sales organizations in complex sales follow this simple pre-meeting process. Doing the homework, knowing the hinge-points of the presentation and focusing on the right players can dramatically improve your win ratios.

The 6 best words in customer service

CBS Money Watch:Sales Machine
January 9, 2012 7:02 AM
ByMichael Hess .2 Comments

(MoneyWatch) Two comedians can tell the exact same joke, with the same timing, and one will have people rolling in the aisles while the other will get blank stares and an awkward golf clap. The joke itself may not even be funny, but the difference can come down to a single word choice. The same can be said for customer service -- the delivery often determines the reaction.


I've written quite a bit in the past about what not to do when speaking to customers. It's a virtually limitless topic that unfortunately is supported by countless daily examples. So this time I thought I'd focus on what I call "positive trigger words" -- the ones that convey the exact same messages but with completely different results.


Of course, what you do is more important than what you say. But whether it's good news, bad news, or simply passing on information, your choice of words will have a significant effect on the way the customer hears what you're saying, and consequently the way she feels about it and reacts to it.

The goal, of course, is to make the customer as happy as possible with the service experience, even if the outcome isn't exactly as she had hoped for. It is, in fact, possible for a customer to have a positive feeling about a company even if she doesn't get what she wants. And that is where words make a big difference:


- People respond positively to words that are active rather than passive. There is a world of difference between "I can" and "I will."



- Words of genuine compassion and empathy suggest that you are not just carrying the company line or reading from a memo.


- Delivering those words in a cheerful, upbeat, and most importantly, natural manner (appropriate to the circumstances, of course) suggests one human being's desire to help another, not just an equivocal, noncommittal suggestion that something "may" be possible.


Here, then, in no particular order, are six active, enthusiastic, mood-altering, wonderfully human words that will dramatically change the way customers react to your conversations, e-mails and text chats. They are ridiculously simple, yet potent tweaks to the normally gray, predictably mundane language of customer service:


"Delighted"

"Absolutely"

"Pleasure"

"Happy"

"Sorry"

"Yes"


Think of the passive catch-all, "Let me see what I can do," which sets the customer's expectations somewhere between low and zero. But change that to "I'd be delighted to help," and the customer will be -- I guarantee -- smiling on the other end of the phone, confident that you're actually interested in helping her, and much more receptive to whatever you have to say.



Note that this only works if it's genuine, not forced or scripted. It presumes a good attitude, and the desire and authority to help people. Contrived speech is always obvious, so don't over-pepper (as in the way so many reps cloyingly insert your name in every sentence). Speak as a normal person, with a smile and a wish to please, and these "good words" will work wonders.


Customers have been beaten into assuming they'll always get mediocre to horrible service, and they are defensive before anyone even answers the phone. When they call, e-mail or chat online with a company representative, they expect boilerplate, robotic, soulless responses in the standard, dehumanized voice of the typical customer service interaction. Break that predictable pattern with the thoughtful use of positive trigger words and you'll change the entire tone of a customer interaction.


As I often say, make people happy and pretty much everything else takes care of itself

Tuesday, January 3, 2012

Are many meetings wasting your employees' time?

As a media sales professional and GSM for many years..I spent so much time in sales meetings it took me off the street where my income was...So for the coming year...I wonder..are meetings costing you and the company money? Philip Jay LeNoble, Ph.D. Publisher

CBS Money Watch
January 3, 2012 8:23 AM
By Laura Vanderkam

(MoneyWatch) I was speaking at a conference two months ago when a woman stood up to tell our session a story. The story supposedly had a happy ending, but it isn't quite so happy, if you think about it.

We were lamenting how much time was spent on meetings. She said that she'd run an analysis on her calendar and figured that, before any given month started, she was already booked for 100 hours of meetings. If you figure that a workweek is 40 hours, that means that 100 of 160 hours was consumed by standing meetings. Forget emergency meetings and the like. These were just meetings undertaken in the normal course of business, and that no one was forced to continuously justify.

The happy ending was that she took this number to her supervisor, and shared it with her colleagues, and everyone agreed that it was ridiculous. The department got rid of a few standing commitments and freed up 30 hours per month.

Of course, that still left her with 70 hours of standing meetings.

That she was grateful for the improvement should give us all pause. But it got me thinking. When is the last time you and the people you work with have conducted a "meeting audit?" Have you looked over your calendar and calculated how many hours are booked before people have even been able to evaluate what matters and what does not? Does this make sense as a percentage of overall time? Or are you wasting your employees' time -- and hence potential productivity -- just because meetings accumulate like piles of mail if no one pays attention?

How many hours do you and your team members spend in regularly scheduled meetings each week?Are many meetings wasting your employees' time?

7 tips for negotiating the best price

Now that the holidaze are over I thought I'd give ya a little help when shopping for something you want...Phiip Jay LeNoble, Ph.D. Publsiher
CBS Money Watch
December 21, 2011 7:28 AM
By Steve Tobak

(MoneyWatch) It's often said that successful people are frugal. Some say that wealthy people are cheap. I don't know if any of that is true, but I do know that it makes me feel really good to know I've negotiated a good deal.
No, I'm not a consumer advocate, but negotiating is in my DNA.

You see, I grew up relatively poor on the streets of Brooklyn where getting stuff for the best price was a way of life. Work ethic was a big deal in my family, and so was making sure you got a good deal when you plunked down your hard-earned cash.

Of course it doesn't hurt that I spent a good many years as a sales and marketing executive in the high-tech industry, either. Put it all together and I guess you can say I'm pretty adept at getting the most for my money without working too hard or, let's face it, coming off like a cheap, pushy jerk.

Here are 7 tips for negotiating the best price I've learned over the years:

It never hurts to ask. The easiest trick that most people don't think of is to simply ask, "Is this your best price" or "Is there anything you can do for me on the price?" Even if you're not into being pushy or negotiating, it never hurts to ask. If they can give you a break, they will. Worst case, they say no and you take it.

Comparison shop. If it's between two competitive models, use the best price to negotiate the other down. Example: I was researching notebook PCs and had it down to similar models from Dell and Sony. I configured it online with Dell, got the price, then called Sony on the phone. The similarly configured Sony was a couple of hundred dollars more, and when I told the salesperson the specifics, he gave me $100 off and threw in a three-year onsite warranty.

Walk away. Especially if it's a relatively big-ticket item like furniture or high-end electronics, you've got to be prepared to walk away from the salesperson with a line like, "Well, that's more than I'm willing to pay. Thanks." The salesperson really doesn't want you to leave, so if he can do anything on the price, he'll usually stop you. If he doesn't, it never hurts to walk away and test his resolve. You can always come back.

The no-hassle negotiation. Here's a negotiating technique that's easy and relatively hassle-free for those of you who hate negotiating. Just be honest. Tell the salesperson, "Look, I hate the whole negotiating thing so why don't you just give me your best price and let's be done with it." You may leave money on the table, but you will get something off the price that you wouldn't have gotten if you hadn't been honest up front.

Get a sale price even when there's no sale. Most places that have periodic sales will give you the sale price even when there's no sale going on. That works with online sites, as well. Usually they're just trying to clear inventory or make their quarter or quota, so as long as those criteria are still in effect, they'll give you the sale discount if they can.

Quantity discount. Most people think that online shopping means everything's discounted as low as it'll go. That's simply not true, especially if you're buying in quantity. You just have to be willing to pick up the phone and ask. If they can give you 5 to 10 percent off, they will. And sometimes they'll throw in free shipping or an upgrade.

Damaged goods. I don't know about you, but oftentimes I'm willing to suffer a small defect, as long as I get something in return. If you're buying something made of pottery, wood or metal, for example, and it has a scratch or something wrong with it and you still want it, don't be afraid to point it out to a salesperson. They'll usually discount it 10 percent or so

Auto Industry to Post Another Good Year

TVNewsCheck: The Business of Broadcasting

Automakers report U.S. sales for 2011 on Wednesday. When final figures are calculated, sales of new cars and trucks are expected to reach 12.7 million, up from 11.5 million in 2010 and 10.4 million in 2009, the worst year since 1982. In 2012, they could climb as high as 13.8 million, close to what experts consider a healthy market — around 14 million.

By Tom Krisher
Associated Press, January 3, 2012 5:47 AM EST

DETROIT (AP) - After hitting a 30-year low in 2009, U.S. auto sales are poised for a second straight year of growth — the result of easier credit, low interest rates and pent-up demand for cars and trucks created by the Great Recession.

The sales forecast bodes well for the industry's continued recovery and for the broader American economy.

In 2009, Detroit automakers were in peril. Car sales plunged as unemployment soared, and loans became harder to get. Chrysler and General Motors filed for bankruptcy protection. Ford avoided bankruptcy only by borrowing billions.

Now credit is more available, interest rates are low and Americans need to replace old cars and trucks they kept during and after the downturn. Millions of drivers in their teens and 20s are expected to buy vehicles, too. That could mean more jobs, more factory shifts and overall growth.

Vince Powell, a retiree from Winfield, Pa., recently traded in his wife's 7-year-old Chrysler 300 luxury sedan for a 2011 model. The old car had 145,000 miles on it, but it was the deal he got that most attracted him: a low interest rate (2.7 percent per year), a six-year loan term and a big discount off the $31,900 sticker price.

"I'm getting a $300 per month payment," he said just before closing the sale at Beaver Motors in Beaver Springs, Pa., near Harrisburg. "I've never had a new car for 300 bucks a month."

In their effort to survive, all three automakers downsized and positioned themselves to turn profits — even if sales remained depressed. Now that sales are rising, the outlook has brightened considerably.

Automakers report U.S. sales for 2011 on Wednesday. When final figures are calculated, sales of new cars and trucks are expected to reach 12.7 million, up from 11.5 million in 2010 and 10.4 million in 2009, the worst year since 1982.

In 2012, they could climb as high as 13.8 million, close to what experts consider a healthy market - around 14 million.

December sales could reach an annual rate of 13.4 million, which would make it the second-strongest month of the year. Only November was better. Auto website Edmunds.com forecasts a 37 percent rise in sales at Chrysler Group LLC in December, thanks to new and revamped products such as the Jeep Grand Cherokee SUV and the Chrysler 200 midsize sedan.

Carmakers have announced plans to crank up factories and add thousands of jobs. Last January, Ford said it would hire 7,000 workers over the next two years. During the summer, GM said it would add 2,500 at the Detroit factory that makes the Chevrolet Volt electric car. Volkswagen hired 2,000 for a new plant in Tennessee, and Honda added 1,000 in Indiana. The industry will add 167,000 jobs by 2015, a 28 percent increase over current levels, predicts The Center for Automotive Research in Ann Arbor, Mich.

During the summer, the auto industry was adding jobs at a faster pace than airplane manufacturers, shipbuilders, health care providers and the federal government. It kept adding jobs even when the national unemployment rate rose above 9 percent, Standard & Poor's downgraded U.S. debt for the first time and the stock market tumbled.

Government estimates show Americans spent roughly $40 billion more on new cars and trucks in 2011 than in 2009. Based on annualized figures from the first quarter of 2011, new-car spending totaled $206 billion, or 1.3 percent of the gross domestic product, Commerce Department data shows. That compares with $166 billion in 2009, about 1.2 percent of the country's economy.

And the momentum in auto sales is likely to continue because people need to replace aging cars, said Jeff Schuster, senior vice president of forecasting for LMC Automotive, an automotive consulting company in Troy, Mich. The average American car is now 11 years old.

U.S. auto sales peaked at 17 million in 2005, when Detroit's automakers were much bigger and overproduced cars that they were forced to discount heavily. Sales could eventually reach that level again around 2018, said Schuster, because of 70 million so-called millennials born between 1981 and 2000 who need to set up households and buy cars.

Other trends emerged in 2011. Many people bought smaller vehicles as gas prices hit a record average of $3.53 per gallon. Fuel-efficient compact cars, which have been vastly improved by automakers, are likely to unseat the midsize sedan as America's favorite passenger car for the first time in 20 years.

At the other extreme, pickups rebounded as businesses started to replace older trucks. Sales for the year were expected to rise 11 percent, and Ford's F-Series will remain the country's top-selling model, a title it has held for more than three decades.

For much of the year, U.S.-based automakers took advantage of Japanese car shortages to increase sales, especially in the compact car segment normally dominated by the Honda Civic and Toyota Corolla. Japanese companies ran short of popular models after an earthquake and tsunami disrupted production in Japan in March.

Ford, GM and Chrysler saw their combined share of the U.S. market rise by 200,000 cars and trucks between the end of 2010 and November, 2011. The Detroit Three's market share rose from 45.1 percent last year to 47 percent through November of last year. At the same time, Honda's share fell 1.6 percentage points to 9 percent, while Toyota's dropped 2.5 percentage points to 12.7 percent.

Schuster expects Japanese carmakers to take back some of the sales they lost.

Geoff Pohanka, who runs a chain of car dealers in the Washington area, said his December has been strong, thanks especially to the restocking of cars at his Honda and Toyota showrooms. He predicts Japanese car companies will offer incentives to regain lost sales.