There have been many consumer studies by many different study groups on the number of Do-It-Yourselfers in the automotive customer market. Some of the research indicates that many people change their own oil and a huge percentage of the people indeed wash their own cars. One very wise Internet Entrepreneurial Guy stated that he believed this indicates potential opportunity to sell car wash or detailing kits online if they could separate themselves from the competition.Good point indeed one Car Wash Association indicated that nearly 40% of the people wash their own car. As fuel prices get higher that number might also climb, although with so many more cars on the road from sales each year the industry its self may not take a huge hit over all. So, are DIY or Do-It-Yourself Car Wash Kits a profitable item to sell on the Internet?Well, yes, I remember our company The Detail Guys had sold something like this on the Internet in 1996-1998 and only had a limited success due to price point. We stopped because of the costs and wanting to get back to our core business, by 2000 we stopped offering these. I think our biggest reasoning was;1.) Do we go and lease another building?2.) Get into the soap, tire dressing, window cleaner business?3.) Buy the other components to make up the DIY packages?We offered personal kits and supplies for mobile auto detailers, we has some good customers. It was kind of cool to sell products to our competitors, we figured we made money whether we actually cleaned the cars or not. Kind of like FedEx buying up Custom Clearing Companies in Canada. Whether you ship with them or not, they still get a piece of the action.What we found was the costs to put it all together and go with the increased volume meant that we had to hire a manager, two workers and a secretary, while dealing with all the OSHA laws and EPA cradle to grave policies which were coming into play back then. Lots of red tape and also many others had begun to copy us online and the price points were quite competitive within a 6 month to 1-year period; today competition will copy you the same day and even steal your Ad Copy too boot.I think I have an old business plan for that profit center somewhere, maybe I should dig it up and look into this in the future. Although I must say I much prefer my retirement than grinding it out in the competitive automotive sector. Besides there are many companies selling these on the Internet. In any case I hope this article propels thought in 2007.
In 2007, automobile sales witnessed a satisfactory year in China. After the depression in 2005, the automobile market steadily develops with a prospective tendency: the sales of medium and high grade passenger cars and urban SUV will maintain high growth; commercial passenger car industry will also steadily develop; however, the general growth rate of commercial freight vehicles will decrease, and the opportunity lies in products upgrading and export.Affecting and supporting factors in 2008In 2008, automobile industry will face affecting factors including energy-saving environmental policy, levying of petroleum tax, unification of domestic and foreign enterprise taxes, high-price petroleum and development of new energy etc. Thus automobile sub-industries will face new opportunities and challenges.Formation of a new consumer group and the obvious consumption upgrade trend are the backgrounds for a steadily developing passenger cars market, while GDP, fix asset investments and new rural construction factors are the supporting factors for commercial freight vehicles stable growth. Demographic dividend, tourism boom and expressway expansion are the forces to maintain constant development of commercial passenger cars. In the automobile industry, there are passenger cars as discretionary consumer products, as well as commercial vehicles with capital goods purpose. Each branch industries will undergo a development stage where opportunity and challenge co-exist, meanwhile, the leading enterprises of automobile parts will also have enormous opportunities. Therefore upstream leading automobile parts merchants in the automobile industry chain will embrace a high-speed development stage.Growth numbersPresently the average per-capita auto number is three cars per a hundred persons in China. According to the internationally accepted automobile popularizing stage division, China is in the “early stage of motorization”. Nevertheless, due to distinctive urban-rural dual structure in China and the different development level between urban and suburban districts, per-capita auto number is twenty cars per hundred persons in tier one cities, where the automobile consumption is in a “stage of motorization”. It is estimated that most cities of China will remain in this stage for a long period.As of October 2007, automobile sales reached 7,150,000 cars in China, a year-on-year accumulated increase of 24%. Among this number, passenger cars sales were 5,079,400, with a year-on-year accumulated increase of 23.75%, while commercial vehicles sales were 2,070,000, with a year-on-year accumulated increase of 25.14%. Firstly, let’s look at the short-term sales trend of various car types.Since 2002, annual sales of passenger cars have cross the million line in China, achieving a high-speed growth for five years. At the end of 2007, it is estimated that sales will reach six million cars. Considering great economic difference among regions in China, the main development engine for the automobile industry is the existing customer’s replacement demand and new user’s first purchasing demand.Passenger cars Brand competition between passenger cars is fierce. Currently passenger cars brands total about 340 in China, and the annual average sales per brand is 17,000 this year, a year-on-year decrease of 45% for passenger cars brands. The reason is that passenger cars market exhibits brand disorder and excessive small enterprises, which is also related to the consumption feature of passenger cars in China.Passenger cars, as the consumption segment of automobile industry, have an incomparable market potential to the buses and freight vehicles. In the car segment, we think high-grade brand sales will be stable, while competition in medium-grade market will be vigorous. Fashionable style and good dynamic performance cars will be warmly received by new-generation automobile consumers, but the spring for low-grade economic car still needs time.Replacement demand-driven consumers are less sensitive to the price and petroleum cost, instead, they more focus on the maturity and performance of the brands. Therefore, this demand may be for medium and high displacement passenger cars. The consumer group for first cars is aged below 30, favouring fashionable and dynamic style, so it is estimated that urban SUVs and medium-grade cars will be the major consumption.SUVs and MPVsImproved leisure style SUVs will continue the high-speed growth, which is little affected by petroleum price and tax factors etc. According to the mature automobile market data, the market share of SUVs continues to increase. As the automobile demand releasing and purchasing ability gradually growing in second and third tier cities, SUVs will have new growth spots.A MPV combines together household and business purposes, which blurs the line between discretionary consumer products and capital goods. In this year, the growth rate of MPVs will exceed the average growth rate of passenger cars industry, but we consider its potential is less than SUVs market. Currently some automobile enterprises invest in MPVs, so we believe family style MPVs will occupy some market share of family passenger cars.Commercial vehiclesIn segmentation of commercial vehicles, the trend to getting “heavy” is obvious. Heavy vehicles, coach and heavy tonnage with semi trailers noticeably increased faster than other segments of commercial vehicles. Among commercial vehicles, freight vehicles cyclicality is relatively long, and the bus industry steadily develops with sales growth almost maintaining 20% per annum.Commercial freight vehicles shall benefit from future factors such as GDP of China growing at above 10%, continuing high growth in fixed asset investments, further expansion of weight-based charges, increasing freight vehicle demand from new rural construction among towns and villages, and export market opening for leading enterprises. In general, commercial vehicles will maintain about 10% growth, due to booming of heavy vehicles industry this year. but total sales growth next year will be less than current year on pcp. Sales structure of heavy vehicles will be further changed, with bigger proportion for high power and large capacity heavy vehicles, and export of high-grade trucks is estimated to expand further. In future, two growth spots for the truck industry will be large capacity, energy-saving heavy trucks and export market.Bus industry maintains constant growth. Due to the large population of China, and road passenger transportation volume increasing, replacement of sightseeing buses has become one of driving forces for bus industry development. Similar to truck industry, buses as a segment of commercial vehicles are popular among foreign importers due to its high price/performance, and now mainly exporting to regions such as Middle-East and Cuba. There is still a significant gap of automobile technology between China and European and American mature markets, so it is difficult to export buses to the developed countries. Automobile industries in developing countries are relatively behind, but with transportation demand increasing, it should be beneficial to the commercial vehicles export of China. Export price per vehicle is higher than that in domestic industry, which could help improving the gross profit of producers.
As usual, the big Detroit Auto Show is the automakers’ chance to show off all their hybrid and electric vehicle experiments, as though those constitute anything more than a few percent of total sales. In the meantime, the companies continue to make a handsome profit off the bread-and-butter models like the Ford Fusion.Not that we should expect anything less. But the question is: where is all the money coming from? Last year, light vehicle sales in the U.S. rose 10%, while new housing sales in the U.S. continue to struggle along at a fraction of what they were before the economic crisis began in 2008. Does this reflect a change in consumer buying habits? One automobile lender, Ally Financial, thinks so. They say that consumers were far more likely to skip house payments than auto loan and lease payments during the most recent recession.Why? Are consumers really willing to give up their home before their automobile? Probably not. More likely, this is the result of several changes that have been taking place over the last few years and even decades. First, many home buyers got in debt way over their head during the housing bubble, with monthly payments that they were never going to be able to afford. When the crisis hit in 2008, these borrowers likely figured they were never going to be able to pay off that $765,000 house, but they at least had a shot at paying off a $13,000 vehicle loan.A second reason, and one that makes a lot of sense, is that consumers reason that they need a vehicle to get to work. This is logical. Along with that, it’s possible that many people are counting on the fact that there are so many foreclosures. California, for example, had 29,000 new foreclosure filings in just one month last year. Perhaps people underwater on their home loan figure it will take longer to repossess their car than their home.The fact that some industry observers are engaging in hand-wringing over 18.5 million vehicles sold in China last year (“only” a 2.5% growth) just shows how high expectations are for the automotive industry. The question we have to ask next is: are these true profits, or is the auto industry setting itself up to be the next big “bubble” with loans to customers who will never be able to pay back the money?Only time will tell.