TRAVERSE CITY, Michigan (Reuters) - U.S. new car buyers are richer and more demanding because they have more choice among brands that are closer in quality than ever before, Ford Motor Co’s (F.N) sales and marketing chief said on Tuesday.
After the recession and credit crisis brought U.S. new auto sales down more than 35 percent from 2007 to 2009, not only did automakers recreate themselves into leaner companies but their customers changed greatly, too, said Jim Farley, global marketing and sales chief for Ford.
People buying cars now have better credit and can afford to pay more for vehicles that are packed with technology, Farley said to reporters on the sidelines of an industry conference in northern Michigan.
“We’ve entered a new era in the U.S.,” said Farley. “The products are really competing on equal ground.”
The Detroit automakers had lost their dominance before the 2008-2009 auto industry crisis, but the increasing strength of “challenger brands” like Hyundai Motor Co (005380.KS) and Kia Motors (000270.KS) from South Korea after the crisis has changed the market, he said.
“The people buying cars now are the highest-income people,” said Farley. “They want the newest product. And so, I think the new era we are seeing, I don’t want to say it’s European-like, but it’s a lot of manufacturers with equal share, and great products and we’re competing on largely who has the newest product...”
In sales results for July that automakers announced on Tuesday, Ford saw its sales rise 9 percent from last July.
“Customers have so many new choices now,” Farley said, in part due to the rise of quality and sales among U.S. automakers Ford, General Motors Co (GM.N) and Chrysler, now controlled by Italy’s Fiat FIA.MI.
Farley said he did not expect a price war later this year when Japanese automakers Toyota Motor Corp (7203.T), Honda Motor Co (7267.T) and Nissan Motor Co (7201.T) recover from the impact of the March earthquake and tsunami in Japan that cut sales and inventory.
He said that each of the Japanese automakers built their U.S. sales on the strength of resale values of their vehicles, which may help curb any move to increasing consumer incentives by the Japanese automakers.
He said that recently industrywide, automakers have been “very responsible” about incentives in the U.S. market, but that recently in China, incentives have become an issue that threatens profit margins.
Reporting by Bernie Woodall; editing by Carol Bishopric