Blue Book Briefing

November 2009 - Blue Book Briefing

In this issue – NOVEMBER 2009:

INDUSTRY INSIGHTS – Timely commentary from James Bell, executive market analyst for Kelley Blue Book’s kbb.com: RE-ENERGIZING SPIRITS WITH FAST CARS AND FRESH PERSPECTIVES
LATEST NEWS & BLOGS ON KBB^® GREEN – The latest news and blogs posted to KBB Green from the editorial staff of Kelley Blue Book’s kbb.com
LATEST NEWS STORIES ON KBB.COM – The latest video and written news stories by the editorial staff of Kelley Blue Book’s kbb.com
NEW-VEHICLE REVIEWS ON KBB.COM – All-new and updated video and written reviews from the editorial staff of Kelley Blue Book’s kbb.com
WHAT’S NEW:

· Kbb.com Picks 10 Sinister Car Faces for Halloween

· Kelley Blue Book Monthly Market Report: Compact-Car Values on the Rise; Market Stabilization Years Away

· Kbb.com Study: New-Car Shoppers Delay Purchase After Cash-for-Clunkers

· Kelley Blue Book® Residual Values Names Approved Guide Book by RVI Group

INDUSTRY INSIGHTS:

Re-Energizing Spirits with Fast Cars and Fresh Perspectives

- James Bell, executive market analyst, Kelley Blue Book’s kbb.com

OK, first things first - hello! I am the “new guy” here at Kelley Blue Book, and couldn’t be happier. After 12 years working in this industry (plus countless others following this biz as a personal hobby), I feel that I have landed in just the right spot. Kelley Blue Book is a brand, tool and institution that has been respected and trusted by hundreds of millions of car buyers throughout its 83 years of service. Now it is time to take this solid ship into exciting new waters.

I have just returned from two incredible days with my friends at the annual Motor Press Guild (MPG) Track Day extravaganza and now I am re-energized to share the overwhelming passion that this industry possesses. The goal of this event is to put vehicles from just about every manufacturer through their paces on a street drive surrounding and a road course within Auto Club Speedway in Southern California. MPG is fortunate enough to have on their roster some of the most dynamic and innovative automotive journalists in the Southern California area and the participating manufacturers make sure to bring their best toys out for participants to evaluate.

Imagine the following line-up of cars all aimed toward the track with the keys in the ignition and their fuel tanks topped off: Audi S5 convertible, BMW M3, Subaru WRX STi, Chevrolet Camaro SS, Mercedes-Benz SL63 AMG, Nissan 370Z Nismo Edition, Ford Taurus SHO, Porsche Panamera, Dodge Challenger SRT-8, Mazdaspeed3, Volkswagen GTI…and the roster goes on. Over the countless laps of hard driving at Track Day, there were very few mechanical failures. In the spirit of full disclosure, most failures were traced directly to those of the human kind! Each and every test drive uncovered a sense of reason, direction and promise for the right driver. But it isn’t all about racing, as the real focus of the day is to put these steeds up against one another back-to-back to help distill the subtle nuances. It’s also about how their respective engineers have worked to present the essence of their own brands, and what life would be like as a prospective owner of such a branded vehicle.

And it is within this spirit that I am excited to work with the Kelley Blue Book brand as well. In the U.S. market today, there is no single resource that can offer current and future drivers insight into this spirit coupled with trusted, comprehensive data to help guide buyers through this important purchase process with full confidence and authority. It is my firm belief that ONLY kbb.com can bring such a mechanism to the U.S. market. Our goal is to not just be known as a “one-stop-shop” with tools to take a buyer from initial research through accessing trade-in values to new-model selection and into the dealer experience and final purchase. (However, if you are looking for such an experience, be sure to check out The Trusted Marketplace℠ section of kbb.com)! Rather, our ultimate goal is to become every buyer’s friend in the business; the person down your street that knows you, your transportation needs and what “turns you on.” The same person you would never consider shopping for a new car without first consulting for a little confident guidance. Keep a close eye on kbb.com and future Blue Book Briefing columns as we showcase exciting new features and topics heading into the New Year and beyond.

LATEST NEWS & BLOGS ON KBB GREEN:

Check out the very latest news and blog entries by visiting www.kbb.com/green and clicking on News & Blogs.

The following latest news & blogs by kbb.com’s editorial staff went live on the site or were updated during October 2009.

LATEST NEWS STORIES ON KBB.COM:

Check out the very latest news stories by visiting www.kbb.com and scrolling down to the Latest News & Articles link on the home page.

The following latest news stories by kbb.com’s editorial staff went live on the site or were updated during October 2009.

Videos Posted to Both kbb.com and youtube.com/kbb:

Videos Posted Only to youtube.com/kbb:

BMW 5 Series GT Quick Look

Written Stories Posted to kbb.com:

NEW-VEHICLE REVIEWS ON KBB.COM - WRITTEN:

The following new-vehicle reviews written by kbb.com’s editorial staff went live on the site or were updated during October 2009. To see any new-vehicle review from kbb.com’s editorial staff, please visit www.kbb.com and click on the News and Reviews tab, then select the make and model.

2010 Audi A4

While Audi's lineup has increased over the years, the A4 Sedan and Wagon (Avant, in Audi-speak) has remained the German automaker's volume leader, thanks to its ability to blend spirited driving performance with supreme passenger comfort. Although other midsize luxury sedans – like the BMW 3 Series, Mercedes-Benz C-Class and Infiniti G Sedan – may have been the headliners in recent years, the capable A4 has always been there, biding its time in the wings and waiting to swiftly enter stage right. Finally, it deserves the spotlight again: debuting last year with bolder exterior styling, a more spacious interior, a re-tuned 2.0-liter four-cylinder turbocharged TFSI engine and an enriched list of available content, the 2010 Audi A4 is ready for its close up…

2010 Audi A6

The midsize 2010 Audi A6 is the ideal vehicle for the socially mobile family in need of generous interior space and all-wheel-drive capability, but not at all interested in an SUV. Offered in both Sedan and Wagon (known as the Avant) forms, the A6 combines traditional Audi styling, luxury and performance with the sure-footedness of quattro all-wheel drive. Larger than the A4, but not as bulky (or expensive) as the A8, the A6 offers a range of models and features with broad appeal to the premium midsize luxury sedan buyer…

2010 Audi A8

The 2010 Audi A8 is a full-size premium luxury sedan loaded to the brim with the company's latest technological advances. More than just a showcase for Audi design and engineering, the A8 serves two masters: The driver and the chauffeured. Every bit the equal of such makes as the Mercedes-Benz S-Class, BMW 7 Series and Lexus LS, the A8 appeals to those who have the cash, but might prefer not to flaunt it quite so much. The A8's subtle styling is alluring without being flashy, a traditional design that stands the test of time long after other cars have become dated. Offered in regular or extended wheelbase versions, the A8 is all about style, sophistication and success…

2010 Audi S6

Audi knows how to bring the pain to the competition by producing a line of high-performance sedans and coupes to rival the best from BMW, Mercedes and Infiniti. The 2010 Audi S6 is a prime example. Not as smooth on the highway as the more mainstream A6 on which it's based, and not as quick through a canyon as a similarly-priced Porsche 911 Carrera, Audi's factory-tuned S6 – like most of Germany's factory-tuned super sedans – is nonetheless a brilliant way to enjoy varying degrees of each with only a single monthly payment. Now if we could just convince Audi to build a wagon model like the S4 Avant…

2010 Cadillac Escalade

Fast-living rappers and bling-dazzled celebrities swooned over the original Escalade, but, in addition to more power and a greater length, the 2010 Cadillac Escalade stresses finesse over flashiness. Refinements are easily noticeable inside and out, and the newest Escalade behaves more admirably on the road than its predecessor. Marketers claim segment-leading horsepower and torque for the "Gen IV" 6.2-liter V8 and, at 60 mph, the engine cruises along at just 1,500 rpm…

2010 Cadillac Escalade EXT

At the time the Escalade EXT was created, its purpose was to give Cadillac an entrant in the then-growing market for big sport utility vehicles and full-size pickups, and with features not available on the competition. While the Escalade ESV is derived from the long-wheelbase Chevrolet Suburban, the EXT is Cadillac's take on Chevy's innovative Avalanche truck, which quickly converts from a closed SUV to a surprisingly capable pickup via a removable Midgate Panel divider system that extends the usable bed into the rear-seat area. The 2010 Cadillac Escalade EXT boasts GM's latest chassis, body, interior and powertrain upgrades, as well as a generous allotment of new convenience and safety features…

2010 Cadillac Escalade ESV

Called the luxury king of SUVs, Cadillac's three-row Escalade ESV offers more horsepower and nine more cubic feet of cargo space than Lincoln's long-wheelbase Navigator L. Though the Navigator L offers a few competitive advantages, including its fold-flat third seat, more towing capacity and a Manufacturer's Suggested Retail Price (MSRP) of nearly $9,000 less, the 2010 Cadillac Escalade ESV dominates the image arena. The full-size Escalade ESV has become the status symbol of choice for country clubbers and the urban cool affluent, and this 21-inch longer version offers even more than the previous generation…

2010 Chevrolet Silverado 1500

The Ford F-150 may hold the title of best selling individual pickup in the country, but when you combine the sales of the Chevrolet Silverado with the nearly-identical GMC Sierra, it's a different story. The General Motors pickups outsell the Ford handily and also outsell all the import label pickup trucks combined. After undergoing a complete remake in 2007, the 2010 Chevrolet Silverado enters a year witnessing a tough slog for truck and SUV sales. To its credit, the new line of Active Fuel Management-equipped V8 engines offered in the Silverado give it segment-leading fuel economy. And, for those with an ecological bent, a number of engine choices are now Flex-Fuel E85-capable. There is also a hybrid model, reviewed separately…

2010 Chevrolet Silverado HD

Building on the well-received Tahoe, Suburban and lighter-duty 1500 pickups, the 2009 Chevrolet Silverado 2500HD/3500HD series brings increased capabilities, refined interiors and enhanced drivability. And, in a nod to Ford's Super Duty line, there's more to differentiate this newest heavy-duty truck from its lighter-duty sibling…

2010 Chevrolet Silverado Hybrid

The 2010 Chevrolet Silverado Hybrid is a powerful full-size pickup that can deliver 40 percent better city and 25 percent better overall fuel economy compared to its conventional counterparts without sacrificing full-size truck capabilities, which include a 1,459-pound maximum payload and a 6,100-pound towing capacity. Teaming GM's sophisticated Two-Mode Hybrid system with a 332-horsepower aluminum 6.0-liter Flex-Fuel V8, it can operate battery-only up to 30 mph, yet drives much like any large pickup under most conditions. Most importantly, it consumes significantly less fuel at both city and highway speeds and even when fully loaded or towing. With EPA economy ratings of 21/22 city/highway mpg with two-wheel-drive or four-wheel-drive, its 26-gallon fuel tank can deliver a range of 500 miles or more…

WHAT’S NEW:

KBB.COM PICKS 10 SINISTER NEW-CAR FACES FOR HALLOWEEN

Editors Choose Wicked-Looking New Car List to Celebrate Scary Halloween Season

IRVINE, Calif., OCTOBER 15, 2009 – According to a study published in the December 2008 edition of the journal Human Nature, “people seem to like mature, dominant, masculine, arrogant, angry-looking cars.” In honor of this ghoulish automotive delight, the Kelley Blue Book www.kbb.com editors have assembled mug shots of 10 new cars with sinister-looking faces, just in time for the 2009 Halloween season: www.kbb.com/sinistercars.

Facial features common among vehicles considered for the 2009 list of 10 Sinister Car Faces include sharp angles, squinting eyes and gaping maws (as if emitting battle cries or preparing to eat their next victim). Some of the cars that made the list evoke images of science-fiction villains and birds of prey, while one entry is even named after a mythical serpent.

“This list highlights the fact that some of the most beloved cars on the road wear the wickedest expressions,” said Jason Allan, online content editor for Kelley Blue Book’s kbb.com. “We might profess a preference for a friendly face, but we often vote with our dollars and the Dodge Neon is long gone.”

Sample Choices from kbb.com’s List of 10 Sinister Car Faces

Mitsubishi Lancer Evolution

Rolls-Royce Phantom

Infiniti FX50

Cadillac CTS

Ford F-150 Raptor

For the remaining cars on the 10 Sinister Car Faces list, including all of the frightening commentary and evil behind each of the editors’ picks, visit the 10 Sinister Car Faces story in kbb.com’s Latest News section at www.kbb.com/sinistercars.

KELLEY BLUE BOOK MONTHLY MARKET REPORT: COMPACT-CAR VALUES ON THE RISE; MARKET STABILIZATION YEARS AWAY

IRVINE, Calif., OCTOBER 8, 2009 – Kelley Blue Book, www.kbb.com, the leading provider of new- and used-car information, today releases the October edition of the Kelley Blue Book Monthly Market Report. In this month’s report the company’s analysts and statisticians are beginning to see an uptick in the small car market, which had been hit severely when gas prices stabilized. Also noted in this month’s report is a look forward at the car market in the wake of ‘Cash for Clunkers.’

Values in the car-based segments have underperformed all year, dropping consistently as gas prices stabilized. This drop in values may have been an overcorrection, which partly explains the rebound in values in late August that continued to climb through September. Used-car values do however continue to benefit from the low supply and shortage of new vehicles following the end of the ‘Cash for Clunkers’ program. With fewer new vehicles in the marketplace, used vehicles continue to be a more affordable alternative driving prices up across the board.

“Several cars that might have been traded in were scrapped in the last few months through the ‘Cash for Clunkers’ program and new-car inventories are just as low, helping to drive used-vehicle values up,” said Alec Gutierrez, senior market analyst, Kelley Blue Book. “The compact market may have actually gotten too low this year due to irrational behavior and the overcorrection of the economy and gas prices.”

‘Cash for Clunkers’

The ‘Cash for Clunkers’ program concluded on August 24, yet its effects are still rippling through the automotive industry. While new-vehicle sales for July and August outpaced any other month this year, September sales have shown that the lift to new-car sales was only temporary.

“Many manufacturers increased production levels in August as it became clear that the ‘Cash for Clunkers’ program was moving metal and shrinking inventories,” said Gutierrez. “With that increased production call taking place in August, those new inventories should be hitting showrooms in the next 30 days; however, it remains to be seen if demand will be sufficient to support the increased levels of inventory coming into the market.”

On that note, if inventory levels exceed post ‘Cash for Clunkers’ demand, manufacturers will be forced to offer incentives to move all of the excess inventory as we have seen demand shrink following the program. If this comes to fruition, an increase in inventory and diminished demand will put downward pressure on both new- and used-car values.

The strong new-car sales reported in July and August have led to an inventory crunch at many dealerships, leaving some dealers with no choice but to keep prices relatively high in order to manage their current stock. Higher new-vehicle transaction prices have led car shoppers to consider buying more affordable late-model used vehicles as an alternative to more expensive new vehicles. This trend can only be reversed if sufficient inventories of new vehicles are restored to dealerships.

The marketplace for both new- and used-vehicles will only stabilize once inventories reach a level consistent with demand and, more importantly, conditions in the overall economy improve. Based on current indications, this won’t be any time soon. Unemployment has continued its upward trajectory coming in at 9.8 percent for September while the U.S. GDP (gross domestic product index) has declined for the past three consecutive quarters. With so much uncertainty in the economy and automotive industry, we may be several years away from what can be considered a recovery in the marketplace.

The question remains, once economic conditions improve, what will be the new ‘normal’ market? Can the industry be sustained at 12 or 13 million units per year? If we are ever to reach a level of sustainability in the marketplace, the pressure will be on the manufacturers to manage their business like no other time in history.

For additional information, please visit www.kbb.com/media for the latest Blue Book Market Report. To subscribe to the monthly Blue Book Market Report, please email pr@kbb.com.

KBB.COM STUDY: NEW-CAR SHOPPERS DELAY PURCHASE AFTER CASH FOR CLUNKERS

Consumers Willing to Spend More Later and More Likely to Purchase Hybrids if Carpool-Lane Stickers Available

IRVINE, Calif., OCTOBER 7, 2009 – According to the latest Kelley Blue Book www.kbb.com Market Intelligence Study, since the end of the CARS 2009 program (commonly referred to as ‘Cash for Clunkers’), in-market car shoppers have indicated they are once again delaying the purchase of a new vehicle. However, the price consumers are considering paying for a new car has significantly increased in the month since the CARS 2009 program ended.

In September 2009, 50 percent of in-market car shoppers said they are delaying the purchase of a new vehicle, up nine points from 41 percent in July 2009 (prior to the start of the CARS program). In addition, consumers indicate that in the past month they are less likely to be persuaded to change their purchase timeframe due to the availability of incentives, rebates and special financing offers. In September 2009, 63 percent say the availability of incentives has not affected their timing plans at all, up 10 points from consumers who said the same in August 2009.

However, in the past month alone, the average amount of money shoppers say they are willing to pay for their next new car has increased $1,671. In September 2009, shoppers said they would be willing to spend an average of $27,271 on their next new car, up from August 2009 when they said they would spend an average of $25,600.

“With the ongoing economic recession and the Cash for Clunkers stimulus program over, the latest Kelley Blue Book Market Intelligence data shows that availability of incentives and rebates is no longer enough to persuade car shoppers to deviate from their intended purchase timeframe,” said James Bell, executive market analyst for Kelley Blue Book’s kbb.com. “Although shoppers say they are delaying their purchase timeframe, at least when they do hit the dealerships they’ll be willing to stretch their wallets a bit further and spend more, resulting in a higher dealer and manufacturer profits.”

Additionally, a current hot-button issue in many states is whether to issue (or re-issue) carpool-lane stickers to hybrid vehicles. A May 2009 quick-poll on kbb.com asked consumers how likely they would be to buy a hybrid if carpool-lane stickers were available for those vehicles, and a majority (55 percent) of car shoppers said they would be more likely to consider buying a hybrid if they could get a carpool-lane sticker.

The latest Kelley Blue Book Market Intelligence study was fielded to 553 in-market car shoppers on Kelley Blue Book’s kbb.com from September 18-28, 2009, all of whom indicated they currently own a vehicle and intend to purchase or lease a new or used vehicle within the next 12 months.

KELLEY BLUE BOOK^® RESIDUAL VALUES NAMED APPROVED GUIDE BOOK BY RVI GROUP

RVI to Insure Vehicle Residual Values Based on Kelley Blue Book Residual Forecasts

IRVINE, Calif., OCTOBER 7, 2009 – Kelley Blue Book, www.kbb.com, the leading provider of used car values and residual analysis, announces a new relationship with RVI Group www.rivgroup.com, the pre-eminent name in residual value insurance, in which RVI now recognizes Kelley Blue Book as its approved Residual Value Guide and will henceforth insure vehicle residual values based upon the company’s residual value forecasts.

The past twelve months have seen levels of volatility that have surpassed anything previously seen in the industry, and the recent financial crisis has demonstrated the need to incorporate additional macroeconomic factors into the forecast methodology. In this new relationship, Kelley Blue Book will fulfill RVI’s exacting forecasting requirement for insuring residual values.

“After performing our due diligence for more than a year, we are confident that Kelley Blue Book’s approach delivers extremely reliable vehicle residual values,” said Rene Abdalah, vice president of RVI Analytical Services. “We chose Kelley Blue Book due to our common approach and the company’s methodological transparency. We respect the clarity of Kelley Blue Book’s forecast model assumptions and their in-depth product knowledge of the vehicles we insure.”

Kelley Blue Book uses a time-tested methodology of collecting millions of vehicle transactions and reporting projections based on current vehicle data, sales data, market conditions for each vehicle, competition within vehicle segments, expectations of the future economy and the combined experience of Kelley Blue Book’s team of market and pricing analysts. Kelley Blue Book’s Residual Values are used by banks, financial institutions, governmental agencies and the automotive leasing industry.

“Our goal has always been to support manufacturers, banks and other financial institution partners in mitigating risk, sustaining profitability and having the broadest understanding of the vehicle marketplace as possible,” said Eric Ibara, director of residual value consulting at Kelley Blue Book. “Our advanced modeling capabilities allow us to develop a forecast that incorporates the quantifiable elements and minimizes the subjectivity of the model, providing a broad view incorporating the effects of industry volatility as well as economic forces.”

The Kelley Blue Book Residual Value Guide is published bi-monthly in hard copy form and now in electronic format. Subscribers of the electronic version will benefit from the latest forecast a full 45-days earlier than book subscribers.

About RVI Group

The pioneer in residual value insurance, RVI and its family of companies have been serving the Auto Finance Industry for over 20 years by helping clients improve the financial performance of their leasing, securitization, and other residual-driven financings. RVI’s underwriting expertise and automotive experience benefit its clients through a broad range of risk management and assessment products and services. Learn more about RVI at www.rvigroup.com.

About Kelley Blue Book

Since 1926, Kelley Blue Book, The Trusted Resource®, has provided vehicle buyers and sellers with the new and used vehicle information they need to accomplish their goals with confidence. The company’s top-rated Web site, www.kbb.com, provides the most up-to-date pricing and values, including the New Car Blue Book® Value, which reveals what people actually are paying for new cars. The company also reports vehicle pricing and values via products and services, including software products and the famous Blue Book® Official Guide. According to the C.A. Walker Research Solutions, Inc. – 2009 Spring Automotive Web Site Usefulness Study, kbb.com is the most useful automotive information Web site among new and used vehicle shoppers, and half of online vehicle shoppers visit kbb.com. Kbb.com is a leading provider of new car prices, car reviews and news, used car blue book values, auto classifieds and car dealer locations. No other medium reaches more in-market vehicle shoppers than kbb.com.