At the thinkLA Automotive Breakfast in Century City, California, Steve Sturm, AOL's category development officer for autos, jumpstarted the presentations with a detailed overview of the current landscape for automakers. Vehicle prices are up $700 from 2013, vehicle incentives are up 7.9 percent, and vehicle production is up 3 percent from 2013. Sturm also pointed out that the average age of U.S. cars is now 11.4 years (it was 9.6 years in 2002). This mean people will certainly need new cars soon, as most of the cars out there are quickly aging, particularly now. So overall, things are looking fairly good for the car industry this year.
"The factors to watch," explained Sturm, "are fuel prices and interest rates." Fuel in particular will have a huge effect on the market, particularly for large trucks vs. compact cars or hybrids. Gas prices are high but somewhat stable in Los Angeles right now, Sturm explained, but if prices hit $4.50 to $5 per gallon then we can start worrying about gas-guzzlers. Sturm also noted that 30 of the 41 new car redesigns launching in the second half of 2014 are coming from Asian auto brands. And this of course, was not the only statistic to demonstrate the growing power and influence of this segment.
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The two key product trends we can expect to see growth in are alternative fuels and high tech features. Hydrogen cars will start rolling out this year, which will no doubt make a great impact on the landscape, and by 2020, 90 percent of cars will be connected to internet. (Today only 10 percent are connected!) Sturm also shared three key new targets with attendees. Millennials, which at 80 million-strong now exceed baby boomers, are leading the pack, and contrary to popular belief, they are buying new cars. Luxury buyers of course remain important, and the third essential target is made up of what Sturm called "alpha males," or the typical full-size pickup and SUV buyers. Consumers in general have gained more control over the buying process, leading to more choice, greater transparency, and less brand loyalty in the coming year.
Sturm wrapped up his comprehensive talk explaining that while auto brands are still somewhat hesitant about digital marketing, digital spend is predicted to increase to $15.5 billion in 2014. It will be exciting to see what these powerful brands come up with in the second half of the year.