Young Drivers Steer Toward Foreign Cars

October 26th, 2007

When was the last time you saw a 25-year-old driving a Buick that didn’t belong to his grandparents? Or, for that matter, a senior citizen tooling around voluntarily in a Scion tC? Import brands dominate a list of models with the youngest buyers—averaging 40 years old or younger—while models from Detroit are most popular with drivers over 60. That’s a big problem for the Detroit Three, which need to conquer more import buyers as foreign brands attract, and keep, younger customers.

By now, anyone who can see lightning and hear thunder is aware that Chevrolet is advertising the redesigned 2008 Malibu on TV, in print, in outdoor advertising, online, and generally everywhere as “The Car You Can’t Ignore.” But young people have roundly ignored the Malibu for years and, pickups and SUVs aside, it isn’t the only U.S.-made car that should be feeling snubbed.

Domestic brands like Chevrolet have to “disrupt” that pattern and get themselves noticed, said Ed Peper, Chevrolet’s general manager, in a presentation to the International Motor Press Assn. on Oct. 18 in New York. In plain English, that means U.S. carmakers must figure out a way to get, and hold, the attention of younger buyers with models that offer the looks, quality, reliability, pricing, performance, and fuel economy coming out of Asia and Europe.

For 2007, market share for the Detroit Three brands, at 51.2% year-to-date through September, is barely above 50% of U.S. light-vehicle sales. That’s down from 54.1% in the year-ago period and 63.2% just five years ago, according to Automotive News. At the same time, Japanese, European, and Korean brands have benefited from Detroit’s loss. Young Urban Trendsetters

That’s across the whole market, but when you zero in on age demographics it becomes increasingly clear in which segments Ford («www.businessweek.com»), General Motors («www.businessweek.com»), and Chrysler are hurting most: the highly desirable buyers who are 35 and under. According to recent statistics from the Power Information Network, Toyota’s («www.businessweek.com») tiny Scion tC has the auto industry’s youngest buyers, with an average age of 35. In fact, breaking it down by age, the models that attract the youngest buyers are all imports.

At the other end of the spectrum, PIN’s data shows that the spacious, but unhip, Lincoln Town Car from Ford has the highest average age, with buyers averaging 69 years old. It’s not that Detroit, or any automaker, doesn’t want older buyers. But the goal of focusing on younger buyers is to encourage brand loyalty. If you buy a Toyota now, you might move up to a Lexus later as your earning power increases. If Ford or GM can’t capture drivers young, they may never get them.

PIN gleans data from millions of auto loans and leases filed at dealerships across the country. Age statistics are for owners who bought or leased a vehicle from January through the end of September. PIN is a subsidiary of J.D. Power & Associates. (J.D. Power and BusinessWeek are both divisions of The McGraw-Hill Companies («www.businessweek.com»).)

Toyota created the Scion Div. in 2004, specifically to attract younger buyers. “Scion is heavily marketed to young urban trendsetters via mostly nontraditional means, so it is not surprising that the tC has the youngest customer profile in the industry,” says Toyota spokesman Wade Hoyt.

The tC’s average age of 35 is a little misleading. The biggest age group of Scion tC buyers is around 22 to 23 years old, according to PIN. There is another large group of owners around 48 years old, but relatively speaking, few are 35.

Alcoa Second-Quarter Profit Down

October 26th, 2007

NEW YORK—Aluminum maker Alcoa Inc. () on Monday said second-quarter profit slipped nearly 4 percent as outage costs at two smelters weighed down results.

Net income fell to $715 million, or 81 cents per share, from $744 million, or 85 cents per share, for the same period last year.

The recent results include an after-tax restructuring increase of $21 million, mainly from the completion of a joint venture with Sweden’s Sapa Group, and a 2 cent-per-share charge linked to Alcoa’s outstanding $27.5 billion bid for Canadian rival Alcan () Inc.

Quarterly revenue rose to a record $8.1 billion, a 3.8 percent increase from $7.8 billion during the year-ago period. The growth was fueled by higher volumes and improved product mix, according to the Pittsburgh-based company.

Analysts surveyed by were expecting earnings of 81 cents per share on sales of $8.3 billion.

Tony Blair reportedly will receive $9 million advance for his memoir

October 26th, 2007

Tony Blair, the former prime minister of Britain, has agreed to sell his memoir for an advance of about $9 million, according to a person with knowledge of the negotiations.

After a four-day auction, the book was bought by two divisions of Random House, Alfred A. Knopf in the United States and Canada, and Hutchinson in Britain.

Sonny Mehta, chairman and editor in chief of Knopf, said that Blair intended to write a “serious and frank book” about his life and in particular his decade at 10 Downing Street.

Blair, 54, won three consecutive elections for the Labour Party, starting with a landslide victory in 1997. He ended his 10-year tenure in June, having seen his popularity plummet because of his support for President George W. Bush and the war in Iraq.

He also had a close relationship with former President Bill Clinton and played a role, dramatized in the movie “The Queen,” in persuading Queen Elizabeth II to return to London and address the nation after the death of Diana, princess of Wales.

“I hope my memoirs will provide a serious and thoughtful, but also entertaining, reflection on my time as a member of Parliament and as prime minister,” Blair said in a statement.

According to Mehta, the book will be published simultaneously in Britain and the United States, but that publication is a few years away. Matthew Doyle, a spokesman for Blair, said that he had not yet “put pen to paper.”

Mehta, who declined to comment on the size of the advance, said he was confident that Blair could write a book that would sell at least as well as “The Downing Street Years,” the memoir of the former British prime minister, Margaret Thatcher, which was on The New York Times best-seller list for several weeks in 1993 and 1994.

“There have been a handful of international statesmen over the past few decades who have had such a dramatic position on the global stage, and he is really among them,” Mehta said.

Blairs advance would appear to rank second only to the more than $10 million reportedly paid to Clinton for his memoir, “My Life,” published in June 2004, also by Knopf and Hutchinson.

According to people with knowledge of the negotiations for Clintons book, there was no auction in the United States because Clinton said he wanted Knopf to publish the book.

Blairs advance also appears to top the more than $8.5 million paid to Alan Greenspan, the former U.S. Federal Reserve chairman, whose book “The Age of Turbulence” is currently a New York Times hardcover nonfiction best seller.