2 Automakers Fear Effects of Shutdown on Sales

General Motors, the nation’s largest automaker, acknowledged that the shutdown was chipping away at the consumer confidence that automakers depend on to sell vehicles, even if it was still too early to gauge the full impact of the fiscal standoff.

“The longer this issue goes unresolved, the growing anxiety among consumers and the market will not help the industry keep up its strong pace,” said Greg Martin, a spokesman for General Motors.

Hyundai also said this week that industry sales could fall as much as 10 percent in October because of uncertainty surrounding the shutdown, according to John Krafcik, chief executive and president of Hyundai Motor America.

“Anytime you turn on the news, it’s all you’re hearing about,” Mr. Krafcik told Bloomberg TV on Monday. “We think that anxiety is the sort of anxiety that keeps customers, potential buyers, on the sidelines when they’re thinking about a big purchase like an automobile.”

The automakers are coming off a sluggish September, when new vehicle sales were off 4.2 percent. That was the first time that industrywide sales had dropped since January 2011. G.M., down 11 percent, and Hyundai, off 8.2 percent, were among the worst performers.

Now, rising economic uncertainty is adding to the concern that the sales momentum created this year by pent-up demand and readily available credit could continue to slow, analysts said.

“As the shutdown drags into its third week and the government moves closer to breaching the debt ceiling, the likelihood that October auto sales will be softer than expected increases,” said Lacey Plache, chief economist for the industry researcher Edmunds.com.

Not all automakers expressed concern, though. Ford Motor said that the industry appeared to be on pace with projections, made before the impasse, to sell more than 15.5 million vehicles this year.

“We haven’t seen any noticeable decline that can be directly attributed to the government shutdown at this time,” said Erich Merkle, Ford’s United States sales analyst.

Chrysler Group also said that the impact of the shutdown had been minimal.

“Outside of the greater Washington, D.C., area we see virtually no impact on auto sales in October,” Gualberto Ranieri, a Chrysler spokesman, said in an e-mail. “Right now we are confident that industry and Chrysler Group October sales will both be up over the same period in 2012.”

Some automakers, however, have started to acknowledge the shutdown’s impact on government workers’ finances. Hyundai, Ford, Nissan and Toyota have said that they will allow government employees to defer their car loan or lease payments for up to three months.

Toyota said its offer to assist customers affected by the shutdown included furloughed workers, businesses and employees of businesses directly affected by the shutdown, government contractors and suppliers. Customers “in good standing” are eligible to defer up to three months of payments through Toyota Financial Services or Lexus Financial Services.

“The government shutdown has placed an unanticipated financial strain on many individuals and families,” Al Smith, vice president of service operations for the Toyota Financial Services Group, said in a statement on Monday.

Toyota declined to say whether the government shutdown would affect October sales.

“Operationally we are fine,” Carly Schaffner, a spokeswoman, said.

Hyundai announced a program on Oct. 1 that gives current owners payment relief “for as long as they are out of work.” The automaker is offering to postpone payments by 90 days for furloughed employees who want to buy a car this month.

About a thousand people have applied to defer payments under Hyundai’s program, a spokesman, Chris Hosford, said.

G.M. and Chrysler said they had no plans to offer a similar program.

“However, as it is with most cases, the individual lender will work with the consumer,” said Mr. Martin, the G.M. spokesman.

This article has been revised to reflect the following correction:

Correction: October 17, 2013

An article on Wednesday about automakers’ concerns over the partial federal shutdown’s effect on car sales paraphrased incorrectly from remarks by John Krafcik, Hyundai’s chief executive, in a Bloomberg TV interview. He said that industry sales over all could fall as much as 10 percent in October; he was not referring to Hyundai’s sales alone. The article also misstated, in some copies, Ford Motors’ sales projections. It said the industry appeared on pace to sell more than 15.5 million vehicles this year, not this month.

Automakers Build Showroom in an App

“They won’t come into the stores to educate themselves,” said Peter Chung, general manager of Magic Toyota and Scion in Edmonds, Wash. “They’ll do that online.”

More than half of the younger buyers surveyed by AutoTrader.com, a car-buying site, said they wanted to avoid interacting with dealership sales representatives.

In response, automakers like Cadillac and Toyota are starting to embrace technology that tries to take the showroom to the buyer. Known as augmented reality, it embeds images and videos in a picture on the user’s smartphone or tablet. The result is a far more detailed view of the image, often in three dimensions with added layers of information.

For example, when Cadillac introduced the ATS last year, it created a campaign in cities across the country that allowed observers to point an iPad at a chalk mural and watch the car drive through scenes like China’s mountainous Guoliang Tunnel and Monaco’s Grand Prix circuit. The goal was to grab the attention of potential buyers, especially younger ones, who would not normally think of Cadillac when researching new cars.

Later, Cadillac added the technology to its print advertising, pointing readers to download the brand’s smartphone application to view a three-dimensional model of the car. The app allows users to zoom in on the car and turn it 360 degrees by swiping their finger across the screen.

“It’s obviously different than going to a dealership, but at least it’s enough to engage with the vehicle in an environment where they’re comfortable,” said Arianna Kughn, Cadillac’s social media manager.

Audi has used the technology in its brochures and instruction manuals, while Toyota added it to a campaign with the computer-generated pop star Hatsune Miku to interest a younger audience in its 2012 Corolla and to increase the number of downloads of the automaker’s shopping app.

Other businesses are seeing an opportunity as well. Metaio, a German software company with an office in San Francisco, has worked on projects for Audi, Volkswagen and Toyota.

Specular Theory, based here in Venice Beach, is using Hollywood production techniques to create renderings that allow users to open the doors of a car that is not really there, peer inside and roam around, or take a test drive, merely by running their fingers over a phone or tablet screen.

Its founder, Morris May, is applying the expertise he developed over 20 years as a graphic designer on movies like “Star Wars: Attack of the Clones” and “Spider-Man 2” to redefine the way people view cars in the showroom, online and through mobile devices.

“We’re changing the way people experience cars,” Mr. May said, as he used his finger to open the car door of the virtual model displayed on his iPad, revealing the interior of the car, including the dashboard, steering wheel and texture of the seats.

Augmented reality to the uninitiated may seem like a bizarre sci-fi plot device but is actually accessible to anyone with a smartphone or tablet. Mr. May turned on his iPad and pointed the camera at a piece of paper that looked like a camouflage print, which concealed the code for what is called a target image. He trained the lens on the image and a three-dimensional car appeared on the tablet screen.

The technology offers cost savings to automakers. Traditionally, they spend millions when marketing a new model, on photo shoots or building a “cookie-cutter configurator” that changes the car’s colors or features on a Web site, Mr. May says.

When a new model is introduced, that work is scrapped, and the production team, which includes photographers, Web developers and media buyers, starts anew.

As an alternative, Specular Theory uses an automaker’s computer-aided design data to create material that is consistent across Web browsers, phone and tablet screens and showroom floors, where dealers can project and modify life-size, three-dimensional car models.

When an automaker makes a minor change to, say, the tailpipe of next year’s model, Specular Theory can eliminate the time and money spent creating a new campaign by tweaking data from the marketing materials.

Mr. May’s model uses the weight of the car and the tension of the springs to calculate how it drives, controlling the car with a joystick.

Specular Theory, which started six months ago, is still in its infancy but has landed Autodesk, which makes three-dimensional design software for a variety of industries, as a client.

Automakers Report Strong April Sales

DETROIT (AP) — Detroit was king in April, with demand for its big pickups helping to boost U.S. auto sales and offset a soft month for Toyota.

Ford, GM and Chrysler sold a total of 144,042 full-size pickups, up 29 percent from last April, driven by strength in the U.S. housing industry.

Overall sales grew 8.5 percent to nearly 1.3 million. While that's the industry's best April total since 2007, the pace slowed from the first three months of this year. On an annualized basis, April sales were 14.9 million, the first month below 15 million since October.

One reason for the slowdown: Toyota. The Japanese automaker's U.S. sales dropped by 1 percent, or around 2,000 vehicles, from last April. Alec Gutierrez, a senior market analyst with Kelley Blue Book, said he and other analysts underestimated the impact that increasing competition is having on Toyota.

Popular Toyota vehicles like the Corolla and Camry sedans lost sales to fresher models like the Hyundai Elantra and the Ford Fusion. Gas prices — which are 30 cents cheaper than at this time last year — hurt sales of the Prius hybrid, down 21 percent. Toyota's share of the market fell to 13.7 percent from 15 percent a year earlier, putting it behind GM and Ford.

Analysts still expect the industry to sell more than 15 million cars and trucks this year. Gutierrez is keeping his forecast at 15.3 million. That's up from sales of 14.5 million last year. The most recent high was 17 million in 2005, while the trough was 10.4 million during the recession in 2009.

"We're not reading too much" into the April number, Gutierrez said.

Ford, General Motors and Chrysler reported double-digit sales increases last month. Nissan led Japanese automakers with a gain of 23 percent, while Honda's sales rose 7 percent. Volkswagen sales dropped 10 percent, according to figures released Wednesday.

Detroit dominates the pickup segment, as U.S. buyers remain loyal to domestic brands despite efforts by foreign brands to win them over. Sales of Ford's F-Series, the best-selling vehicle in the U.S., rose 24 percent, while Chevrolet Silverado sales rose 28 percent. Chrysler's recently redesigned Ram pickup saw a 49-percent increase.

The gains bode well for second-quarter earnings, since pickups are among automakers' most profitable vehicles.

Truck sales have been strong all year because of customers like Adrien McFrederick, who recently put down a deposit on a 2013 Ram 3500.

McFrederick, 35, owns a marble and tile business, and needed to replace the 2007 Silverado he kept while work was slow. He started looking at Rams late last year after he and his wife bought a Chrysler Town and Country minivan.

Businesses like McFrederick's are getting a boost from a rise in home building, which increased 7 percent from February to March. A revived housing sector means higher sales of big pickups as companies and laborers return to the market. GM said its sales to small businesses rose 32 percent to 57,000 in April.

A different kind of business — natural gas drilling — is propelling sales at Chuck Eddy Jr.'s Chrysler-Dodge-Jeep-Ram dealership near Youngstown, Ohio. Eddy said energy industry workers from all over the country were coming in to buy trucks last month, keeping him in tight competition with a nearby Ford store.

"I'm selling heavy-duty trucks. We had people coming in from all over the country buying. We had a guy come in from Montana," Eddy said.

Jesse Toprak, a senior analyst for the TrueCar.com auto pricing site, said full-size trucks made up around 11.5 percent of sales in April, up from around 10 percent last year. He expects them to top 12 percent of total sales — or nearly 2 million vehicles — by the fall of this year, when truck sales are usually strongest. Full-size truck sales peaked at 15 percent of the U.S. market in 2004.

The growth in truck sales shows underlying strength in the economy, Toprak said, since small businesses won't buy them unless they're confident in the future.