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Generation Y car buyers have little patience for the ‘old’ ways of the auto industry. This Internet-savvy group wants good fuel economy in a ride that feels like an extension of their smart phones. Chevy’s answer for this is the 2013 Spark.

You won't find brown paper pasted to the windows of your local car dealership this fall. That sort of thing is long gone, though a few of you will remember the buzz, the heart-pumping excitement of a time when September was a riot of new models.

These days, though, the auto industry is alive with bigger and more interesting developments than a mere collection of new fenders hidden behind butcher paper and highlighted with balloons. You will still find new sheet metal among the 2013 models, but the developments and trends run deeper than cosmetic change. What's new from the auto industry in the fall of 2012 is really and truly new.

Take performance and fuel economy. Virtually every all-new model introduced for 2013 will boast a bump in power and a friendly step forward at the fuel pump. To get there, car companies have become fanatical about reducing weight, boosting engine efficiency, refining and reinventing transmission technology and streamlining car designs so they slip through the air with less resistance.

The goal is to improve performance in every way, not just from 0-100 km/h. In short, a broad-based improvement in overall performance is one thing to look for among the 2013 models – fuel savings with no loss of muscle.

Meanwhile, a long list of auto makers will keep chasing Generation Y buyers – twentysomethings or Millennials, if you will, with affordable small cars loaded with the features a generation of wired, smart phone-obsessed young people demand. The Chevrolet Spark subcompact is a perfect example.

Millennials will some day replace baby boomers as the dominant demographic in the car business, but not quite yet. That's why the industry is also looking after mature buyers who purchase mid-size family cars. This fall, the new Altima will be joined in competition by all-new versions of the Ford Fusion, Chevrolet Malibu and the Honda Accord. That foursome of all-new 2013s will compete with recently updated versions of the Volkswagen Passat and Toyota Camry, to name two, as well as stalwarts of the segment such as the Hyundai Sonata and Kia Optima.

Many mid-size buyers this fall will be leasing a new ride, which brings us to another major development: leasing. Leasing is making a comeback. Those 2013 mid-size cars will come loaded with all sorts of high-tech gizmos and electronic features, and managing them is emerging as a major challenge. So that's development No. 5.

With that scene-setter, here is a closer look at five major standout developments to watch as the new models of 2013 roll into showrooms starting next month:

1. Leasing makes a comeback

Leasing, notes auto analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants, is returning to the Canadian market.

"Close to 50 per cent of Canadians leased their vehicle at the peak a few years ago and this dropped to less than 10 per cent with the financial crisis in 2008. The issue wasn't the demand for leasing it was the availability of leasing products," he says in a note to clients.

Those products, he adds, are becoming more widely available now because original equipment manufacturers are once again able to turn bundles of leased vehicles into securities, then selling them to investors.

"Leasing accounted for close to 20 per cent of sales in 2011 and should account for mid- to high-20 per cent in 2012. With very high used vehicle prices a lot of consumers could embrace a new vehicle especially if they are able to lease," notes the analyst.

Leasing also is getting a boost from a recovery among residual values of younger used vehicles. According to DesRosiers Automotive, data from Canadian Black Book suggest residual values of three-year-old used passenger cars have risen steadily in recent years, from 49 per cent in 2010 to 50.8 per cent in 2011 and again to 54.6 per cent in 2012. Light trucks have also seen gains, climbing from 48.2 per cent in 2010 to 50.6 per cent in 2012.

The residual, of course, is the predicted value of a vehicle when the leasing contract ends two, three, or four years down the road. Lease payments are based on the difference between the sale price and the predicted or residual value. In essence, someone who leases is renting the car for a monthly payment based on the difference between the selling price and the residual, with interest-rate charges and fees also included.

The point is, higher residuals make for lower monthly lease payments, which further drive the new vehicle market. No one is able to predict whether leasing will return to "a massive" 42.4 per cent of the total vehicle market as was the case in 2007. On the other hand, the leasing market today is three times what it was in the depths of the last economic downturn in 2009 (7.1 per cent).

A return to high levels of leasing will change the sales mix of both new and used vehicles. Leasing enables consumers to get more vehicle for the same monthly payment they would make on a fully purchased vehicle. Lower monthly payments bring more buyers into the new vehicle market, too. And leasing accelerates the "churn" or turnover in new vehicle sales. Meanwhile, a larger supply of off-lease and off-fleet used vehicles makes for a more complete used vehicle market.

2. Fuel economy

The car companies as a group are serious about dramatically improving fuel economy in virtually every vehicle they sell. How? With a range of technologies and design refinements.

Let's start with CVTs or continuously variable transmissions. Nissan Motor has been an industry leader in pushing CVTs as one way to improve fuel economy. The gearless transmission is efficient, but gearheads are unimpressed. Automotive News calls this the "sneer factor."

Citing figures from IHS Automotive, the industry publication says CVTs accounted for just 1 per cent of the North American market in 2005, but by 2010 CVTs accounted for 7 per cent of all transmissions. IHS expects CVT penetration will soar to 16 per cent of vehicles sold in North America in 2015, notes Automotive News.

No wonder the redesigned Honda Accord will come with a CVT this fall. Rumour has it Toyota will put a CVT in its redesigned Corolla compact next year, too. They will be joined by others already in the market, such as Subaru's Legacy and Impreza. The company says CVT transmissions have been essential to the Impreza's 36 per cent fuel economy improvement.

Then there's weight loss as a fuel efficiency driver. The 2013 Nissan Pathfinder is being stripped of more than 200 kg compared to the SUV it replaces, going from a truck-like frame to unit-body or car-like construction. Nissan says that will help boost fuel economy by as much as 30 per cent.

Finally, engines. They keep getting smaller and smaller and more fuel efficient, yet with direct fuel injection and turbocharging buyers are losing on the power front. The new Fusion, for instance, will have only a four-cylinder lineup, though it will be a comprehensive one.

3. Managing the gizmo parade

As The New York Times recently noted, buying a car these days is a lot like buying a gadget. Even budget rides can be had with navigation system, satellite radio, Bluetooth interface, voice activation and no end of infotainment options, including state-of-the-art surround sound.

Ford Motor has been among the leaders here. The company says its SYNC voice-activated in-car connectivity system, introduced in 2007, is now installed in more than 500,000 Ford vehicles in Canada. SYNC includes voice-activated phone dialling, contact synchronization, MP3-player integration, Bluetooth audio streaming and turn-by-turn audio directions.

Ford says its own research has found that customers who bought 2011 models of Ford vehicles treat SYNC as a must-have technology and purchased the system 82 per cent of the time. Also, more than 80 per cent of SYNC users said they are likely to recommend the system to others. SYNC has grown to include SYNC with MyFord Touch (introduced in 2010) and while Ford has been criticized for creating an overly complicated system, it's here to stay – with refinements, of course.

Managing in-car gadgets has emerged as one of the great challenges facing the auto business. Each car company has its own approach. GM's CUE system, for instance, is arriving only in the Cadillac XTS, ATS and SRX for now, but some form of CUE will reach into other GM models, without a doubt – with the richest versions reserved for Caddies.

And on the story goes. As cars load up with features, the need to organize and interact with them becomes critical – and a critical differentiator from model to model and brand to brand.

4. Battle of the mid-size cars

Those looking for a new family four-door priced to start in the low-$20,000s will have plenty of choices for 2013. They include 2013 versions of the Ford Fusion, Chevrolet Malibu Nissan Altima and Honda Accord.

The takeaway message: the days of the mid-size "driving appliance" are gone. The newest players come to the struggle boasting sleek and sporty designs wrapped around comfortable packaging for five. Power is coming from responsive and fuel efficient engines tied to six-speed or more automatic transmissions that together send each car maker on the road to meeting tougher 2016 fleet-wide fuel economy rules.

Reliability, of course, really is a given here right across the board, therefore most believe the big differentiators are design and technology.

5. The Millenial car chase

Generation Y buyers – so-called Millennials – are a no-nonsense bunch with big demands and little patience for the "old" ways of the auto industry – from the products themselves to the sales and service experience. Millennials don't want to haggle at the dealership. They are also Internet-savvy and they want good fuel economy in a reliable ride that feels just like an extension of their ever-present smart phones.

Millennials, say industry and trend experts, will replace the current bulge of aging baby boomers who have for so long been the dominant force in the car business. As Automotive News notes, Gen Y buyers born in the early 1980s through the early 1990s represents two of five car buyers, according to a study last year by consulting firm Deloitte, adding that some estimates have them purchasing 75 per cent of vehicles by 2025.

Auto makers are answering the need here with vehicles like the 2013 Chevrolet Spark small car. GM Canada will sell the Spark with an app called "Bringgo" and in doing so will be able to sell affordable, smartphone-enabled, turn-by-turn navigation for the masses. The Spark and its Bringgo is not about the driving experience at all. The twentysomething Millennials expected to buy it are more interested in staying connected than driving.

Dealers, meanwhile, will need to adapt. Before long, suggests The Detroit News, you can expect to find the most progressive dealerships staffed by young sales people armed with computer tablets who are as comfortable chatting in person as they are online. After all, studies show that more than 90 per cent of car shoppers begin online. Millennials visit an average of 25 sites before buying a vehicle, according to Google. And they are not terribly brand loyal.

The new wave of younger buyers is starting to change not only what is rolling into dealerships, but how the deal is done.

jcato@globeandmail.com

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