Dealerships

AIADA chairman: On the table this Thanksgiving — Uncertainty

ALEXANDRIA, Va. - 

Thanksgiving has always been one of my favorite holidays. A uniquely American opportunity to gather with family, share favorite recipes, and reflect upon all the blessings in your life is a blessing in itself. But this year, I suspect many dealers will experience indigestion around the Thanksgiving table NOT due entirely to green bean casserole.

Dealers, like a lot of small business owners, are feeling anxious about all the political and economic uncertainty swirling around the country. Ever since Congress embarked upon its fast-paced tax reform efforts, and the president began railing against the North American Free Trade Agreement (NAFTA), dealers and other small business owners have been experiencing heartburn over what the future could hold.

Objectively, tax cuts are a very, very good thing. The United States tax code is long overdue for sensible reform that benefits American workers and businesses, and I am hopeful that 2017 is the year we finally see it happen. That said, never in this country’s history has a tax overhaul been attempted at such break neck speed. Dealers are getting whiplash trying to figure out what’s in the bill, what’s out, and how it will all affect our bottom line.

Even as taxes fully occupy most of Washington, D.C., AIADA is also keeping an eye on trade. In his presidential campaign, and now as the 45th President of the United States, Donald Trump has spoken out forcefully against what he views as trade imbalances between the U.S. and the rest of the world. His favorite target has been NAFTA, and the agreement is now being renegotiated at his request. Unfortunately negotiations aren’t going smoothly, prompting dealers to wonder: What happens to the American auto industry – one of NAFTA’s greatest success stories – if America pulls out of the agreement?

We know that without NAFTA jobs will be lost, the cost of cars and trucks will rise, and that international nameplate brands will have less reason to invest in American manufacturing facilities. The White House’s affinity for protectionism is a real and present danger not just to our highly globalized industry, but to the American economy as a whole. At risk are countless industries, including auto retailers who today employ an all-time high of 1,134,200 workers.

Last year at this time, the 20 percent border adjustment tax took us by surprise, but we were able to defeat it with your support. This year we have new challenges that we can only beat back with your help. AIADA is already hard at work, reminding and informing the administration and its trade negotiators that NAFTA is working for the American automobile dealer. We have formed an active public affairs coalition in D.C. to protect NAFTA and raise awareness of its positive effects, just as we are working on Capitol Hill to protect your interests during the tax debates.

Hopefully, AIADA can put your mind at ease this Thanksgiving, so you can focus on the important things – like pie.

Paul Ritchie is the current chairman of the American International Automobile Dealers Association (AIADA). This blog post originally appeared on the association’s website here.

Black Friday is no turkey when it comes to car shopping

CARY, N.C. - 

While many Americans might be napping off that extra helping of turkey, car-shopping activity isn’t likely to hit the snooze button on Black Friday.

New research from Cars.com indicates that 18 percent of car shoppers say they have more reason to visit dealerships that day. And nearly three-fourths of that crowd (74 percent) say it’s directly due to the special deals and incentives being offered on Black Friday.

Interestingly enough, though, it’s not just the sweet deals that are driving some consumers into the showroom.

“With deals aplenty, shoppers have good reason to go car shopping,” said Cars.com editor-in-chief Jennifer Newman, in a news release. “However, our research indicated that regardless of deals and incentives, 16 percent of shoppers are more inclined to visit a dealership this Black Friday because they have more available free time, and 8 percent said they’d shop over Black Friday simply because ‘it’s fun.’”

And Black Friday may be even more prosperous for dealers than the following Cyber Monday or any other portion of the weekend, according to data from Dealer.com.

The company’s Dealer DataView index shows that after dipping modestly at the end of summer, total dealership website traffic climbed 3 percent from September to October.

Views of vehicle detail pages climbed 2 percent, the index found.

These two measures combined indicate that fall is showing a “relatively robust selling climate,” Dealer.com said in a news release, noting that dealers are preparing to see activity spikes for both Black Friday and Cyber Monday.

“However, insights from last year regarding credit application volume — a leading indicator of purchase intent — suggest that dealers have a compelling reason to prioritize Black Friday over the rest of the holiday weekend,” the company said.

Last year, credit applications on Black Friday were up nearly 40 percent against other Fridays that November, according to data from Cox Automotive sister company Dealertrack that was cited by Dealer.com.

But Cyber Monday did not see a similar lift, as there was just a 2.6-percent rise against other Mondays that month.

“The DataView index provides a timely snapshot and actionable insights for dealers seeking to better understand consumer sentiment,” said James Grace, senior director of analytics products at Cox Automotive Media Solutions, in a news release. “As dealers gear up for the holiday season, the November report points to another period of robust demand and purchase intent from car shoppers.”

Study: 18% of car shoppers ‘more inclined’ to visit dealership on Black Friday

CHICAGO - 

Cars.com outlined for consumers some of the top car deals they can expect to find at their local dealerships. But it would also be prudent for dealers to take note of what specific vehicles shoppers have their eyes on this year as arguably one of the busiest holidays of the year for most dealerships approaches.

Cars.com pointed out that with “a trifecta” of year-end, month-end and Black Friday, manufacturers are stepping up incentives for this upcoming holiday weekend. 

After a sluggish October for new-car sales, OEMs are using the holiday as an “additional way to entice shoppers,” Cars.com pointed out.

On top of the incentive of what are expected to be record auto sales deals, dealers should expect a hefty increase in traffic, as well, if a recent Cars.com study is any indicator.

According to the Cars.com study, 18 percent of car shoppers said they’re more inclined to visit a dealership on Black Friday. And seventy-four percent of those shoppers said they’re more inclined to visit a dealership on the holiday specifically as a result of special deals and promotions.

Jennifer Newman, Cars.com’s editor-in-chief, had this to say for potential vehicle shoppers, “We’re seeing solid incentives from a number of different manufacturers. If you are already in the market for a new car, you might want to consider hitting your local dealership lots this Black Friday instead of waiting in long lines at your nearest big-box store. From the data we’ve seen, the reward is there for certain vehicles,” she continued.

Here are a few of the most noteworthy incentives manufacturers are doling out for Black Friday, according to Cars.com. These manufacturers are also offering further deals if customers finance through their respective captives.

  • Ford Fusion: savings of between $2,150 and $5,000 on certain 2017 trims
  • Hyundai Elantra: a discount of $3,000 on 2018 Elantra sedans and $1,000 off on the hatchback model, the Elantra GT
  • Kia Optima: Savings of $1,500 off the 2018 Optima and $3,000 off the 2017 model. 
  • Kia Sorento: 2017 Sorento models can be purchased with a $3,000 to $4,000 discount, and 2018 models are being offered with a $1,500 to $2,000 discount.

“With deals aplenty, shoppers have good reason to go car shopping,” Newman said. “However, our research indicated that regardless of deals and incentives, 16 percent of shoppers are more inclined to visit a dealership this Black Friday because they have more available free time, and 8 percent said they’d shop over Black Friday simply because ‘it’s fun’.”

COMMENTARY: Baby You Can Drive My Car

DANBURY, Conn. - 

Maybe the Beatles were on to something back in 1965 when they released this single. If you look around the market these days; marketers have their heads down trying to figure out how to transform their business models to include some sort of subscription type offer and bring it to market.

It’s really very interesting to experience such a dramatic shift in the focus of the marketing community regarding the best way to bring new products to market. Just a year ago much of the marketing speak in our industry was focused on leveraging ecommerce and the remnants of brick and mortar retailing.

With the monopoly-like dominance that Amazon has developed in recent months thru organic growth and strategic acquisitions; it appears that many merchants have literally thrown in the towel believing that there is no way to compete with this juggernaut. At best, most believe that they are really competing for a much smaller piece of the overall consumer market that is reserved for the No. 2 position in their respective market segments.

Product marketers are feeling the impact of this brick and mortar retail channel consolidation and centralization as they vie for the love of Amazon, Walmart and other big players who are grabbing huge swaths of consumer purchasing. The Big guys are using their distribution “prowess” to crush margins and profits resulting in a product marketing arena that is desperate to find new ways to work “around the channel” and make their appeal directly to the consumer. With the dubious future of Toys R Us, toy manufacturers are looking at a holiday season that is fraught with peril from a unit sale and “are we going to get paid” perspective.

What has become most interesting about the new found awareness and recognition of the direct to consumer and subscription model is how universal the appeal is with all demographic segments and product categories in the consumer marketplace.  The incredible rise overnight of more than a dozen automakers and auto aggregators marketing subscription services around the consumer’s ability to drive the car of their dreams and/or their necessity is incredible. Before you jump to conclusions and believe these opportunities are the 2018 version of rent a wreck, consider the big brands that are already playing in this space: Ford, Volvo, Hyundai, Cadillac, Porsche & Chevrolet are all players. There are a host of other aggregators that are offering cross car brand subscription opportunities.

The model is fairly simple. Each company asks the subscriber to pay an upfront fee (as a qualifier) and then provides a number of different subscription options to select from. The options are pivoting on the subscriber’s monthly budget, style of car, number of miles to be driven etc. The subscriber pays their fee and the car is either ready for pick up or can be delivered to the subscriber’s home or business. There is no insurance or registration fee to be paid. You get to drive the car you want at the level you want for a monthly subscription fee.

The strategy is ingenious in its simplicity and the potential to deliver several different revenue streams. Clearly, the subscription fee is nice upfront cash along with a commitment to pay a monthly subscription over time brings a recurring revenue stream. Automakers and dealers have plenty of inventory on their lots these days and this is a neat way to generate revenue to the dealer prior to a sale of a car. Dealers are always looking for new buyers to “test drive” their cars; knowing that if they can get a “butt in a seat” - 90 percent of the time the driver will buy the car. In the subscription model offering, they lure customers in and have them pay for the right to “test drive” the car over time. No doubt…during that period…dealers and automakers will have a range of incentives to turn a subscriber into a buyer of the vehicle. In a sense, they are “seeding” their prospect pool and potentially getting paid twice!

The overarching lesson for all marketers in the evolution of this new business model for automakers and dealers is that holding on to the past and/or lamenting the current state of the distribution model dynamics is wasted energy. If marketers aren’t thinking both in and out of the box for new direct to consumer strategies….what are they waiting for?

Time to get moving and drive down a new road to profitability … in 2018 and beyond.

Jim Fosina is Fosina Marketing Group’s chief executive officer.

Dealer interactions with car buyers drive highest sales satisfaction

COSTA MESA, Calif. - 

Despite an array of online resources available to car shoppers today, interactions with dealership sales staff just before purchasing leads to high sales satisfaction, says J.D. Power. 

As vehicle technology features become more advanced, shoppers largely depend on dealership experts to instruct them on how to use new technology, according to the latest U.S. Sales Satisfaction Index Study by J.D. Power.

Forty-one percent of mass market buyers and 33 percent of luxury buyers want to hear about all of their vehicle's features and controls during the delivery process.

Additionally, 65 percent of shoppers who had a sales consultant show them how to use specific features on their personal devices said it was both a “very effective” tool and that they feel more comfortable accessing apps and websites from their vehicle.

“While customers are preparing themselves online with the best information and negotiation tactics, they still prefer to interact with a salesperson or product specialist prior to buying a vehicle,” J.D. Power automotive retail practice vice president Chris Sutton said in a news release.

“Dealers can't control a customer's pre-purchase activities, but they should be prepared to positively influence areas that will affect a customer's likelihood to buy as well as their level of satisfaction. An example is to post photos of actual inventory to their website or engage with shoppers via text messaging or phone calls. Be sure that online specials are up to date and easy to access from the dealer's site. These simple things go a long way toward earning a sale and satisfying a customer,” Sutton explained.

Additionally, for the second consecutive year, the study ranks Buick highest in sales satisfaction among mass market brands.

Buick received a score of 808, and MINI ranks second among mass market brands with a score of 803. GMC ranks third with a score of 793.

With scores of 830, for the first time, Lincoln ranks highest, in a shared spot with Mercedes-Benz, followed by Infiniti with a score of 821, and Porsche with a score of 818.

The study’s findings also highlights the power of follow-ups with car buyers.

While 80 percent of mass market buyers and 87 percent of luxury buyers said they were contacted by the dealership following a purchase, according to the study, only 32 percent of mass market buyers and 51 percent of luxury buyers received a second follow-up explanation of vehicle features.

The study measures satisfaction with the sales experience among new-vehicle buyers and rejecters, who browse a dealership and purchase elsewhere.

Buyer satisfaction is based on six measures, including dealer personnel (28 percent); delivery process (21percent); working out the deal (18 percent); paperwork completion (16 percent); dealership facility (13 percent); and dealership website (4 percent).  And rejecter satisfaction is based on five measures: salesperson (40 percent); fairness of price (15 percent); experience negotiating (15 percent); variety of inventory (15 percent); and dealership facility (14 percent).

The study is based on responses from 28,989 car buyers who purchased or leased a new vehicle in April or May.

Los Angeles metro Nissan store captures brand's most Hispanic buyers

DOWNEY, Calif. - 

Nissan recently announced that its Downey Nissan store in California currently leads the brand in volume sales to Hispanic customers.

In addition to nearly doubling its sales to the Hispanic market this year, the Los Angles metro-area based dealership also leads the brand's Western region in year-to-date overall sales, according to Nissan.

 "The automotive retail business is a people business,” Downey Nissan owner Tim Hutcherson said in a news release.

“The key is to find, hire and train people who truly love every aspect of their career. If they love what they do, who they work for, the product, the process, and the environment the results are going to be positive. It's really difficult to sabotage any task you truly love performing.”

General sales manager, Nakita Joshi said she credits sales growth to the people who make up Downey Nissan, as well.

In April, Downey Nissan moved to a new 55,000 square-foot facility on Firestone Boulevard, which intersects with three cities representing a large Hispanic population.

Currently, 90 percent of the dealerships sales staff are bilingual English-Spanish.

“We’re like family,” said Joshi. “Our customers see themselves reflected in our staff, and that makes a huge difference.”

Downey Nissan is on pace to sell approximately 4,800 new and used-vehicles this year, according to Nissan.

Manheim broadens OVE to give dealers digital sale hosting capability

ATLANTA - 

For dealers who have units that just won’t turn, Manheim rolled out another solution on Thursday to solve that problem.

To offer dealers more ways to meet their buying and selling needs on their terms, Manheim launched a new OVE “Dealer Direct Event” sales channel.  With this offering, dealers can host digital event sales using inventory on their lots, without transporting it to a physical auction location.

 “This is one of many ways we are helping dealers prepare for the emerging digital future,” said Derek Hansen, vice president of digital at Manheim, in a news release. “We are bringing more options to dealers than ever before — especially outside our own locations — to give them the flexibility and control they need to more efficiently buy and sell vehicles.”

Collectively, Manheim’s offsite solutions, which include Digital Assurance, Dealer Direct Event Sales and Mobile Auctions, have grown 50 percent in volume year-over-year, according to a company news release. Manheim said that significant growth reflects rising demand for — and usage of — these useful tools by dealers.

This year, the company highlighted, these solutions will drive more than 100,000 transactions with more than 20,000 dealers participating.

 The Digital Assurance solution offers unique value for dealers who have a smaller quantity of high-quality wholesale units on their lots. With this solution, qualified vehicles can be listed on OVE with a complimentary DealShield 21-day purchase advantage guarantee provided to the buyer, which gives buyers greater confidence in making the purchase online.

 Manheim’s Mobile Auctions — where the auction comes to the consignor — are designed for those who have a minimum of 100 units to sell, but are farther from a physical auction location. With Manheim’s growing fleet of mobile units, company officials emphasized the versatility of these sales has proven to be a convenient and efficient option for independent and franchise dealers, as well as commercial consignors. 

“Mobile Auctions generate the highest sales rates among all Manheim channels — nearly 70 percent — and dealers tell us that they enjoy more profits from these sales,” added Alan Lang, division vice president at Manheim.

Xtime integrates Vantiv Payment to help dealers speed transactions online, in-store

REDWOOD CITY, Calif. - 

Xtime announced Wednesday it has integrated its Xtime Engage product with Vantiv Integrated Paymen. This will provide dealerships with a payment process that allows customers to easily submit payments online or via tablets.

In addition to giving Xtime users access to menus, pricing and service history, dealers can now accept a wide range of payment types both in-store and online with the new integration.

“By meeting customers on their terms and valuing their time, dealers can instill satisfaction and loyalty and drive their revenue,” Xtime marketing and managed services division vice president Jim Roche said in a news release. “The checkout experience should leave a positive impression and not diminish, or ruin, an otherwise excellent service experience.”

Additionally, even Xtime software users who currently employ another company to process payments can access Vantiv’s integrated solution.

“We are very pleased to partner with Xtime to offer a flexible payment option that employs the highest standards in security and safety to the U.S. automotive industry,” added Matt Downs, head of channel and business development at Vantiv.

“This solution provides automotive dealerships with a new level of security by offering point-to-point encryption, as well as improving the consumer’s experience by offering a full suite of payment methods.”

The payment solution is PCI-compliant, when processing card transactions it utilizes encryption and tokenization to maintain the high-security standards, according to Xtime.

Auto industry social media response rate high, but response time slow

CARY, N.C. - 

While automotive comes in as the industry least likely to be complained about in a top 10 list of industries most complained about on social media, the industry still has room to improve its response time, shows recent consumer data from Sprout Social.

“People don’t buy cars everyday — so while maintenance issues and product questions can pop up anytime, they may not have as much reason to negatively call out auto brands as they would for the CPG brand that, for example, makes the cereal they eat for breakfast every morning,” Sprout Social director of content Lizz Kannenberg said in an email interview.

“The potential payoff for complaining about your car is different than it is when you complain about your cereal; whereas you might get a coupon for a free box if you complain about your o’s or flakes, you’re unlikely to get a comparable ‘make good’ from an automaker.”

At 12 percent, the automotive industry average response rate on social is higher than the all-industry average at 11 percent. But among the list of 10 industries examined in the Q3 2017 Sprout Social Index, automotive also came in as the No. 6 industry needing the most help with social customer service.

“While the volume of consumer complaints may not be as high, people aren’t getting the responses they’re looking for when they do reach out,” Kannenberg said.

The auto industry’s average response time to consumers on social is 13.5 hours, the second longest average response rate out of 15 industries, according to the study.

“Responsiveness on social is crucial to how consumers view a particular brand. Think through how people are welcomed when they walk into your showroom, dealership or garage. You wouldn’t ignore them point-blank. Extend the same type of welcome to people who reach out to you on social to build the brand, and the customer relationships, that will pay dividends in terms of long-term loyalty,” Kannenberg explained.

Via Survata, an independent research firm in San Francisco, Sprout Social surveyed more than 1,000 consumers online between July 10 and July 14 for the study.

Dealers back off inventory build, triggering price reaction

LAWRENCEVILLE, Ga. - 

Whether it’s just a momentary slowdown or the sign of a longer-term dealer trend, Black Book watched vehicle depreciation slightly intensify as store managers opted not to load up on potential inventory coming through the auction.

The latest Black Book Market Insights report shows both car and truck segments decreasing more in value than usual. Although car segments saw an overall larger depreciation, editors noticed two truck segments saw larger price declines as a percentage than any of the car segments.

“Depreciation rates increased on both car and truck segments as buyers become hesitant to load up on inventory,” said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.

Black Book’s representatives in the lanes back up Goyal’s assertion beginning with what the lane watcher in Florida reported back to headquarters.

“More no sales than the past few weeks as buyers don’t seem to be speculating at all,” said the representative in the Sunshine State.

Next door in Georgia, a similar story unfolded as Black Book’s watcher said, “A large quantity buyer says that he will wait until the sellers lower their floor prices, which he believes is just around the corner.”

Out West, the sentiment continued with dealers not ready to gamble in Nevada.

“The market remains good but dealers are cautious about over supplying their retail lots in the event of a downward market pivot,” Black Book’s representative said.

And in Arizona, the lane recap was, “More hesitation in the bidding process this week, which produced a noticeable amount of no sales.”

The impact of those dealer decisions meant that based on volume-weighted data, overall car segment values declined by 0.60 percent last week. In comparison, the market values had decreased on average by 0.41 percent per week in the previous four weeks.

Among cars, editors determined the full-size car and sporty car segments performed the worst, decreasing by 0.94 percent and 0.82 percent, respectively.

Again looking at volume-weighted data, Black Book reported that overall truck segment values — including pickups, SUVs and vans softened by 0.40 percent last week, worse than the average decrease of 0.25 percent per week recorded during in the previous four weeks.

Among trucks, editors noticed the sub-compact crossover and compact van segments performed the worst last week, dipping by 1.03 percent and 1.13 percent, respectively.

Specialty market update

As the editors do on a monthly basis, Black Book also offered its latest assessment of the specialty segments of the wholesale market. Here is the rundown:

— Collectibles: Editors indicated most segments of the collectible car hobby have done well at the various auctions held so far this fall.

— Recreational vehicles: Black Book reported values of both motorized and towable units sold at wholesale auctions increased once again this past month, “which, as we said last time, is unusual for this time of year,” according to the editors.

— Powersports: Black Book said November finds the powersports market in a leveling off period. “Changes in value this month are more subdued than we have seen recently,” editors added.

— Heavy-duty: Black Book calculated a good supply of units in several segments helped to maintain steady depreciation in October. Editors noted that construction/vocational group values have dropped the most since August, but still bring strong numbers.

— Medium-duty: Black Book acknowledged the wholesale market continues its downward trend. However, some late-model unit prices have stabilized,” editors said.