Dealerships

86 Dealers Earn Alfa Romeo Franchises

AUBURN HILLS, Mich.  - 

Chrysler announced Tuesday morning that 86 dealers in North America have been awarded Alfa Romeo franchises, with expectations that number may one day grow past 300 locations.

This initial pool of dealers have been picked from existing FIAT and Maserati brand dealers, and includes 82 dealers in the U.S. and four in Canada.

These stores will be the first to offer the 2015 Alfa Romeo 4C couple and limited-edition 4C Launch Edition when the brand returns to North America this year.

The company said additional franchises will be announced later in the year. At first, each of the stores will receive the 4C Launch Edition.

“This group of dealers represents the first phase in the Alfa Romeo dealer network selection process,” said Peter Grady, vice president of network development for Chrysler Group. “Each Alfa Romeo dealer will have a unique staff dedicated to the brand’s premium market clientele.

“We require each Alfa Romeo dealer to have their sales and technical staff go through an intensive curriculum to ensure the highest levels of customer care and proficiency of the Alfa Romeo 4C,” he continued. “We anticipate that the Alfa Romeo dealer network ultimately will exceed 300 franchises in North America.”

The U.S. dealers are scattered throughout 33 states, as detailed below by the list, which also includes the four Canadian stores:

  
Alabama
FIAT of Huntsville, dba Alfa Romeo of Huntsville, Huntsville, Ala.
 
Arkansas
Landers FIAT, dba Landers Alfa Romeo, Benton, Ark.
FIAT of Fayetteville, dba Alfa Romeo of Fayetteville, Fayetteville, Ark.
 
Arizona
Larry H. Miller FIAT Tucson, dba Larry H. Miller Alfa Romeo Tucson, Tucson, Ariz.
FIAT of Scottsdale, dba Alfa Romeo of Scottsdale, Scottsdale, Ariz.
 
California
FIAT of Burlingame, dba Alfa Romeo of Burlingame, Burlingame, Calif.
FIAT of Bakersfield, dba Alfa Romeo of Bakersfield, Bakersfield, Calif.
McKevitt FIAT, dba McKevitt Alfa Romeo, Berkeley, Calif.
Premier FIAT of Fremont, dba Premier Alfa Romeo of Fremont, Newark, Calif.
Orange Coast FIAT, dba Orange Coast Alfa Romeo, Costa Mesa, Calif.
Santa Monica FIAT, dba Santa Monica Alfa Romeo, Santa Monica, Calif.
FIAT of Los Angeles, dba Alfa Romeo of Los Angeles, Los Angeles, Calif.
Kearny Mesa FIAT, dba Kearny Mesa Alfa Romeo, San Diego, Calif.
Walter’s FIAT, dba Walter’s Alfa Romeo, Riverside, Calif.
Mossy FIAT, dba Mossy Alfa Romeo, National City, Calif.
FIAT of San Francisco (San Francisco Motors), dba Alfa Romeo of San Francisco, San Francisco, Calif.
Maserati of Walnut Creek, dba Alfa Romeo of Walnut Creek, Walnut Creek, Calif.
 
Colorado
AutoNation FIAT North Denver, dba AutoNation Alfa Romeo North Denver, Northglenn, Colo.
 
Connecticut
FIAT of Fairfield County, dba Alfa Romeo of Fairfield County, Stamford, Conn.
 
Florida
Rick Case FIAT, dba Rick Case Alfa Romeo, Davie, Fla.
FIAT of North Miami, dba Alfa Romeo of North Miami, North Miami, Fla.
FIAT of Melbourne, dba Alfa Romeo of Melbourne, Melbourne, Fla.
FIAT of Pensacola, dba Alfa Romeo of Pensacola, Pensacola, Fla.
Sunset FIAT of Sarasota, dba Sunset Alfa Romeo of Sarasota, Sarasota, Fla.
FIAT of Winter Haven, dba Alfa Romeo of Winter Haven, Winter Haven, Fla.
FIAT of Orange Park, dba Alfa Romeo of Orange Park, Jacksonville, Fla.
Greenway FIAT of East Orlando, dba Greenway Alfa Romeo of East Orlando, East Orlando, Fla.
Fields FIAT, dba Fields Alfa Romeo, Orlando, Fla.
 
Georgia
FIAT of Savannah, dba Alfa Romeo of Savannah, Savannah, Ga.
 
Iowa
D&D FIAT, dba D&D Alfa Romeo, Davenport, Iowa
Billion FIAT, dba Billion Alfa Romeo, Clive, Iowa
 
Illinois
FIAT of Chicago, dba Alfa Romeo of Chicago, Chicago, Ill.
Bettenhausen FIAT of Tinley Park, dba Bettenhausen Alfa Romeo of Tinley Park, Tinley Park, Ill.
FIAT of Metro East, dba Alfa Romeo of Metro East, Fairview Heights, Ill.
 
Indiana
FIAT of Glenbrook, dba Alfa Romeo of Glenbrook, Fort Wayne, Ind.
Expressway FIAT of Evansville, dba Expressway Alfa Romeo of Evansville, Evansville, Ind.
 
Kentucky
Jake Sweeney FIAT, dba Jake Sweeney Alfa Romeo, Florence, Ky.
 
Louisiana
Landers FIAT, dba Landers Alfa Romeo, Shreveport, La.
 
Maryland
Heritage FIAT, dba Heritage Alfa Romeo, Owings Mills, Md.
Criswell Maserati, dba Criswell Alfa Romeo, Germantown, Md.
 
Michigan
Suburban FIAT, dba Suburban Alfa Romeo, Ann Arbor, Mich.
Fox FIAT, dba Fox Alfa Romeo, Traverse City, Mich.
Golling FIAT, dba Golling Alfa Romeo, Bloomfield Hills, Mich.
FIAT of Lakeside, dba Alfa Romeo of Lakeside, Macomb, Mich.
Zeigler FIAT of Grandville, dba Zeigler Alfa Romeo of Grandville, Grandville, Mich.
 
Minnesota
FIAT of Bloomington, dba Alfa Romeo of Bloomington, Bloomington, Minn.
 
Missouri
Northtowne FIAT of Kansas City, dba Northtowne Alfa Romeo of Kansas City, Kansas City, Mo.
 
North Carolina
Hendrick FIAT of Cary, dba Hendrick Alfa Romeo of Cary, Cary, N.C.
 
Nebraska
FIAT of Omaha, dba Alfa Romeo of Omaha, Omaha, Neb.
 
New Jersey
FIAT of Maple Shade, dba Alfa Romeo of Maple Shade, Maple Shade, N.J.
Fullerton FIAT, dba Fullerton Alfa Romeo, Somerville, N.J.
 
Nevada
FIAT of Las Vegas, dba Alfa Romeo of Las Vegas, Las Vegas, Nev.
Findlay FIAT, dba Findlay Alfa Romeo, Henderson, Nev.
 
New York
FIAT of Larchmont, dba Alfa Romeo of Larchmont, Larchmont, N.Y.
 
Ohio
Bob & Chuck Eddy FIAT, dba Bob & Chuck Eddy Alfa Romeo, Youngstown, Ohio
Yark FIAT, dba Yark Alfa Romeo, Toledo, Ohio
Bob-Boyd FIAT, dba Bob-Boyd Alfa Romeo, Columbus, Ohio
Bob Ross FIAT, dba Bob Ross Alfa Romeo, Centerville, Ohio
 
Oklahoma
FIAT of Edmond, dba Alfa Romeo of Edmond, Edmond, Okla.
 
Pennsylvania
Baierl FIAT, dba Baierl Alfa Romeo, Wexford, Pa.
 
South Carolina
Benson FIAT, dba Benson Alfa Romeo, Greer, S.C.
 
Tennessee
Harper FIAT, dba Harper Alfa Romeo, Knoxville, Tenn.
 
Texas
FIAT of Austin, dba Alfa Romeo of Austin, Austin, Texas
Holt FIAT of Fort Worth, dba Holt Alfa Romeo of Fort Worth, Fort Worth, Texas
Northside FIAT, dba Northside Alfa Romeo, Spring, Texas
Randall Noe FIAT, dba Randall Noe Alfa Romeo, Tyler, Texas
Allen Samuels FIAT, dba Allen Samuels Alfa Romeo, Waco, Texas
FIAT of Corpus Christi, dba Alfa Romeo of Corpus Christi, Corpus Christi, Texas
Helfman FIAT, dba Helfman Alfa Romeo, Houston, Texas
Brown FIAT, dba Brown Alfa Romeo, Laredo, Texas
FIAT of McKinney, dba Alfa Romeo of McKinney, McKinney, Texas
Cavender FIAT, dba Cavender Alfa Romeo, Selma, Texas
 
Virginia
Safford FIAT of Tysons Corner, dba Safford Alfa Romeo of Tysons Corner, Vienna, Va.
Safford FIAT of Fredericksburg, dba Safford Alfa Romeo of Fredericksburg, Fredericksburg, Va.
FIAT of Alexandria, dba Alfa Romeo of Alexandria, Alexandria, Va.
Pomoco FIAT of Newport News, dba Pomoco Alfa Romeo of Newport News, Newport News, Va.
 
Vermont
Berlin City FIAT, dba Berlin City Alfa Romeo, Williston, Vt.
 
Washington
FIAT of Tacoma, dba Alfa Romeo of Tacoma, Tacoma, Wash.
Barton FIAT, dba Barton Alfa Romeo, Spokane, Wash.
 
Wisconsin
Bergstrom Maserati, dba Bergstrom Alfa Romeo, Appleton, Wis.
 
West Virginia
Urse FIAT of Morgantown, dba Urse Alfa Romeo of Morgantown, Morgantown, W. Va.
Moses FIAT of St. Albans, dba Moses Alfa Romeo of St. Albans, St. Albans, W. Va.
 
Canada
FIAT of Vancouver, dba Alfa Romeo of Vancouver, Vancouver, B.C.
Maranello FIAT, dba Maranello Alfa Romeo, Vaughan, Ont.
LaSalle FIAT, dba LaSalle Alfa Romeo, LaSalle, Quebec
JD FIAT, dba JD Alfa Romeo, Boischatel, Quebec

Dealer Employees Paid More, but Retention Remains Issue

McLEAN, Va. - 

The National Automobile Dealers Association released its second annual NADA Dealership Workforce Study back in November, but the organization dug back into the report this week, releasing a few more key findings — including an interesting tidbit on pay scales.

According to the report — which was produced in partnership with DeltaTrends — car dealership employees, on average, earn 27 percent more than the average weekly earnings of all U.S. private sector employees.

The report is based on 2012 hard data culled from 290,000 car and truck payroll records, and includes both national and regional data. More than 2,240 dealerships enrolled in the 2013 Dealership Workforce Study.

Perhaps not surprisingly, compensation in luxury dealerships tends to be higher than compensation in non-luxury dealerships.

F&I managers had the highest income growth in 2012, at 8.4 percent, followed by service managers at 8 percent and sales consultants at 7.8 percent.

Overall, the overall median salary in dealerships rose by almost 4 percent in 2012.

Dealerships are also shifting a bit when it comes to who they are hiring.

According to the study results, many dealerships are looking to the younger generation when ramping up their teams.

Dealers hired members of Generation Y 41 percent of the time in 2012.

NADA cautioned that to keep them, “we need to address dealership culture, work house, salary and incentive programs, as the turnover rate in 2012 for this age group was 54 percent.”

Dealerships are also increasing their female employee numbers, as dealerships hired women 19 percent of the time in 2012, up 2 percent from the previous year.

However, NADA noted again that the industry might need to work on dealership culture, as the turnover rate for female sales consultants is at 76 percent.

The overall turnover rate for dealership employees is 35 percent, which is less than that of the U.S. private sectors of 41 percent.

That said, turnover is still an issue, NADA pointed out, stressing that high rates might be due in part to long hours.

“The total number of hours and weekend that employees are scheduled to work has a significant impact on retention,” NADA said in the report.

Sales consultants working 50 to 60 hours per week earn 4 percent more a year than their counterparts working 40 to 45 hours.But there's a caveat.

When employees work over 45 hours, turnover increase and retention decreases, implying a change to the incentive system may be due.

For more insight from the NADA study, see the Auto Remarketing story below:

NADA Report Offers Insights on Recruiting, Retention of Dealership Workforce

 

Used Department ‘Increasingly Important’

FORT LAUDERDALE, Fla. - 

In one particular piece of The Blue Sky Report from Haig Partners, the firm emphasizes the often strong profitability of a dealer’s pre-owned operation, while also illustrating the importance of that department with this key statistic:

The share of total retail unit sales for franchised dealers that used vehicles accounted for in 2013 was more than 7 percentage points higher in 2013 than it was in 2007, according to the report.

And there were 152,342 more used unit retail sales in 2013 for public retailers than there were in 2007, the report indicated, citing filings with the SEC.

“More dealers are focused on their used-vehicle business because of the sometimes stronger profits for used cars, and the reconditioning that also boosts fixed operations,” the report notes.

“And F&I on used cars can be higher than with new-car sales,” it continued. “Dealers are doing a better job gaining trade-ins and many have accepted the tenets of the vAuto approach, where rather than hoping for above market grosses, they sell the car for market value and try to increase the number of unit sales per month for a given amount of working capital to maximize profits.

This was just part of the multitude of data included in The Blue Sky Report, which reviews the dealership buy-sell market in addition to several data sets examining dealer values, auto industry profits and more.

For instance, the report notes that dealership buy-sell transactions rose by double-digit rates in 2013, and analysts are predicting this year’s rates will continue to rise. What’s more, it shows that in 2013, public retailers committed more than $1 billion to acquisitions for the first time since 2006.

More from Haig Partners can be found in Auto Remarketing’s story here and in the full report here.
 

FTC Staffers, NADA Debate Tesla Sales Model

WASHINGTON, D.C. - 

Late last week, a trio of Federal Trade Commission staffers released a blog post asserting car shoppers should be able to decide how they shop for their next vehicle, in regards to the ongoing controversy and legal battle Tesla’s direct-to-consumer sales model has sparked in the dealer community.

It didn’t take long for NADA to respond to the post. A press release from the dealer organization hit the Web late last week, claiming the individual states should, in fact, decide how consumers shop for new cars.

NADA claimed that the in implying consumers should be able to choose whether they want to visit a dealership or buy directly from the automaker the FTC staffers “failed to acknowledge how the franchised dealer network actually benefits car buyers through price competition and safety, and provides enormous economic benefits to local communities.”

In the NADA release, Jonathan Collegio, NADA vice president of public affairs, was quoted saying, “For consumers buying a new car today, the fierce competition between local dealers in a given market drives down prices both in and across brands — while if a factory owned all of its stores it could set prices and buyers would lose virtually all bargaining power. And buying a car isn’t like buying a pair of shoes online. Cars require licensing to operate, insurance and financing to take home, and contain hazardous materials, so states are fully within their rights to protect consumers by standardizing the way cars are sold.”

The authors of the original FTC blog post — Andy Gavil, director of the Office of Policy Planning; Debbie Feinstein, director of the Bureau of Competition; and Marty Gaynor, director of the Bureau of Economics — began by focusing on how sales and consumer behavior is always evolving.

They gave the following example, as stated in the blog post: “Consumers once shopped predominantly at their local stores; but first mail order catalogs and today the Internet have created new ways to shop for and purchase a wide range of goods and services. Similarly, consumers once arranged for taxis by hailing one from a street corner or by calling a dispatcher; yet today, smartphones and new software applications are shaking up the transportation industry, creating new business opportunities and new services for consumers.”

The authors contend that the same evolution is being stalled in the business of buying cars, due to local laws in many states that require consumers to buy cars from licensed auto dealers.

“Removing these regulatory impediments may be essential to allow consumers access to new ways of shopping that have become available in many other industries,” the blog post states.

Of course, the current dealer sales system has been raised into question by automaker Tesla as it pursues its direct-to-consumer sales strategy.

The FTC staffers when on to explain why they think blocking direct-to-consumer sales is “bad policy.”

“American consumers and businesses benefit from a dynamic and diverse economy where new technologies and business models can and have disrupted stable and stagnant industries, often by responding to unmet or under-served consumer needs. When that occurs in an industry long subject to extensive regulation, existing businesses — like automobile dealers — often respond by urging legislators or regulators to restrict or even bar the new firms that threaten to shake up their market,” the FTC staffers wrote.

The staffers also contended that since Tesla only sold a little over 22,000 units last year, there might not be as much of a competitive threat from the young automaker to established dealers as originally thought.

Bottom line: The blog post asserts change is a “critical dimension” of the competitive process among dealers and the auto industry.

“Such change can sometimes be difficult for established competitors that are used to operating in a particular way, but consumers can benefit from change that also challenges longstanding competitors,” the blog post concluded. “Regulators should differentiate between regulations that truly protect consumers and those that protect the regulated. We hope lawmakers will recognize efforts by auto dealers and others to bar new sources of competition for what they are — expressions of a lack of confidence in the competitive process that can only make consumers worse off.”

The FTC emphasized that the views expressed in the blog post are those of the authors, and do not necessarily reflect the opinion of the Commission or of any individual Commissioner.

To view the entire blog post, see here.

To read more on Auto Remarketing’s coverage of Tesla and the automaker’s controversial sales model, see the below stories:

Tesla Sales Model May Push No-Haggle Pricing Forward

More Affordable Tesla May Mean More Changes

What Future May Hold for Tesla in Used-Car Market

Hyundai Ousts Toyota as Most Reliable Automaker

IRVINE, Calif. - 

When choosing their next car purchase, consumers are often looking for the vehicles that will run as smoothly as possible and cause them the least amount of headache.

According to the results of CarMD.com Corp.’s 2013 CarMD Vehicle Health Index and Manufacturer & Vehicle Reliability Rankings released Wednesday, Hyundai has risen to the top in this respect, ousting Toyota from its 2-year stint in the No. 1 spot.

Rounding out the top five “healthiest” and most reliable automakers are Toyota, General Motors, Chrysler and Honda, respectively.

Interestingly, half of the top 10 manufacturers (Hyundai, Toyota, Nissan, Kia and Volkswagen) experienced a drop in reliability rating, with more frequent visits to the repair shop and increased average repair costs.

The other five (GM, Chrysler, Honda, Ford and Mitsubishi) saw improved ratings.

The No. 3 brand — General Motors — saw the biggest boost, moving up from a No. 8 ranking in 2012.

Coming in at no. 10, Mitsubishi ranks in the top ten for the first time this year.

As far as cost goes, GM owners saw the lowest average repair cost among the top 10-ranked manufacturers at $304.99.

Interestingly, Toyota had the highest overall repair cost at $540.53. The five vehicles with the highest average repair costs were Toyota Prius hybrids, which contributed to Toyota's rise in average repair cost, CarMD reported.

Though Hyundai pushed Toyota from the No. 1 brand ranking, for the third consecutive year, the top-ranked vehicle is a Toyota, with the 2012 Camry ranked as the most reliable vehicle for 2013.

And the Camry isn’t the only Toyota vehicle to have held this spot.

Previously, the Corolla ranked No. 1 with the 2009 Corolla and 2010 Corolla earning top spots in the past two CarMD rankings.

This year’s top 10 list of most reliable vehicles includes four sedans, four compacts and two SUVs.

Interestingly, Nissan, a brand that didn’t make it into the top five brand rankings, led the pack with five vehicles, including the 2012 Altima (ranked No. 2), 2011 Rogue (No. 5), 2012 Rogue (No. 6), 2012 Sentra (No. 7) and 2011 Sentra (No. 9).

Toyota has three cars in the top 10, including the 2012 Toyota Camry (No. 1), 2011 Toyota Corolla (No. 3) and 2011 Toyota Camry (No. 4).

Hyundai, this year’s top-ranked brand, only has one vehicle on the list — the 2010 Elantra, which came in at No. 8.

Mazda also made the top 10 list for the first time with its Mazda3 (No. 10)

The index also ranks the top three vehicles by category: compact, minivan, sedan, full-size SUV, wagon/crossover, truck and luxury.

The 2012 GMC Sierra, ranked No. 1 in the truck category, pushing Ford from the top spot, which it held last year.

And that wasn’t the only upset.

In the luxury category, Buick and Lincoln unseated Lexus and Infiniti with the Buick Lacrosse, and 2010 and 2007 Lincoln MKZ vehicles.

To view this year's complete index data, visit the landing page here.

 

Cadillac, Buick Rank Highest in Service Customer Satisfaction

WESTLAKE VILLAGE, Calif. - 

A dealership’s service center serves as a way to ensure customer loyalty and for many, also acts as a direct pipeline for trade-ins — but much of this depends on customer satisfaction.

J.D. Power released the results of its 2014 U.S. Customer Service Index (CSI) Study — which measures customer satisfaction with service at a franchised dealer facility for maintenance or repair work among owners and lessees of 1- to 5-year-old vehicles — showing two domestic nameplates leading the pack.

Cadillac ranks the highest among luxury brands for customer satisfaction with dealer service, while Buick ranks highest among mass market brands.

This is according to responses from more than 90,000 owners and lessees of 2009 to 2013 model-year vehicles.

Cadillac topped the list for luxury brands with an overall CSI score of 872 on a 1,000-point scale, an increase of 14 points from 2013.

Cadillac was followed by Audi (868); Lexus (867); then Infiniti (865) and Lincoln (865) in a tie.

On the mass-market side, Buick took home the honors with an overall CSI score of 835, jumping up 26 point from 2013.

Following Buick in the mass market rankings are Volkswagen (830); GMC (828) and MINI (828) in a tie; and Chevrolet (812), J.D. Power reported.

Overall, J.D. Power reported customer satisfaction with dealer service is on the way up.

Among luxury brands, overall customer satisfaction with service at a dealer facility averages 855, up from 846 in 2013.

The CSI average among mass market brands is 797, up from 789 in 2013.

Customers Buying into Service

Part of these boosts in customer satisfaction for the leading brands may have been due to the increase in customers buying service plans.

J.D. Power said the percentage of vehicle owners with complimentary or prepaid vehicle maintenance packages has more than doubled during the past five years.

“Maintenance packages — whether they’re complementary or paid for by owners — create a long-term relationship between the customer and dealership, which, when coupled with satisfying service experiences during that period, can have a very positive impact on loyalty rates,” said Chris Sutton, senior director of the U.S. Automotive Retail Practice at J.D. Power.

“Maintenance packages help capture a higher percentage of service visits, and since customers with these plans are predisposed to purchase such items as batteries, brakes and tires from the dealer even after their plan expires, dealers retain key revenue opportunities for service and repairs,” Sutton added.

Here are the numbers.

According to the study, 68 percent of luxury vehicle owners and 46 percent of mass-market brand owners indicate their vehicle was covered under either a complimentary or prepaid maintenance package during the first year of ownership, compared with 35 percent of luxury and 15 percent of mass-market brand owners in 2009.

These plans help drive repurchase rates and create trade-ins to feed dealers’ used inventory, as well.

According to the study, 72 percent of those who have a complimentary or prepaid maintenance package repurchasing the same vehicle make on their next purchase, compared with 62 percent who did not have a maintenance package.

So, when trying to ensure customer satisfaction and create loyal, repeat customers, what are the top factors to consider in the service department?

According to the study, six of the top 10 performance indicators for CSI involve service advisor-related best practices, including being focused on customer needs; providing helpful advice; and keeping the owner updated about the status of their vehicle.

 

NADA: ‘Haphazard’ Incentive Spending Not Likely

McLEAN, Va. - 

In a recent whitepaper, NADA Used Car Guide lists several factors — including rising incentives in the first two months of 2014 — that point to continued increases in pricing discounts this year. 

But here’s the thing: automakers aren’t likely to become “haphazard,” says NADA, which in fact suggests OEMs will temper their spending in the second quarter.

First, the data.

Citing statistics from Autodata Corp., the “2014 Used Vehicle Price Forecast” special report from NADA UCG notes that per-unit new-vehicle incentive spending in 2013 was at $2,576. This marked a 3.7-percent increase.  In the first two months of this year, spending climbed 8.4 percent.  

These two movements plus the widespread expectations for a calming of new-car sales growth can be seen as “strong evidence that discount levels will continue to rise in 2014,” NADA said in the report before adding this caveat.

Even though discounts will rise, automakers aren’t likely to take “a haphazard approach,” when it comes to spending, NADA suggests, and their recent discipline is proof of this new mentality.

“The big increase in spending over the first two months of the year was to a large degree expected; manufacturers are trying to ensure a strong end to a first quarter that was stymied by very poor weather conditions,” analysts noted in the report.

“In addition, automakers continue to repeat a mantra of profitability before market share, and the hard-won profit gains of the past few years among domestic manufacturers give reason to believe this is more than just investor-pacifying rhetoric,” they continued. “Manufacturers are painfully aware from past experience that it’s extremely difficult to shut off the incentive spigot once it’s been opened up.”

During Q2, it’s likely that incentive spending will slow down, NADA predicts. Moreover, OEMs are expected to continue honing in on finance and lease subvention as their discount approach instead of customer cash. NADA emphasized that customer cash is the incentive that is “most destructive to used-vehicle prices.”

Here’s another kicker: new-car transaction prices should rise.

In fact, last year, there was a 1.1-percent increase in prices, NADA said, citing the U.S. Bureau of Labor Statistics. And this occurred even with more spending.

There has been an uptick in transaction prices in each of the last six years, NADA said, following a decade-long downturn.  As for used transaction prices, these have mostly trended upward since 2009, but did soften a bit last year.

“With manufacturer suggested retail prices (MSRPs) continuing to rise — MSRPs grew by 1.6 percent for the 2013 model year and are up another 1.5 percent for 2014 models — combined with a favorable economic outlook, a reasonable increase in North American production (LMC Automotive predicts 2.9-percent growth) and the prospect of a modest incentive hike, it’s unlikely that new-vehicle transaction prices will fall this year,” NADA said.

“This will prevent direct downward pressure on used vehicle prices,” it added.

In the whitepaper, NADA also broke down the types of incentives spending while discussing the projected extent of lease subvention, strong credit quality among lessees, expectations for finance subvention and cash discounts, plus much more.

The complete white paper can be found here: 2014 Used Vehicle Price Forecast.

 

 

 

More Affordable Tesla May Mean More Changes

COLLEGE PARK, Md.  - 

To many, it would seem luxury electric car company Tesla Motors has been fighting an uphill battle against dealer organizations across the country that dissaprove of its direct-to-consumer sales model.

But the company is gaining ground, as it was announced this week it has reached a compromise with New York state, through which the company can continue selling its luxury vehicles directly to New Yorkers at its five current locations.

But with states like New Jersey — where the Motor Vehicle Commission approved a rule banning Tesla’s sales model — fighting to preserve the current dealership system, it is likely Tesla will continue to battle lawsuits for months to come.

That said, a game changer may be in the works in coming years.

Many in the industry have labled Tesla Motors as a small niche company that won’t pose much of a threat, even if its sales model is a bit controversial.

But reports in 2013 of Tesla’s plans to offer a more affordable model to arrive in late 2016 — Tesla  chief executive officer Elon Musk said in late 2013 the car which has been dubbed “Gen III” would cost roughly half of the starting $69,900 price tag of the flagship Model S — has many considering the larger implications of allowing direct-to-consumer sales.

The bottom line? A cheaper model potentially means a much larger market, perhaps encroaching on electric vehicle market share currently held by models such as the Nissan Leaf and Chevrolet Volt.

Brent Goldfarb, associate professor of management and entrepreneurship at the University of Maryland's Robert Smith School of Business and start-up company expert, says a lot is hanging in the balance.

Goldfard said the topic of whether is it a good idea for the automotive business to allow Tesla to sell directly to buyers might be a moot point.

“I don’t imagine the auto dealers will have a choice. It’s simply a matter of time,” he said.

What factors does “the inevitable” hang on?

Goldfarb said there are only two factors that might hold Tesla Motors back: “ (1) that Tesla is unable to successfully bring an affordable, high-quality, mass-market electric vehicle to market, and (2) no additional manufacturers (of non-electric vehicles) push to enter the market using a direct distribution model.”

Goldfarb gave the example of similar companies, Tata Motors Ltd. in India and Chery Automobiles in China, as examples of other up-and-coming auto manufacturers that could make a similar splash.

If, in fact, Tesla does succeed in bringing a more affordable option to consumers, the challenges will expand for dealers, says David Kirsch, also an associate professor of management and entrepreneurship at the University of Maryland's Robert H. Smith School of Business.

“Allowing Tesla to sell directly to consumers will not initially affect most dealers, only those selling competing luxury vehicles like Audi, BMW, Mercedes and Lexus,” said Kirsch, author of the revised dissertation The Electric Vehicle and the Burden of History, published by Rutgers University Press in 2000.

“For those dealerships, Tesla's challenge forces these incumbents to develop new ways of meeting and exceeding customer expectations,” he added.

Of course, a cheaper model will most likely largely widen Tesla's impact on the industry.

Dealers who are not quite as concerned about Tesla’s approach argue that the luxury automaker’s audience is so small currently that the company doesn’t pose much of a threat, but that could easily change.

“The answer depends upon whether Telsa is able to successfully bring an affordable, desirable EV to market. If not, then the threat may be minimal,” said Kirsch.

So far, the automaker has seen faster adoption in a few markets outside the U.S., in part due to environmental concerns.

“China is facing a near-catastrophic environmental crisis, and authorities there are pushing for the adoption of electric vehicles. Relative to other luxury brands (Porsche, Mercedes, etc.), Tesla is relatively affordable. Also, China has recently become the largest auto market in the world, so even a small slice of that market is likely to produce significant sales for a growing company,” Kirsch said.

He explained that Tesla is also popular in some of the smaller European vehicle markets like Norway and the Netherlands, “where consumers are concerned about the environment and where national governments do not have a domestic manufacturing base to protect.”

Though the company’s footprint in the U.S. remains small, many in the industry think the evolution of the Tesla lineup and the direct-to-consumer sales approach is a sign of future changes and integral shifts in the industry.

Historically, technological changes have frequently reshaped markets, Goldfarb shared, offering the following example.

“The current dealer-based distribution model is itself an outgrowth of the rise of mass production in the early decades of the 20th century. Manufacturers needed dealers to optimize product mix for local markets, hold inventory to smooth production, and provide a point of contact with emerging brands and companies that could not be present in every market,” Goldfarb said.

Has this model runs its course?

Kirsch says, “Not entirely.”

“Dealers still provide many of these same services to the manufacturers, but does a new entrant (Tesla, in this case) necessarily need a dealer network? Probably not,” he asserted.

Regardless of whether Tesla is successful in its fight to sell directly to consumers and bring an affordable vehicles to the market, it is apparent the car-buying environment is changing, with car-sharing networks, direct-to-consumers sales, and private seller numbers growing.

Do these factors have the potential to change the way automotive dealers operate in the U.S.?

Kirsch says, “Absolutely,” but states many of these changes has been in the works for a while.

“For instance, Internet-based advertising and lead generation has been around for over a decade. Multi-brand, mega-dealers have also changed the bargaining dynamics between dealers and manufacturers,” Goldfarb said.

He went on to suggest that dealers can and should consider responding to the Tesla challenge through a different route than filing more lawsuits. For more insight from analysts on ways the U.S. dealer network can respond to challenges stemming from Tesla's direct-to-consumer sales model, stay tuned to Auto Remarketing Today.

More information regarding the University of Maryland's Robert H. Smith School of Business can be found here.

Top Brands for Dealership Customer Experience

WABAN, Mass. - 

Based on findings from the Temkin Group — a customer experience research and consulting firm — the three car brands whose dealers offer the highest-rated customer experience are Toyota, Buick and Lexus, with Subaru not far behind.

These findings were just part of the 2014 Temkin Experience Ratings, an annual ranking of companies based on a consumer study for 10,000 participants covering 268 organizations across 19 industries, including the auto dealer business.

The study, which measures the quality of the customer experience, hones in on these three “dimensions”: functional (can you do what you want to do?), accessible (how easy is it to work with the company?), and emotional (how do you feel about the interactions?).

The three scores (functional, accessible and emotional) are averaged to calculate a company’s Temkin Experience Rating, the group explained.

So how did dealers of various brands shake out?

Toyota, Buick and Lexus dealers each earned average scores of 74 percent to lead the pack of auto dealer brands. This also placed the trio in a tie for 59th when looking at the scores of all 268 companies evaluated (auto dealer industry and otherwise).

Toyota has led the dealer rankings for two straight years, while this was the first time that Buick and Lexus have been evaluated. Closely following these three was Subaru at 73 percent. Hyundai was at 70 percent.

 “Toyota, Buick, and Lexus dealers are leading the industry-wide effort to become more customer-centric,” said Bruce Temkin, managing partner of Temkin Group.

Twelve of the remaining 15 auto dealer brand scores were between 61 percent and 68 scores, with three brands scoring between 50 percent and 57 percent.

Showing the most improvement were Hyundai (up 6 percentage points), BMW (up 5 points to 65 percent), Nissan (up 4 points to 63 percent), and Toyota (up 3 points).

In similar news, top annual deaelrship awards were shared with Auto Remarketing recently by Acura and Toyota, respectively.

Acura revealed its Dealership of Distinction honors for 2013 performances; that list can be found here.

Meanwhile, Toyota shared its President’s Award recipients. The complete list is here.