Sales Forecasts

Data analytics provider enhances reporting software to save dealers time & clicks

PLEASANTON, Calif. - 

Dashboard Dealership Enterprises has redesigned its business analytic reporting suite for increased functionality using input from dealer clients.

Executive Eye 3.0, the latest version of Dashboard’s flagship product, offers a variety of graphic display options designed to help dealers easily navigate the program.

New visual enhancements include updated colorful themes, more white space and increased organization.

"Reporting has always been clunky, time consuming; often it’s difficult for dealers to understand how numbers translate into actionable data," Dashboard Dealership Enterprises chief executive officer Josh Blick said in a news release. "Executive Eye 3.0 is a groundbreaking tool that completely changes the paradigm of how a business analytic reporting tool can be used. Instead of spending time compiling reports, managers instantly have actionable data at their fingertips."

In beta testing, Executive Eye 3.0 exhibited a 30 percent increase in dealership usage compared to an average usage of 2.0, according to Dashboard.

The suite’s direct messaging capabilities allow dealers to communicate directly with Dashboard's customer support and other users. The messaging tool’s reports, alerts and comments can all be shared without the need to compose emails outside of Executive Eye.

Additionally, Executive Eye’s Consolidated Doc report allows dealers to instantly combine documents from individual stores into a single report.

Dealers interested in performance comparison can also view key performance indicators from each of their stores side-by-side.

Executive Eye 3.0 is mobile-friendly across all platforms and devices. A mobile application download is not needed to access the software on a mobile device.

Consulting firm discusses ‘used-car time bomb’

DETROIT - 

The newest report from AlixPartners — whose client roster includes corporate boards and management, law firms, investment banks and other kinds of investors — cautioned the industry that a “used-car time bomb” is about to explode.

AlixPartners explained that it arrived at that dire assertion through a project that began two years ago through what the firm identified as the “CASE” trends that are “completely revolutionizing” the automotive industry — the connected, autonomous, shared and electric vehicles of the not-too-distant future.

AlixPartners released this analysis detailing how automakers, suppliers and other industry players need to evolve their organizations and their partnering approaches to successfully transition to a “new automotive ecosystem.” 

Using several examples, the firm detailed where companies, often relying on traditional auto-industry approaches, are falling behind and why they should consider revamping their operating models. 

The report projected a significant downturn in U.S. new-vehicle sales ahead, to 16.9 million light-vehicle units this year and to a cyclical trough of 15.2 million units in 2019 — partly driven by a “used-car time bomb” of 500,000 more off-lease vehicle-returns in 2017 versus 2016, on top of the 500,000 more units in 2016 versus 2015.

The reports noted these trends will likely be a “double-whammy” to new-vehicle sales, displacing turns to cheaper used vehicles while increasing lease payments on new vehicles as leases get written with anticipated higher residual rates and tighter credit standards.

While dealerships might be turn more used vehicles, AlixPartners also mentioned that as more off-lease vehicles fill the wholesale market, firm analysts are projecting that used-vehicle prices will soften at a rate double the 13-percent drop they believe already has happened since 2014, costing captive finance companies up to $5 billion. 

Beyond just the growth in off-lease volume, AlixPartners spent much effort on looking at how vehicle technology is going to impact which models might roll over the curb more quickly and which ones might need a spiff to get delivered.

On the connectivity front, the AlixPartners analysis pointed to the example of Tesla’s “high-spec” center-stack display, featuring over-the-air upgrades from the company and iPad-like features. Though this feature has been on the market since the 2012 model year, and has garnered strong reviews from consumers, AlixPartners noted that no other major automaker has moved to match the system.

On the autonomous-vehicle front, the AlixPartners analysis found there are now more than 50 major companies now working on autonomous vehicles or full autonomous-vehicle systems, as well as a plethora of smaller companies and start-ups. This “Wild-West” environment will likely result in a handful of big winners, according to the study, but on the other hand, also many disappointed investors. 

The report also mentioned that many of the newer high-tech entrants have completely different “DNAs” than traditional automotive companies, including being used to high returns on capital. Given the “white-hot” competition brewing, the analysis predicts that AV systems-costs could drop 78 percent by 2025. 

On the shared-mobility front, the analysis included a survey of a total of 2,000 U.S. adult consumers that showed just how fast things are changing in today’s automotive world.

The survey polled 1,000 consumers across 10 large markets where both car-sharing and ride-sharing are popular (the metro areas of Austin, Texas, Boston, Chicago, Los Angeles, Miami, New York, Portland, Ore., Seattle, San Francisco, Oakland, Calif., and Washington, D.C.) and, as a control group, 1,000 respondents across the entire U.S. This effort mirrored a consumer survey by AlixPartners in November 2013.

In this year’s survey, consumers in the 10 trend-setting markets said their awareness for virtually all major car-sharing brands (names such as Zipcar, Car2Go and Enterprise CarShare) has decreased, and 21 percent of respondents were unable to name any brands at all. 

By contrast, this year’s survey also asked users of ride-sharing (brands like Uber and Lyft) in those same 10 markets about their intended usage in the next 12 months versus their past usage, and 24 percent said their usage would be more than in the past, versus just 5 percent who said less — an 18-percentage-point difference.

Meanwhile, AlixPartners said just 17 percent of car-sharing users surveyed in those markets said they would employ car-sharing more in the coming 12 months than in the past — versus 16 percent who said they would use that mobility service less in the year ahead.

Moreover, among respondents in the 10 markets, the survey found that ride-sharing was five times more likely to be a top-three transportation mode than was car-sharing (11.6 percent versus 2.5 percent), and three times more likely than traditional taxis (11.6 percent versus 4.2 percent).

In addition, among millennials surveyed in the key markets, 9 percent said ride-sharing has allowed them to postpone or avoid getting a driver’s license — what AlixPartners contends is another indicator of today’s fast-changing times.

Another key finding of the survey, coupled with AlixPartners analysis, is that in the 10 key markets each vehicle used in car-sharing is likely replacing the need for 19 personal vehicles — a decrease from 32 vehicles based on the results from AlixPartners’ 2013 survey.

Meanwhile, according to the same analysis, one vehicle used in ride-sharing is likely displacing four personal vehicles. The report went on to note that both ride- and car-sharing vehicles are typically replacing vehicles driven less than 5,000 miles per year, not typical commuting vehicles.

On the electrification front, the AlixPartners study reveals that China is investing heavily to take a leadership role in electric vehicles. In an example of that, the report noted that Chinese automakers commanded 96 percent of the 2016 market in China for full electric vehicles (not including hybrids), more than double their share (43 percent) for all types of light vehicles. It also finds that of the 103 EVs to be launched globally by 2020, 49 of them will come from China-based automakers.

The report additionally predicts that China is targeting to have two-thirds of the world’s manufacturing capacity for lithium-ion batteries by 2021 (175 GWh of power, or the equivalent of five Tesla “giga-factories”).

Meanwhile, the report recapped that hybrid sales in the U.S. have slowed, from 3.2 percent of the market in 2013 to just 2.1 percent so far in 2017, while plug-in and battery-electrics sales, while increasing, still represent only 1.0 percent of the market. This, says the study, underscores the need for maximum flexibility in both organizations and partnerships to handle the expected, but bumpy, shift to the new automotive ecosystem that’s coming.

Finally, and also in a way on the partnership front, the AlixPartners study determined that private-equity firms have switched, in droves, from being buyers to sellers — most often to “strategics” (companies in the auto industry already), as private-equity-to-strategics deals skyrocketed from 6 percent of total auto-M&A transaction values in 2013 to 84 percent in 2016.

John Hoffecker, global vice chairman at AlixPartners and a 30-year automotive veteran, said, “There’s an all-new automotive ecosystem developing, and I fear that many players really aren’t prepared for it. The changes coming are the biggest since the internal-combustion engine pushed aside horses and buggies, yet what the exact changes will be are as unpredictable as trying to guess which app is going to be most popular on next year’s smartphones.

“Leading players will be those that both study hard and are fast on their feet,” Hoffecker continued.

Mark Wakefield, global co-head of the automotive and industrial practice at AlixPartners, added, ”With the rapid but uncertain developments in connectivity, autonomy, shared mobility and electrification, traditional approaches to partnering and running organizations could well be setting up the auto industry to be disrupted. 

“Fast and savvy organizations that build their own agile ecosystems and create smart partnerships, but without locking themselves into technologies that may become quickly outdated, will be best positioned to afford the needed ‘CASE’ investments of the future and to prosper from the coming industry changes rather than being rolled over by them,” Wakefield went on to say.

Used-car sales likely to reach 3.2 million in June

CARY, N.C. - 

Used-car sales this month could trend down a bit from May, but they should maintain the same annualized rate, according to Edmunds.

The company released its monthly industry sales projections on Wednesday, calling for approximately 3.2 million used-car sales in June. That’s down from 3.3 million in May.

However, the seasonally adjusted annualized sales rate is expected to remain at 38.6 million this month.

On the new-car side, Edmunds is calling for 1.48 million sales in June, which would be down 2.3 percent year-over-year and month-over-month as the market continues to slow.

“While six straight months of sales declines sounds troubling, June is sandwiched between two major holiday sales events, which makes it a bit of a gloomy month historically,” Edmunds executive director of industry analysis Jessica Caldwell said in a news release. “Car shoppers are savvy enough to know automakers push the deals on holiday weekends and are willing to hold off on buying until they know they’re getting a hot bargain.”

The new-car SAAR for June would be 16.6 million.

The company said it is holding its annual forecast of 17.2 million new-car sales for full-year 2017, buoyed by economic strength and “enticing deals” in the second half.

Though down 2 percent from the best-ever year in 2016, hitting this mark would mean 2017 would have the fourth-highest new-car sales total ever.

Over at Cox Automotive, Kelley Blue Book is calling for 17.1 million new-car sales this year.

“We are moving into a ‘post-peak’ period for the U.S. auto industry,” Jonathan Smoke, chief economist for KBB parent company Cox Automotive, said in a news release.

“Many of the tailwinds that took the market to record sales in 2015 and 2016 are slowly becoming the headwinds that will keep new vehicle sales in check through the end of the decade,” he said.

KBB also noted a strong economy as a being a plus for new-car sales, it cited tailwinds like affordability and the 3.6 million cars expected to come off lease this year — vehicles that could be a less expensive, pre-owned alternative to new.

But that's not to say the new-car market is in dire straits by any stretch.

“Overall, despite slowing new-vehicle sales, we think the automotive market is healthy,” Smoke said. “Sales of approximately 17.1 million will make 2017 among the best years the industry has ever recorded. And the mix is strong, with profitable SUVs and crossovers dominating the market.”

Strongest world growth expected since 2010 could help EU auto rebound

LONDON and SOUTHFIELD, Mich. - 

In what could be good news for the automotive industry, Fitch Ratings projected in its latest Global Economic Outlook (GEO) that the recovery in global growth is strengthening and is expected to pick up to 2.9 percent this year and peak at 3.1 percent in 2018, which would be the highest rate since 2010.

“Faster growth this year reflects a synchronized improvement across both advanced and emerging market economies,” Fitch chief economist Brian Coulton said.

“Macro policies and tightening labor markets are supporting demand growth in advanced countries, while the turnaround in China's housing market since 2015 and the recovery in commodity prices from early 2016 has fueled a rebound in emerging market demand,” Coulton continued.

The biggest positive forecast revision since Fitch’s GEO shared back in March is to the Eurozone. Here, stronger incoming data, improving external demand and greater confidence that European Central Bank qualitative easing is gaining traction on activity have resulted in an upward revision of 0.3pps to the 2017 Eurozone growth forecast, taking it to 2 percent.

The recent pick-up in world trade growth has also been striking, according to Fitch.

However, the outlook also mentioned this improving global picture implies an evolving monetary policy outlook.

Fitch pointed out that China has recently seen a tightening in credit conditions, which will start to have an impact on growth later this year and the Fed looks set to pursue a normalization course at a rate of three or four hikes per year through 2019. Low core inflation allows the European Central Bank to carry on with qualitative easing for the time being, but the reduction in deflation risks will see the program phased out by mid-2018.

“With the (U.S. Federal Reserve) now signaling that qualitative easing will start to be unwound later this year, these monetary policy adjustments could spark some volatility in global financial markets attuned to persistent monetary accommodation,” Coulton said.

Auto-specific analysis

As Fitch shared its robust projections, IHS Markit currently is expecting that the passenger car market in the European Union will grow by 1.7 percent year-over-year to almost 14.94 million units. Those expectations are coming off a performance by the EU that saw year-over-year growth come in at 7 percent in 2016.

IHS Markit analysts pointed out the passenger car market in the European Union rebounded during May, according to the latest data published by European Automobile Manufacturers' Association. Registrations during the month climbed by 7.6 percent year-over-year to 1,386,818 units. This figure has helped to increase the growth momentum as the year-to-date now stands at 6,719,209 units.

“A strong rate of growth has been stimulated by a robust economic performance in the Eurozone, with a real GDP increase of 0.5 percent quarter-over-quarter according to Eurostat figures with positive contributions from Germany, Spain, France, Italy, Netherlands, Finland and Portugal,” IHS Markit principal automotive analyst Ian Fletcher said.

“Domestic demand is likely to have been the driver of this improvement, with fixed investments leading the way. Labor markets are also continuing to improve; unemployment is down in the region, while political risks are continuing to diminish,” Fletcher continued.

“However, future growth could be hampered by consumers becoming more cautious as their purchasing power and real incomes are squeezed by increased inflation and limited wage growth,” he went on to say. “IHS Markit expects that real GDP growth will ease slightly to 0.4 percent quarter-over-quarter in the second quarter and remain there in the final two quarters of 2017, although recent survey evidence suggests that an upward revision to near-growth prospects is more likely than a downward revision.”

More on policy & near-term forecast

Turning back to Fitch’s projections, the firm’s report mentioned the changing impact of fiscal policy on growth in the advanced economies also remains an important factor behind the improved near-term outlook.

The report pointed out fiscal policy began to shift to a mild easing stance from 2016 in the U.S. and the Eurozone after several years of substantial fiscal tightening over 2011 to 2015. Fitch’s analysis of multipliers suggested this shift has had a significant impact on growth dynamics in the advanced economies and seems likely to provide a further boost to growth over the next couple of years.

Demand growth in the larger emerging market economies is recovering strongly in 2017, according to Fitch. Both Brazil and Russia have recently seen a return to positive real GDP growth rates and the latest data suggest consumption and investment is starting to pick up in Russia.

Following very large declines in aggregate demand in the aftermath of sharp falls in commodity prices in 2014, there is now room for demand to recover in large emerging market commodity producers.

“The two key downside risks identified last quarter — Eurozone fragmentation risk and aggressive U.S.-led protectionism — have not gone away but have certainly diminished somewhat in recent months,” Coulton said.

U.S. shoppers more willing to pay for vehicle technology

SOUTHFIELD, Mich. - 

Evidently vehicle shoppers in the U.S. will pay a much higher sum for advanced technology in their next new model than their counterparts in places such as Canada, Germany, the United Kingdom and China.

And IHS Markit suggested that automakers adjust their strategies accordingly.

The firm released a new global survey on consumer preferences for automotive technology on Monday. The project included more than 5,000 vehicle owners intending to purchase a new vehicle within the next 36 months who were surveyed in the 2017 Automotive Connected Services and Apps Consumer Analysis. The survey represented five key automotive markets — the U.S., Canada, China, Germany and the United Kingdom. This is the fifth annual survey of its kind from IHS Markit and identified key attributes for consumers, providing insight into preferences, desires and future interest as new-vehicle intenders return to market.

However, their willingness to pay for technology demonstrates a wide variety of viewpoints from consumers across these leading global markets

“This year’s survey includes consumer input on 31 technologies, from a variety of viewpoints,” said Colin Bird, automotive technology analyst for IHS Markit and co-author of the report. “Suppliers and automakers alike will be able to use these findings to help drive future business decisions and technology investments, while determining future product offerings.”

Here are some of the main survey findings. Any costs mentioned are in U.S. currency.

Creature comforts trump other technologies when cost is involved

Interestingly, the survey showed creature comforts topped consumers’ interests at the top of the list of technologies those surveyed would be willing to pay for. Consumers in four regions reported the highest propensity to invest in sunroof-moonroof technology in their new vehicle, with consumers in Germany willing to spend an additional $642 to have their next new vehicle equipped with one. Consumers surveyed in China agreed to pay $440 for similar technology.

Alternatively, consumers in the U.S. were most likely to pay for a rear-seat entertainment system, indicating a threshold investment of an estimated $640. Rear-seat entertainment ranked second for U.K. and China audiences, with a price point of $388, but did not resonate as a top choice by consumers in any other region included in the survey.

According to IHS Markit forecasts, significant volumes of new vehicles will be equipped with telematics by 2022. The projected volume figures are as follows:

—87 percent in the U.S.
—91 percent in Germany
—92 percent in the U.K.
—89 percent in Canada
—54 percent in China

The forecast also says more than half of the global fleet of vehicles in operation will be connected.

In comparison, 32 percent of all respondents surveyed agreed that telematics would be a feature they would be willing to pay for in their next new vehicle, and in-car wi-fi was noted by 29 percent. However, when asked about cost, both of these technologies were mentioned with a much lower price point by consumers willing to pay for them and different price points that varied by region.

Roadside assistance, crash notification and navigation systems are top of mind for consumers

The firm reported more than half of all respondents indicated they already have at least one vehicle that featured an infotainment or navigation system that offered features such as roadside assistance, stolen vehicle assistance, crash notification or turn-by-turn navigation. These features garnered the most interest for future vehicles as well, across all geographies. Thirty-two percent of respondents globally indicated roadside assistance as the most important telematics feature in a new vehicle, with stolen vehicle assistance important to 28 percent of respondents.

Automatic crash notification and turn-by-turn navigation were both preferred by one quarter of respondents.

In addition, the inclusion of real-time traffic information was overwhelmingly preferred by 51 percent of total respondents, with dynamic routing and a desire for maps to be updated wirelessly based on current conditions preferred by 41 percent for routing and 36 percent for wireless updates, respectively.

For consumers surveyed in China, however, remote vehicle control from a smartphone was the most popular feature, with 39 percent of respondents in the region indicating that feature was most important to them. Respondents in China represented a slightly younger demographic than in other countries, with the vast majority living in urban centers where technology was more widely accepted.

Integrated apps have opportunity in new vehicles

As in-vehicle technology continues its growth trajectory, so too does consumer desire to integrate their mobile apps into their vehicle, according to IHS Markit.

Among those surveyed, nearly all consumers who had familiarity with replicating their smartphone system onto an in-vehicle display indicated they were interested or somewhat interested in having this feature in their next new vehicle.

In addition, nearly half of all respondents indicated navigation apps as the leading use of smartphone apps in the vehicle. Weather apps followed with 40 percent of respondents using them in the vehicle, and 36 percent of respondents use music apps while in their vehicle. This creates significant opportunity for screen projection solutions, such as Apple CarPlay and Android Auto.

“Consumers expect a lot from their next vehicle,” Bird said. “Their expectations are constantly evolving as well, as consumers expect development and implementation of these technologies in vehicles to be introduced as quickly as consumer electronics such as smartphones and tablets.

“It’s up to OEMs and suppliers to determine how to best address these challenges and ramp up business plans accordingly,” Bird went on to say.

The complete report can be acquired here.

Franchised dealers eye opportunity in off-lease

CARY, N.C. - 

Off-lease vehicle volume is rising, used-vehicle prices are falling and Brian Benstock, vice-president of Paragon Honda and Paragon Acura, counts it all opportunity.

He’s looking forward to selling or leasing new vehicles to consumers when their leases expire and plans to buy a lot of those lower-mileage, off-lease vehicles for his thriving certified used-vehicle operations.

And though the industry expects a glut of off-lease vehicles to put downward pressure on new- and used-vehicle prices in the coming months, Benstock said it’s just “normal” market “ups and downs.” Honda and Acura residuals are holding up well, he adds.

“I’m excited about a lot of cars coming off-lease. Those cars need to be replaced, so there’s an opportunity to sell more new cars,” said Benstock who expects his Woodside, N.Y., dealerships to this year exceed the 3,012 certified used Hondas and 1,048 certified used Acuras they sold in 2016.

“And if the value drops on used cars, we’re going to pay less for them and that will create a value for the potential buyer. I’m bullish on the fact there are more off-lease cars.”

Price pressure

Edmunds estimates that 3.5 million off-lease vehicles will return to the market this year and the number will grow to 3.9 million in 2018 and to 4.2 million in 2019. That’s up from 2.5 million in 2015 and 3.2 million in 2016. That added volume is exerting downward pressure on prices of late-model, used cars and trucks.

For example, from the first quarter of 2010 to the first quarter of 2017, the average value of 3-year-old used vehicles increased 8.7 percent while the original MSRP of 3-year-old vehicles grew 14.7 percent in the same time period, according to Edmunds.

Lower used-vehicle prices can make it harder and more expensive for consumers who owe more on their trade-in than it’s worth to get auto loans.

Ivan Drury, senior analyst at Edmunds, said “42, 43 percent” of all new-car buyers have trade-ins and of that number, at least 25 percent owe an average of $5,000 more on their current vehicles than they are worth.

He said the overall percentage of buyers saddled with negative equity “is not overwhelming but what is so scary is that the (dollar) amount is so high.”

So far, interest rates are not a problem for dealers seeking financing for their customers because the increases have been small and most of the credit tightening is at the subprime level.

But Doug Wolford, vehicle exchange and lease manager at Oxmoor Toyota in Louisville, Ky., keeps his eye on interest rates and overall economic conditions such as housing and healthcare costs, anyway.

“It’s been 5 or 6 years since we’ve seen rates we’re going to be seeing in the next 12 to 18 to 24 months,” Wolford said. “I get credit apps on 95 percent of my customers and I listen to them. Student loan debt is a killer.”

CPO “maturing”

For years, off-lease vehicles have been the bread-and-butter of manufacturer-backed certified used-vehicles programs. But those sales are “maturing” and “not growing as fast” as they did in previous years, cautions Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.

Incentives are lowering new-vehicle transaction prices so close to the prices of certified used vehicles that many consumers are opting for new instead of used, Goyal said.

“We are in a market that has plateaued and declining in many respects,” Goyal said. “Certified will tick up a little bit this year but it will be under the 5 percent.”

Even so, used-vehicle prices are high and Benstock believes CPO sales have room to grow.

“There is strong demand for used cars,” he said. “There is a significant portion of the dealer body not participating in certified programs, and remember there is several times the number of used cars are sold in the nation as new cars. Until we get that certified number closer to one-to-one with new, I think we still have a lot of room for growth.”

Todd Caputo, owner of Sun Chevrolet in Chittenango, N.Y., is already seeing his new-vehicle sales slowing down.

But he anticipates stocking more and lower-priced off-lease vehicles at his Chevy store and his two used-car dealerships.

To aid the effort, he’s building a new dealership in Cicero, N.Y., to replace his existing Sun Auto Warehouse used-car store. The $6 million, 43,000-square-foot facility will be twice the size of the current store and is to open in November.

His other used-car location is in Cortland, N.Y.

Caputo said his three dealerships retail about 5,000 used vehicles a year.

He added: “Savvy franchise dealers will be able to capitalize on off-lease vehicles and be more profitable with used cars.”

3 report findings show ride sharing might not squelch car buying altogether

BOSTON - 

The speculation that dealership showrooms and finance company underwriting offices would become desolate because consumers simply would abandon vehicle purchasing for alternative transportation options such as Uber and Lyft appears to be a little bit premature.

Experts from Strategy Analytics acknowledged that OEMs are rightfully concerned about the impact the increased usage of these options will have on consumers' interest in purchasing future vehicles. However, a new report from the automotive connected mobility (ACM) service at Strategy Analytics released on Monday has found that ridesharing usage may not negatively impact the future vehicle purchase intention of current vehicle owners.

Key report findings from the report, titled Impact of Ride Sharing Frequency on Vehicle Purchase Intention, include:

—Ridesharing usage actually increased the likelihood that current vehicle owners would purchase another vehicle within the next five years. This was true across the U.S., Europe and China.

—Frequent ridesharing users that also own their own vehicle had greater transportation needs than those that don’t. Ridesharing fills a niche that is convenient but will not supplant their personal vehicle.

—Millennials who had no children and used ridesharing at least once a week were less likely to purchase another vehicle within the next five years than all respondents that had children.

“The question of how emerging transportation options like ridesharing and car-sharing will impact vehicle sales is a very complex one to answer. Issues of cost, convenience, usability, privacy, type of journey and length of journey all impact transportation choices,” said Chris Schreiner, the report’s author and director of syndicated research.

“Frequent ridesharing users do not seem likely to delay their next vehicle purchase, but it is still possible that they might choose a less expensive or lower class vehicle. Alternatively, they may choose to downsize their fleet from three vehicles to two,” Schreiner continued.

Vice president Kevin Nolan added, “However, it is prudent to note that external factors such as ridesharing competition reducing end-user costs, expanded availability and autonomous taxis, all have the ability to negatively affect consumers' future purchase decisions."

To purchase the entire report, go to this website.

Jaguar Land Rover invests in Lyft

While the Strategy Analytics report shared its points on Monday, automakers still appear to be staying connected with ride-sharing firms.

Jaguar Land Rover’s InMotion Ventures on Monday announced a $25 million investment in Lyft; a move the company indicated will support Lyft’s expansion and technology plans.

The OEM added that the funds also will provide the opportunity to develop and test its mobility services, including autonomous vehicles, and to supply Lyft drivers with a fleet of Jaguar and Land Rover vehicles.

InMotion managing director Sebastian Peck said, “We are excited to collaborate with a leading platform like Lyft not only on developing premium mobility solutions but also devising innovative solutions to the transport problems Jaguar Land Rover’s customers face.

“Personal mobility and smart transportation is evolving and this new collaborative venture will provide a real-world platform helping us develop our connected and autonomous services,” Peck continued.

The Lyft investment was included as part of the company’s most recent round of fundraising, which closed in April.

“We’re excited to join forces with Jaguar Land Rover and InMotion,” Lyft president and co-founder John Zimmer said. “Lyft envisions a future where shared mobility will transform cities and improve people’s lives. This partnership will help us achieve that ambitious goal.”

InMotion’s latest investment follows its recent seed investment in SPLT, the Detroit-based digital carpool business, which works with Lyft to provide non-emergency medical transport.

Hanno Kirner, executive director of corporate and strategy at Jaguar Land Rover added, “This is a strategic investment for both parties as we focus on innovating new mobility solutions for our customers. Collaborating with an expanding technology business like Lyft is going to help us both accelerate our ambitions.”

This isn’t the first time Lyft landed investment funds from an automaker. Back in January of last year, General Motors pushed $500 million into Lyft as part of a long-term strategic alliance to create an integrated network of on-demand autonomous vehicles in the U.S.

In addition, GM now holds a seat on Lyft’s board of directors thanks to the investment.

Carvana sets new revenue record with 118% spike in Q1

PHOENIX - 

Online used-vehicle retailer Carvana highlighted that its first-quarter revenue soared to a new record, increasing by 118 percent year-over-year.

Unfortunately, the record revenue figure of $159 million wasn’t enough to overcome the company’s expenses that resulted in Carvana sustaining a net loss of $38.4 million, representing an increase of 122 percent.

Still, with improvements in the number of units retailed and gross profit per unit, Carvana leadership remains upbeat about its future as a publicly traded company that caters to online-savvy vehicle purchasers.

“We are excited to announce record revenue in our first earnings report as a newly public company. Our strong performance this quarter reflects a significant increase in retail units, as well as expansion into new markets. During the quarter we made important enhancements to the customer experience through new product development, resulting in ongoing optimization from website through vehicle delivery,” Carvana founder and chief executive officer Ernie Garcia said when the company released its financial report late on Tuesday.

“We continue to see increased consumer adoption of online car buying across our markets, charting a clear path to consistent growth within the $710 billion U.S. used auto market. Carvana’s unique business model includes proprietary technology and assets, like the vending machines, that deliver customer experiences that position us to execute against our aggressive growth plans,” Garcia continued.

The company reported that it retailed 8,334 vehicles during the first quarter, an increase of 120 percent year-over-year. Carvana’s total gross profit per unit was $1,169, an increase of $123 per unit.

And the company’s total gross profit for the quarter came in at $9.7 million, a spike of 146 percent. Still, Carvana’s net losses have gone from $17.3 million in the year-ago quarter to $35.7 million in the closing quarter of last year to above $38 million in Q1.

Looking ahead, Carvana shared expectations for its second quarter; forecasted metrics that included:

• Retail unit sales of 10,000 to 10,500

• Total revenue of $193 million to $203 million

• Total gross profit per unit of $1,375 to $1,425

And the company went on to give predictions of what it might generate for the full year, including:

• Retail unit sales of 44,000 to 46,000, an increase from 18,761 in 2016

• Revenue of $850 million to $910 million, an increase from $365 million in 2016

• Total gross profit per unit of $1,475 to $1,575, an increase from $1,023 in 2016

• 16 to 18 new market openings, bringing the company’s end of year total to 37 to 39

And on Wednesday, Carvana announced the company added two more markets in Georgia, bringing aboard Augusta and Macon.

Along with two new additions in the Peach State, Carvana operates in 29 markets:

—Atlanta
—Austin, Texas
—Birmingham, Ala.
—Charlotte, N.C.
—Chicago
—Cincinnati
—Cleveland
—Columbia, S.C.
—Columbus, Ohio
—Dallas
—Greenville, S.C.
—Hampton Roads, Va.
—Houston
—Indianapolis
—Jacksonville, Fla.
—Memphis, Tenn.
—Miami
—Nashville, Tenn.
—Orlando, Fla.
—Philadelphia
—Pittsburgh
—Raleigh, N.C.
—Richmond
—San Antonio
—St. Louis
—Tampa, Fla.
—Washington, D.C.

Editor’s note: Watch for an upcoming report from Auto Remarketing featuring more comments from Carvana leadership about its Q1 performance and future expectations.

Used-car sales to dip modestly

SANTA MONICA, Calif.  - 

Used-vehicle sales across the industry may move down sequentially this month, but the seasonally adjusted annualized rate should maintain, according to a forecast released Thursday by Edmunds. 

The company is calling for 3.3 million used-car sales this month, following April sales of 3.4 million used units and 10.2 million in the first quarter.

Meanwhile, ALG is forecasting 3.23 million used-car sales for May, which would be a 5.4-percent decline from a year ago. 

Edmunds is looking for May’s used-car SAAR to reach 38.3 million used sales, which is consistent with April.

According to Edmunds’ Used-Vehicle Market Report released earlier this month, first-quarter used-car sales were off 1.3 percent year-over-year.

However, it was still ahead of the 9.8 million used vehicles sold in Q1 of 2015, the 9.6 million in Q1 2014 and the 9.8 million in Q1 2013.  

Franchised dealers sold 2.9 million used units in Q1, down 0.3 percent but ahead of the first quarter numbers in each of the four other years included in the Edmunds data set (2012-2015). 

 

7% compound annual growth likely in global used-car market

CARY, N.C. - 

You can expect the international used-car market to show some nice growth over the next handful of years, according to two reports released in the past week.

Technavio, a global tech research and advisory firm, forecasts a 128.42 million-unit global used-car market by 2021. That would represent a compound annual growth rate of more than 7 percent.

Meanwhile, Research and Markets is calling for 7.07 percent compound annual growth in the international used-car business for the 2017-2021 period.

While the Americas has had the strongest share of the global used-car market (47.76 percent in 2016), according to Technavio, the area of the world that will see the most growth is the Asia-Pacific Region.

And it could make a run for the title.

“APAC is the fastest-growing segment of the used car market, expected to showcase a CAGR of over 20 percent through 2021,” Technavio analyst Praveen Kumar said in a news release.

“The region is expected to increase its market shares swiftly and is likely to compete with the Americas by the end of the forecast period,” Kumar added.

Technavio says the used-car market in these countries is being helped by the growth in e-commerce along with easier emission norms.

“The online sales contribute to the majority of the organized used car sales in APAC, with traditional brick-and-mortar stores moving to online platforms for generating leads and increasing customer base,” Technavio said in the release.

As far as the Americas, late-model vehicle demand is pushing prices of these cars higher and helping to drive more revenue dollars in this market, according to Technavio. The company also credits e-commerce gains and improving employment prospects as influential.

Plus, ownership cycles are becoming shorter.

The firm said there was 43.58 million used-car sales in the Americas last year.

“The Americas occupied a majority 48 percent of the global used car market in 2016, and is expected to continue its dominance through the forecast period, driven by decreasing ownership cycles,” Kumar said.

Moving over to Europe, Middle East and Africa (EMEA), Technavio is forecasting a 2021 used-car market of 36.03 million units.  Its share of the global market in 2016 was just under 34 percent.

Calling the auto industry in this region “quite mature,” the firm points to the aging population and higher fuel costs as key engines of used-car growth.

“Regions such as Russia lack stringent vehicular emissions regulations, which will positively impact the market,” Technavio said. “Compact and midsize cars are the most preferred vehicles due to their wide availability and decreased prices.”

Pre-owned quality perception

While also pointing to the value proposition of pre-owned cars as a key factor in the segment’s growth, Research and Markets also credits online used-car dealers and more automakers getting into the used-car space.

More specifically, Research and Markets suggest that consumers are viewing the quality of used cars more favorably because of those two factors.

“The majority of the purchase decision regarding used cars depends on the customer's conviction about the quality of the car available. Customers purchase used cars due to the affordability,” the company said. “The quality of the used vehicle is a key decision-making factor as the details regarding the ownership of the vehicle are vague and damages after the vehicle purchase are not covered by the warranty.”

 

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