Black Book’s latest wholesale price data and anecdotes from the lanes offered vivid details about what’s happening when clean trucks and SUVs roll over the block.
This week’s Black Book Market Insights report also indicated overall values are holding up well as the industry approaches the spring selling season.
“Lower mileage trucks and SUVs continue to be in demand. We are seeing consignors holding out for more money on their units to drive up prices," said Anil Goyal, senior vice president of automotive valuation and analytics at Black Book.
Black Book’s volume-weighted data showed overall car segment values decreased by 0.58 percent last week, better than the average weekly decrease of 0.69 percent in values over the previous four weeks.
Editors determined the midsize car segment performed the best, decreasing the least in value; just $10 or 0.13 percent. Meanwhile on the opposite end of the spectrum, they spotted sizeable declines for luxury cars ($163 or 0.93 percent), prestige luxury cars ($172 or 0.54 percent) and premium sporty cars ($247 or 0.63 percent).
Turning next to volume-weighted truck data, Black Book reported that overall truck segment values — including pickups, SUVs, and vans — decreased by 0.46 percent last week, slightly better than the average weekly decrease of 0.52 percent in values noticed during the previous four weeks.
Editors found that compact van segment performed the worst, decreasing the most in value among all the truck segments at $152 or 1.89 percent.
As Goyal references, the talk in the lanes is about how dealers are craning their necks at the sale if a gently used truck or SUV is being consigned.
Beginning in Massachusetts, Black Book’s observer said, “Overall the money was pretty good. Trucks, crossovers, and full-size SUVs all sold well.”
Over in Pennsylvania, the grip of winter is leaving a mark as the Black Book lane watcher shared, “New-car sales are still slow with the bad weather being a factor. Improving weather and a robust tax season will be welcome.”
In another cold-weather location — Michigan — sale activity seemed to be much warmer than the temperature outside as Black Book’s representative stated, “Michigan dealers are stocking up on inventory but out of state buyers are making a lot of the on-line purchases due to the high demand in their market.”
Sliding South to the Sunshine State, Black Book’s report out of Florida indicated, “Buyers at the auction are purchasing only what they need. They are mainly looking for trucks and SUVs with good miles."
Finally, like the price of fuel, the higher costs when the hammer fell in California took more out of dealers’ pockets and floor plan as Black Book noted, “Not enough quality vehicles available to meet the demand, so prices remain high.”
Undoubtedly, Julio Jones likely would rather be preparing to play in the Super Bowl for the second consecutive year as a member of the Atlanta Falcons.
But since his team lost in the NFL playoffs to the Philadelphia Eagles, which did advance to Super Bowl LII this coming Sunday in Minneapolis, Jones will instead be in the town where he enjoyed great college success for the grand opening of franchised dealerships bearing his name.
On Tuesday, Jones will be in Tuscaloosa, Ala., where he played football for the University of Alabama earning a national championship and All-American honors for the opening of Julio Jones Kia and Julio Jones Mazda. The dealerships are located at 4301 Greensboro Ave. in Tuscaloosa.
Jones has partnered with a team of professionals to oversee the dealerships while he continues his football career. These dealerships will be managed by the Carriage Automotive Group of Gainesville, Ga.
Jones isn’t the only individual with ties to the Alabama football program who dabbles in the franchised dealership business. In fact, Alabama football coach Nick Saban owns a couple of luxury brand stores in Birmingham, Ala.
In fact, success in football and moving metal prompted the National Automobile Dealers Association to make Saban one of the keynote speakers at this year’s convention.
Digital Air Strike’s Mystery Shop Study released Thursday found that more often than not dealers could be losing leads because of the poor and slow responses inquiring shoppers receive online.
When it comes to responding to internet shoppers, more than 18 percent of the stores never responded to shoppers, only 16 percent responded within 15 minutes and the overall average is more than 24 hours, according to the study.
Digital Air Strike said Internet shoppers who receive a response within 10 minutes are three times more likely to visit a dealership.
The average amount of leads submitted when a dealership is closed is at 40 percent, and dealers can be missing out on customers doing research during their off-time at odd hours.
Furthermore, the study also took a look at how brands respond to online shoppers compared to their competition.
Digital Air Strike contacted dealers with a specific vehicle request including questions that required specific answers.
The brands whose dealers most often answered the questions with the specific vehicle information within 15 minutes, include: Fiat Chrysler, Toyota, Mercedes, Ford, BMW, General Motors and Honda, respectively.
- Fiat Chrysler: 34%
- Toyota: 20%
- Mercedes: 18%
- Ford: 17%
- BMW: 16%
- General Motors: 15%
- Honda: 13%
Additionally, the Mystery Shop study also examined what is available for customers when they visit a dealership.
The study found that only 25 percent of dealerships provide pre-owned vehicle options, though 42 percent of customers who inquire about a new vehicle end up buying used, according to Digital Air Strike.
The company suggests that 85 percent of dealerships should consider adding pre-owned vehicles to their inventory.
The Mystery Shop study was conducted with more than 1,500 U.S. automotive dealerships that received leads submitted over four months via dealers’ websites and through Facebook’s Messenger app.
Now franchised dealers have another way to leverage the J.D. Power brand recognition; this time in the finance office.
On Tuesday, J.D. Power launched what the company dubbed the J.D. Power Automotive Protection Products for new-vehicle buyers. These F&I products are available now at an expanding network of franchised dealerships across the country.
“The finance and insurance market is fragmented and is often perceived negatively by consumers,” said Chris Sutton, vice president of U.S. automotive retail practice for J.D. Power.
“J.D. Power has an obligation to stand up for the consumer in everything that we do,” Sutton continued. “These products carry our name because the terms and conditions have been adjusted, as well as the selling process. Customer satisfaction, both immediate and long term, is the goal.
“The confidence inspired by our brand is something we believe will help lead new-car dealers to more sales of these important products and more satisfaction with the dealer-customer relationship in the long term. This will result in a win-win for consumers buying new cars and for dealerships selling these products,” Sutton added.
J.D. Power Automotive Protection Products include extended service warranties, tire protection, surface protection, GAP, key replacement, lifetime warranty, dent and ding, maintenance, high tech coverage and windshield protection as an add-on.
J.D. Power emphasized that it will provide participating dealers with rigorous training programs and business management support through a proprietary CARE Selling process designed with sales agency partner Bill Holcomb to drive sales during the final steps of purchase while promoting customer satisfaction and brand loyalty.
“CARE Selling has been developed to address evolving customer needs and expectations,” Holcomb said. “Our process, coupled with customized products, has documented success.”
Consumers also will be surveyed after each claims process to ensure an exceptional customer experience commensurate with the J.D. Power brand name.
To learn more about J.D. Power Automotive Protection Products, visit www.jdpprotect.com or call (850) 376-2482.
Looks like dealers in Italy are struggling to gain the confidence of their female customers, just like some dealers in the United States.
And the potential remedies could help stores on both continents.
According to a study conducted by CDK Global in North America, 43 percent of women in Italy do not trust dealerships.
The research carried out by CDK Global revealed that many women feel uncomfortable when they are looking for a vehicle to buy, precisely because they are women. Analysts at CDK Global scrubbed 64,000 reviews, finding that 43 percent of women do not trust the automotive industry and often describe their buying experience at dealerships in a completely different way than men.
The study found that the reviews and the language used by the customers contain valuable information to understand what is appreciated or not in their experience within the dealerships. The words “stressed,” “confused,” “disregarded,” and “intimidated” were among the top ten most used by women, and many of them, especially in sales and service reviews, said they felt “insecure” or “stupid.”
“It is already known that women are generally not comfortable at dealerships, but research highlights the real extent of the problem,” said Renato Dagostino, general manager of CDK Global Italia.
“In fact, women are increasingly influencing the purchase decisions of the car, which is why it is very important for dealers to make sure they offer women the right shopping experience,” Dagostino continued.
The reviews were divided by department (sales and service) and then further distinguished on the basis of the final judgment. The words most widely used by men and women indistinctly highlight that the most felt need in general is to receive a “fair” treatment from the dealership staff, who is “available” and able to make the customer “happy” at the end of the experience.
However, the results showed significant differences regarding the elements that influence the experience of men and women.
Men, in the reviews, focus much more on the product, while women focus in particular on the interaction with the dealership staff, which highlights the importance of rethinking the “customer experience” reserved for female customers.
For women, “understanding” was the most used in positive sales reviews, often along with other adjectives such as “kind” and “considerate.”
In both sales and service, women have noticed that the “smile” of staff (even those with whom they did not interact directly) contributed to creating a positive experience.
The experts of CDK Global were based on the evidence that emerged from this analysis to suggest the following advice to dealers, aimed at improving the experience of women in dealerships:
—Keep eye contact and smile: Help build a positive climate of trust and a lasting relationship.
—Find out what is important in a vehicle they are looking for: Positive reviews underline the ability to listen and the willingness to understand their specific needs.
—Give clear information: Explaining the various issues in a comprehensive way can eliminate any concerns or doubts of the customer, putting her at ease.
—Giving continuous and constant updates: Many positive reviews include the word “continuously” in relation to communications and interactions with the dealership.
—Offer a welcoming environment at the dealership because the details are important: Provide amenities such as clean bathrooms, WiFi in the waiting area, a children’s area, free drinks and a variety of reading materials.
—Create targeted advertising campaigns: Differentiate messages for women.
Researchers at CDK Global have found that many dealers are already on the right track and that this often positively surprises women who go to the dealership. The results show that dealers can seize the opportunity to stand out as companies that are particularly attentive and sensitive to female customers.
For more information on CDK Global in Italy, visit www.cdkglobal.it.
TagRail announced the general availability of its digital retail platform on Thursday.
The dealer-customizable and brandable online car-buying tool can help dealerships attract, engage and close more online shoppers via a near-total in-home shopping/buying experience, the company said.
“Our goal is to have the consumer complete about 90-95-percent of the transaction at home online and to have a frictionless delivery experience when he or she arrives at the dealership,” TagRail vice president of sales David Luce said in a news release.
In addition to pushing leads and order-pending opportunities to dealership’s CRM and finance platforms, the digital shopping solution can capture user activity to point dealerships to opportunities for improvement and analysis, according to TagRail.
Features that the new digital retail platform provides includes trade-in appraisal which uses guides from Black Book, Kelley Blue Book and NADA, along with accessories that offer dynamic and colorful product options.
“TagRail’s new Digital Retail Platform provides users penny-perfect payments by running a soft pull and providing users accurate VIN-specific warranty and aftermarket pricing, and accurate and current rebate information in an online platform providing great communications with the consumer and full disclosure. With the online in-store need the final trade appraisal, the goal is to deliver the vehicle in less than one hour,” said Luce.
Additionally, according to TagRail, dealers can easily customize the tool’s sequence of activities based on user behavior analysis or dealer preference.
Larry H. Miller Dealerships announced the opening of its Mercedes-Benz of Draper dealership on Thursday.
The dealership was formerly named Mercedes-Benz of Lindon and recently relocated to a newly built 45,069-square-foot building on 5.5 acres of land in Draper, Utah.
Mercedes-Benz of Draper includes a 1,100-square-foot AMG Performance Center, with specially-trained AMG sales and service personnel, according to LHM.
“We’re thrilled for our customers to experience our new state-of-the-art dealership. From the beautiful design of the building, to the customer lounge, large private offices for customers to complete their vehicle purchase, and additional service bays, we look forward to continuing to deliver the same outstanding experience to which our customers have become accustomed,” Mercedes-Benz of Draper general manager Ray Gunn said in a news release.
An AutoHaus2-designed Mercedes-Benz showroom features automotive-grade finished steel columns, exposed steel structure, a full-height window wall, silver metal roof canopy and stainless steel accents.
Additionally, a fully-enclosed service drive has 22 bays and the showroom houses a customer lounge that includes a children’s area, refreshments and Wi-Fi, according to LHM.
The dealership is located at 11548 South Lone Peak Parkway.
The ramp-up of standalone used-car stores from the likes of Sonic Automotive, AutoNation and Penske Automotive Group is certainly one of the key pre-owned strategy moves leading the retail auto market right now.
But it’s not just the big kids on the block.
Todd Caputo and his Sun Auto Group — a small collection of one franchised dealership and two pre-owned stores — has been in the used-car standalone store game since the 2000s.
Caputo’s father, Joe Caputo, opened Sun Chevrolet of Chittenango, N.Y., in 1979, having previously been a used-car dealer in Syracuse, N.Y.
Todd Caputo, who is now 46 and the dealer principal and president of the group, grew up working in the new-car dealership and continued to do so through college.
In 2004, he opened the first standalone used-car store, which had been a Lincoln-Mercury store in Cicero, N.Y., that closed. Caputo purchased the building and turned it into a pre-owned vehicle superstore.
In 2009, Caputo opened another used-car superstore, this time in Cortland, N.Y., after purchasing a building that had been a Ford location.
Caputo, who put together his own branding as the “Used Car King” in the local market, realized an opportunity in standalone pre-owned stores early in the game.
“I really saw, even back then, that I thought it was a good opportunity for me to kind of have a cluster in this market, where I could cluster a new-car store and kind of piggyback off the Sun name, and be able to use the resources from my new-car store to sell used cars,” he said.
These days, the three locations — Sun Chevrolet, Sun Auto Warehouse (located in Cicero) and the Sun Auto Warehouse of Cortland — combine to retail 4,800 to 5,000 used cars each year, Caputo said. They sell about 800 to 1,000 new cars in total.
New facility
And in recent news, the group constructed a new facility that replaces the building at the Cicero location, which was the first standalone store it opened.
“I was able to acquire the land around me at my Cicero location. When I first bought the property, it was about five acres. And about five years ago, I was able to purchase another 48 acres around the property,” Caputo said. “So, that allowed me to build a larger building, which I desperately needed to do.
“Because that dealership, the Lincoln-Mercury store that I bought, used to retail like 40, 50 cars a month. And we were selling 200, 250 used cars a month out of that place. We just outgrew it,” he said.
What’s more, the group’s centralized business development center was there, so “we just didn’t have the room,” Caputo said.
Construction on the new facility, which can fit 20 used cars in the showroom, began in March of last year, and the group held a soft opening in November. A larger grand opening is on tap this winter.
“Everything that the manufacturer has asked a lot of the new-car facilities to do, I did; from a child’s playroom to a convenient waiting area with a fireplace. I built a very large service drive, a service department,” Caputo said of the new facility for the standalone pre-owned store. “There’s an indoor delivery area where customers can take delivery of their cars inside; especially this time of year, it really matters a lot. So all of the deliveries are done indoors.”
The design, Caputo says, gives the store a bit of “personality.” And, he said, the goal is to provide an experience at the used-car store that is just like one you would receive at the new-car store.
He noted that “we wanted to give them the experience of a new-car experience while they’re buying a used car, regardless of what they pay.”
The look of the store, he said, is similar to that of a luxury car brand store: “That’s the feel that you get when you walk in, and that’s the way we try and treat people.”
As for what’s in store for this Cicero location, Caputo has big plans.
“We’re expecting to sell 3,000 cars out of here this year, and I truly believe we’re going to do it,” he said.
And they have already begun a similar remodel to the Cortland store, which is scheduled to finish this spring.
Advantages to standalone pre-owned stores
One plus to having standalone pre-owned car stores, Caputo said, is that, “I can brand myself and not necessarily worry about the manufacturer controlling how I brand myself. I can build the building the way I want to build it. I don’t have to worry about the manufacturer dictating to me what my processes need to be … I don’t have anybody to answer to. When you have a franchise, you have a lot of people you’ve got to answer to, a lot of rules that you have to follow, a lot of guidelines that you have to follow. And this gives me the flexibility not to have to do that …”
Another perk has to do with trade-ins.
The average used car they sell has about 28,000 miles and is 2 to 3 years old. The average price is in the low $20,000 range.
So with these being later-model units, it actually helps the new-car side of the business take in trades that they might not otherwise have utilized.
Keys to success
Caputo, who says he has kept up with the public dealer groups’ efforts around standalone pre-owned, was asked what has made Sun Auto Group successful at operating their own used-car outlets.
“Our biggest strength would probably be the organization of people that I have — management team, back-office people, fixed operations … branding and marketing,” he said. “More than anything else, honestly, I’ve got really good car people working for me in all three stores. And that’s really been the key to our success and our growth more than anything else, and I would probably say that’s No. 1.”
Dealers know that competition for retail used-vehicle sales and profits is fierce, and keeping expenses manageable and transaction prices competitive is a never-ending battle.
But despite that, many dealers are betting on a strong economy and strong used-car sales this year, and some are even adding stores or refurbishing or replacing existing ones.
“Overall, I think the economy is pretty strong, and I don’t see any severe swings up or down in 2018 — that’s what I’m hoping for and gambling on,” said Mark Weida, owner of Street Smart Auto Brokers in Colorado Springs, Colo., explaining why he’s bullish about 2018.
“I think consumer confidence is stronger than it has been in a while,” he added.
Weida retails about 50 used units a month at the store he opened in 2011 and believes his second store, which opened in November, will yield 30 to 40 unit sales per month when it fully ramps up to speed.
Todd Caputo, owner of Sun Chevrolet in Chittenango, N.Y. — who also just invested over $8 million to replace one of his two stand-alone used-car stores, said, “I think it’s going to be a really good year for retail used-car sales. Interest rates might go up a little bit but not that much.”
Caputo retails about 500 used vehicles a month at his three locations.
Here are other trends worth tracking in 2018 and why, according to Weida, Caputo and industry watchers who monitor the retail used-vehicle market. Some of the comments were made on the sidelines of Used Car Week in La Quinta, Ca., in November.
The inventory story
It’s been said before, but we’ll say it again: A lot of off-lease cars and trucks are slated to return to the market in 2018. How many?
About 300,000 more than returned in 2017, bringing the total to 3.9 million units, Cox Automotive predicts.
That’s good news for dealers, especially independent dealers who may not have had many opportunities to buy late-model used vehicles, said Tom Kontos, chief economist at KAR Auction Services Inc.
He predicts that the additional used-vehicle volume in the marketplace will lower prices by 2 percent to 3 percent in 2018.
“Since there is so much inventory that the grounding and non-grounding (like-brand franchise) dealers will take a pass on buying, it gives independents room at the table,” Kontos said.
But independent dealers who are looking for 5- to 8-year-old vehicles, the bread and butter of many used-car lots, might be disappointed, said Patrick Brennan, senior vice president, Industry Solutions Marketplace at Cox Automotive.
Those vehicles are scarcer because fewer were sold as new during the recession and in the years immediately afterwards.
“So that’s challenging when they look for cars,” Brennan added.
Caputo decided his used-vehicle inventory this year would include more small SUVs and crossovers, such as the Chevy Trax, Equinox and Terrain and fewer sedans, such as the Cruze, Malibu and Impala.
He said he’s been pretty successful finding those trucks in the past, but with so many more coming off-lease and incentives from the manufacturer to buy them, the prices have already dropped about 10 percent compared to early 2017. And he believes prices will fall even more.
“There are literally thousands of them coming off lease, and the prices are going to go down,” said Caputo. “They (the manufacturers) know there is a tidal wave coming, and they are trying to dispose of them as quickly as possible.”
Weaker profits?
Dale Pollak, founder of vAuto, said a troubling trend for dealers is that used-vehicle sales are strong, but profits are “uncharacteristically” weak because of margin compression.
Dealers can buffer margin compression by selling more used vehicles, more quickly and redirecting more of their promotional and advertising dollars to the Internet where 90 percent of used-vehicle buyers shop for vehicles, Pollak said.
Dealers also need to do a better job recruiting, hiring, training, supervising and retaining employees, he added.
“Any inefficiency in a margin compressed market is going to be magnified,” Pollak said.
Third-party Internet sites
When a dealer buddy told Weida that his cost to list used-vehicles for sale on a major third-party classified site doubled from about $1,200 month to $2,500 when the buddy renewed his subscription, it was a bit disconcerting, Weida said.
He has vowed to closely monitor prices he pays to list vehicles on various third-party sites.
“Dealers are trying to scramble and figure out where we should put our dollars,” said Weida, a former new-car dealership general manager.
“That’s a challenge for all of us. Most of us as independents know what we’re up against versus the new car dealer; we have to be less expensive. If (our vehicle prices are the same as prices found at new-car dealerships) most people will buy from the franchise dealer.”
CPO
There will be a generous number of certifiable off-lease vehicles in the market to support CPO programs in 2018, but it will be up to dealers to certify them. And many dealers make their decision based on how much marketing support manufacturers pour into their programs. That may present a problem because manufacturers are more focused on new-vehicle sales, which are sliding, than CPO, said Larry Dixon, senior director, valuation services at J.D. Power.
Dixon also pointed out that a few years ago the number of certified vehicles retailed was virtually equal to the number of vehicles coming off lease.
But CPO sales for 2017 — up an estimated 0.1 percent to 2,645,718, units according to Autodata Corp. — is considerably lower than the 5 percent increase in overall late model used-vehicle volume, he said.
“Will CPO sales decline in 2018? It’s certainly possible given the slowing rate of growth we’ve observed over the last couple of years,” Dixon said.
A free resource to help dealerships manage their compliance responsibilities is now available.
Dealertrack recently released its 2018 Compliance Guide, which outlines the changes and updates in compliance that will affect dealers in 2018.
Now in its 13th year, the Compliance Guide is a leading resource on current trends and best practices in F&I compliance.
“Dealers understand that compliance can be critical to their bottom line, but many do not know how to balance staying current in today’s ever-changing regulatory environment with the day-to-day needs of running and growing their business,” said Jay Seirmarco, assistant general counsel at Cox Automotive. “For the last 13 years, Dealertrack has offered the Compliance Guide, free of charge, because we know how valuable such a resource can be for dealers seeking to improve their dealership’s operational efficiency.”
With “Confidence in Every Deal” as this year’s theme, Dealertrack highlighted the guide focuses on the Consumer Financial Protection Bureau’s examination of automotive dealer transactions under the Larger Participant Rule.
Furthermore, Dealertrack noted that it is anticipated that the CFPB will also be seeking to enforce compliance with federal consumer credit protection laws in auto financing.
Additionally, Dealertrack added that it is expected that the Federal Trade Commission will continue to examine claims of so-called “yo-yo” financing and perhaps initiate claims related to lack of disclosure of applicable safety recalls for vehicles at dealerships.
The Compliance Guide is designed to highlight what is ahead for dealers in 2018 and provide tips for managing compliance with confidence, geared towards establishing a culture of compliance, enhancing data security and maintaining customer transparency.
Given the emphasis that the CFPB and FTC appear to be placing on examining auto finance practices and, in the wake of widely publicized 2017 security breaches, creating a culture of compliance should remain a priority for dealers, according to Dealertrack.
To register to receive a complimentary copy of Dealertrack’s 2018 Compliance Guide, go to this website.
