Kia Motors America said that last month's certified pre-owned sales marked its best April ever and more than a 5-perecent increase. And this, right after Kia had its best first quarter ever for CPO.
Last month, Kia sold a 6,953 vehicles, which was up 5.6 percent year-over-year. CPO sales have risen 14 percent year-to-date, reaching 26,406 units, according to Autodata Corp.'s April CPO retail sales report.
"Kia's record CPO sales are not surprising when you consider Kia offers the longest powertrain coverage, excellent financing incentives and a strong inspection process," IntelliChoice director of data products Eric Anderson said in a news release. "This is why IntelliChoice awarded Kia the best popular brand CPO program."
Kia’s CPO program only accepts Kia vehicles that are five years old or newer with less than 60,000 miles, according to KMA. Each vehicle also undergoes a 150-point quality assurance inspection by certified technicians.
Additionally, KMA said all Kia CPO purchases come with a 10-year/100,000-mile powertrain limited warranty and 12-month/12,000 mile Platinum Coverage.
On Monday, LotLinx announced that it named a senior vice president of channel strategy to lead major initiatives aimed at expanding the company’s presence in the car dealer market.
Chosen for the newly created position is Mark Conner, who most recently managed a team of 60 marketers for Lithia Motors.
“Under Mark's long and skillful leadership as assistant vice president of marketing, Lithia grew to be the highest performing publicly traded dealership group in the U.S.,” LotLinx founder Len Short said in a news release.
“I am confident Mark will be a tremendous asset toward the growth of our award-winning product suite of technologies. He is an auto marketing maven, bringing a deep knowledge and passion for the retail car business that will add significantly to our ‘dealer-first’ operating mission.”
At Lithia Motors, Conner’s leadership significantly influenced the group’s marketing approach, and he played an integral role in doubling its store footprint over the past seven years, LotLinx said.
In his new role, Conner has been tasked with leading all of LotLinx’s efforts to serve larger dealer groups.
LotLinx said Conner brings expertise in understanding how to scale best practices across a multi-rooftop dealer group, as well as an in-depth understanding of how car dealers drive ROI.
Asbury Automotive Group named its new chief financial officer late Friday afternoon.
Chosen for the role of senior vice president and CFO is Sean Goodman, who comes to Asbury from Unifi, a company in the textile industry.
He will join Asbury on July 5, replacing Keith Style, who was set to step down on March 7 to accept the position of president and CFO of a privately owned company.
“Sean brings a wealth of financial knowledge with a proven track record to his new position. He will be responsible for providing leadership to the finance and accounting functions while also continuing the development of our shared services initiatives,” Asbury president and chief executive officer Craig Monaghan said in a news release.
“I am thrilled about Sean joining our team and am certain that his contributions will lead to further success for our organization,” Monaghan said.
Goodman has been VP, CFO and chief accounting officer at Unifi since January 2016.
His background also includes positions with Toshiba Corp. subsidiary Landis+Gyr, Home Depot, Morgan Stanley and Deloitte & Touche.
Autotrader’s list of the top certified pre-owned deals available this May recognizes BMW, Chevrolet, Volkswagen and Volvo for extending types of deals often reserved for buying new.
“Shopping CPO is ideal for price-conscious car shoppers that do not want to sacrifice quality over a good deal,” Autotrader executive editor Brian Moody said in a news release. “With CPO inspection and warranty coverage, you're likely to get a vehicle that is among the better choices out there.”
BMW's CPO program offers models that are available with a warranty that offers coverage for up to six years or 100,000 miles from the original sale date this month. Shoppers particularly interested in the brand’s 3 Series or 4 Series can get 0.9 percent interest for up to 36 months. Autotrader calls this offer “a new-car deal on a used model.”
Chevrolet is offering qualified shoppers interested in a CPO Chevrolet Cruze, Equinox, Malibu, Silverado or Traverse 1.9-percent interest for up to 36 months through the end of May. This is an exceptional rate for a used vehicle, Autotrader said.
This month Ford's CPO program boasts up to seven years or 100,000 miles of powertrain protection from the original sale date, as well as an additional year or 12,000 miles of bumper-to-bumper coverage. Qualified buyers will also be offered 2.9-percent interest for up to 66 months on all of its CPO models, according to Autotrader.
Nissan's program is extending “impressive” incentives to qualified shoppers that are available on any model among its CPO fleet through the end of the month. May’s offerings include 1.95-percent interest for up to 36 months or 3.95-percent interest for up to 72 months. Additionally, Nissan is offering up to $500 cash back on its Altima, Maxima, Rogue and Sentra models.
Throughout the month, Land Rover's program will extend bumper-to-bumper coverage for up to seven years or 100,000 miles. Autotrader said the best deal Land Rover has this month is on 2013-2015 Evoque models. The automaker is offering qualified shoppers interested in an Evoque CPO 0.9-percent interest for up to 60 months.
Toyota's CPO program is among Autotrader’s highlights this month. The automaker is offering seven years or 100,000 miles of powertrain protection, along with an extra year of bumper-to-bumper coverage. Additionally, through the end of the month, the Prius is available at 1.9-percent interest for up to 60 months. The deal also extends to the smaller Prius c and larger Prius v.
This month Volkswagen has a special offer aimed at qualified shoppers interested in financing. Throughout May, shoppers can purchase any CPO model with 1.99-percent interest for up to 60 months. Autotrader said this is “a great rate and a long term that you'll typically only find in the world of new vehicles.”
Volvo’s CPO program is offering shoppers bumper-to-bumper warranty coverage for seven years or 100,000 miles from the original sale date, through the end of the month. Autotrader said this is among the longest warranties in the industry. Qualified buyers interested in financing their CPO purchase can also get 0.9 percent interest for up to 24 months. This is a rate rarely offered on used models, according to Autotrader.
For additional details on the CPO programs Autotrader named this month, click here.
Dealers often overestimate the trust car shoppers have in them and customers sometimes know more than the salesperson, according to MAXDigital’s recently released strategic dealer research study on the subject of trust and transparency in the digital age.
MAXDigital surveyed U.S. dealers during the 2017 National Automobile Dealers Association Convention and Expo.
Almost 70 percent of dealers said their customers have a high level of trust in their salespeople, while a December 2016 Gallup poll showed that just 9 percent of consumers have a high level of trust in car salespeople, according to MAXDigital.
“This research highlights the need for dealers to recognize that their sales processes may no longer match customer expectations or pre-conceived notions,” MAXDigital chief executive officer Steve Fitzgerald said in a news release.
“Consumer buying habits have changed and it appears that many dealers haven’t addressed the need to become product experts and to sell based on quality and value, instead of price.”
Interestingly, 61 percent of respondents said customers either “sometimes”, “most of the time” or “always know” more about a vehicle they are considering than the sales team.
Eight out of 10 dealers told MAXDigital that either “most of the time” or “always,” customers arrive after having thoroughly researched their purchase options.
The automotive industry cloud-based software provider said its survey suggests a need for dealers and their sales teams to become product experts.
MAXDigital said roughly 400 U.S. dealers completed the survey in January, before and during the 2017 NADA Convention.
For MAXDigital’s full report and other findings, visit www.maxdigital.com/trust.
Jim Ellis Automotive Group announced recently that Jimmy Ellis, president of the family-owned and operated dealership network, has decided to launch a giving campaign that will benefit local first responders in Atlanta.
Each of the group's 14 locations will participate in the first responder campaign. A portion of the profit from every new or pre-owned vehicle purchase made throughout the month will be donated to first responders within its dealership areas, according to the group.
“Local first responders came to mind as a group that we would not only like to donate to during the month of May, but a group that we want to honor throughout the year with special incentives to say, ‘Thank you for all you do and the support you have given our business over the last 46 years,’” Ellis said in a news release.
“We are also so thankful for our customers that rally behind us in supporting each of these giving campaigns. Let’s see what we can do in May to give back to those who sacrifice daily for our safety and well-being!”
Along with the cash donations for local first responders, Jim Ellis Automotive said it will also extend special discounts to all eligible first responders throughout the rest of the year.
All qualifying first responders can take advantage of $500 off any vehicle purchase, in addition to a 15 percent discount off parts and service at any Jim Ellis dealership.
Additionally, the group said it will be working with first responders to set up additional “Thank You” events this year at both its dealerships and at local police precincts and fire stations.
Last year, the group had a similar campaign for the Boys & Girls Clubs of Metro Atlanta, which raised a $65,000 donation.
“After seeing the generosity of our dealerships and the support of our clients during the campaign with Boys & Girls Clubs of Metro Atlanta, I wanted to identify another local group that could benefit from more of this generosity,” Ellis added.
Wise F&I recently announced that it is expanding its vehicle service contract programs and has developed WiseMVP, a pre-owned motor vehicle service contract that provides coverage for vehicles that are up to 20 years old and that have up to 200,000 miles.
The company said its new plan allows consumers who purchase an older vehicle or one with high mileage to protect themselves from the unforeseen costs associated with vehicle repairs.
WiseMVP currently offers consumers three levels of coverage, as well as added benefits, such as towing, car rental and roadside assistance.
“With the number of pre-owned vehicles increasing and the struggle consumers have to pay for unexpected vehicle repairs, we wanted to offer a product that would provide the consumer with the coverage they need,” Wise F&I president Matt Croak said in a news release.
Additionally, with each of the three coverage plans, WiseMVP provides short-term coverage options for embedded or give-away programs offered by a dealership.
Wise F&I’s full suite of products includes GAPWise, WiseCARE, WiseTVP, WiseMVP, TIREWise, THEFTWise and KEYWise.
Generally speaking, consumers and dealers often don’t seem to see eye-to-eye when it comes to trade-in appraisal, says Black Book senior vice president of sales Jared Kalfus.
“The consumer feels that the appraisal being delivered by dealers is not necessarily as accurate as compared to the valuations that they’re doing themselves online,” Kalfus said in a phone interview with Auto Remarketing.
Black Book’s latest online survey, which examined car shoppers' sentiment on trade-in appraisal when purchasing a vehicle, found that 47 percent of those polled desire a dealer’s offer to be within $501 to $1,000 of their researched quote for it to be satisfactory.
“What the survey has found, and is kind of concerning, is that there’s a bit of conflict and there’s a lot of valuation difference based on how much the dealer appraises the vehicle versus the researched quote that the customer found online,” Kalfus said.
Thirty-six percent of the survey’s participants told Black Book that in the past, their researched quote retrieved online was $1,001 to $1,500 apart from a dealer’s offer, and 27 percent said their quote was more than $1,500 apart.
Additionally, 46 percent of the survey’s respondents say that getting an accurate trade appraisal is either “very important” or “extremely important” to their decision on their next car purchase.
Kalfus said that “the industry needs to focus on accurate data to really come to terms with keeping these deals together and validating the appraisals and valuations that consumers are finding when they’re doing their own research to avoid this conflict when they actually get to the dealership.”
The findings of the survey illustrate not only the importance of the trade for the consumer but the accuracy of the valuation, he said.
“What we wanted to validate was just how important the trade was to consumers and to figure out if it was equal, less or more important in the consumers’ eyes than industry folks and dealers who utilize our data,” Kalfus explains. “What we found is that it’s just as important and in some cases even more important from the consumers’ vantage point.”
The survey shows that the appraisal delivered by the dealer is not accurate as compared to the valuations found online.
“The trade-in appraisal is just as important to keeping that deal together and actually consummating that deal as the actual new car negotiations itself,” Kalfus added.
Dealers need to be sure that they are utilizing appropriate data tools, such as valuation guides and industry credible valuation guide books that provide the most accurate valuations, according to Kalfus.
He points out that in cases where the customer is turned off from making deal because of an appraisal value, the dealer not only misses the opportunity to make a sale, but to also acquire a new vehicle trade and sell that customer financing, in addition to service and maintenance opportunities down the road after the sell.
“The trade-in is actually the precursor to multiple other streams of revenue and profit for the dealer. If the deal blows up because of the trade, the dealer loses out on selling the new car to the customer,” he added.
Black Book distributed its survey to roughly 2,100 consumers throughout the U.S. in March, according to the used vehicle valuation solutions provider.
The latest move from Lithia Motors continues what has been an active few years on the acquisition side of the business.
The retailer has expanded its operations to Pennsylvania with the purchase of Baierl Auto Group in Pittsburgh.
Lithia announced the acquisition on Monday afternoon.
Baierl, which has Acura, Cadillac, Chevrolet, Ford, Honda, Kia, Subaru and Toyota franchises, pulls in about $500 million in estimated annual revenues, Lithia said.
“The combination of Baierl and Lithia continues our strategy of acquiring dominant franchises with entrepreneurial leadership ready to further unlock the potential of our new team and brand,” Lithia president and chief executive officer Bryan DeBoer said in a news release.
“Since 1954, Baierl has provided exceptional customer service to the Western Pennsylvania Community and we're pleased to partner with them to accelerate growth,” he said. “Entering the Pittsburgh market increases our involvement in cutting-edge technology around autonomous transportation and allows us to proactively adapt and learn from the consumer behaviors and trends associated with it.”
Lithia continues to grow and become more nimble, "strengthening our capital engine for growth," DeBoer said.
"Our strategy of acquiring businesses that have yet to realize their potential provides greenfield rates of return, while the stores we purchased over the past several years supply internal dry powder to deliver earnings growth independent from the new vehicle SAAR as they mature," DeBoer said. "Our entrepreneurial, people-powered culture allows us to purchase unrealized potential at extremely attractive prices with very low risk and outperform not only auto retail, but all retail."
That enterprising spirit was evident in comments made during the company's latest earnings call and through its M&A activity in recent years.
Lithia bought DCH Auto Group in the summer of 2014 and then the Carbone Auto Group last September.
In Lithia's quarterly conference call last month, DeBoer did more than hint that the company was far from done expanding its footprint.
“I think when we think about acquisitions at Lithia Motors, this is something that perpetuates in each and every leader in the organization, here in Medford or in the stores,” DeBoer said. “It’s a day-to-day process that each of us are looking for growth opportunities.
“If we look at the physical market, it is the most robust market that we've probably ever seen,” he continued. “We believe that pricing is starting to equalize where sellers are asking relative prices to what buyers can be expected or willing to pay, and I believe that the coming quarters and years will be a good acquisition climate.”
DeBoer pointed out during the call that the amount of cash Lithia generates annually — $200 million to $300 million — gives Lithia the flexibility to make the moves it chooses. Furthermore, he said Lithia is seeing synergies of blending together its portfolio of stores. However, the Lithia boss reiterated that it’s an ongoing process.
“We want to build market share, we want to build stability, and we want to build those margin improvements and those revenue growth over a period of time,” DeBoer said during the call. “To be fair, it can take two, three, four, five years to be able to build upon that foundation, which is what creates that organic dry powder which allows us to continue to grow our same store sales to reach potential within those new acquisitions. It just takes some time.”
Sonic Automotive had record first-quarter used-car sales and March, in particular, was the retailer’s strongest month ever for pre-owned volumes.
The company’s standalone EchoPark pre-owned stores had 1,673 sales during the quarter (up 77.8 percent year-over-year) and could be poised to expand by as many as 20 locations next year.
“If you look at the first quarter, and you look holistically, it’s the first time in a quarter that Sonic Automotive has sold more pre-owned cars than new cars,” executive vice president Jeff Dyke said in an earnings call with the investment community on Wednesday.
“And we expect that to continue to grow,” he said. “The more stores we open up, you’re going to see our used-car business continue to take a commanding lead in the overall volume and mix of this company. And long-term, profitability-wise, it’s going to take the lion’s share of that, too.”
There are currently five EchoPark locations in Colorado, with the next stops being Texas and the Southeast. Last year, Sonic purchased AutoMatch — a group of four used-car stores in Georgia and Florida – and is converting those outlets into EchoPark locations.
“Our stores, on a same-store basis, year-over-year, cash flow was just about break-even for the quarter. Our original stores are making money,” Dyke said. “That’s why we’re pushing forward so hard with EchoPark — (we are) very, very excited about that. Our throughput is great. Our volume growth is excellent.”
He added: “We could not be more excited about EchoPark and the opportunity that we have there. It is just going gangbusters in Denver and we’ve already broken ground in San Antonio (and) Dallas, and the Carolinas will be just behind that.
“We’ll probably get the AutoMatch stores all converted this year, and three or four stores open by the end of the fourth quarter,” he said. “And then we could have the opportunity to open 15 to 20 stores next year.”
Opening new locations for Echo Park
Dyke was asked about weighing the decision to build EchoPark stores (which it is doing in Texas and Carolinas) versus buying existing stores and converting them (which it is doing with the acquired AutoMatch stores in Florida and Georgia).
He said the company is looking at both: greenfields and acquiring stores to convert.
“It’s just a financial decision. It’s a math equation,” he said. “That’s it.”
The criteria for any store, Dyke said, is to have the ability to hold 400 units of sellable inventory.
“And as we meet those standards, we can pop ’em out like popcorn,” he said. “It’s great because our break-even is at a level where we don’t have to sell that many cars and as we continue to grow the brand in these markets like we’re doing in Denver, we start to see nice profitability out of the stores, and then the question is just, how fast can you grow them?
“We’re 100 percent confident in our ability to make money out of them. We’re 100 percent confident in our ability to sell a lot of cars. The big trick is getting your footprint where you want it at the price you want, and then getting it approved by the local governments, which aren’t sometimes as keen as you might believe on having a used-car facility opened up.”
However, Sonic’s experience is that once it has presented to localities, they have achieved a “100-percent success rate” at getting greenlit.
Tech update
Among other technology updates discussed, Sonic said it will introduce an appraisal app “in coming months.”
Perhaps most significant, Sonic customers will be able handle the entire transaction online, Dyke said.
“They’ll be able to buy a car online and we’ll deliver, white-glove, the car to their place of business, their home, wherever they would like,” Dyke said.
He added: “I know it’s not a large part of the customer base today but we project that over time, that’s going to grow and that opportunity will be there for our consumers to use at their convenience.”
