CarGurus conducted a survey of more than 1,000 U.S. consumers to gather their opinions around how the recent presidential election will impact the automotive industry and their plans to buy a vehicle.
Overall, survey findings showed many expect both vehicle and gas prices to increase, and even more expect to see fewer government incentives for environmentally friendly vehicles, but that will likely not impact the decision to buy one.
CarGurus learned the following based on the presidential election results:
• 35 percent think auto prices will increase.
• 8 percent think auto prices will decrease.
• 57 percent think auto prices will stay the same.
• Almost half (46 percent) think gas prices will increase.
• Almost one quarter (21 percent) think gas prices will decrease.
• Almost one third (32 percent) think gas prices will remain the same.
In addition, the survey uncovered the following:
• 70 percent noted that the election will have no impact on their decision to buy a U.S. or foreign-made vehicle
• 75 percent expect to see fewer government incentives to buy efficient models like electronic vehicles and hybrids, and 25 percent expect to see more
When asked what impact a reduction in government incentives would have on the likelihood to consider purchasing an electric vehicle:
• 67 percent said it would not have an impact on their decision
• 17 percent said they would be much less likely to consider an electric vehicle
• 16 percent said they would be somewhat less likely to consider an electric vehicle
The CarGurus survey also found that younger respondents were more skeptical in their post-election opinions. They were more likely than older shoppers (ones 55 and older) to believe gas prices will increase, with 60 percent of 18 to 24 year olds thinking gas prices will increase as opposed to 44 percent of respondents aged 55 or older.
Additionally, almost 10 percent of younger shoppers also said they would delay decision to buy a vehicle and almost 10 percent of 25 to 34 year olds planning to spend less on the vehicle since the election.
“Our survey uncovered that while the election may have produced a level of uncertainty related to some issues like car and gas prices, others such as an affinity towards an electric vehicle remain largely unaffected,” said Sarah Welch, senior vice president of consumer marketing at CarGurus.
“It will be interesting to watch how this unfolds over the coming months and years, especially with the theme of financial prudence and caution coming from the younger generation,” Welch added.
The survey’s full findings can be found here.
Chalk up dealerships changing hands as another industry component being impacted by the presidential election.
According to analysis from the Blue Sky Report released on Tuesday, dealership M&A activity declined by 7 percent year-over-year during the first nine months of 2016. Kerrigan Advisors, which publishes Blue Sky Report each quarter, explained that sellers are likely to push closings to 2017 in anticipation of potential tax benefits from the incoming Trump administration
Overall, the report mentioned premium pricing declined in the first nine months of the year, but buy/sell activity remained strong with a 32-percent increase in the number of multi-dealership groups selling in the first nine months of 2016.
Today’s is the auto industry's most comprehensive and authoritative quarterly report and analysis of dealership mergers and acquisition activity and franchise values. It includes analysis of the first nine months of 2016 – laying out the high, average and low blue sky multiples for each franchise in the luxury and non-luxury segments for the quarter – and offers a detailed view of public and private company dealership acquisition activity.
Key data and analysis from the report also includes:
• 172 dealership buy/sell transactions completed in the first nine months of 2016 versus 184 transactions in the first 9 months of 2015.
• Buy/sell activity declined slightly in the second and third quarter, resulting in a 7-percent decline year-to-date.
• Pace of acquisition activity is not likely to increase in balance of 2016.
• Transaction sizes are rising and multi-dealership groups are coming to market at an increasing pace.
• For the third quarter of 2016, Kerrigan Advisors’ average blue sky multiples remained relatively stable.
• While premium pricing of auto dealerships is on the decline, most buyers are willing to acquire dealerships within Kerrigan Advisors blue sky multiples.
• The auto retail markets made a dramatic shift to high margin trucks and SUVs, driven by low gas prices.
“Buy/sell activity remains strong but, with the expectation of a tax reduction from the Trump administration, fourth-quarter activity could decline as sellers hope for a more favorable tax rate on their sales proceeds in 2017,” said Erin Kerrigan, managing director of Kerrigan Advisors.
The report identified three key trends moving forward into 2017:
• Auto retail’s hedged business model sustains dealership profitability.
• Economies of scale and scope drive consolidation.
• Foreign interest in U.S. auto retail rises.
“A trend we are watching closely for 2017 is the entry of foreign investors into the market,” Kerrigan said. “Because international companies are attracted to the franchise protections afforded to U.S. auto dealerships and are seeking geographic diversification beyond their borders, we expect foreign investors to make their mark on 2017 with at least one or two completing sizable acquisitions.”
The Blue Sky Report is published four times a year and includes Kerrigan Advisor’s signature blue sky charts, multiples and analysis for each franchise in the luxury and non-luxury segments. The multiples are based on Kerrigan Advisors’ view of franchise values in the current buy/sell market and can be applied to adjusted pre-tax dealership earnings to estimate blue sky value. To download the report, click here.
As the wholesale industry moved closer to Thanksgiving, both prices — especially for sports cars — and bidding in the lanes noticeably softened as recapped in the latest Black Book Market Insights report.
The report noted an increase in depreciation for nearly all segments across the board as the industry gets deeper into the fourth quarter. Although most segments are seeing accelerated declines, Black Book editors mentioned compact vans stood out by holding their value steady from the previous week.
“Steeper declines, typical in the fourth quarter, continue across all segments. Sporty cars experienced the most, driven by seasonality,” said Anil Goyal, Black Book’s senior vice president of automotive valuation and analytics.
Volume weighted, Black Book indicated overall car segment values decreased by 0.69 percent last week, higher than the depreciation rate of 0.59 percent seen in the previous four weeks.
As Goyal referenced, sporty car, premium sporty car and compact sar segments declined the most by 1.22 percent, 0.84 percent and 0.79 percent, respectively.
Volume-weighted, editors determined overall truck segment values — including pickups, SUVs and vans — decreased by 0.66 percent last week, higher than the depreciation rate of 0.51 percent seen in the previous four weeks.
Black Book found that the midsize crossover/SUV, minivan and compact crossover segments declined the most by 1.30 percent, 0.99 percent and 0.77 percent, respectively.
Representatives in the lanes noticed dealer bidding dipped a bit just like prices.
Black Book’s lane watcher in Texas reported, “The retail market around this location has become very mixed which has created lower auction sales rates.”
A similar story unfolded in Tennessee where the representative relayed back to editors, noting, “The market has slowed somewhat in this area but full-size trucks still continue to lead demand.”
In Florida, “Sales have become slower here,” Black Book personnel said. “Dealers still searching for lower mileage clean history units.”
Out West, scene in California was, “Tough sale for high-line units today with many no-sales.”
And finally in Washington, “The market is soft here with four-wheel drive units bringing the most attention.”
DealerRater has announced that it received its 3 millionth online review last month.
The site published its first consumer review on Jan. 3, 2003 and has since grown its platform as reviews have become progressively vital to the car shopping process.
"Hitting 3 million reviews is a significant milestone for DealerRater and our industry," said Gary Tucker, chief executive officer of DealerRater. "We witness the importance of reviews every day as tens of thousands of car buyers visit DealerRater to read and write reviews about their dealership experiences. The fact is that consumers are seeing less and less distinction from one manufacturer's product to the next – customer experience is where deals are won and lost."
In celebration of the milestone review, DealerRater said it will recognize both the dealership and the consumer associated with the review.
The monumental review came from a Hickory, N.C., customer who purchased a new car from Hendrick Honda Hickory on Oct. 30.
"We congratulate DealerRater on its terrific accomplishment," said JR Fredell, Hendrick Honda Hickory general manager. "They provide a terrific platform for our customers to tell others about their experiences. We're thrilled that our focus on employees and serving our customers has often been rewarded with five-star comments throughout the years."
Additionally, DealerRater offers a product that it said is the first of its kind in the automotive industry.
Earlier this year, the car dealer review website began to allow consumers to both review individual dealership employees and connect with them in real-time.
DealerRater helps dealers answer to reviews by allowing them to respond to negative reviews and address the situation with an unsatisfied customer.
Currently, the company’s review model exclusively scores dealerships based on recent reviews that are written within the last 24 months.
On Tuesday, Lithia Motors announced the acquisition of Honolulu Ford in Honolulu, Hawaii.
"We are pleased to welcome the newest members of the Lithia family with the addition of Honolulu Ford, our fifth store in the state of Hawaii,” said Bryan DeBoer, Lithia president and chief executive officer. “Clustering locations in a condensed geographic area allows us to develop and share talent, leverage corporate overhead, and build on our positive reputation in the market.”
The store brings an additional $90 million in estimated annual revenues.
“This store continues the cadence of acquisitions we have established in 2016 and brings our cumulative estimated annual revenues acquired to over $1.1 billion this year," said DeBoer.
Search Optics recently released results from its first annual digital marketing trends survey, which analyzed the needs, wants and decision-making strategies of more than 160 U.S. automotive dealers associated with a variety of leading automotive brands.
The phone survey, conducted in partnership with Incept Corporation, yields insight into critical digital marketing challenges facing automotive dealers today, as the importance of digital marketing rises.
“Digital marketing plays an enormous role in the success of today’s automotive dealers, from driving traffic to the lot to advancing the sales cycle through the use of digital strategies,” said Troy Smith, president and founder of Search Optics. “The survey provides clear insight into the greatest challenges dealers face as the speed of digital change in our industry advances at a rapid rate and winning more business depends heavily on their ability to keep pace.”
As part of the survey, Incept researchers questioned dealers about their expectations and satisfaction concerning digital marketing service providers.
Dealers who participated in the study unilaterally agreed that their most important goal with digital marketing is to obtain both results and a reasonable return on investment. More than 80 percent also said search engine optimization (SEO) is the most important service acquired through external marketing partners.
Additionally, dealers communicated a strong need for insights and strategic guidance from their providers.
According to the survey, SEO is the most popular service dealers seek digital marketing service providers for, followed by website, paid search, social media, email, display advertising and video services.
More information on the survey and its findings are available on the Search Optics blog in a post titled “Five Essential Questions to Ask Your Digital Marketing Service Provider.”
On Monday, Dealer.com announced that General Motors certified its Digital Advertising Solution as an in-Market Retail (iMR) Turnkey Product.
The approval gives GM Dealers access to purchase Dealer.com's advertising product and receive co-op reimbursement from GM for their investment.
"GM's approval of Dealer.com Advertising will create more lucrative advertising and sales opportunities for their entire dealer network," said Andy MacLeay, director of digital marketing at Dealer.com. "Dealers now have greater choice on where to most effectively spend their digital advertising dollars."
Dealer.com provides dealers multi-channel advertising that integrates paid search, retargeting and display advertising, as well as unified analytics into a combined strategic portfolio.
Additionally, with the certification, Dealer.com Advertising will be included within GM's Dealer Vendor Advisor Portal that connects iMR Turnkey Vendors with GM Dealers.
CarClicks recently introduced its partnership with Autobytel that integrates its Autobytel Direct product to CarClicks’ existing automotive network, which promotes dealership inventory online.
“Online automotive has evolved, and the need for digital agencies to provide innovative, results-driven solutions has never been more critical,” said Jeff Coats, president and chief executive officer of Autobytel Inc. “Autobytel is in pole position to deliver these products with proven results for engaging millions of consumers and driving quality car buying traffic to dealer and manufacturer websites. We are pleased to be partnering with a progressive company like AIM to drive premium, filtered, and qualified traffic to its clients.”
CarClicks, a product of Automotive Internet Media (AIM), links in-market auto shoppers online directly to vehicle display pages of its dealership clients nationwide.
The product will add high-quality Autobytel Direct traffic to all of its dealership clients’ initiatives in order to increase their number of website visitors. CarClicks said the move provides its dealership clients added exposure and merchandising to both their new and used inventory.
Autobytel provides consumer leads to automotive dealers and delivers consumers with online automotive content.
“We tested Autobytel Direct with a few of our dealerships and were delighted with the quality of traffic it provided,” said Tony French, president of AIM. “Our CarClicks program is dedicated to driving only the highest-quality traffic to our dealer clients and Autobytel is an excellent addition to our network.”
“Adding another quality new-vehicle traffic source only strengthens the overall value of the CarClicks program,” he continued. “Any time we can provide a better mix of potential new and pre-owned buyers to our dealer websites is a win for our clients.”
LotPop announced the launch of LotScore on Tuesday, an inventory scoring system which reports dealers’ top inventory and market indicators to help boost their used vehicle sales.
“Dealers using inventory management systems have access to so much data the information confuses decision-making. Instead, LotScore distills that data and, along with analyzing third-party party website data, presents managers with 23 essential and actionable inventory performance metrics,” said Jasen Rice, LotPop founder and chief executive officer.
LotScore is available as part of LotPop’s virtual inventory management service for physical and online inventory management. It is accessible to dealers using LotPop’s full services, such as professional inventory oversight, management of inventory, and online listings best practices.
The scoring system weekly grades a dealer’s inventory in four key areas and scores their growth regarding set goals. The service focuses on scoring inventory status, inventory marketing, inventory stocking and inventory ROI.
“LotScore represents more than a decade of research isolating key inventory performance metrics that actually point to inventory, pricing and market trends. This is the insight a GM, GSM or used car manager needs at their fingertips to isolate opportunities or trouble before things go off track,” Rice said.
In a development relevant to dealerships of all sizes, the Federal Trade Commission on Thursday announced final amendments to its Used Car Rule.
The FTC sought public comments on a series of proposed changes to the rule — formally known as the Used Motor Vehicle Trade Regulation Rule — that requires dealers to display a window sticker, or “Buyers Guide,” on used vehicles offered for sale.
The guide discloses whether the dealer is offering to sell a used vehicle “as is” (without a warranty), or with a warranty.
If the sale is with a warranty, the FTC explained the guide discloses the terms and conditions, including the duration of coverage, the percentage of total repair costs the dealer will pay and the vehicle systems the warranty covers. In states that do not permit “as is” used-vehicle sales, the regulator pointed out dealers must use an alternative guide that discloses whether the sale is with a warranty or with implied warranties only.
In December 2012, the FTC sought public comments on proposed changes to the Buyers Guide as part of its systematic review of all of the agency’s rules and guides. In response to comments received, the agency sought comments on additional proposed changes to the Used Car Rule and invited comments on alternative approaches that public commenters proposed for the vehicle history disclosure and the “As Is” statement.
As announced on Thursday, the FTC is revising the Buyers Guide by:
—Changing the description of an “As Is” sale.
—Placing boxes on the face of the Buyers Guide that dealers can check to indicate whether a vehicle is covered by a third-party warranty and whether a service contract may be available.
—Providing a box that dealers can check to indicate that an unexpired manufacturer’s warranty applies.
—Adding air bags and catalytic converters to the Buyers Guide’s list of major defects that may occur in used vehicles.
—Adding a statement that directs consumers to obtain a vehicle history report and to check for open recalls. The statement also instructs consumers to visit ftc.gov/usedcars for information on how to obtain a vehicle history report and visit safercar.gov to check for open safety recalls.
—Adding a statement, in Spanish, to the English-language Buyers Guide, and advising Spanish-speaking consumers to ask for the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish.
—Providing a Spanish translation of the statement that dealers may use to obtain a consumer’s acknowledgement of receipt of the Buyers Guide.
FTC officials indicated the amended rule permits dealers to use their remaining stock of Buyers Guides for one year after the effective date of the amended rule.
For used dealers, the FTC offers what’s titled “A Dealer’s Guide to the Used Car Rule,” which can be downloaded here.
“Fillable” versions of the Buyers Guide in English and Spanish are available at FTC.gov.
The FTC vote to publish the Notice of Final Rule in the Federal Register was 3-0.
