While it may seem we’re swimming through a painfully large number of automotive recalls on a daily basis, that doesn’t change the fact that cars simply last longer, on average, than ever before.
This is reflected by the most recent U.S. vehicle registration data from IHS, which shows that the average length of vehicle ownership has hit another all-time high for both used vehicles (63 months) and new vehicles (78 months).
According to Brian Skutta, AutoAlert’s chief executive officer, how long a consumer holds onto their vehicle has a direct impact on the SAAR and is also a key performance indicator for the auto industry.
“To put this in context, the lengthening ownership lifecycle is resulting in consumers buying fewer vehicles over their lifetime, giving dealers fewer opportunities to sell them cars if you wait for them to come to you,” Skutta said.
Via an online survey of over 400 vehicle owners, AutoAlert reached out to get a better idea of where today’s customers could be swayed to get back in the market for a new or new-to-them vehicle.
Here are a few key findings of the study, according to AutoAlert:
- Seventy-five percent of consumers would be very likely or somewhat likely to trade-in their vehicle today if their monthly payment would remain about the same.
- Fourty-nine percent of survey respondents were not aware they were able to upgrade their current vehicle before their loan or lease is at end-of-term.
- Regardless of how long consumers have owned their current vehicle, 63 percent of them would like to upgrade their vehicles every three years or less.
- Dealerships that keep their service customers coming back are smart because 57 percent are very likely or somewhat likely to purchase a new car from the dealership where they service their car.
- Sixty-nine percent of consumer respondents felt it was very important or somewhat important for the place they bought their vehicle to proactively notify them when they are in a position to upgrade their vehicle if it doesn’t impact their monthly car payment.
- More than half of consumers want to be notified about key points in their ownership lifecycle (e.g. warranty is expiring, trade-in value is about to decrease rapidly, before incurring mileage overages on lease, end of contract).
- The three highest motivating factors to buy or lease a new vehicle were:
- 83 percent better fuel-efficiency
- 68 percent too many repairs to be made on current vehicle
- 65 percent additional safety features
“Dealerships find better stewardship of their customer records through data mining, empowering them to disrupt longer trade cycles down to an average of 36 months – a dramatic increase in trade-cycle velocity,” Skutta said. “This type of data-driven engagement with consumers is where dealerships are finding a great return on investment.”
According to the company, out of the more than 400 survey participants, 35 percent were millennials, 31 percent were Generation X and 34 percent were baby boomers.
To check out the full white paper of the results, click here.
The United States Environmental Protection Agency today issued a notice of violation of the Clean Air Act to Volkswagen AG, Audi AG and Volkswagen Group of America, alleging that five of its diesel-powered vehicles include “defeat device” software that circumvents EPA emissions standards for certain air pollutants.
Separately, the California Air Resources Board issued an in-use compliance letter to VW. Both the EPA and CARB have initiated investigations based on VW’s alleged actions.
Covering roughly 482,000 diesel passenger cars sold by VW and Audi in the U.S. since 2008, the affected diesel models include the following:
• Jetta (Model Years 2009 – 2015)
• Beetle (Model Years 2009 – 2015)
• Audi A3 (Model Years 2009 – 2015)
• Golf (Model Years 2009 – 2015)
• Passat (Model Years 2014-2015)
“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” said Cynthia Giles, assistant administrator for the EPA’s Office of Enforcement and Compliance Assurance. “Working closely with the California Air Resources Board, EPA is committed to making sure that all automakers play by the same rules. EPA will continue to investigate these very serious matters.”
According to the EPA, a “sophisticated software algorithm” on certain VW vehicles detects when the car is undergoing official emissions testing and then activates full emissions controls only during the test. Otherwise, the effectiveness of the affected vehicles’ pollution emissions control devices is greatly reduced during all “normal driving situations,” resulting in the emission of nitrogen oxides, or NOx, at up to 40 times the standard legally allowed.
The discrepancy was discovered after independent analysis by researchers at West Virginia University, working with the International Council on Clean Transportation. In early September, the EPA and CARB asked for an explanation for the identified emission problems, which both organizations say that VW admitted that the cars contained “defeat devices.”
When reaching out to VW, the company responded to Auto Remarketing with the following official statement.
“Volkswagen Group of America, Inc., Volkswagen AG and Audi AG received today notice from the U.S. Environmental Protection Agency, U.S. Department of Justice and the California Air Resources Board of an investigation related to certain emissions compliance matters. VW is cooperating with the investigation; we are unable to comment further at this time. This is a notice of non-compliance that needs to be addressed. Volkswagen will develop a remedy in coordination with EPA and CARB. Owners of the affected vehicles should be aware that this is not a safety related issue. Owners of these vehicles do not need to take any action at this time.”
The folks at Edmunds.com offer a couple of key points for dealers to think about when judging the situation. Below is part of a note the company shared:
- In recent high-profile recalls, there has been very little — if any — impact on sales. With so many recalls in the news, they easily become white noise for a lot of consumers, and they don't appear to have much of an influence on shopping decisions. Nevertheless, Edmunds encourages all car owners to take any recall notices seriously and follow the instructions provided by their dealers.
- Edmunds counts 44 models that offer diesel-powered engines in the 2015 model year . VW and Audi combine to produce 17 models — or 39 percent—of those 44 total models.
Matt DeLorenzo, Kelley Blue Book's managing editor of KBB.com, also chimed in on the subject, saying this may result in a major hit for diesels in the U.S.
“Not only is this a black eye and a huge problem for Volkswagen, from an industry perspective it may set back diesel technology as a means for automakers to reach the requirements for high fuel economy," DeLorenzo said. "Manufacturers were counting on diesels to deliver fuel economy comparable to hybrids without the expense of having an engine plus electric motors and a battery pack. We may have reached a tipping point where now diesels will become more expensive to make than hybrids. That coupled with European cities looking to ban or limit diesels, there will be a shift away from that technology to hybrids and electrification through pure battery EVs and fuel cells.”
To check out the full statement from the EPA, click here.
To finalize the civil action with the multiple federal agencies connected with the faulty ignition switch recall, General Motors has one week to transfer $900 million into U.S. coffers.
The settlement announced on Thursday also detailed federal investigator findings of how the OEM “actively concealed the truth” about those faulty ignitions in six discontinued models that now are getting long in the tooth — if they’re even still in operation.
So what should dealers do if somewhere in their inventory there’s a Pontiac G5, a Saturn Ion or Chevrolet Cobalt that was originally equipped with an ignition that GM has acknowledged to have caused a total of 15 deaths, as well as a number of serious injuries?
“As for dealers, there is no reason to avoid these vehicles,” Kelley Blue Book residual value analyst Eric Ibara said in a message to Auto Remarketing on Thursday.
“Most people are unaware of the recall, so it is unlikely that they will shy away from these vehicles,” Ibara continued. “The important thing is for dealers to make sure that the recall fix has been made on the vehicle before they retail the car. For GM, it is obviously a win as it puts this incident behind them, and they can focus on the major launches coming up.”
GM explained that the settlement resolves a shareholder class action filed in the United States District Court for the Eastern District of Michigan.
In addition, the company has reached a memorandum of understanding potentially covering approximately 1,380 individual death and personal injury claimants. They include more than half of the personal injury plaintiffs who have lawsuits pending in the Multi-District Litigation (MDL) in the United States District Court for the Southern District of New York.
“The parties to these agreements have resolved difficult claims without the burden, expense and uncertainty of litigation,” GM executive vice president and general counsel Craig Glidden said.
As a result of these settlements, the company said it will record a charge of $575 million in the third quarter.
“Today’s settlement between General Motors and the federal government, highlighted by a $900 million fine, reflects the increased government scrutiny all automakers will face going forward,” said Kelley Blue Book senior analyst Karl Brauer.
“GM’s efforts to address the systemic elements surrounding the ignition switch failure, and its willingness to work with the government going forward, played a key role in resolving the issue,” Brauer continued.
“The terms of this agreement include tighter oversight between GM and federal regulators going forward, which is similar to the terms in the recent agreement reached between the government and FCA after that automaker’s failure to address recalls,” he went on to say.
Barra speaks again
Following the announcement by regulators at lunchtime, GM chief executive officer Mary Barra addressed employees in a town hall meeting later on Thursday afternoon at the GM Vehicle Engineering Center in Warren, Mich. Barra made multiple appearances on Capitol Hill last year where lawmakers lambasted her for how the automaker handled the situation, which stemmed from the ignition switching out of the run position while in motion — disabling the steering system, airbags and other critical components.
“Let’s pause for a moment and remember that people were hurt and people died in our cars. That’s why we’re here,” Barra said on Thursday.
“I have said many times how sorry I am for what happened. On behalf of all of us, I have apologized to the families who lost love ones and to those who were injured. I do so again today,” she continued.
“We let these customer down in this situation. We didn’t do our jobs. As part of our apology to the victims, we promised to take responsibility for our actions,” Barra went on to say.
Barra made a similar presentation to employees after GM hired former federal prosecutor Anton Valukas to investigate what happened, part of the process that led to the dismissal of more than a dozen higher-level executives who were a part of matter.
“I have said many times I wish I could turn back the clock. If I could, I would do so in a heartbeat. But I can’t,” Barra said. “What we can do is make sure we respond the right way. We have done that, and we will continue to do so.
“I concluded my remarks on the Valukas Report by saying I believe in GM and I believe in you. This past year has only strengthened my confidence in you and the company,” she went on to say.
Recap of federal investigation
GM eventually recalled more than 2.2 million vehicles during the matter that first surfaced early last year. The units involved included:
— 2005, 2006 and 2007 Chevrolet Cobalt
— 2005, 2006 and 2007 Pontiac G5
— 2003, 2004, 2005, 2006 and 2007 Saturn Ion
— 2006 and 2007 Chevrolet HHR
— 2007 Saturn Sky
— 2006 and 2007 Pontiac Solstice
“GM engineers knew before the defective switch even went into production in 2002 that it was prone to easy movement out of the run position,” federal officials from the Department of Justice and Department of Transportation said when announcing their settlement with the OEM on Thursday.
“Testing of a prototype showed that the torque return between the run and accessory positions fell below GM’s own internal specifications. But the engineer in charge of the defective switch approved its production anyway,” they continued.
Regulators determined that by the spring of 2012, GM knew that the defective switch presented a safety defect because it could cause airbag non-deployment in certain GM vehicles. But the National Highway Traffic Safety Administration indicated that it did not receive a notice about the problem from GM until February of last year. NHTSA said GM “egregiously disregarded” the regulator’s five-day regulatory reporting requirement for safety defects.
“GM’s delay in disclosing the defect at issue was the product of actions by certain personnel responsible for shepherding safety defects through GM’s internal recall process, who delayed the recall until GM could fully package, present, explain, and handle the deadly problem,” officials said.
“Rather than move swiftly and efficiently toward recall of at least the population of cars known to be affected by the safety defect and thus certainly destined for recall, GM personnel took affirmative steps to keep the company’s internal investigation into airbag non-deployment caused by the defective switch ‘offline’ — outside of GM’s regular recall process,” they continued.
“On at least two occasions while the defective switch condition was well known by some within GM but not disclosed to the public or NHTSA, GM personnel made incomplete and therefore misleading presentations to NHTSA assuring the regulator that GM would and did act promptly, effectively, and in accordance with its formal recall policy to respond to safety problems — including airbag-related safety defects,” officials went on to say.
The settlement agreement imposes on GM an independent monitor to review and assess policies, practices, and procedures relating to the automakers safety-related public statements, sharing of engineering data and recall processes.
And as far as criminal charges, officials said they are alleging one count of engaging in a scheme to conceal material facts from NHTSA and one count of wire fraud. However if GM abides by all of the terms of the agreement, the federal officials will defer prosecution for three years and then seek to dismiss the charges.
Transportation Secretary Anthony Foxx said, “General Motors not only failed to disclose this deadly defect, but as the Department of Justice investigation shows, it actively concealed the truth from NHTSA and the public.
“Today’s announcement sends a message to manufacturers: Deception and delay are unacceptable, and the price for engaging in such behavior is high,” Foxx continued.
U.S. Attorney Preet Bharara added, “For nearly two years, GM failed to disclose a deadly safety defect to the public and its regulator. By doing so, GM put its customers and the driving public at serious risk.
“Justice requires the filing of criminal charges, detailed admissions, a significant financial penalty and the appointment of a federal monitor,” Bharara went on to say. “These measures are designed to make sure that this never happens again.”
DealerSocket found that more than half of surveyed dealers for its inaugural Independent Dealership Action Report cited inventory acquisition and access to capital as the top problems facing their business this year.
On Wednesday, DealerSocket director of product marketing Marylou Hastert explained a primary reason why those two problems surfaced through a preview of this report, which is to be released at the Innovate 2015 Conference next week.
“Independent auto dealerships face a tough challenge in today’s market — competing against often larger and better-funded franchise dealers,” Hastert said.
“According to our data, franchise dealerships are seeing an average 617 percent higher yield in gross profits selling used cars. And they’re selling them an average 16.5 days faster than new vehicles,” she continued.
“As a result, franchise dealers are stepping up their activity in an area previously dominated by independents,” Hastert went on to say.
DealerSocket says the new influx of franchised competition is intensified by their big marketing budgets and referral bases.
“Ultimately, independent dealers will be forced to adopt a more innovative, preemptive approach in order to thrive,” Hastert said.
According to the report, independent dealers who leverage technology are emerging successful in the head-to-head competition with Franchise dealers for both used vehicles and customers. The report reveals the following, as listed by the company:
— How Independent dealers can acquire the right inventory, at the right price, in spite of franchise dealers’ access to closed auctions
— The specific software category that consistently delivers substantial revenue growth, but is not utilized by close to 90 percent of independent dealers
— The most overlooked source for independent dealers to purchase used vehicles, while simultaneously increasing revenue
— The key technology most Independent dealers still don’t have that achieves an average 660 percent return on investment — while also enabling them to turn inventory an average 27 days faster than franchise competitors
DealerSocket will unveil its full Independent Dealership Action Report at Innovate: The Independent Dealer Industry Conference, which begins on Sunday in Fort Worth, Texas. DealerSocket president and chief executive officer Jonathan Ord will discuss the findings during his opening keynote.
All Innovate attendees will receive hard copies of the 43-page report, which analyzes industry trends, performance benchmarks and metrics, and consumer online shopping behaviors. Sources include the following, as listed by the company:
— Key performance data from 2,150 independent and buy-here, pay-here dealers
— DealerSocket survey results from 4,000 independent and BHPH dealers
— Experian data from the 2015 Used Car Industry Report generated by the National Independent Automobile Dealers Association
— NIADA proprietary industry analysis
— J.D. Power’s Power Information Network
DealerSocket’s Independent Dealership Action Report comes on the heels of a similar initiative for the franchised market, which was released at the company’s User Summit in August and Auto Remarketing recapped here.
In addition to receiving the comprehensive industry report, Innovate attendees will access more than 80 classes — all more than 1 hour long — that dive deep into compliance, technology, collections, finance, accounting, operations and more.
“Innovate is the only show for Independent dealers and lenders with two full compliance tracks, which by themselves cover 16-20 different topics. In total, attendees will access more than $10,000 in legal insight for the price of admission,” organizers said.
DealerSocket expects more than 500 attendees at this year’s conference, including more than 35 major exhibitors and financial institutions that were hand-picked through an invitation-only sponsor selection process.
To view the full schedule or to buy tickets, visit www.MyInnovate2015.com.
DealerSocket completes Click to Call integration through CRM
Also on Wednesday DealerSocket finalized integration of its Click to Call tool with Century Interactive in a move meant to help dealers using DealerSocket’s CRM and Century Interactive's Call Tracking solution.
The companies explained that managers now can simply click a customer's phone number through the CRM to automatically make an outbound call. This feature is designed to empower dealers to work more efficiently by tracking, recording and categorizing outbound calls dealership sales agents make every day.
“This new integration connects sales opportunities and phone call conversations in the most actionable way possible for automotive dealers,” officials said.
“Simplicity is key when connecting dealers to prospects and returning customers. That's why this new feature is a big win for customers that are enrolled in DealerSocket's Call Management solution,” they went on to say.
To learn more about DealerSocket and Century Interactive Outbound Click to Call Integration, call (855) 516-7631 to speak with a DealerSocket specialist or visit dealersocket.com.
Are Tesla CPO vehicles available in stores?
That’s a question a recent Business Finance News article looked to answer, as the news organization reported Tesla opened a new store and service center in South California for both new and pre-owned Tesla Model S vehicles.
The news was originally published by the Orange County Register, who broke the story in August that Tesla had opened a “hub” in the Buena Park Auto Center in Orange County, Calif.
The Tesla retail centers, coined by the company as Stores & Galleries, in the past just gave buyers the option to test-drive a new Tesla car at the store and place an order, while drivers looking to purchase a certified pre-owned model had to request a test drive and buy the vehicle through the company’s CPO website.
Now, according to the Business Finance News article, consumers in the market for a used Tesla can now access the same perks as a new-vehicle shopper in the new 23,000 square-foot showroom in the Buena Park Auto Center — a store for both its new and used vehicles.
Now, if a shopper is in the market for a CPO Model S, they can purchase it directly from the new facility. According the BFN report, there were 36 CPO models in the facility on opening day, and going forward all of the automaker’s trade-ins in Orange County will be available at the new store.
Auto Remarketing reported Tesla launched its CPO website and started selling certified vehicles back in late April.
According to the site, every pre-owned Model S comes with a four-year, 50,000 mile limited warranty.
Every pre-owned Model S also receives a full inspection, remaining battery and drive warranty, and 24-hour roadside assistance.
Car shoppers have the ability to search by market area and color. They can also specify which type of Model S they are in the market for, choices which include the 60 kilowatt-hour, 85 kilowatt-hour, and the 85 kilowatt-hour performance Model S.
Now, shoppers in Orange County have the ability to check out trade-in certified models in their area and purchase directly from the new store — an interesting move in light of Tesla’s controversial overarching direct-to-consumer model.
What remains to be seen is if the model catches on, and if the industry will see more of Tesla’s showrooms housing used models, as well.
Stay tuned to Auto Remarketing, as we track the progress and evolution of Tesla’s launch into the used market.
No, CarMax isn’t going to be checking if quarterback Tom Brady is throwing footballs that are fully inflated.
Rather, CarMax finalized a partnership with the reigning Super Bowl champion New England Patriots on Tuesday to be the official used-car retailer of the team. As part of the multi-year sponsorship agreement, CarMax highlighted that the company will be visible to fans and consumers through extensive branding within Gillette Stadium and the surrounding footprint, as well as media, digital and social elements throughout the 2015 season.
"Boston is an important new market for CarMax, and we are thrilled to partner with one of the most exciting and successful teams in football,” CarMax chief marketing officer Jim Lyski said. "Our focus will be to use this partnership to better serve our customers and fans in the New England area.”
CarMax plans to open its first Boston-area stores in Danvers and Norwood in December and a third in Westborough in summer of next year.
Meanwhile at Gillette Stadium, CarMax will be the first brand to be showcased on the stadium’s iconic bridge and lighthouse. The bridge was recently expanded to four times its previous size to give fans plenty of room to hang out and watch the action while improving the concourse’s foot traffic on game days.
“We know Patriots fans have been asking for the bridge to be expanded, and we are proud to be a part of the expansion to an area of the stadium that provides fans with so much enjoyment,” Lyski said.
The company will also be honoring local community heroes and donating $80,000 to area nonprofits through a consumer contest called The Bright Side of Game Day.
The Bright Side of Game Day is a new contest to celebrate local community heroes who bring the Bright Side to their communities through volunteer work and a commitment to helping others. Fans can nominate local community heroes who will have a chance to win a VIP Patriots package, including tickets to a home game, on-field recognition and a $10,000 donation to the nonprofit of their choice.
Eight local heroes will be honored with a total of $80,000 in donations made to the New England community. Nominations are being accepted now at www.brightsideofgameday.com.
“CarMax is excited to recognize local community heroes who share our passion for giving back to the communities where we live and work. Not only will we be able to contribute $10,000 to the winner’s favorite nonprofit, we’ll be able to introduce Patriots fans to the heroes making a difference in their community,” Lyski said.
Additionally, CarMax will partner with the Patriots on various community initiatives throughout the season.
“We are excited to welcome CarMax to the New England market as the official used car retailer of the Patriots,” said Murray Kohl, vice president of corporate sales for the New England Patriots. “This partnership not only offers our fans a great new space to gather on game day with the expansion of our signature bridge, but will also benefit our local communities through CarMax’s program The Bright Side of Game Day.
“We look forward to teaming up with CarMax on some of our organization’s community initiatives this season,” Kohl added.
DealerRater.com broke its monthly record in August, reporting nearly 60,000 consumer review submissions to the site last month.
The total number of reviews for August, coming in at 59,814, represented a 69-percent increase over August 2014’s results.
“August was our biggest month ever for submitted reviews,” said Gary Tucker, the company’s chief executive officer. “The dramatic increase in reviews submitted to DealerRater.com reflects how consumers are embracing third-party reviews during the shopping process and sharing their experiences afterwards. DealerRater is meeting a consumer need, not unlike how Twitter and Facebook have shaped the way people share information with one another.”
According to the company, the sharp increase in submitted reviews is partly due to products like ReviewBuilder, which is part of its DealerRater Certified Dealer Program suite, and LotShot, a photo review application. DealerRater’s partnership with Autotrader also allows site visitors the ability to read and write DealerRater reviews.
The company also recently announced a partnership (coined as the Hyundai Advantage Program) between J.D. Power, DealerRater and Hyundai North America, that invites new Hyundai owners to review their dealer on the site. According to the company, the program has delivered its dealers a 366-percent increase in submitted reviews since January.
According to Tucker, every review is reviewed to be certain it’s been submitted by an actual person.
“Our reviews average more than 100 words, so people are telling a story that will help interested shoppers make a connection with a dealer and an employee at that dealership, and select the best dealership and salesperson for them,” Tucker said. “DealerRater.com specializes in one industry — automotive — making for an exceptional customer experience for those writing and reading reviews about car dealers. We recently surpassed 2 million reviews and expect to reach 3 million sometime next year.”
Going by DealerRater’s numbers, the site averages 2,000 reviews a day. For more information, visit the company’s site here.
Two dealer-centric events and another one coming up later this month all are giving DealerSocket chief executive officer Jonathan Ord plenty of opportunities to interact with current dealership clients as well as prospects.
Along with four primary wants, Ord shared the two main strands of questions he’s received as the leader of the company that’s made four significant acquisitions since the start of the year.
Ord recollected during a recent phone conversation with Auto Remarketing that, “The real interesting question for the whole industry’s perspective is and what gets asked of me quite frequently is, ‘What are you guys doing?’
“Sometimes it’s with the wonderful smile on their face and them saying, ‘I’m glad you’re doing what doing. I’m glad you’re providing these wonderful services for the dealerships,’” he continued. “Other times, it’s ‘Hey, are you trying to control all of my data? Are you going to raise the fees on everything I’m currently doing today? Are you going to make like difficult on me long term?’”
While it’s plausible an executive could consider the latter questions a bit hostile in light of DealerSocket adding DealerFire, FEX DMS, AutoStar Solutions and Dealertrack’s Inventory+ business, Ord took the opposite approach last month as the company hosted a special event ahead of the Texas Independent Automobile Dealers Association annual convention as well as its annual User Summit.
Ord and the DealerSocket team will have yet another intimate go-round with dealers beginning on Sept. 20 in Fort Worth, Texas, during Innovate: The Independent Dealer Industry Conference.
“I love the fact that they ask those questions on either side,” Ord said of the company’s dealer client base with is already approaching 10,000. “In one sense, they’re very positive and excited that we’re doing more in the space. And on the other side, I can allay some fears and destroy some rumors about why we’re doing what we’re doing.
“I love the vocal dealers because they’re the ones who teach us and the ones who also help us to figure out how to get through in the space in a way that makes a lot of sense. It lets them know we’re here for them,” he added.
And DealerSocket is out to fill the needs Ord indicated he keeps hearing from store owners and managers such as:
— Improved used-vehicle acquisitions to enhance inventory
— Upgraded access to valuation data
— Compliance guidance to navigate regulatory demands
— Customer experience assistance to make it more mobile friendly
DealerSocket’s business approach
During the wide-ranging conversation with Auto Remarketing, Ord acknowledged that dealership owners concerns are valid as more consolidation happens. Part of the reason DealerSocket was able to acquire the Dealertrack tool stemmed from regulatory concerns as Cox Automotive moved to bring Dealertrack into its portfolio that already includes properties such as Manheim, Kelley Blue Book, Autotrader and vAuto.
“Dealers are rightly in fear because they see a lot of things happening in both the new-car and the used-car space that are concerning,” Ord said. “The big players in the new-car space are optimizing on EBITA and really are financially motivated and trying to figure out how to return more dollars to their investors and really putting a blind eye to innovation and the progression that happens when we as technology companies invest money and aren’t solely focused on financial metrics.
“One of the biggest things that I tell our dealers in the education we try to get out in the space is that we optimize on innovation,” he continued. “We optimize on creativity. We believe that profitability and success follow innovation and hard work wherever it goes. We really believe in the dealer both independent and (franchised). We believe in their value to the consumer. What we try to do is create better products and solutions that allow them to do what they do best.”
Ord mentioned how DealerSocket is able to accomplish these tasks because of its financial relationship with Vista Equity Partners, a private equity firm with more than $14 billion in committed capital focused on investments in software and technology-enabled services companies. That alliance first materialized last May “to accelerate growth.”
The DealerSocket boss highlighted that growth has come while the company still is turning a profit in the “high single digits” with an eye toward much loftier figures. And Ord pointed out DealerSocket isn’t just hoarding cash.
“We’re investing a ton into our R&D department, a ton into our support departments, a ton of money into the increase abilities of companies like Finance Express, AutoStar, AAX and DealerFire,” he said. “We’re giving them more access to resources and ability to create and be innovative. We’re excited about that because we feel like if we keep the dealer at the heart of everything we do and try to innovate and create a boatload of value, the business side will work itself out long term. We don’t need to optimize and pleasing investors when we should be worried about our customers.”
Next dealer interaction opportunity
DealerSocket is putting the finishing touches on its plans for Innovate, which is set to include more than 80 in-depth classes that will dive deep into compliance, collections, finance, accounting, operations, marketing, sales and more. Conference hosts expect more than 600 attendees at this year’s event, including more than 50 major exhibitors and financial institutions that were hand-picked through an invitation-only sponsor selection process.
“We are beyond excited to welcome one of the auto industry’s most admired brands into our growing Innovate family,” DealerSocket chief marketing and sales officer Matt Redden said. “We’ve enjoyed a longstanding partnership with Cars.com on the franchise side of DealerSocket’s business for more than a decade. Their new investment in Innovate will further promote our shared commitment to the independent dealer market.”
Innovate will take place at the Fort Worth Convention Center in Fort Worth, Texas.
“Today’s franchise dealers are enticing more consumers than ever before with sophisticated digital marketing practices,” said Greg McGivney, Cars.com’s vice president of strategy and business development. “It’s time for the independent industry to level the playing field with their own world-class solutions. We look forward to strengthening our partnership with DealerSocket and the independent market.”
What might be next
Ord hesitated to share with Auto Remarketing the exact ingredients of DealerSocket’s “secret sauce,” but he did state the company remains in acquisition mode. And reportedly its partner Vista Equity is, too.
An online report from Bloomberg indicated Vista Equity is in the running to acquire Solera Holdings, which earlier this year purchased DMEautomotive, a Florida-based company that provides risk and asset management software and services to the automotive and property marketplace.
“Combining DMEa’s proprietary technologies with Solera’s existing portfolio will enable Solera’s customers to increase customer retention and drive loyalty through tailored and frequent digital contact across the entire automotive ownership lifecycle,” Solera said in an Auto Remarketing report back in April.
No matter how many more properties are collected in the portfolio, Ord pledged that DealerSocket would work to make all the parts fit together into a single solution offering that benefits all kinds of dealerships.
“It’s not an easy job to integrate companies,” Ord said. “It’s not an easy job to take disparate groups of people who have been working in silos for years and wrangle them into one solid vision around the dealer and how their products and services fit into an overall platform landscape that can really transform and disrupt the way dealers do business today. That’s our goal and that’s what we’re doing.
“Contrary to how acquisitions have been done in our space for a long time, we are trying to roll these acquisitions together from the git-go,” he continued. “We’re not leaving them as separate companies. Our goal is fundamentally different.”
So when the leaves begin to fall in autumn of next year, where might DealerSocket stand?
“One of our big culture statements internally is it’s all about the relationship and the progression and enhancement that happens to individuals as they interact with each other. That’s the reason why we exist. It’s on our walls at our offices,” Ord said.
“It’s not so much about business or financial metrics. It’s about we progress with the relationships we have with our customers, with our partners and most often with our internal employees as we grow and learn together,” he continued.
Ord later added, “Next year, I would hope there is tremendous buzz in the space that DealerSocket not only acquired these great companies but that they also made it work really well for dealers.”
Women visit 30 percent more dealerships than men prior to buying a car, according to a Women-Drivers.com study. Several reasons contribute to this difference. In a recent report from Kelley Blue Book, women are twice as likely as men to be undecided about which car they really want.
Added to this is the fact that women are less confident (38 percent) about car buying than men (58 percent), and take longer to make a decision (75 days for women versus 63 days for men).
One in 10 women know the exact vehicle they want, compared to one in five men. This means that when a woman is at a dealership, she may not be ready to make a buying decision. If a woman leaves a particular dealership, there is a 60-percent chance she won’t return.
The tendency for women to shop at more dealerships, coupled with the longer sales cycle and different buying criteria can be turned into an advantage for a dealership if the right steps are taken to meet the needs of this ever-growing segment of car buyers.
3 ways to help women choose the right vehicle
Women have different selection criteria than men when deciding on a car. Understanding the differences can help women reach a decision more quickly at your store, making it less likely she will feel the need to visit a competitor.
- Dealership websites are at women’s top of the list for car research. Understanding and targeting women’s needs can help them make quicker and more-informed decisions. For instance, a section on the dealer’s website that compares features are important to women, such as safety and durability, will steer a buyer toward a particular car.
- Kelley Blue Book’s study indicates that women are more interested in the practical aspects of a car. Women see a car as a way to get where they need to go, and are interested in durability, reliability and safety. Dealerships can focus on these aspects of a car on their website as well as in the showroom.
- Women are interested in getting the “exact vehicle they want,” whereas men are looking for the best deal. Sales advisors should place a high emphasis on understanding the features a woman is looking for, and finding the best match. Asking the right questions and engaging her will help a sales advisor understand a woman’s priorities.
4 ways to attract women to a dealership
Women have several choices when deciding which dealerships to visit. NADA reports that dealerships net profits have been flat for three years in a row due to such a competitive market. An astounding six in 10 women do not purchase from the dealership closest to their home.
- Women are 50 percent more likely than men to rely on car dealership reputation and they prefer reading reviews from women. A dealership will benefit from encouraging satisfied and happy women clients to write reviews. This has an additional benefit to a dealership, because women who are satisfied are more likely to leave a higher-scoring review.
- Because nearly one-third of women rate dealer’s websites as “unhelpful,” making sure that the website content appeals to women will keep them on the site longer and help speed a buying decision. This means knowing and highlighting what matters to women, such as durability, safety and economy, not just MSRP.
- Women rank “respect” and “trust” at the top of the list when it comes to working with a sales advisor. Customer excellence ranks higher in a purchase decision than finding the best price or deal. Creating a comfortable environment that establishes trust and respect makes the difference for sales now and in the future.
- Women now account for half of car purchases and influence up to 80 percent of auto-buying choices. According to a study by the University of Michigan’s Transportation Research Institute, women drivers now outnumber male drivers 105.7 million to 104.3. Understanding these statistics and reflecting them in your sales approach and process are important to foster an environment of trust and respect.
3 ways to ensure women buyers return to a dealership
The top reason women provide for not purchasing at a dealership on their first visit is that they are still shopping. However, only four in 10 of those “shoppers” who leave a dealership without buying a car return to the same dealership. Given that women shop at more than one dealership, it is important to create an environment that welcomes a return visit to your dealership.
- Establish trust and respect. Women place “respect” and “trustworthiness” as the top two reasons to buy from a sales advisor. Treating a potential buyer with respect and establishing trust at the outset of the sales relationship will create a positive environment, which in turn can increase a woman’s confidence in her buying decision. She will remember that trust and it will create a strong reason to return to your store.
- Understand what a woman buyer is looking for. During the initial visit, a sales advisor should ask the right questions to understand a woman’s priorities. Are certain features non-negotiable? If the right model and color are not available right away, can the right car be found? Taking the extra step toward finding the right fit can bring a buyer back to the showroom.
- Create an efficient buying process. Women nationally report that the average time spent purchasing a vehicle at a dealership is 3 hours and 20 minutes. Reducing this time lets women know you respect their time and creates a positive feeling that will encourage return visits, positive reviews and referrals.
Women have different selection criteria than men when deciding on a car. Understanding the differences can help women reach a decision more quickly, making it less likely she will feel the need to visit a competitor.
Editor's Note: Anne Fleming is president and car-buying advocate of Women-Drivers.com and a guest contributor to Auto Remarketing. She was also recognized as one of AR's 2013 Women in Remarketing.
It’s that time of year again: the next generation is headed back to school and their variety of before- and after-school activities.
Parents, family and friends looking at upgrading their vehicles will have this in mind this time of year, so Steve Halloran, the chief editor at CarGurus, has announced his company’s recommendations for them to help ease their guesswork. Dealers can gain a few tips, as well.
“For families with school-age children, finding a vehicle that balances safety and reliability with space, comfort and convenience is important,” Halloran said. “To eliminate the guesswork for shoppers, we’ve identified the vehicles that meet these specific criteria and also offer bonus features that will make time spent shuttling the kids a little more pleasant.”
According to a recent online poll by CarGurus, 38 percent of car shoppers with school-aged kids said they spend between 30 minutes and one hour each day with kids in their car. A third said that time was stretched over an hour.
When a customer comes onto the lot, it may be worthwhile to ask if kid-hauling is part of their regular activities. Here’s a list of vehicles that may be appealing to them, according to CarGurus.
Midsize SUVS
- Mitsubishi Outlander (2016 MSRP starts at $22,995)
- Toyota Highlander (2015 MSRP starts at $29,765)
- Ford Explorer (2016 MSRP starts at $30,700)
- Chevrolet Traverse (2016 MSRP starts at $31,205)
- Infiniti QX60 (2015 MSRP starts at $42,400)
- Acura MDX (2016 MSRP starts at $42,865)
Minivans
- Kia Sedona (2016 MSRP starts at $26,400)
- Toyota Sienna (2015 MSRP starts at $28,700)
- Honda Odyssey (2015 MSRP starts at $28,975)
Large SUV
- Chevrolet Suburban (2016 MSRP starts at $49,700)
According to CarGurus, this list was compiled based on currently available models with a focus on safety records, cargo storage space, seating capacity and availability of technology features.
For more information about CarGurus, visit its site here.
