Even during this time of new-model inventory scarcity, recent research by Cox Automotive showed how adamant about purchasing a new vehicle some consumers remain instead of considering the delivery of a certified pre-owned model or other used vehicle.
Cox Automotive recently reported that 77% of new-vehicle intenders surveyed at the end of April are staying focused on the new-vehicle market, while just 23% of new-vehicle intenders are considering a shift from new to used.
And what’s more, that Cox Automotive research showed 42% of those new-vehicle intenders would be willing to pay more than MSRP for a new model.
“A vast majority of consumers surveyed are aware of the global microchip shortage and are expecting limited choice and higher transaction prices. Dealers are being transparent: ‘We’re short on inventory,’ they say, which is Latin for ‘You’ll be paying full price, plus some,’” Cox Automotive said in a Data Point that included the survey results.
Contained in a recent blog post by Cox Automotive’s Jonathan Smoke, the company’s chief economist noted that average incentives on new vehicles declined 5% from March to April, dipping to an average of $3,239 per vehicle. That’s also 25% lower than a year ago.
Smoke said incentives as a percentage of average transaction prices decreased to 7.9%, which was the lowest level since January 2015.
Smoke added that the average transaction price for new-model deliveries in April was $40,768, which was up 0.5% from March and 2.2% higher year-over-year.
Meanwhile, Edmunds shared some interesting data about how some consumers continue to pick new over used despite some characteristics that might make a CPO or used model appealing.
According to Edmunds, the percentage of consumers who paid above sticker price for a new vehicle climbed to 12.7% in April, compared to 11% in March 2021 and 8.1% in April of 2020. This is the highest level that Edmunds has on record dating back to 2002.
Edmunds analysts explained that consumers are paying well above list price because of a combination of unique market factors: The global chip shortage is severely constraining the supply of new vehicles, and automakers and dealers are less pressured to discount vehicles since consumer demand remains incredibly high.
Edmunds data showed that new-vehicle inventory available at dealerships nationwide was down by 48% by the end of April compared to a year earlier. Inventory of trucks was down by 64%, SUVs by 44% and passenger cars by 42%.
“New vehicles — particularly new trucks and SUVs — are basically the 2021 equivalent of toilet paper and hand sanitizer a year ago,” Edmunds executive director of insights Jessica Caldwell said in a news release. “Dealers and automakers are making good profits right now since consumers seem to be a bit more accustomed to paying more for goods in the past year, and new vehicles are no exception.
“Demand is staying strong as vaccinations ramp up across the country and Americans look to hit the open road in a new car, but as the chip shortage continues, there soon won’t be enough vehicles to meet consumer appetites,” Caldwell continued.
Perhaps the shoppers scanning your store website or actually walking your blacktop might be shifting toward your used inventory, especially when you consider what Edmunds senior manager of insights Ivan Drury mentioned.
“At the rate we’re going, it's going to be a lot tougher for car shoppers to find exactly what they want this summer,” Drury said.
David Adcock, executive vice president of Binary Automotive Solutions, joins the Auto Remarketing Podcast to talk about the chip shortage's impact on automotive beyond new cars and manufacturing.
He also discusses, on a higher level, the impact of more technologically advanced vehicles.
To hear the conversation, click on the link available below, or visit the Auto Remarketing Podcast page.
Download and subscribe to the Auto Remarketing Podcast on iTunes or on Google Play.
And stay tuned Wednesday for Auto Remarketing senior editor Joe Overby's appearance on "The Culture of Value" podcast wth Binary Automotive Solutions chief marketing officer Troy Scheer.
Carwiser, which says it offers the only national online marketplace where dealers compete to purchase used vehicles from consumer sellers, now has an integration with Black Book as well as an advisory board with five industry experts who collectively have vast experience.
On Tuesday, Black Book announced the integration of its valuation and enhanced vehicle matching VIN-decoding data into CarwiserXchange 2.0, the rebranded moniker of Carwiser’s platform.
Carwiser also introduced its advisory board, which is comprised of five key industry members, including:
— Mark Boyd, board member of Boost Acquisition and former LotLinx board member and chief sales officer of Cargigi before it was sold to eBay
— Ron Frey, who has had advisory and executive roles with JM Family Enterprises, CDK Global, CU Direct, TrueCar and AutoNation
— Mitch Golub, founder and former president of Cars.com
— Steve Greenfield, chief executive officer and founder of Automotive Ventures
— Tony Hoang, president at Tonka Venture Capital and founder and former chief executive officer of Cargigi and the head of the U.S. vehicles marketplace at eBay
The company recapped that CarwiserXchange 2.0 is a comprehensive solution for dealers that connects in-market vehicle sellers with potential buyers, namely online and franchise dealerships.
Carwiser explained that dealers can set their buying preferences and receive notifications when a vehicle matches their specific preferences and as another dealer has made an offer on a vehicle they want. The dealer can dig into the details of that specific vehicle — including its Black Book valuation — and respond with a compelling and winning offer.
“Black Book’s industry leading valuation and VIN Decoding data will allow dealers to make informed decisions without leaving the CarwiserXchange 2.0 platform,” Black Book executive vice president of revenue Jared Kalfus said in a news release. “This will help a dealer buy right and buy quicker.”
In addition to a variety of notifications to get dealers engaged, CarwiserXchange 2.0 also can provide dealers with more communication support and education.
“We want to help dealers learn what is important to them, their unique business, and of course their customer base,” Carwiser CEO Patrick Howell said. “If they want to see how they can do a better job of buying cars, we’ll walk them through how they can do that. If they want to see what available inventory in the marketplace might work better for them, we can help them as well.
“We want to have a partnership with our dealer customers, and our new and improved platform allows us to do that,” Howell went on to say.
To get more information about CarwiserXchange 2.0, send a message to [email protected] or call (858) 829-9488.
RumbleOn and CarGurus are working together to provide dealerships with another technology-driven path to secure valuable inventory.
The companies announced last week that CarGurus will leverage RumbleOn’s technology as well as its transportation and distribution services in the testing of a new inventory acquisition product for dealers that can enable dealers to source consumer vehicles on the CarGurus platform.
The latest phase of CarGurus’ inventory acquisition product pilot launched this month in Massachusetts.
“Our proprietary technology suite has underpinned our offering since Day 1,” RumbleOn chief executive officer Marshall Chesrown said in a news release. “We have strong relationships with dealers and our agnostic business model has propelled our rapid expansion in both powersports and automotive.
“We are proud that CarGurus has selected RumbleOn for this pilot, and we are excited to help support their new and innovative solutions for dealers around the world,” Chesrown continued.
“This program not only validates the strength of our technology, but it demonstrates the agility of our business model. We believe there are boundless opportunities ahead of us and this is yet another example of how we are executing on our disruptive strategy,” Chesrown went on to say.
Ryan Russell, head of strategic partnerships for CarGurus Labs, added this perspective.
“We are excited to work with RumbleOn as we continue to build an innovative inventory acquisition solution for our dealers,” Russell said. “As with all of our product development, our ability to rapidly test and learn is critical.
“RumbleOn’s technology and dealer-centric processes will allow us to execute this pilot with speed and flexibility so that we can evolve our product and deliver a best-in-class solution for dealers,” he added.
For more information, visit www.rumbleon.com or www.cargurus.com.
With dealership competition as fierce as ever and consumers further recognizing the value of used vehicles, vAuto wants to be sure its tools are as sharp as possible. On Wednesday, the company expanded its proprietary suite of market data to all Stockwave users.
The expansion included the introduction of vAuto’s Live Market View and Autotrader’s Scarcity Index.
Stockwave is a vAuto solution that can help dealers effectively and efficiently find and purchase vehicles from top wholesale sources all through a single platform. Through this expansion, Stockwave users — both independent and franchised dealerships — will gain access to valuable market data from vAuto and Autotrader to help them make more confident and informed used-vehicle purchase decisions.
While rising affordability concerns are causing new-vehicle sales volume to taper, vAuto insisted the used-vehicle market continues to hold strong. In fact, vAuto acknowledged dealerships may need to be more concerned about supply than demand.
To date, wholesale market growth and supply has largely been driven by off-lease vehicles. However, Cox Automotive calculations suggest off-lease volume will peak in 2019, indicating supply moving forward could become a major headwind for the used-vehicle market rather than demand itself.
Both independent and franchised dealers are starting to take notice, with approximately 33% of all dealers saying limited inventory is holding back their dealership, according to the Cox Automotive Dealer Sentiment Index for the second quarter of 2019. That’s an increase of 4 percentage points from last quarter.
“With the number of off-lease units at a peak and fewer consumers as a whole trading in their vehicles, the data and insights dealers have at their fingertips are more important than ever to ensure they are buying and selling the right inventory at the right time for the right price,” said Patrick Janes, business development director for Stockwave at vAuto.
“As supply changes, so must dealer inventory strategies. By introducing Stockwave Market Data, both independent and franchise dealers will be better equipped with information to acquire the inventory they need and capitalize on rising demand,” Janes continued.
Previously only available to Stockwave dealers with vAuto Provision, all standalone Stockwave dealerships will now also have open access to the following four key metrics right in the platform:
1. Autotrader Scarcity Index: Gives dealers an understanding of online search demand for a car relative to the number available in a given market area.
2. vAuto rBook Market Days Supply: Lets dealers know at a glance whether a vehicle is likely to sell fast, given competing cars in the market and recent sales.
3. vAuto rBook Adjusted Market Average Price: Uses proprietary technology to indicate what a vehicle’s real market average pricing is with inventory mileage from competitors factored in.
4. vAuto rBook Market Average Odometer: Specifies the average mileage of retail vehicles in a dealer’s given market.
“Having the Scarcity Index and Market Days Supply inside Stockwave will help my team save hours of scanning through search results to find the right cars,” said Craig White, pre-owned director at Ourisman Lexus of Rockville.
“What we used to track through static spreadsheets is now all in one dashboard and available at a quick glance, enabling my team to make split-second decisions on vehicles that weren’t even on our original buy list. We are now nimbler, able to monitor multiple auctions at once and effectively growing our used-vehicle volume to meet rising demand,” White went on to say.
Auto Remarketing recently hosted Janes as a part of a free webinar to share strategies on improving inventory management. That webinar is available here.
For more information on Stockwave, visit www.vauto.com/stockwavedata.
