One of the coldest February in years that brought record-breaking snowfall and temperatures with it had a direct impact on used-car prices. And with this slowdown in price growth and disruption to dealers and buyers, pent-up demand is expected to push prices higher than expected this month.
That’s according to data shared in the latest Guidelines report from NADA Used Car Guide.
The extreme winter weather seen across much of the country put a damper on used-price growth in the lanes last month.
Wholesale prices for vehicles up to 8 years in age grew by 0.8 percent levels from January. This was slightly lower than NADA’s forecasted 1-percent spike.
And looking at the trend from a historical standpoint, February’s drop was almost a full percentage point lower than roughly 1.7-percent average decline for the month from 1996 to 2014, according to NADA data.
Jonathan Banks of NADA Used Car Guide, said: "Since the inclement weather possibly prevented dealers from attending auctions ― and customers from commuting to dealer lots ― demand wasn't as strong as it usually is in February."
Banks went on to explain: "As a result, prices were almost a full percentage point lower than the historical average we've tracked since 1996 … consumers should know the savings trend won't last for long, as pent-up demand and tax refund checks will fuel spring season purchases."
According to the report, mainstream segment price growth was fairly consistent, with price increases ranging from 0.5 percent to 1.4 percent.
Interestingly, rates for half of the eight non-luxury segments tracked by NADA — compact cars, compact utilities, large pickups and midsize utilities — all saw an increase of 0.7 percent last month. The largest monthly price spike in February was seen in the midsize car segment, which saw prices rise by 1.4 percent
Year-over-year, large pickups were up 7.6 percent from February 2014, coming off a strong 2014 for price retention.
Two more strong performers, the report noted, were midsize utilities and midsize vans, whose prices were 4.2 percent and 2.6 percent higher than the same period last year, respectively.
And interestingly, low gas rates at the pump and a 6-percent increase in late-model supply, according to the report, didn’t impact subcompact car rates negatively. In fact, this segment saw prices rise by 1 percent last month when compared to January.
On the luxury side of the market, the story was a bit different.
“As they’re historically prone to do, prices for luxury segments moved in the opposite direction of their mainstream counterparts in February, with prices for luxury cars and trucks alike declining across the board,” said Banks.
Luxury compact car prices saw the biggest drop with a 1-percent decline, while the remaining luxury segments fell by an average of 0.5 percent.
For more insight on how the frigid February impacted the auction price environment, see the video above from NADA Used Car Guide.
As for what’s in store for March, NADA UCG expects used prices to rise by 1 percent this month, before starting on a downward trajectory in April.
“Given February’s weather-afflicted performance, however, it’s now likely seasonal demand will be stronger over the period than anticipated last month,” Banks said, hinting we might see prices rise a bit over current expectations.
Last year, similar winter weather hindered used-vehicle purchases for both dealers and consumers, which led to a 4-percent increase in March, which was the highest price spike ever recorded by NADA for the month.
“While we don’t foresee a similar outcome this year, it wouldn’t be surprising to see appreciation in March exceed the 1 percent high-end of our forecast,” said Banks. “As for April, we still expect to see a drop in prices over the month. The drop will be at a less substantial rate of 0.5 percent to 1 percent, rather than the 2 percent or higher rate forecasted in February.”
Here’s a statistic shared by Search Optics chief relationship officer Christian Fuller that may shed some light on how important your dealership’s mobile website, and the design of that website, can be.
“What we find is that your conversion-to-lead on a mobile device, the ability to take a visitor that comes in from a mobile environment and actually hits call or submits an email is significantly higher than for a PC,” Fuller said in a February phone interview with Auto Remarketing. “In some metros, currently we’re seeing more than 50 percent of the users coming in from mobile devices. There are even some that are over 60 percent.”
That mobile customer often tends to be in the lowest funnel of the car-shopping process, so when you have a mobile-first marketing strategy, “you’re really driving that person who is the most likely to make an action,” he added.
“In the mobile environment, if you’re focused on the experience in mobile and then backing into the larger PC screen environment, it allows an even better experience over there, because if you’ve got the mobile nailed, the PC just becomes a richer experience of it,” he said.
Fuller was adding some additional context to one of the automotive digital marketing predictions for 2015 that Search Optics made in January — the company suggested that responsive design of dealer websites will become even more important, given the increase in tablet and smartphone usage — but the statistics he shared tie into much of what others are noting about the prevalence of mobile.
The 2015 Automotive Buyer Influence study from AutoTrader.com, for example, shared some mobile trends showing that 39 percent of car shoppers reports using a smartphone, compared to a mere 19 percent in 2013.
And these shoppers aren’t putting their phones down when they enter a physical in store. In fact, 65 percent of shoppers used the device while visiting a dealership.
For tablets, the numbers are slightly lower; 35 percent reported using a tablet in the 2015 study, compared to 19 percent in 2013.
AutoTrader explained the mobile device usage growth is being led by used-car buyers, who showed the largest increases in using smartphone and tablets for car shopping last year.
“The power and proliferation of mobile devices in the U.S. is undeniable, and consumers are rapidly turning to these devices as they shop for cars,” said Jared Rowe, president of AutoTrader.com. “The importance for all automotive advertisers to have a robust cross-platform presence cannot be underscored enough if they want to reach and influence consumers as they shop for cars.”
And it seems these new more convenient devices are pulling shoppers away from their desktops and laptops. In 2013, 91 percent of car buyers who used the Internet to shop for cars reported using a desktop/laptop, compared to 82 percent in the 2015 study.
That’s not to say, however, that buyers have abandoned PC usage.
“Mobile will continue to be an important element in the future of car shopping, as it enables buyers to get the information they need whenever and wherever they need it,” added Rowe. “But rather than just thinking with a mobile mindset, automotive advertisers need to ensure that they are developing specific experiences across the spectrum of devices consumers use to shop for cars so they can deliver the right information at the right time.”
Speaking of mobile device usage and auto advertising, here’s an interesting tidbit related to what’s perhaps the biggest celebration of marketing (and football) of them all – the Super Bowl.
Dataium released its annual Big Game Automotive Report late last month and found that, as expected for most any Super Bowl Sunday, overall dealership website shopper traffic dipped that day.
But the firm offered this nugget: mobile device usage was up from a year ago, which possibly helped curb total traffic declines.
“Aggregate traffic was down 12.5 percent over a typical Sunday night, but this compares favorably to last year’s 14.7 percent decrease,” Dataium said in the analysis. “This effect may be due to the higher use of mobile devices (56.4 percent) during this year’s game as compared to 2014’s (41.8 percent).”
All told, the company said Super Bowl advertising netted a positive for automakers and their dealer. Dataium has been doing the Super Bowl study for four years, but this marked the first where “all automotive ads saw positive short-term lifts in dealership website traffic across all participating brands,” the company noted.
Deanna Smith, an analyst with Dataium added: “With advertisers applying advanced analytics, consumer response to commercials has been increasing. Combining this fact, with increases in mobile device use, more real auto shoppers were able to ‘seek and surf’ without leaving the comfort of their seat, making the combination of technology and analytics a super big win for advertisers.”
To put it in ballpark terms, nine out of every 10 car buyers shop online. Essentially, three-fourths of the car-shopping process takes place online, and three-fourths of the buying decision is made online. What’s more, the Internet is more powerful than any other factor influencing a car buyer’s decision.
Why, then, does the average dealer only spend 41 percent of their advertising on digital? (Note: NADA puts the figure at 41 percent; Borrell has it at 57 percent, according to Haystak Digital Marketing).
Sharing those statistics, that was the question that Haystak Digital Marketing founder Duncan Scarry posed to a crowd of mostly dealers at the 2015 Digital Summit his company was hosting at Google headquarters on Wednesday.
But it’s not just about simply bulking up your online advertising. You have to be everywhere when it comes to your online presence, Scarry said — so, for example, not just AutoTrader.com or Cars.com, but both; not just Google or Bing, but both.
One example that Scarry gave during his presentation was that of Grand Central Station in New York. If you compiled all the origination-to-destination combinations from all of those travelers passing through, you would almost assuredly find that no two paths are the same.
The same could be said of online car shopping. As Scarry put it, there is no Point A and Point B with a straight line in between — there are infinite number of ways shoppers can, and do, shop online, he said.
If you look at the usage of the various categories of online shopping — third-party sites, dealer sites, search engines, OEM sites, etc. — not one has 100-percent market penetration, Scarry pointed out.
Put a different way, he said the single biggest opportunity to influence the shoppers is on the Web. Thing is, they could be any number of places on the Internet, so you as a dealer have to be everyone,
And given these stats, plus the fact that consumers use eight sources on average with 24 different research points, Scarry says the amount of data they consider is “astronomical.”
But boosting your presence and casting a wide net is only part of it — it has to be quality content, he emphasized.
To paraphrase, chicken scratch can't necessarily be turned into chicken salad.
Naked Lime Marketing recently launched an all-new, comprehensive website platform for dealers called Aptus Websites.
Naked Lime explained that the company developed Aptus to help dealers build a more effective digital dealership that supports a smoother, more flexible end-to-end retail experience for consumers.
Officials highlighted Aptus benefits include:
— The ability for dealers to choose what content consumers see on each device, all while maintaining one URL for better search engine optimization (SEO)
— Easy drag-and-drop website editing capabilities that allow dealers to change site elements on the fly
— Faster page loads to help improve the consumer experience and conversion rates
— A new, more intuitive website administrative tool for dealership employees to quickly and easily manage the components of their site
— A tailored website setup process and Web strategy advice and support from Naked Lime's specialists to help dealers gain the most from their digital dealership
“Which device consumers use for Web browsing is often driven by context: Where they are, what they intend to do and the amount of time the task will take,” said Jim Wright, vice president and general manager of Naked Lime.
“Dealers are recognizing they need to account for these factors when designing their dealership websites,” Wright continued. “We’ve developed Aptus, inspired by the Latin word for 'adapt,' to help make it easier and more efficient for dealers to deliver a more pleasing online experience by serving up the right Web content on the right device to every consumer who visits the dealership's website.
“The vast majority of today’s consumers already have made their buying decision prior to stepping foot in the dealership. They've been interacting with the dealer across a number of devices and formats before selecting which car and where to buy,” he went on to say.
“With Aptus, dealers are better able to put their best message in front of consumers during each online interaction, which can lead to a better retail experience for consumers and better business results for dealers,” Wright added.
More details about the solution can be found by watching the above video or going to nakedlime.com.
Dealers now have an improved way of connecting with potential buyers in their market, as NADAguides has enhanced its Car Deals, Incentives and Rebates online research tool.
The solution now can provide consumers with a clear understanding of local car deals and identifying the deepest discounts available that very day in their neighborhood and surrounding areas. The tool uses the consumer’s ZIP code to locate regional and national vehicle incentives available within driving distance, determines the best deals available and provides a listing of dealerships.
If potential buyers can’t find what they want in the immediate area, dealers from farther way could reap the benefits.
NADAguides now can provide the ability to search regionally for the best incentives among 12 specific vehicle categories/types including coupe, sedan, truck, SUV, van, wagon, sport, hybrid, luxury, convertible, crossover or electric.
NADAguides director of product development Troy Snyder explained that providing consumers with all promotions across a vehicle category can allow them to compare different manufacturer incentives on similar vehicles, which may become a deciding factor in the vehicle they choose.
Furthermore, for the consumer with more specific search criteria, Snyder mentioned regional and national promotions can be researched by year, make and model.
Snyder added that the most up-to-date information on the market is available because NADAguides updates these details on a nightly basis.
“Consumers have been utilizing our Car Deals, Incentives and Rebates research tool to help them find the best national deals for quite some time now,” Snyder said. “The regional enhancement our team has made to this tool allows users to find the deepest local incentives, which often differ from those on the national level.
“Additionally, the ability to search by vehicle category is extremely helpful for those that are still trying to narrow their consideration set,” he continued. “A cash rebate, low percentage financing or other incentive may be the deciding factor for a consumer choosing between multiple car brands and models.”
The Car Deals, Incentives and Rebates research tool can be found in the NADAguides Research Center.
As Black Book personnel visited and watched over 70 auctions last week, market insight reflected the approaching tax season as Black Book editorial director Ricky Beggs reported prices are strong, and of course, “the tax season favorites are getting sold.”
As many dealers are tracking, the IRS began accepting tax returns on Jan. 20 — and when the checks come through, many consumers will head toward the lots.
By the end of last week over 36 percent of all price adjustments in the lanes were increases.
This marks the sixth week out of seven that price jumps have beat out the 30-percent mark.
“This is not all that unusual during February and March each year, but this level supports our comments as to how active the market is now, and was back in November and even December,” Beggs said.
For cars, the average price decline last week at auction came in at $62, just under the $63 drop seen the week before.
The largest drops were seen in the luxury-level car segment with a decline of $129; the prestige luxury cars followed, dropping by $108 last week.
Beggs said the spring market is looking up for entry-level cars, as retention continues to be strong. This segment saw prices drop by a mere $20 last week.
Moving over to highlight the truck segments, overall truck prices fell by $43 last week, also similar to the $46 drop the week prior. Trucks continue to lead the pack in terms of price retention.
In fact, the compact SUVs enjoyed their third consecutive week of price increases, rising $71 last week.
Other strong performing segments were the full-size pickups with a drop of $6, the midsize SUVs with a decline of $9, and both the full-size vans and wagons with declines of $12 and $7, respectively.
“Except for the larger drop the prior week for the midsize SUVs, these have been our better performers over the past month or so,” said Beggs.
On the other hand, some of the larger models aren’t holding their prices up quite as well.
For example, the full-size SUVs saw a drop of $114 last week, while the full-size crossovers fell by $95. Luxury SUVs also saw a larger-than-average decline with an $85 downturn turn.
Beggs said, “One would think the continuing falling gas prices would get a better reaction from these full-size utilities.”
Gas prices continued to fall last week, dropping to an average of $2.07 per gallon, according to Black Book.
To view the latest “Beggs on The Used Car Market Report”, see above.
Taking a look at mobile trends, the 2015 Automotive Buyer Influence study from AutoTrader.com shows that 42 percent of recent car buyers used multiple devices to shop for cars last year.
Mobile usage is expanding at a rapid rate as only 24 percent of car shoppers used multiple devices in 2013.
AutoTrader explained the mobile device usage growth is being led by used-car buyers, who showed the largest increases in using smartphone and tablets for car shopping last year.
“The power and proliferation of mobile devices in the U.S. is undeniable, and consumers are rapidly turning to these devices as they shop for cars,” said Jared Rowe, president of AutoTrader.com. “The importance for all automotive advertisers to have a robust cross-platform presence cannot be underscored enough if they want to reach and influence consumers as they shop for cars.”
Smartphone usage for car buying, in particular, is on the rise. Last year, 39 percent of car shoppers reports using smartphone, compared to a mere 19 percent in 2013.
And these shoppers aren’t putting their phones down when they enter a physical in store. In fact, 65 percent of shoppers used the device while visiting a dealership.
For tablets, the numbers are slightly lower; 35 percent reported using a tablet in the 2015 study, compared to 19 percent in 2013.
And it seems these new more convenient devices are pulling shoppers away from their desktops and laptops.
In 2013, 91 percent of car buyers who used the Internet to shop for cars reported using a desktop/laptop, compared to 82 percent in the 2015 study.
“Mobile will continue to be an important element in the future of car shopping, as it enables buyers to get the information they need whenever and wherever they need it,” added Rowe. “But rather than just thinking with a mobile mindset, automotive advertisers need to ensure that they are developing specific experiences across the spectrum of devices consumers use to shop for cars so they can deliver the right information at the right time.”
2014 was rife with reward and loss. From the passing of one of our nation’s finest actors to the world’s largest and most-viewed sports competition, Google trend data for our most recently eclipsed year sheds light on what our information-craving nation was most interested in, while a seemingly infinite wealth of human knowledge is available literally at our fingertips.
It likely comes as no surprise that the top three most-searched items for the year ended up being Robin Williams, the World Cup and Ebola, according to Google. Those are just several points on the big list of hard-hitting news topics. There is, however, quite a bit to learn about what consumers were searching for in regards to the auto market, an industry that saw over $1.1 trillion in revenue for new and used U.S. auto sales in 2014, according to current data projected by TrueCar. That is an estimated 54 million units, 37 million of which are used vehicles. The latter represents a 3.3-percent increase in used-vehicles sales over 2013.
The domestic auto market had a shining year in terms of search interest. The top three brand-related searches on Google were for Ford, Jeep and Dodge, with General Motors following Toyota in fifth and Tesla rounding out the top ten.
The interest in the automotive industry peaked in the summer, with autos and vehicles making up 22 percent of the nation’s total searches at the end of July.
As far as a simple search of “used car” on Google, the state of Mississippi led all other states with the most searches, while Augusta, Ga. and Charlotte, N.C. were the top cities with the search.
Dealership reviews will now be available on AutoTrader.com.
As part of a partnership between AutoTrader and DealerRater announced Tuesday, consumer-generated ratings and reviews of dealerships done through DealerRater will be integrated into dealer profile pages on AutoTrader.com. That starts this month, the companies said.
Additionally, a shopper can click a “Rate & Review This Dealer” button while browsing cars on AutoTrader.com. When the consumer clicks that button, he or she is directed to the “Write a Review” page on DealerRater.com, where the shopper can then grade the dealer on customer service, quality of work, friendliness, price and overall experience.
After the shopper submits the content, DealerRater’s content integrity team reviews and verifies the material before it hits the Web.
“The car buying process can be boiled down to three key steps: finding the right vehicle, understanding the appropriate pricing and choosing a dealership that delivers an exceptional customer experience across all departments,” said Jared Rowe, president of AutoTrader.com. “The addition of DealerRater reviews to AutoTrader.com will provide shoppers with streamlined access to the resources they need to make confident decisions while enabling our dealer customers to gauge and enhance their service levels.”
The program allows dealers — including those who are subscribed to DealerRater’s Certified Dealer Program and those who are not — to post their DealerRater reviews on AutoTrader.com.
However, the DealerRater Certified Dealers get this benefit: if there is a shopper who submits an unsatisfactory review, the dealer gets a two-week reconciliation period in which the store can communicate with the shopper and resolve the issue prior to the review’s publishing.
Once that two-week time frame ends — and provided the customer has not edited or removed the review — it is published on both DealerRater.com and AutoTrader.com.
Sharing his thoughts on the partnership, DealerRater chief executive officer Gary Tucker said: “This partnership reinforces how critical online dealer reviews are in today’s car shopping process. Each day, more than a thousand car buyers write a DealerRater review, and their opinions about their dealership sales and service experience are invaluable referrals for other car shoppers.
“Written by consumers for consumers, DealerRater reviews help guide car shoppers to the best dealerships, and also allow auto dealers to reach a higher level of trust with car shoppers through transparency,” he said.
Tucker added: “We’re excited to put more than 1.6 million dealer reviews at AutoTrader.com customers’ fingertips, as well as help our Certified Dealers continue evaluating and improving their customer service experience.”
Auto Remarketing talked with Tucker this summer about transparency in the digital auto marketplace and how it relates to Millennials. That story, plus related content from an interview with AutoTrader vice president of research and market intelligence Isabelle Helms, can be found in the Oct. 1 digital edition of Auto Remarketing.
AutoTrader indicated that DealerRater is its first partner in this initiative. When asked by Auto Remarketing if there was a possibility for expansion or additional partners, the official response from Rowe provided by the company was this: “There is the possibility for additional partners, as we believe very strongly in dealer choice.”
When it comes to car-shopping traction by the various forms of social media, Facebook is huge, as many resources in the industry will attest.
In addition to emphasizing the vast importance of Facebook to the car-shopping process, Digital Air Strike also shared a list of other social networks and the percent of car shoppers who used them to do research businesses.
The rankings below were included in the company’s 2014 Automotive Social Media Trends Study:
YouTube: 37.2 percent
LinkedIn: 36.6 percent
Pinterest: 23.6 percent
Twitter: 23.1 percent
Instagram: 18.9 percent
G+: 7.6 percent
Vine: 4.3 percent
Flickr: 2.7 percent
Foursquare: 2.7 percent
Other: 2.2 percent
Meetup: 1.9 percent
Swarm: 1.4 percent
Meanwhile, 34.1 percent said they only used Facebook.
