August 2012

Toprak: Increased Late-Model Supply Helps Push Used Sales Growth


Used-vehicle sales appear to be headed toward the 4-million-unit range this month, which would beat the figures from last August by more than 4 percent, according to

Specifically, TrueCar is calling for 3.99 million used sales this month, which would be a 4.7-percent increase from a year ago.

“It’s mostly an inventory-driven increase,” Jesse Toprak, the company’s vice president of market intelligence, explained to Auto Remarketing on Wednesday afternoon.

In essence, the increase in new-car sales volumes in recent years has now led to “slightly” greater availability of used units aged three years or newer, Toprak said.  There are simply more of these cars out there.

Also driving the year-over-year increase has been sales of the $10,000-and-under crop of used units, as Toprak noted, “That business remains strong.”

Granted, the nearly 4 million used sales expected industry-wide in August would be down 13.3 percent from July, TrueCar noted. But Toprak attributes this mostly to “seasonality.”

Given the Labor Day Weekend, end-of-summer clearance and end-of-model-year sales, the new-vehicle market is naturally stronger, he explained, noting that “new-car sales sort of grab the limelight in August.”

On this front, TrueCar is forecasting 1.26 million new-vehicle sales (including fleet), which would be a 17.2-percent year-over-year gain and an 8.9-percent sequential uptick. New-vehicle retail sales are projected to jump 14.3 percent year-over-year and 9.7 percent sequentially, according to TrueCar.

CNW Offers Used Projections

Elsewhere in the used-car market, CNW issued a sales forecast on Aug. 21, calling for 3.89 million used sales this month, compared to 3.81 million in August 2011.

The firm projected to year-to-date sales through August to settle at 27.88 million, compared to 26.93 million used sales in the opening eight months of last year.

“August usually is a relatively slow month for used sales, but this year’s numbers are distressing, especially for independent dealers,” said CNW president Art Spinella.

Getting into specifics, CNW is predicting franchised dealers to move 1.52 million used vehicles in August, which would beat last year’s numbers by 6.3 percent. Year-to-date numbers would then be at 10.27 million for a 4.6-percent increase.

Casual sales are projected to climb 12.6 percent to 1.08 million, with year-to-date private-party sales up 14.6 percent at 8.34 million.

However, CNW expects independents to dip 9 percent with 1.30 million sales for the month. It is calling for their year-to-date sales to come in at 9.27 million, which would be down 5.6 percent.

“Private-party sales continue to sparkle as more consumers offer their cars on websites such as craigslist and other no-charge outlets,” Spinella shared.

“The independent dealer body is torn. In some regions of the country, used sales by indies are soaring while in other parts of the country, they are in the tank,” he continued. “Regardless of regional differences, independents on the whole are on track to a 9-percent decline in August.”

Webb Says Used Profitability on Rise

In the August Auto Industry Brief written by Manheim’s Tom Webb and distributed Wednesday, the chief economist of Manheim consulting recapped CNW’s report on July used-vehicle sales and August projections.

Then, Webb turned to used-vehicle profitability and shared how the nation’s public dealer groups are an example of an ongoing trend.

“Operating efficiencies, quick inventory turns, and strong F&I income have enabled dealers to make good profits in their used vehicle operations, despite a narrowing in gross margins,” Webb noted.

“Confirmation of this industry-wide trend was provided by the earnings reports of the publicly traded dealership groups,” he continued. “On a sales-weighted basis, their same-store used retail unit volumes rose for the 13th consecutive quarter. Gross margins, however, have declined on a year-over-year basis for 10 consecutive quarters.”

Top 3 Reasons Consumers Consider CPO


The benefits of buying a certified pre-owned vehicle might be numerous, but findings from have boiled down the reasons why, exactly, consumers consider CPO.

Shoppers most often say it’s because of the peace of mind they get from the certification, the fact that it has a stronger warranty, or that they cannot afford to buy new, says Howard Polirer, director of industry education at

Polirer was among the speakers Wednesday afternoon during a CPO teleconference panel hosted by General Motors. He was referring to the findings of a 2011 study conducted on behalf of AutoTrader by Morpace, which illustrated shoppers’ reasons for CPO consideration.

More specifically, 71 percent of consumers cited the peace of mind from the certification/warranty, 61 percent said it was because CPO had a better warranty than used, and 58 percent said they couldn’t afford a new vehicle.

Interestingly enough, speaking to the third of these points, Polirer explained how the economy has played a role.

“All of a sudden, the value proposition of certified to a consumer has a lot more meaning,” Polirer said Wednesday.

He was joined on the panel by Larry Pryg — the national manager of GM CPO Vehicle Operations — and Denny Dunfield, the general manager of Al Serra Auto Plaza in Grand Blanc, Mich.

In addition to sharing insight on why shoppers consider CPO, the trio covered a wide spectrum of certified topics, including some helpful tips for dealers. One of the common trends emphasized during the discussion was the increased awareness among consumers about certified.

In fact, this was one of two major factors — the other being a stronger emphasis on certified from automakers — driving the CPO sales growth. Last year was the best year ever for CPO sales, and through July, certified sales this year are up 4.8 percent from 2011, according to Autodata Corp.

Industry-wide CPO sales updated through August yet to be reported, but Pryg said Wednesday he expects GM will move 285,000 certified units for the year.

Used Prices On The Way Down, but Still Remain Close to New Rates


Though used-car prices are trending downward after landing at record highs due to low supply, rates are still high and some consumers are turning towards buying new.

In light of this trend, offered a list of vehicles shoppers should consider buying new, since used prices for these units are sitting particularly close to this year's model rates.

The list of ten vehicles includes units such as the 2012 Chevrolet Equinox LT, which is going for $24,845 new, according to Kelley Blue Book Fair Purchase Price. And the used 2011 Equinox model is going for $24,305, according to Kelley Blue Book Suggested Retail Value. This marks a difference of only $540.

Other models on the list include the 2012 Mazda MAZDA2 Sport, the 2012 Kia Rio LX Sedan and the 2012 Volkswagen Gold TDI 4D, to name a few. To see the full list of “10 Cars You Should Buy New" from, see here.

On the other hand, prices for new and used cars may begin to drive apart in the near future, according to CarGurus. The automotive research company reported Wednesday that its CarGurus Used-Car Price Index, which tracks the average price of a used car available for sale in the U.S., is currently at $19,316.

This is down approximately 2.4 percent since prices peaked in May and down 2.2 percent from this same time last year.

And officials expect prices to continue downward for the rest of year;  CarGurus analysts say they expect to see the average price of a used car continue to decline by at least another 4 percent by the end of 2012.
“This Fall is setting up to be a good time for consumers to find savings on a used-car purchase, which is quite a change from a few months ago,” said Langley Steinert, founder and chief executive officer of CarGurus.

“The tight supply issues that drove many used-car prices up earlier this year seem to be resolving, and that, combined with a typical seasonal drop-off in demand, bodes well for shoppers. Still, we recommend that consumers do careful research and their price homework as they shop for the right car,” he continued.

Breaking it down by vehicle type, the company noted that “the downward price trend in recent months is consistent across all categories.

“Year over year, average prices on most vehicle types are presently lower than this time last year,” they continued.

But there are a few exceptions. Despite rising gas prices, the average prices for vans, pickups and SUVs are presently higher year-over-year.

“Average prices on these large, less fuel-efficient vehicles were generally low in summer 2011 due to high gas prices and reduced demand,” the company concluded.


California Legislature Sends First BHPH Bill to Governor


Only a signature from the governor stands in between a bill to significantly change how buy-here, pay-here dealers operate in California from becoming law.

The state legislature on Tuesday approved Assembly Bill 1447, the measure that would require a written warranty among other mandates. Gov. Jerry Brown has until the end of September either to sign or veto AB 1447, written by Assemblyman Mike Feuer.

"Without the protections included in AB 1447, mostly low-income buy-here pay-here customers can't be sure they are buying dependable vehicles," Feuer said.

"This bill requires a minimum warranty to help ensure buyers are paying for reliable transportation and other critical safeguards for consumers," he continued. "I urge the governor to sign this critical measure."

The main points of AB 1447 include:

—Require BHPH dealers to provide a written warranty that covers most major components and lasts for at least 30 days or 1,000 miles, whichever happens first.

—Prohibits BHPH dealers from requiring a buyer to make regular payments in person.

—Requires BHPH dealers to receive written consent from the buyer prior to selling a vehicle equipped with electronic tracking technology.

—Requires BHPH dealers to provide notice to the buyer of the presence of "starter interrupt" technology in the vehicle, ensuring that advance warnings are provided to the driver — prior to the vehicle being disabled — in order to help avoid stranding a driver in dangerous circumstances.

Meanwhile, the author of Senate Bill 956 said through Twitter that his measure is to be voted on this week. Sen. Ted Lieu indicated the bill could be sent to Brown before Friday, the legislature's deadline to get all proposed measures through both the Assembly and Senate.

To recap, SB 956 has three main goals:

—Impose first-ever regulations on dealers offering buy-here, pay-here installment loans by requiring them to obtain a California Finance Lender's license.

—Limit used-vehicle installment loans to an interest rate of no more than 17.25 percent, which would give California the strongest cap in the nation.

—Change the way BHPH dealers are able to repossess vehicles to include grace periods and make it easier for buyers to reinstate a repossessed unit.

Finally, AB 1534 now has been read three times on the legislative floor and could be heading to a vote this week, as well.

AB 1534 would require a BHPH dealer to display a label on any used vehicle offered for retail sale that states the "reasonable market value" of the unit. The bill would require the label to contain specified information used to determine the vehicle's reasonable market value and the date the value was determined.

Moreover, AB 1534 would require a BHPH dealer to provide to a prospective buyer of the used vehicle a copy of any information obtained from a nationally recognized pricing guide the dealer utilized to determine the reasonable market value of the vehicle.

GM Exec: Company Working to Build Trust, Communication with Dealers

MCLEAN, Va. - 

The key to the partnership between OEM and dealer is honest, open communication, and General Motors is working to improve relations with its 3,000 U.S. dealers.

That’s the word from Alan Batey, GM's U.S. sales chief, on the company’s desire to improve communications with dealers regarding its Essential Brand Elements program. Batey shared his thoughts in an interview on National Automobile Dealers Association’s AutoFocus with David Hyatt.

The EBE program has been the source of controversy among GM dealers, many of whom say the small dealer is treated unfairly.

Batey, a third-generation GM employee who has worked internationally during his 33-year career and now works in the U.S., said communicating clearly to dealers is very important in making sure everyone understands the company’s message and strategy.

While GM and its dealers will not always agree on business points, he said, there’s a need for mutual understanding.

“The key to our partnership is open, honest communication,” he said. “We need to listen to their point of view; we need to try and take it on board wherever we can, but where there is a difference, they also need to understand our perspective.

“And then ultimately we need to create trust, because when you don’t have trust in a relationship unfortunately decision making becomes slow, and in this fast moving industry we’re in, we’re going to lose.”

Batey credited NADA’s recent visit to Detroit for helping to generate ideas for improving GM’s communications with its smaller dealers.

“We’ve taken that advice on board, and in fact, we’re going to lay out a plan so that every dealer in the nation who wants to have face-to-face consultancy with us on a confidential basis can get it,” he said.

Also of note is the company’s focus on improving facilities.

“I think it’s true to say that the face of our business is our dealers,” Batey said. “Clearly, as we came out of bankruptcy one of our challenges was that the face of our brands was not consistent. And frankly, our facilities lagged our competitors. So we knew we needed to do something, do it fast, and provide a financial platform for dealers to be able to use to fund their investments.

“I would say we’re at a point right now where we’ve got a lot of facilities going up," he continued. "These are voluntary programs, so dealers can opt to do it or not. We’re really working with every dealer individually, making sure they understand the program, they understand the requirements, and they do it if it makes good business sense to do it.”

Improved communications, updated facilities and new product launches are part of the company’s vision, Batey said, one that requires engagement across the organization.

“We want to move away from being competitive, to being the best,” he said. “We have a very clear vision, and we now need to move fast and deliver against that vision. One company globally, one GM, with our brands distinctively positioned in the market, and then it’s all about execution with excellence and passion in everything we do.”

To view the interview, click here.

DSC of Indiana Launches Mobile Website

CARMEL, Ind. - 

Dealer Services Corp. of Indiana rolled out a new mobile version of its website aimed at making it easier for store managers to connect to products and services.

Officials this week explained the new mobile version of is accessible from any smartphone. The launch is part of the company's continuing efforts to bring information to a wider customer base so dealers can maximize their profits.

The mobile site also includes a Spanish version, DSC Español, which can allow users to view in Spanish.

Through the mobile site, customers can also download DSC Unplugged Mobile, DSC's smartphone app to access their myDSC virtual office enabling dealers to scan vehicles for book-out, floor plan inventory, view vehicle titles and manage their DSC account 24 hours a day, seven days a week.

"We have seen a dramatic increase in Web traffic from smartphones," said Patty Turner, DSC's director of marketing and administrative services.

"The goal of the mobile site is to provide our customers and business partners with an interface that quickly leads them to the information they need on the go," Turner continued. "This site was designed to meet the growing technology needs of our customers as they transact business at the auction or away from their lots."