November 2012

Payless Opens New Franchised Louisiana Store; Offers CPO Program


Payless Car Sales revealed last week a new store in Louisiana’s capitol city.

Gerry Lane’s Payless Car Sales is now open for business at 11025 Reiger Road in Baton Rouge.

The new store is located next to Gerry Lane Cadillac.

The company contends that this store allows Baton Rouge customers to buy quality used vehicles with confidence from “two names they know and trust: Gerry Lane and Payless Car Sales.”

“Gerry Lane’s new store is a part of Payless’ focus to bring in the very best franchisees in automotive retailing,” said Keith Wiesman, president and chief executive officer of Payless Development LLC. “Now that the store is open, customers in Baton Rouge can experience our ‘Drive More… Pay Less’ way of doing business.”

Also, the store features the Payless Assurance Certified Pre-Owned program.

The program offeres CPO customers a vehicle inspection, vehicle reconditioning, comprehensive limited warranty, Carfax vehicle history report, roadside assistance, rental reimbursement and travel protection.

Mike Venable, the new store’s general manager, said, “Our staff is excited that we are now Payless Car Sales and offering the Payless Assurance Certified Pre-Owned program. This is exactly the kind of program our customers are looking for.”

ServNet Holds ‘Meet the Owners’ Event; Highlights Growth as 25th Year Approaches

FRANKLIN, Tenn. - 

Standing at the threshold of its 25th year, ServeNet held a Meet the Owners event earlier this month that served as a time to "review the group’s history and continued strengths."

ServNet auction owners and executive team met with executives from Bank of America, Hyundai Capital, Consumer Portfolio Services, Lobel Financial, Automotive Information Network, KARS-R-US, and others at an event at the Marconi Automotive Museum in Orange County, Calif.

This museum is home to a $30 million collection of historical, exotic and classic cars.

Commenting on the company’s growth, Charles Nichols, ServNet president and partner in BSCAmerica Auctions, said, "We are pleased to trace tremendous growth in ServNet as a group, and among ServNet auctions individually, since its founding in 1988.

"What began as a cooperative marketing effort involving 10 auctions in 1988 has evolved into a network of the nation's top auctions, now 30 members strong, which sets standards for best practices, builds effective partnerships with auction customers, and facilitates a level of communication that benefits both the member auctions and consignors from coast to coast,” he continued.

At the Owners’ Business Meeting held before the Meet the Owners event in Southern California, Nichols commented on the past year for the company.

"2012 has been an excellent year for ServNet Auctions, which are, in fact, tracking year-over-year sales stronger than the industry as a whole," said Nichols. "I attribute this to the group's entrepreneurial efforts, strong capitalization and premier customer service during a challenging economic period in our industry."

He also went on to note that ServNet’s market share is on the "rise," growing 11 percent over the past 12 months.

Also, the exec shared that employment is up this year at ServNet auctions across the country, with more "'boots on the ground' to offer our customers an unparalleled level of service."

Furthermore, the company has recently made upgrades at auction facilities all over the country.

Recent improvements include new reconditioning facilities at Pittsburgh Independent Auto Auction, Kansas City Independent Auto Auction, DAA of the Rockies and Missouri Auto Auction; a new inspection facility at State Line Auto Auction; an expanded lot at Sparkling City of San Antonio; added lanes at Missouri Auto Auction; and a new facility for specialty sales at Bel Air Auto Auction.

"In 1988, ServNet's aim was to increase the visibility of our independent auctions and to stress the advantages of the personal service we offer," said Nichols.

"We have come a long way since then, as we have responded to the rapidly changing requirements of our industry. ServNet Auction owners have a passion for the work, knowledge and experience that is unmatched and a lifelong commitment to their businesses and the industry. It is their dedication and their vested interest in their auctions that has resulted in success for their businesses, for ServNet, and for the customers we serve,” he concluded.

J.D. Power & LMC Automotive: November New-Car Sales Bouncing Back


Here’s an item dealers still can be thankful for now that all of the turkey leftovers are gone: New-vehicle sales appear to be back on track after Hurricane Sandy.

The latest sales forecast developed by J.D. Power and Associates’ Power Information Network and LMC Automotive showed the new-vehicle retail selling rate is back to a healthy level this month after being negatively impacted by Hurricane Sandy in October.

November new-vehicle retail sales are projected to come in at 931,900 units, which represent a seasonally adjusted annualized rate of 12.9 million units.

Analysts said November is expected to reflect the highest retail selling rate since January 2008. They emphasized retail transactions are the most accurate measurement of true underlying consumer demand for new vehicles.

“Sales have strengthened each week in November, which bodes well for a strong finish to the month and the year,” said John Humphrey, senior vice president of global automotive operations at J.D. Power and Associates.

“We expect healthy sales in December as the industry continues to recover from Sandy and leads into its year-end sales events,” Humphrey continued.

The firms indicated total light-vehicle sales in November are expected to increase 12 percent from November of last year with volume at 1,113,500 units.

Fleet sales are expected to hold steady below a 17 percent share of total sales, which is the same level as October but lower than the 18 percent share last November.

LMC Automotive is maintaining the 2012 forecast for total light-vehicle sales in the United States at 14.4 million units and the forecast for retail sales at 11.7 million units.

While the forecast still rounds to the same numbers as it did in October, the overall outlook is more favorable, according to analysts.

LMC Automotive highlighted the U.S. sales forecast for next year remains stable at 15 million units for total light-vehicles and 12.2 million for retail sales, but represents a slower growth rate of 4 percent from 2012.

Jeff Schuster, senior vice president of forecasting at LMC Automotive, noted there continues to be the possibility of accelerating the growth in 2013 as the current level of uncertainty is expected to be reduced in the first half of the year.

“The irrepressible need and willingness of consumers to replace aging vehicles is stronger than the effects of natural disasters and fiscal turmoil both here and abroad,” Schuster said.

“A sustained recovery pace in auto sales is expected over the next six months, barring any fiscal cliff hangover, but the medium-term forecast is still dependent on more pronounced economic activity and growth,” he continued.

Analysis of North American Production

The firms calculated North American light-vehicle production volume remains up 20 percent through the first 10 months of this year, compared with the same period a year ago.

Volume through October is at nearly 13.1 million units, the same volume level as in all of 2011.

Vehicle inventory in early November rose to a 71-day supply — the highest day supply level in 2012 — compared with 59 days in October.

Analysts explained the supply growth is a result of an increase in inventory ahead of anticipated year-end sales, as well as the impact of Hurricane Sandy, which caused significant damage along the East Coast and slowed demand in the last week of October.

Car inventory has risen to a 66-day supply from 51 days in October, while truck inventory has increased to a 77-day supply from 65 days.

The firms indicated vehicle inventory levels should stabilize this month and into December as sales are expected to recover due to consumers who had delayed their purchases last month returning to the marketplace following the storm and from additional sales due to the need to replace damaged vehicles.

LMC Automotive’s 2012 North American production forecast stands at 15.3 million units, which is a 17-percent increase from 2011.

The North American production forecast for 2013 is expected to be nearly 15.8 million units, a mere 2-percent rise from 2012, with further upside potential.

“The continued pace of demand in North America, with sales up 13 percent through October, is supporting the short-term production plan and volume at the highest level since 2005,” Schuster said.

“Production levels continue to be managed to demand, so a growing level of inventory is not setting off any alarms, as some inventory building is normal as a year closes,” he concluded.

ALG Residual Value Awards Brings One OEM Back to Top Spots with Sweep


The brand rankings in the 14th annual ALG Residual Value Awards winners announced this morning marked both a sweep and reclaimed crowns.

Honda took top honors on the mainstream brand side following a three-year absence from the No. 1 spot, while Acura ranked first on the luxury side, ending a two-year absence.

These brands combined to win three of the 22 vehicle categories, while the Toyota, Lexus and Scion brands led the way with nine combined category wins.

ALG’s awards are doled out based on vehicles projected to maintain the strongest percentage of original MSPR after three years. Models were evaluated in such criteria as segment competition, historical vehicle performance and industry trends. 2013 model-year vehicles were considered.

“Residual value is a complete indicator of vehicle value, taking into account quality, durability and brand desirability,” stated Larry Dominique, president of ALG. “The Residual Value Awards measure the most important brand performance metric – the statement consumers make with their wallets when they purchase a vehicle.”  

Breaking down the brand rankings further, Hyundai placed second on the mainstream side and was followed by Scion, Subaru and Mazda in spots three to five.

“Hyundai’s ascent as a brand is nothing short of impressive,” said Dominique. “Since 2007, when the brand ranked in the bottom quartile for Residual Value, Hyundai has delivered well-executed product, and has kept incentives and fleet – two elements that can quickly damage residual value – in check. And, as demonstrated by the redesigned Santa Fe Sport, they continue to deliver.”   

For the premium brands, Infiniti was second, Audi was No. 3 and Lexus was fourth. Mercedes-Benz was fifth.

The complete list of winners is as follows:

Mainstream Brand Rankings
1. Honda
2. Hyundai
3. Scion
4. Subaru
5. Mazda
6. Toyota
7. Nissan
8. Kia
9. Volkswagen
10. Mitsubishi
11. Ford
12. Dodge
13. Buick
14. GMC
15. Chevrolet

Premium Brand Rankings
1. Acura
2. Infiniti
3. Audi
4. Lexus
5. Mercedes-Benz
6. BMW
7. Cadillac
8. Porsche
9. Volvo
10. Lincoln

Segment Awards
Subcompact Car: Honda Fit
Compact Car: Hyundai Elantra
Midsize Car: Honda Accord
Full-size Car: Hyundai Azera

Sports Car: Scion FR-S
Alt-Fuel Vehicle: Toyota Prius c
Minivan: Honda Odyssey

Subcompact Utility Vehicle: Mini Cooper Countryman
Compact Utility Vehicle: Toyota FJ Cruiser
Midsize Utility Vehicle: Hyundai Santa Fe Sport
Full-size Utility Vehicle: Toyota Sequoia

Midsize Pickup: Toyota Tacoma
Full-size Pickup: Toyota Tundra

Premium Compact Car: Mini Cooper
Premium Midsize Car: Mercedes-Benz C-Class
Premium Full-size Car: Lexus GS 350
Premium Executive: Lexus LS 460

Premium Sports Car: Porsche 911 Carrera
Premium Alt-Fuel Vehicle: Mercedes-Benz ML350 BlueTEC

Premium Compact Utility Vehicle: Acura RDX
Premium Midsize Utility Vehicle: Audi Q7
Premium Full-size Utility Vehicle: Toyota Land Cruiser

Viewing Fiscal-Cliff Impact Through Auto-Industry Prism

IRVINE, Calif., and SANTA MONICA, Calif. - 

The fiscal cliff is all the talk in Washington, D.C., nowadays since lawmakers must decide if the Bush-era tax cuts and a 2-percentage point payroll tax deduction among other elements will be extended by Jan. 1. Kelley Blue Book did some calculations recently to find out exactly what these tax issues mean to a typical consumer, and more importantly, to a potential buyer at a dealership.

Senior market analyst Alec Gutierrez figures a 2-percent bump in taxes on a household earning $100,000 per year would equate to $2,000 per year in additional taxes, or roughly $166 per month.

“This sum is equivalent to a lease payment on a brand-new subcompact and covers about half of a typical car payment on a midsize sedan,” Gutierrez said. “If this tax break is allowed to expire, given the fact that many household budgets already are stretched as far they can go, this could put some buyers on the fence about staying out of the market.”

If, in fact, the tax cuts are allowed to expire, Gutierrez fears the population could see an already sluggishly growing economy slump into reverse.

“This is bad news for those banking on vehicle sales continuing their recovery into 2013. While each of these tax cuts could negatively impact the auto industry if allowed to expire at the end of this year, the payroll tax holiday is perhaps of most importance to the average car buyer,” Gutierrez said.

Unless the economy slips back into recession, KBB indicated the industry is still bullish on new-vehicle sales for 2013.

Kelley Blue Book expects an annual increase of 300,000 to 500,000 consumers reaching the end of their lease term in 2013, which should help drive sales even if economic growth slows down.

Kelley Blue Book also anticipates consumers impacted by Hurricane Sandy will continue to seek replacement vehicles into 2013, which will help keep demand strong.

“Now that the election is behind us, the nation will be waiting on pins and needles as the -resident and Congress work together to address the looming fiscal cliff,” Gutierrez said.

Ford’s Perspective on Fiscal Cliff

Executive chairman Bill Ford told Bloomberg earlier this week that a deal between President Barack Obama and Congress to avoid the fiscal cliff is critical to the U.S. economy’s health

“It’s vitally important for the economy that we work this out,” Ford said in this online report. “I clearly hope we get some bipartisan effort to avoid the fiscal cliff.”

Ford chief executive officer Alan Mulally joined other business leaders who met with Obama recently to discuss the assortment of tax increases and other legislative changes that would take effect at the end of the year.

Bill Ford reiterated to Bloomberg that the fiscal cliff could threaten the hopeful recovery of the U.S. economy.

“It’s going to help the country,” Ford said. “Ford is not isolated from what happens to the rest of the economy.” Not Expecting Major Changes chief economist Lacey Plache thinks the likelihood is not high that all of these tax changes will occur.

“President Obama repeatedly has proposed extending the majority of these tax cuts for most taxpayers,” Plache said in an analysis.

The site’s economist said Obama likely will extend the lower Bush-era income tax rates, dividend tax rates and capital gains tax rates for the 98 percent of taxpayers earning less than $250,000 in annual income if married and less than $200,000 in annual income if filing single.

“President Obama also supports eliminating itemized deductions for housing, healthcare, retirement and childcare for only individuals with more than $1 million in annual income, and limiting the benefit of itemized deductions to 28 percent for only taxpayers in higher rate brackets,” Plache said.

“In short, his preferred changes would be targeted at upper income Americans and preserve the status quo for the middle class and below,” she continued. “The Republicans, on the other hand, have strongly objected to tax increases for any income levels, supporting spending cuts as a means to reduce the deficit.

“Currently, the potential compromise that comes up most frequently is to limit tax rates changes to households with more than $1 million in annual income and make up the difference with cuts to entitlement spending,” Plache went on to say.

So what does that debate mean for a dealer wanting to turn inventory?

“The likely tax rate changes should not substantially lower car sales in the near term,” Plache said. “In the longer run, though, the growth of car sales could slow if higher tax rates for the ‘wealthy’ result in enough less spending and investment that job cuts result.”

To read more on what Plache had to say, see her analysis here.

EXCLUSIVE PREVIEW: How Consumers Are Using Search Engines to Shop for New Rides, More


These days, a dealer can assume that most every customer that comes through the store’s doors has searched the Internet once or twice before deciding on a dealership to try out.

But how and when are shoppers turning to search engines, dealership websites and third-party sites during the shopping process?

For a special "Advertising Ideas for Dealers" section in the Dec. 1–15 issue of Auto Remarketing, we talked to industry experts in an effort to answer these questions, and figure out just how profitable search-engine marketing and optimization efforts are for dealers.

And a new white paper from aims to shed some light on how shoppers utilize these online tools.

The white paper, titled “Digital Audience Analysis: Understanding Online Car Shopping Behavior and Sources of Traffic to Dealer Websites,” provides insights about “the actual behaviors of online shoppers that dealers and OEMs can — and should — use to reach more shoppers and convert them into buyers,” the company said.

The paper leverages proprietary data and technology via; Kelley Blue Book and selected partner sites as well as Adobe technology were partners in the study.

The digital audience analysis looked at the online behavior of more than 3 million car shoppers across 1,300 active dealership websites to better understand what sites car shoppers visit, their on-site activity, how they navigate across a variety of automotive sites and the overlap among the sites they visit.

How Are Shoppers Using Search Engines?

Though some industry experts believe that search engines are used much like third-party sites — in other words, as a means for shoppers to find the kind of car they want to purchase — AutoTrader presented a different view.

As the white paper indicates, the company does not think consumers use search engines to actually shop for vehicles; rather, they are searching for the dealership’s location or a store website.

“Our research indicates that car shoppers often use search engines to locate businesses or products that they may have already been exposed to previously. That is, they use other automotive shopping sites to learn about vehicles and dealerships, and then use search engines to locate a dealership, find more information about the dealership or access the dealership website,” said Allyson Estes, senior director of customer marketing at AutoTrader.

Basically, Estes contends that shoppers are using third-party sites and other automotive shopping sites to learn about vehicles and dealerships. Then, they use search engines to locate a dealership.

“By understanding how and when shoppers use search engines, dealers can more effectively allocate their time and their budget for marketing initiatives,” she added.

Kevin Filan, vice president of customer marketing at AutoTrader, chimed in, explaining that dealers may have the “wrong” idea about how shoppers are utilizing search engines while looking for a new vehicle.

“There is a gap between perception and reality when it comes to the role of search in the car-shopping process, which could be leading dealers to over invest in search marketing at the expense of more effective sources,” Filan said.

“Shoppers are using search engines, but what dealers should be focusing on is how and when shoppers are using those tools. Our research shows that for a large portion of shoppers, search engines are an intermediary step where they go to find something they’ve already been exposed to previously,” he continued.

Both the execs as well as the white paper highlighted that search engines are mostly being used as directories and as a “path” to dealership websites.

“Initial analysis of the data used for the Digital Audience Analysis white paper shows that shoppers who visit a search engine immediately before arriving at dealership web sites often use branded search terms or keywords, such as the dealership’s name,” the paper states.

And according to Jason Ezell, president of Dataium, of the 50 percent to 65 percent of traffic that dealers receive from search engines, more 78 percent of those consumers use the dealer name or some variation of it as a key word, almost as if the shopper was using search engines as a digital phone book.

“Dealers’ websites are one of the primary ways they connect with potential customers, and when they see the bulk of traffic to their sites coming from search engines, it makes sense that they would drive more of their marketing dollars into paid search,” Ezell said.

“Because our study was able to look beyond direct referral traffic, however, we found that the majority of search engine traffic comes as a result of a consumer typing a variation of the dealership name into the search field. In other words, consumers are forming impressions earlier in the process, likely via other forms of media; search engines are often the taxi taking them to the place they’ve already decided they want to go,” he continued.

Ezell was referring to a recent study from Dataium and that also looked into the efficiency of dealer online advertising, and highlighted similar trends

The study report explained that nearly 80 percent of direct referrals from search engines during the study were driven by keywords that were a variation on the dealership name.

“In addition, this search activity suggests that these shoppers had been familiarized with the dealership prior to their visit to the search engine,” the report stated, further explaining that search engines are being used to find dealerships the shopper has already decided to visit.

The study, conducted between January and June, measured the activity of more than 20 million automotive shoppers per month on Dataium’s network and focused on evaluating the direct and indirect value of the two primary dealer advertising investments: paid search-engine marketing and automotive marketplaces.

Editors Note: For more information on new advertising trends as well as uses for SEO and SEM in the dealership, see the Dec. 1–15 issue of Auto Remarketing.