S&P Chief Economist, J.D. Power Executive Offer Cautious but Positive Outlooks

Two experts from Standard & Poor’s and J.D. Power offered cautiously positive outlooks for the U.S. economy and for the U.S. auto industry to some 300 auto dealers and industry participants during the recent Western Automotive Conference, sponsored by J.D. Power and the National Automobile Dealers Association (NADA).

Beth Ann Bovino, U.S. chief economist for Standard & Poor’s, said that the U.S. is in its fourth year of recovery with an average growth rate of 2%. On a global level, she cited challenges to be faced including a slowdown in China, the remaining effects of the debt crisis in the Eurozone, and spikes in global oil prices.

In addressing current conditions in the U.S., Bovino said the Fed is focusing on creating jobs and is offering incentives for businesses to invest and hire, which will lead to higher growth. She said there has been robust demand and hiring in the private sector in spite of shocks. Continue reading ›

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Initial Quality in Malaysia Advances for Fourth Straight Year

Malaysia, PenangFor a fourth consecutive year, overall new-vehicle initial quality in Malaysia improves significantly, according to the 2013 Malaysia Initial Quality Study (IQS), based on responses from more than 3,100 new-vehicle buyers during the first two to six months of ownership.*

The 2013 Malaysia IQS findings are encouraging because the automotive market in Malaysia is becoming increasingly competitive with a rising number of new models, which makes it essential for brands to produce high-quality cars and trucks. Continue reading ›

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U.S. Auto Sales Climb in November as Total Pace Surpasses 16 Million Units

John Humphrey

John Humphrey

Through the first half of November 2013, sales returned to a stronger pace than in September and October—which were hampered by negative external factors, including the U.S. government shutdown in October and the pull forward of Labor Day sales with two less selling days in September—according to an auto sales forecast update from J.D. Power and strategic partner LMC Automotive.

Retail new-vehicle deliveries in November are expected to reach 1.03 million units—up 4% from November 2012 on a selling-day adjusted basis*. This figure translates to a 13.0 million-unit seasonally adjusted annual selling rate (SAAR), which is higher than the year-to-date level of 12.8 million units.

Fleet sales on a selling-day adjusted basis are expected to account for 16% of the sales mix in November, which is 3% lower than a year ago and consistent with the low fleet share that has held throughout 2013. Continue reading ›

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Third-Party Auto Website Executives Offer Insight on Business Models

Automotive Marketing Roundtable 2013 DSC_4280-SThird-party automotive website executives offered their observations about vehicle price transparency during a panel discussion at the October J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas, NV. More excerpts from the panel discussion that was moderated by Joel Ewanick, former automotive marketing executive and now managing partner of Global Auto Systems, are highlighted in today’s post.

 Moderator: Joel Ewanick, managing partner, Global Auto Systems, Inc.

Panel Members:

Seth Berkowitz, president and COO, Edmunds.com

Larry Dominique, executive vice president, TrueCar, Inc.

Jared Rowe, President, Kelley Blue Book

Alex Vetter, senior vice president, Cars.com

Joel: You’re very different in how you collect your data—so tell me Seth (Edmunds) why is your data so much better than their data?

 Seth (Edmunds): “I guess we see ourselves across the panel as being least competitive with Cars.com. We respect what they are doing: with the classifieds industry and what they have done in used cars—that’s not really our core space. That might change in the future. I think our biggest differences are with TrueCar and with Kelley Blue Book. . . While we were the company 20 years ago that introduced invoice price, and published it for the first time, we’re actually moving in a completely different direction. . . We are going to have dealers provide actual prices on individual vehicles and then we are going to tell what other people are paying. We have our Price-Promise program, now where you get those actual prices. . . Over the coming months, you’re going to see invoice stripped off behind warning labels where you have to click to get it because we believe that it’s not servicing people anymore and it creates confusion.”

Alex (Cars.com): “Putting a price on a transaction that we know is wildly complex creates distrust in the industry. The expectation that this is the price you are going to pay—is not something that any website [represented] here can actually deliver because so much goes into the pricing at the retail store. We rely on dealer participation to drive that pricing.” Continue reading ›

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Marketing Exec Leads Internet Site Panel in Discussing Price Transparency

Price negotiation for most consumers is often described as one of the most arduous parts of the purchase process, according to Joel Ewanick, managing partner of Global Automotive Systems, Inc. The former GM chief marketing officer led a panel discussion about “Vehicle Price Transparency” with four third-party website executives at the October J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas, NV. Excerpts from the panel discussion are highlighted in this post.

Moderator: Joel Ewanick, managing partner, Global Auto Systems, Inc.

 Panel Members:

Seth Berkowitz, president and COO, Edmunds.com

Larry Dominique, executive vice president, TrueCar, Inc.

Jared Rowe, President, Kelley Blue Book

Alex Vetter, senior vice president, Cars.com

Third-Party Website Leaders Define Business Models

Joel: I see that companies like yours are trying to help the consumer through the process. Can you explain what you do, what your business model is, and then we’ll start to compare and contrast?

Seth (Edmunds): “At Edmunds, we’re working through a major transition. For years, we’ve been an information and pricing authority. We probably have the largest repository of automotive information on the Internet with somewhere in the neighborhood of 3.5 million pages of content. We’ve decided that being this comprehensive encyclopedia of automotive information isn’t enough. . . We’ve decided to make car buying easier. We are going to do this by fostering trust—which is at an all-time low— between consumers and dealers.” Continue reading ›

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Millennials Consume Content and Shop Differently

 Millennials consume content and shop in different ways from other generations and these Gen Y consumers are having a profound influence on the shopping behaviors of Gen X and Boomer buyers. Today’s post offers a few more excerpts about these younger consumers from panelists and presenters at the October J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas, NV.

What Does the Car Mean to Millennials?

“About 25% of millennials said they would buy a car sight unseen. They’d go online, find it, buy it and have it delivered. This is going to become a lot more important as we go along.”—Clayton Stanfield, senior manager, Dealer Outreach, eBay Motors

“For most of us, the car was the thing we wanted. The reality with millennials is that it’s probably a device they want first and foremost. A car is kind of a secondary consideration. Maybe it’s due to economics. Maybe it’s just due to how powerfully products have been marketed to them—like Xboxes and PlayStations. . . for auto manufacturers, a way to accrue loyalty and affinity to their brands is to get deeply immersed in offering the consumer some free content.”—Randy Shaffer, director, Xbox West Sales, Microsoft Continue reading ›

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Experts Discuss how Millennials Consume Content, Shop Differently

AMR 2013 audienceReaching millennial consumers is a key focus for marketers in the auto industry, and was a key topic during presentations and panel discussions at the October J.D. Power Automotive Marketing Roundtable in Las Vegas, NV. A few highlights from a few sessions with panelists and presenters that addressed millennial consumers are presented.

“Let’s talk about millennials. . . They won’t get cable. They don’t have any money. They’re entitled. They want to do their own thing. They’re a completely digital first generation.”—Mike Shields, digital editor of AdWeek

How Different are their Media Consumption Habits?

“My team at Microsoft—80% of them are millennials—it’s an on-demand environment. They want to consume a lot of content at the same time. They can do it better than any other group. Some 83% are using a second screen and multi-tasking. . .You have to make sure you have something there to complement what they are consuming on TV.”—Randy Shaffer, director, Xbox West Sales, Microsoft

“We see ‘fanboys’ consuming media voraciously across all platforms. They go to five movies a month. They’re watching two more hours of television—on demand—than their own peer set. They’re consuming a ton of web video. In the case of gamers, they are willing to pay for content. They’ve been paying for $60 games for a very long time. . . You need to figure out how to present it to them. They will steal it first if they have to. But, if it’s good, they are willing to pay for it—that’s proven in gaming, premium video and web video content as well.”—Jay Sampson, executive vice president, sales and operations, Machinima Continue reading ›

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Satisfaction Surges if Dealers Use Mobile Devices to Enhance Sales Process

Chris Sutton

Chris Sutton

Satisfaction is highest among new-vehicle buyers who are presented with pricing/payment options on a computer screen or a tablet (833 on a 1,000-point scale) during the sales process, according to our 2013 U.S. Sales Satisfaction Index (SSI) Study, which is based on responses from 29,040 new-vehicle buyers or lessees, who completed their transaction in April or May 2013.

Using technology continues to make a major difference in enhancing the buyer’s or lessee’s sales experience at the dealership. Specifically, when a dealership salesperson uses a tablet device during the sales process with new-vehicle buyers, satisfaction is 52 points higher on average (844) than when a salesperson does not use a tablet during the sales experience (792). Satisfaction with a salesperson using a computer printout (820) receives the next highest score, followed by verbal price quotes (792); and lastly, written figures (780).

Our 2013 U.S. SSI Study finds that tablets are proving to be particularly versatile and effective tools and may help maintain consistency during the sales process, while providing accessible and dynamic product information. Yet, we also see that tablet usage among dealership salespeople remains relatively limited—only 10% of dealership salespeople use these devices. On a positive note, that’s still up from 7% in 2012. Continue reading ›

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J.D. Power Expert Outlines Key Forces behind U.S. Sales Growth

Deirdre Borrego presents auto industry outlook at J.D. Power Automotive Marketing Roundtable “The U.S. auto industry has enjoyed remarkable revenue growth this year,” Deirdre Borrego, J.D. Power vice president of client services, said during a presentation at the October J.D. Power Automotive Marketing Roundtable (AMR) in Las Vegas, NV. “From a consumer standpoint,” she said, “there are specific market forces that have kept sales strong and transaction prices high.” Borrego pointed to four key drivers:

• Long-term loans are a key enabler. Nearly one in three 2013 sales to date was facilitated by a loan of 72 months or longer. Extended terms, combined with. . .

• . . . Low interest rates have allowed consumers to buy a richer mix of vehicles while keeping their monthly payment within their household budget.

• Strong residuals enable manufacturers to offer attractive leases to consumers, again with desirable monthly payments.

• Tight used-vehicle supply is another key factor. The average price of a used vehicle increased by roughly $3,000 since 2008 to reach $18,800 so far this year. This drives stronger in-equity positions for existing owners, improving purchasing power or removing barriers to entry. Continue reading ›

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J.D. Power Expert Profiles U.S. Auto Market Sales Trends

 J.D. Power’s Deirdre Borrego, vice president, U.S. Client Services, spoke to industry participants at the October J.D. Power Automotive Marketing Roundtable in Las Vegas, NV. about the U.S. auto market’s recovery and the fundamentals in the market that are driving strong demand.

Highlights from her talk include analysis from the Power Information Network® (PIN) and J.D. Power’s strategic partner LMC Automotive:

• Retail sales to individual consumers in 2013 are expected to reach 12.8 million units which is back to pre-recession levels.

• The real story isn’t just about sales growth. It’s also about transaction price growth. We’ve seen exceptional performance with prices (consumer facing prices net incentives) increasing by about $3,000. Continue reading ›

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