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 ›

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 ›

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 ›

Labor Day Sales Events Boost August U.S. Light-Vehicle Delivery Totals

Buyer and Dealership ManagerU.S. new light-vehicle sales in August were more robust than anticipated, mainly due to a heady retail sales finish over the Labor Day weekend. Retail sales even outperformed the accurate monthly forecast from J.D. Power’s Power Information Network® (PIN) and strategic partner LMC Automotive, which already had projected one of the strongest sales months in six years.

There was an extra boost from holiday sales, especially on August 31 since Labor Day weekend was counted in August’s sales total as the month ended on a weekend. J.D. Power experts say they are not sure yet how much August sales will pull forward from September results. Total consumer spending on new vehicles in August was the highest on record—reaching $38.5 billion,—mainly due to strong transaction prices and higher sales, according to J.D. Power analysis.

Retail sales in August climbed 17.7% above retail totals in the same month of 2012. The final week of August sales totals (August 26 – Sept. 3) captured nearly 35% of the month’s retail sales volume, according to Dave Cutting, senior manager of North American Forecasting at LMC Automotive. Retail deliveries totaled 1.34 million units and the seasonally adjusted selling pace (SAAR) of 13.8 million was the highest since 2006. Continue reading ›

August U.S. New-Vehicle Sales Move Ahead with Gusto

AIS04 car shopperAugust was another month of stellar new-vehicle sales in the U.S. auto industry. In early reports, all three Detroit-based automakers celebrated double-digit gains at the end of a month that was capped off by the Labor Day sales weekend. The three major Japanese automakers posted even stronger double-digit increases than their U.S. rivals. Nearly all multi-franchise automakers reported better sales in August this year vs. 2012.

Consumers continued to replace their aging vehicles—averaging 11 years old—at a healthy pace that matches a monthly forecast update from J.D. Power’s Power Information Network® (PIN) and strategic partner LMC Automotive. Easier credit terms, including long-term loans and more reasonable lease deals, helped spur sales.

Total sales (retail and fleet) reached 1.5 million units for a selling-day adjusted increase of 12.7% from August 2012—the highest unit sales volume since May 2007. J.D. Power projected that the seasonally adjusted annual selling rate (SAAR) would surpass 16 million, which it did.
Continue reading ›

August May Be Best U.S. Retail Sales Month Since 2006

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John Humphrey

The robust pace of auto sales during July in the U.S. market has continued through the first half of August, according to a monthly sales forecast update from J.D. Power and strategic partner LMC Automotive.

August new-vehicle sales may reach the highest level in seven years—since before the Great Recession (December 2007-June 2009). Additionally, J.D. Power anticipates that consumer spending on new vehicles in August will be close to $36 billion, which would be the highest level on record.

Retail new-vehicle deliveries are set to reach 1.27 million units for the month, which is up 12% from August 2012, based on analysis of retail transaction data during the first 15 selling days of the month.* This translates to a seasonally adjusted annual selling rate (SAAR) of 13.1 million units, which means that this would be the third straight month that the retail SAAR has averaged above 13.0 million units. In comparison, the retail SAAR in August 2012 was 12.6 million units. Continue reading ›

U.S. Retail Sales in July 2013 Offset Lower Fleet Deliveries

Cars on Lot drawingJuly total (retail and fleet) new-vehicle sales rose 9.4% from the same month a year ago to 1.313 million units, which translated to a 15.8 million-unit seasonally adjusted annual selling pace (SAAR), according to analysis by J.D. Power and strategic partner LMC Automotive. At the segment level, Large Pickup sales were up by nearly one-fourth from a year ago and Compact Conventional car deliveries were nearly twice as strong as the overall industry pace.

Through the first 7 months of 2013, U.S. new-vehicle sales were up 8.5% from the same period in 2012.

The strength of retail deliveries in July 2013—which rose 12.7% from July 2012, helped bolster total sales, despite a decline in fleet sales. The fleet share of sales in July was the lowest for any month since 2009 (when “Cash for Clunkers,” or the CARS scrappage program, was in effect from July-August 2009). Fleet sales accounted for only 13.0% of the sales mix. Usually, fleet deliveries average between 19% and 22% of monthly sales totals. Continue reading ›

Strong Lender Support Fuels Dealer Financing Satisfaction Rises in 2013

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Michael Buckingham

Dealer satisfaction with automotive lenders in the U.S. increases for a second straight year in all four categories measured, according to our 2013 U.S. Dealer Financing Satisfaction Study. The rise in adoption rates of new processes—such as e-contracting—combined with improvements in dealer support, such as the frequency of contact, and more product offerings contribute to this year’s gains vs. 2012.

As auto sales and the lending environment continue to return to pre-recessionary levels (before 2007), there is healthier competition among more lenders. Nearly one-third (30%) of lenders offer dealers new processes and a wider range of products, and 39% of dealers who are offered these options in turn send regular business to their providers, based on our study results. Continue reading ›

U.S. Auto Market Reaps Double-Digit Gain in June; Best Monthly Pace Since 2007

Car buyer gets keys from DealerAutomakers in the U.S. market finished the month of June with new-vehicle total sales increasing 13.5% (on a selling-day adjusted basis*) to 1.40 million units from 1.28 million units in the same month in 2012, according to analysis from J.D. Power’s Power Information Network® (PIN) and our strategic partner LMC Automotive. The selling pace in June was the strongest in six years and outperformed most forecasts.

Through the first six months of 2013, total new-vehicle deliveries also increased, but not by as much as the June figure; YTD sales were up 8.4%, to 7.82 million unit sales from 7.26 million in the same six-month period a year ago. Trucks outperformed cars in the first half and gained 1.80 percentage points of share from a year ago. The Detroit-based automakers also captured a larger share of the U.S. auto market in the first half—46.1% vs. 45.2% in 2012.

In June, the seasonally adjusted annual selling rate (SAAR) for retail and fleet sales averaged 15.9 million units—the strongest rate since 2007. The year-ago total light-vehicle SAAR was a much weaker 14.4 million units. Continue reading ›

June U.S. Auto Sales Led by Demand for Replacement Vehicles and Pickups

Customer and Salesperson at Dealership shutterstock_52838524U.S. new-vehicle sales in June were bolstered by pent-up demand and the need for owners to replace older vehicles, as well as easier access to credit and a continuing surge in demand for large pickups, partly due to improvements in commercial sectors, such as in housing construction.

Automakers also report that they sold more smaller, fuel-efficient vehicles in June—sub-compact, compact cars and more compact crossovers (CUVs)—than a year ago, which may be partly due to sustained higher prices at the gas pump, which are averaging $3.48 per gallon this week across the country vs. $3.33 a year ago, according to the AAA Daily Fuel Gauge Report.

In the latest update, J.D. Power and its strategic partner LMC Automotive said the month’s sales climbed 13.4% from a year ago on a selling-day adjusted basis* to 1.4 million unit sales, which translates to a stronger-than-anticipated 15.9 million-unit seasonally adjusted annual selling pace. A number of automakers said that their sales have hit higher sales levels than during the past five and even six years. Continue reading ›