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 ›

Retail U.S. Auto Sales Remain Robust in First Half of October

Deirdre Borrego

U.S. retail light-vehicle sales during the first 17 selling days of October continued to increase at a robust pace that was similar to the pace in September, according to a monthly sales forecast update developed by our Power Information Network® (PIN) and strategic partner LMC Automotive.

In October, retail sales are likely to reach 943,200 units, which is a 13% increase (on a selling-day adjusted basis) in volume vs. the same month a year ago. This translates to a seasonally adjusted annual rate (SAAR) of 12.0 million units, which would be the second consecutive month of a retail pace above 12 million. Rates in September and October of this year would be the best in four years (since April and May 2008).

Total light-vehicle sales this month, which include retail and fleet deliveries, are projected to rise 11% from October 2011, with volume surpassing 1.134 million units. This translates to an overall SAAR of 14.8 million units, which is just 100,000 units below September’s 14.9 million-unit SAAR.

Fleet deliveries in October are anticipated to account for 17% of total sales—slightly below the 5-year average of 19% for October, which Continue reading ›

November US Sales Strengthen; 2011 Forecast Raised

Retail car and light-truck sales in the first half of November* were stronger than anticipated, translating to a projected retail sales pace of 11.3 million units—the highest monthly selling rate in more than three years, according to a monthly sales update based on analysis from J.D. Power’s Power Information Network® (PIN) retail transaction data and LMC Automotive. The retail sales pace outdistances last year’s retail pace by some 1.6 million units.

Projected retail sales in November (791,900 units) provides good news as calendar 2011 proceeds to a close. In fact, the improving performance of the past 3 months suggests that the current momentum, primarily driven by replacement demand and improvements in vehicle availability, is not an aberration, suggests John Humphrey, senior vice president of global automotive operations at J.D. Power. Continue reading ›

Lower Interest Rates Prevail, Trade-Ins on the Rise

Grace Hamulic

A majority of new-vehicle buyers or lessees (77.5%) received APRs on their purchase or lease deals below 5% in July this year, much higher than in the same month a year ago (71%). In addition, the average APRs were 4.30% for financed transactions and 2.68% for lease deals, slightly lower than the average 4.48% (finance) and 3.02% (lease) APRs in July 2010, based on our Power Information Network® (PIN) retail transaction data. In the first two weeks of August, 77.6% of buyers and lessees received APRs that still averaged below year-ago rates (4.35% for financed deals and 2.70% for lease transactions).

Additionally, more than one-half of all transactions in July this year included a trade-in (52.6%), which was up 4.4 percentage points from the same month last year, when only 48.2% of all deals included a trade. More than half of all deals in the first part of August this year have included a trade-in (51.6%).

Which models are most (or least) likely to have a trade- in? In July 2011, the model with the lowest trade-in percentage (only 12.2%) was the eco-friendly Nissan Leaf battery-electric vehicle (BEV), which suggests that buyers are likely purchasing it as a second (or even third) vehicle. On the flip side, another Nissan model and a Chevrolet model tie for the highest rate of trade-ins. Among models purchased or leased in July 2011, 76.1% of Nissan Titan and Chevrolet Avalanche deals included a trade-in. Continue reading ›

Mazda, Mitsubishi, Scion Models Still Attract Young Buyers

Grace Hamulic

The 10 light-vehicle models with the highest percentages of young buyers (ages 16 to 35 years old) in the first half of 2011 were mainly compacts, and all were imports. In all, more than one-third of purchasers and lessees of these 10 models were young buyers.

Many of the models in the top 10 this year also had the highest percentages of young buyers in the same time period of 2010, although the percentage rank order was slightly different, according to Power Information Network® (PIN) retail transaction data for the two periods. Mazda, Mitsubishi and Toyota’s Scion youth brand dominated the top 10 list of models with the highest percentages of young buyers this year as they did a year ago. Continue reading ›

May Captive Penetration Dips; Lower Interest Rates Prevail

Grace Hamulic

Slightly more than two-thirds (67.4%) of new-vehicle transactions for all brands in May were financed through automaker captive finance arms—which was down more than 3 percentage points from 70.5% of new-vehicle deals in May 2010, according to our Power Information Network® (PIN) retail transaction data. In addition, a much higher percentage of new-vehicle buyers or lessees received APRs below 5% this year vs. the same month last year, up to 73.7% from 67.4%.

In light of the current inventory shortage of vehicles related to the effects of the earthquake and tsunami on production in Japan, we’re starting to see its impact on trade-ins. Compared with a year ago, the percentage of buyers and lessees with a trade-in on a new vehicle who have negative equity has declined to 21.8% from 24.5%. In addition, more than one-half (51%) of new-vehicle deals in May included a trade-in, which is up from 47.4% of transactions a year ago. Continue reading ›