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Monday, 02 October 2017 00:12

Incentives Reach All-Time High

Incentives have reached all-time highs as manufacturers continue with aggressive discounting to clear out record inventories of prior model year vehicles. 
J.D. Power and LMC Automotive report that average incentive spending per unit to date in September has set a new record at $4,050, surpassing the previous high of $4,024 in November 2016. 
Spending on trucks and SUVs is $4,044, up $206 from last year. Spending on cars is $4,062, down $38.
Incentives as a percentage of MSRP are at 11.1 percent so far in September, exceeding the 10 percent level for 14th time in the past 15 months.

Published in Dealers

The replacement of vehicles lost in the recent hurricanes has started and the increased demand combined with the decrease in supply should drive up used-car prices.

J.D. Power and LMC Automotive report that while new-car sales were down 0.8 percent on a national basis in September, they were up 14 percent in the region that includes Houston. They were down 14 percent in the region that includes Florida, but that should change in October.

 "The effect of hurricanes Harvey and Irma is expected to boost retail light vehicle demand through the remainder of 2017 and into 2018, as recovery continues,” said Jeff Schuster, Senior Vice President of Forecasting at LMC Automotive. “With the need to replace 500,000 or more damaged or destroyed vehicles, the U.S. auto market slowdown will see some relief as demand over the next 6-9 months will likely be upwardly distorted. In addition, a short-term increase in fleet sales may also be an outcome as current shortages are replenished.”

Driven by vehicle replacement need, LMC's outlook for 2017 total light-vehicle has been increased by 70,000 units to 17.1 million. The retail light-vehicle outlook has been increased to 13.9 million units from 13.8 million.

Many of those who drove new vehicles will find themselves replacing their lost cars with used units, as insurnance payments fail to match what they owned on those cars. And there are many used-car owners who lost their vehicles in the hurricanes.

CarMax Inc. has been busy moving replacement units into the Houston area and shipping out damaged carsHarvey hit during the last week of the used-car superstore chain’s latest quarter. It had to shut down its six stores, although five re-opened by Sept. 1.

The sixth store opened later that week. CarMax paid all of its employees for the shifts they would have worked and helped in other ways, including sending supplies to the area.

CarMax lost 1,000 units to Harvey, all of which were scrapped. Chief financial officer Tom Reedy said the company’s insurance covered most of these, but CarMax will still take a $1 million hit in this quarter.

The concern for the industry now is the potential for flood cars find their way onto dealers’ lots.

CarMax CEO Bill Nash said the process for detecting flood cars is greatly improved since Hurricane Katrina in 2005.

The company’s system is designed to flag salvage vehicles and CarMax buyers are trained to spot flood damage.

But this experience will put all these protections to the test.

“There are going to be a lot of flood vehicles out there,” Nash said.

 

 

 

Published in Auctions
Tuesday, 12 September 2017 00:37

J.D. Power Names Best Seats

The J.D. Power 2017 Seat Quality and Satisfaction Study provides automotive manufacturers and suppliers with quality and satisfaction information related to seating systems.
New-vehicle owners are asked to rate the quality of their vehicle’s seats and seat belts with respect to whether they have experienced defects/malfunctions or design problems during the first 90 days of ownership.
The study presents seven segment awards based on the J.D. Power vehicle segment designations: mass market compact car; mass market compact SUV/MPV; mass market midsize/large car; mass market midsize/large SUV; mass market truck/van; luxury car; and luxury SUV.
For each segment, the award for Highest Quality Seats is based exclusively on the total seat problems per 100 (PP100) score (seat quality within segment). Awards are presented to the seating system supplier.
The 2017 Seat Quality and Satisfaction Study is based on responses from more than 77,000 purchasers and lessees of new 2017 model-year cars and light trucks registered in November-December 2016 and January-February 2017. The study was fielded from February through May.
Magna earned the most honors, leading the categories with seats for the Audi A3, Ford Escape and Ford Edge.

Published in Dealers
Tuesday, 22 August 2017 23:38

Dealers See Credit Desk as Crucial

The interactions between dealers and frontline personnel working in the lender's credit department are crucial to the relationship between the two, according to the J.D. Power 2017 U.S. Dealer Financing Satisfaction Study.
For non-captive, captive luxury and captive mass market lenders, the credit desk represents more than half of the survey weight for overall satisfaction, compared with the impact of sales representatives. Overall, the dealer/lender relationship outweighs application and approval process, lender offerings and lease return as the single most important variable associated with high levels of dealer satisfaction.
Dealers overwhelmingly indicate that the credit desk is their first point of contact when looking to resolve problems, far outpacing sales representatives, sales support staff and regional managers. As such, dealer satisfaction with sales reps is highest when reps focus on portfolio performance review, dealership performance consulting and customer retention vs. problem resolution and training.
The optimal dealer communications mix for lenders involves a predictable cadence of monthly visits paired with weekly calls and emails. When touch points outside of these preferred parameters are used, overall satisfaction with sales reps falls by as much as 30 index points (on a 1,000-point scale).

Published in Dealers
Tuesday, 15 August 2017 21:22

J.D. Power Unveils Used Vehicle Index

J.D. Power has launched its own Used Vehicle Price Index Service. The monthly index tracks current and estimated future movement of wholesale used vehicle prices at both the industry and segment level. Index data is underpinned by AuctionNet data, representing more than 80 percent of the nation's auction transactions from Manheim, ADESA, ServNet, ABC and key independents.  The index can forecast data for the current year and two years ahead. There are also industry- and segment-level indices.
Published in Dealers
Monday, 01 May 2017 22:07

ClearVin Uses J.D. Power Values

ClearVin, and J.D. Power Valuation Services (formerly known as NADA Used Car Guide), have recently agreed on a deal that will make the selling and buying of used vehicles much easier for automotive dealers and wholesalers.
NADA Values included in the history report cover retail, trade-in, auction and loan values.
 ClearVin reports provide vehicle specifications along with accident history, salvage and total loss events submitted by insurance companies across all 50 states. Additionally, reports provide title history data, retail, trade-in and loan values, recall history, and any outstanding and past liens that were placed against the vehicle.

Published in Tech News

CarRecord, the Asia-Pacific region's foremost vehicle history report product, will soon be available for the U.S. market.

The reports will provide customers with NADA Values from J.D. Power Valuation Services. J.D. Power uses auction and retail sales transactions – and then reviews asking prices and other relevant information—to accurately value vehicles.

 

Published in Tech News
Friday, 20 January 2017 00:25

Online Site Names Top CPO Choices


Autotrader experts have identified 10 CPO luxury and 10 CPO non-luxury “Must-Shop CPO Cars” that offer a look similar to their brand-new counterparts with affordable pricing and a manufacturer-backed warranty.



Criteria used for CPO luxury vehicles: a retail price of approximately $65,000 or less; a manufacturer-backed certified warranty must have a minimum of 6 years or 100,000 miles of total powertrain coverage included in the purchase price; similar look to a current new car.
Criteria used for CPO non-luxury vehicles: a retail price of approximately $40,000 or less; manufacturer-backed certified warranty must have a minimum of 5 years or 100,000 miles of total powertrain coverage included in the purchase price; similar look to a current new car; vehicles must have an overall federal government safety rating of at least 4 out of 5 stars.

Published in Tech News
Thursday, 19 January 2017 00:46

J.D. Power Unveils Valuation Tool

J.D. Power has debuted J.D. Power Residual Values, a benchmark product for vehicle residual values.
Designed as an information resource for vehicle manufacturers, captive finance companies and lenders, Residual Values incorporates sales transaction data gathered by the Power Information Network (PIN) from J.D. Power (representing more than 40 percent of franchised dealer retail sales transactions in America); the J.D. Power/National Auto Auction Association AuctionNet service (accounting for more than 80 percent of auto auction transactions); and proprietary J.D. Power Voice of the Customer data.
Residual Values is the first all-new product introduced under the newly created Data & Analytics Division of J.D. Power. The unit includes J.D. Power Valuation Services, formerly known as NADA Used Car Guide.

Published in Tech News

Three of every four car buyers didn't even consider buying an SUV, according to the J.D. Power 2017 Auto Avoider Study.
Only 24 percent of car buyers considered buying an SUV in a year in which total retail sales of SUVs comprised 42 percent of the market. Only five years ago, SUVs made up just 34 percent of the market.
SUV buyers are more likely to purchase their vehicle for its cargo capacity, compared with car buyers (42 percent vs. 20 percent, respectively); 4WD/AWD capability (48 percent vs. 9 percent); and safety (45 percent vs. 38 percent
Car buyers who rejected the SUVs they shopped at a dealer did so primarily due to a higher price and a desire for better gas mileage. Conversely, SUV buyers who shopped for cars rejected the cars because they were too small, lacked the desired cargo capacity and lacked 4WD/AWD capability.
Tirty-eight percent of SUV buyers report never before owning the brand of their new SUV, a higher number than for car, pickup and minivan buyers.
Compact SUVs, the largest-volume segment in the industry, are the most shopped or considered vehicles in the market—and also have one of the industry's highest close rates. More than six in 10  new-vehicle buyers who shopped for a compact SUV actually bought a compact SUV. Three compact SUVs—Honda CR-V, Toyota RAV4 and Ford Escape—are among the 10 most shopped/considered models by new-vehicle buyers.

Published in Dealers
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