Author Archive

Knowing customers key to dealers’ social media success

social mediaHow well do you know your customer?

If the answer is, “well” or “very well,” then you have fundamentally what it takes for effective social media marketing that will inspire loyalty from your customers, because you’ll be able to provide the sort of online content that will keep them coming back for more.

Of course, you even may pick up a few new customers along the way via your social media marketing.

However, if your answer is, “not very well,” then, obviously, you have work to do, especially with social media marketing, which is, first and foremost, social.

You can’t help your customers or gain new customers if you don’t know them well enough.

“Instead of waking up to find that your business is only as good as the next transaction, embark on a quest to foster loyalty through social selling,” writes Kathi Kruse, author and consultant, in Auto Remarketing. “Build a network of happy, loyal customers who like doing business with you.”

Kruse provides three social selling tips to inspire loyalty and avoid the “one night stand” transaction:

Let your “why” permeate throughout your message. “The clearest way to a prospect’s heart is to know something about them and incorporate that in your message,” Kruse writes. Facebook, Pinterest and Instagram posts, blog posts and tweets “should center on teaching your customer how to buy. The more you know them, the easier it will be to create content that delights.

Constantly provide value. As a consultant, Kruse guides her clients to be content producers, not just content consumers, because then they can provide a good social media experience. Contributing to conversations “solidifies relationships and converts them into sales.”

Think from the customer’s point of view. Many businesses may be perceived positively, but automotive retail is not one of those, Kruse writes. Dealers must be courageous enough to ask on social media whether people like doing business with them.  “They will define what service excellence means,” she writes. “ Then all you have to do is give it to them. If people like doing business with you, they’ll probably want to come back more often.”

With social media now a part of the marketing landscape, it’s more important than ever to know your customers well and to be able to act on that effectively through social media channels.

– Mark Macesich

Auto sales animated by recovery, low interest, attractive new vehicles

auto salesMay was a very good month for auto sales.

GM, Chrysler and Toyota reported their best sales since before the start of the recession in 2008, while Ford Motor Company did them one better – or should we say three – with its best sales since May 2005.

Meanwhile, among European automakers, Audi and Porsche had their best sales month ever in the United States and BMW reported its best May results ever. Nissan also set a sales record for May and Hyundai Motor Co. recorded its best month ever, Reuters reported.

Industry sales totaled 1.6 million vehicles with a seasonally adjusted annualized selling rate (SAAR) of 16.8 million cars and light trucks, according to Autodata Corp. market research company.

The results “blew away” analysts’ expectations of 16.1 million SAAR, reported Business Insider.

GM’s May sales increase of 12.6 percent nearly doubled expectations despite recall issues and concerns about the amount of time it took the automaker to report some problems, demonstrating, ABC News reported, that “car buyers are willing to forget the past and look at the present and future for GM.”

Premium models along with small and mid-size crossovers led the way to higher-than-expected results.

“Nearly one-half of the new-model activity in 2014 will be premium vehicles, which is expected to create new competition for mainstream segments,” Jeff Schuster, senior vice president of forecasting at LMC Automotive, told Nelson Ireson at The Car Connection auto research website.

Ken Brauer, Kelley Blue Book senior analyst, cited sales strength among crossover vehicles.

“Supporting this increased appetite for more expensive, more premium vehicles is a trend toward longer loan terms in the automotive financing market,” Ireson wrote.

Experian Automotive reports the average loan term has reached a record high 66 months, while loans with terms of 73-84 months grew 27.6 percent in the first quarter of 2014, accounting for 24.9 percent of all new vehicle loans issued, according to Ireson’s Car Connection report.

“Credit conditions are making it easier to buy or lease a new car,” said Jessica Caldwell, Edmunds.com analyst. “Shoppers are opting for longer terms at lower interest rates. In other words, they’re able to afford more expensive cars by keeping their monthly payments at or near what they’re used to paying.”

The surge in auto sales the last three months has begun to make up for the slow start to the year because of severe weather in the U.S. North and East in January and February.

“It’s the continued recovery in the summer selling season,” Shuster of LMC told the Associated Press. “Kind of everything aligning in the month of May.”

Analysts expect June to bring more of the same because of low interest rates, good lease deals and attractive new vehicles.

– Mark Macesich

Finding the sweet spot in used car sales

used carIf you’re looking for the sweet spot in which vehicles will work for your used sales department, it could be the vehicles that are up to 5 years old – designated certified pre-owned.

Sales of vehicles ages 1 to 5 were especially “hot” in April, rising 9 percent over 2013, according to CNW market research and reported by AutoRemarketing.com. Overall used vehicle sales rose just 3.65 percent.

Meanwhile, nearly 200,000 certified pre-owned vehicles were sold during the month, a 9.5 percent jump over the numbers from a year ago.

Coincidence? Probably not, suggests Joel Overby, editor of AutoRemarketing.

Which automakers saw the most movement among certified pre-owned vehicles?

  • Asian automakers, with 91,027 vehicles sold
  • The Big Three, which sold 68,253 certified vehicles
  • European automakers, with 33,811 sold

And even with the second place finish in total used sales, U.S manufacturers saw an increase of 13.5 percent from the previous year. Otherwise, European automakers gained 12.1 percent and Asian carmakers 5.8 percent.

For the first four months of the year, the total number of certified units sold reached nearly 750,000, an increase of 10.5 percent over last year – and that’s just for franchised dealers. If you throw in independent dealers and private party sales, the April numbers jump to nearly 4 million units sold.

CNW research analyst Art Spinella attributes this to the power of the Internet.

“The Internet continues to drive traffic to used car sellers,” Spinella explains. “In April, the number of shoppers who went to a dealership because of something seen on the Internet jumped 116 percent versus a year ago.”

No matter what the reason is, certified pre-owned vehicles between one and five years old seem to be the secret weapon of increased auto sales. So if you’re looking for the new inventory for the used vehicle department, you may want to look at some later model units because it appears that the secret is out.

– LaQuenda Jackson

 

No credit score … no problem

no creditIt’s a necessary evil when you’re in the car business – dealing with customers who have challenging credit or no credit score at all. In the past, little could be done for those with no credit score.

But times are changing, according to a story in Automotive News.

With technology leading the way, lenders can now tap into more nontraditional forms of credit data that can shed light on someone’s debt management skills. Today, there are more details available about a customer’s spending and payment habits than just what is on a credit report. That’s good news for consumers and auto dealers. Why? Because lenders become more confident when they know more about a consumer’s spending.

Nontraditional data “expands the universe of potential borrowers for lenders,” according to Peter Turek, vice president of TransUnion’s automotive division.

Turek says you can get a clearer picture of a person’s credit history by using utility payment information like:

  • Cell phone bills
  • Cable bills
  • Utility records

Lou Loquasto with Equifax believes that reviewing alternative credit is a must because someone may still be a good risk even if he or she doesn’t have a credit score.

“A lot of customers out there don’t have credit scores,” says Loquasto. “Maybe some of the younger folks are going longer without opening up traditional lines of credit,” he suggests.

Low credit scores don’t tell the entire story either.

Experian Automotive reports that subprime loans have climbed to more than 36 percent of all outstanding loans in the fourth quarter. While not attractive, low scores on a credit report are just a snapshot of the full picture. Some customers may have subprime credit ratings, but are not subprime individuals.

“After what we’ve seen with the recession, a lot of people fell on hard times,” says Dennis Carlson, an Equifax deputy chief economist.  “Bad things happen to good people, and a lot of it is out of their control.”

One solution – lenders should see where a customer’s credit is going rather than where it’s been.

“We can show that trended data – where 24 months ago they were at 580, 12 months ago they were at 640, and now they’re a 690. That guy is trending in the right direction,” Loquasto says.

A lender like Santander Consumer USA, which provides full-spectrum auto financing, gives dealers more options for their credit-challenged customers.

In today’s economy, options are what customers and dealers need.

– LaQuenda Jackson

Dealers doing business with Santander Consumer USA

SCUSAThe question if you are a franchise automobile dealer isn’t why should you do business with Santander Consumer USA (SCUSA), it’s why wouldn’t you.

SCUSA is a leader in consistent, fast funding for finance deals across the credit spectrum.

SCUSA manages a multi-billion-dollar portfolio originated from a pool of more than 13,000 dealers (Santander Auto Finance) and from consumers via the internet (RoadLoans.com). Owned by Banco Santander, a top-10 global bank, the Dallas-based company’s executive management team has decades of direct dealership experience that covers the entire prime and non-prime spectrum.

The company boasts “strong operating platforms in originations, funding and servicing, supported by a highly developed analytics team,” all of which serve its dealer partners well.

“The thing I like about Santander Consumer USA is the service that they give to me. It is above all others,” says a finance director at a Houston dealership in a testimonial. “When I need them I have no problem getting a quick call back … They are always looking for a way to put a deal together.”

Here are some of the ways SCUSA provides a competitive advantage to its dealer partners:

Multi-tiered underwriting

SCUSA offers a consistent approach to deal structuring, with every application processed by a proprietary, risk-based scoring and pricing model – a simplified one-stop approach to B-D tier programs.

Dealer-friendly underwriting

Complete deal structuring, extended hours, 24/7 decisions and one-on-one communication with a dedicated buyer all are part of the SCUSA dealer experience.

Funding with consistency and support

Listed on e-contracting vendors Dealertrack and RouteOne as “Santander Auto,” SCUSA provides 48- to 72-hour purchasing for clean deal packages and assistance in gathering stipulations. Dealers also are provided online tool to review the status of their deals.

Sales and Marketing support

SCUSA provides expert program education for dealership personnel in F&I, sales and accounting, dedicated field sales representatives, dealer incentive programs and hands-on problem resolution.

Financial strength and stability

An industry leader for more than a decade, SCUSA has a track record of success in a highly fragmented industry and has experienced consistent, profitable growth through economic ups and downs.

“Santander Consumer USA has programs that will help you sell more cars to more customers,” the company says on its website. “We offer competitive rates and fast funding, and can finance customers with any credit profile. We are the industry leaders in special finance and can often offer approvals for your customers who have been declined by other banks.

“In addition to our indirect finance solutions, we offer a unique referral program through our RoadLoans.com platform.”

For more information, see the “Dealers” section on the Santander Consumer USA website, which includes Dealer Resources, Dealer FAQs and Dealer Contact Information.

– Mark Macesich

The ‘good old days’ for U.S. car dealers? OK, now what?

05-26 GreenLight - The Good Old Days - Part 2_www.soshable.comSecond of two parts

If these are the “good old days” for auto dealers as suggested in last week’s blog post on GreenLight, then those dealers most certainly will be looking for insights into the trends affecting their businesses and ways to take advantage.

But exactly what signs and trends are cited in “The Blue Sky Report” newsletter from Haig Partners dealer consulting firm of Ft. Lauderdale, FLA?

Here’s what dealers need to look for, according to Alan Haig and Nate Klebacha in the report:

Strong profits continuing for public and private dealers. Private dealerships generated an average of $923,248 in pre-tax profit in 2013, according to NADA, a record-high level. Combined pre-tax income for all public U.S. auto retailers was $1.6 billion in 2013, up 13 percent from 2012.

Increasing new vehicle sales per franchise. Thanks to a lower dealer count and rising sales, new vehicle sales per location reached an all-time high in 2013, at 877 per dealership.

Sales growth vs. declining new-vehicle margins. Auto sales appear likely to continue to grow over the next few years, but new vehicle margins have been declining, down 2.6 percent in 2013, due to a number of factors such as the Internet … For the moment this remains a worrying trend for dealers.

Used cars are increasingly important. More dealers are focused on their used vehicle business because of the sometimes stronger profits for used cars, and the reconditioning that also boosts fixed operations. And F&I on used cars can be higher than with new car sales.

Fixed operations are growing nicely. Per NADA data, fixed operations at U.S. dealerships fell 11 percent during the recession but increased the last two years to return to pre-recession levels. … Most retailers believe this growth will continue in the next few years.

Finance and insurance advantages. The average dealership continues to increase its profits from the F&I department. Dealers are offering additional products and doing a better job of selling existing products.

The good old days? Could be – for those dealerships that seize the moment and ride the trends.

See last week’s blog post for more on the megatrends related to these dealer-level trends.

For more details also see “The Blue Sky Report” online.

– Mark Macesich

 

Sunny present and future for auto dealers?

auto dealerFirst of two parts

These are the good old days for auto dealers, proclaims “The Blue Sky Report” newsletter from Haig Partners consulting firm of Ft. Lauderdale, FLA.

“What a difference a few years can make,” write Alan Haig and Nate Klebacha in the report.

“In 2009, we saw the bankruptcy of Chrysler and GM, formerly some of the most valuable companies in the world. Retail sales fell 40 percent from peak levels, thousands of dealerships were terminated and several of the public auto retailers teetered on bankruptcy.

“But today, the sky is a glorious color of blue. There has never been a better time to be a dealer as they are now enjoying record-high levels of profits and values.”

About those profits, the consultants write, “We estimate the total amount of pre-tax profit generated at the dealership level reached a record high of $16.4 billion in 2013, up 9 percent from 2012, based on data that shows the number of dealerships and the average profits per dealership reported by NADA.

“This is noteworthy as the industry has not yet returned to pre-recession sales levels of 17 million units per year. While there are a number of reasons for these high profits, we believe the main factor is that there are around 4,000 fewer dealerships in the U.S. than before the recession.

“With more volume going through fewer dealerships, more gross profit is dropping to the bottom line.”

A key component of continued auto sales improvement is the expected smooth growth of the nation’s Gross Domestic Product (GDP) through 2020, according to Haig Partners.

With a slowly improving employment picture, “new-vehicle sales are projected to continue to increase. Many analysts expect that light vehicle sales will grow to around 16.3 million units in 2014, an increase of 4.6 percent from 2013, and that sales will continue to grow modestly for the next couple of years.

“If so, we would reach 17 million units by 2016,” the consultants write, although “other experts warn that sales have been sluggish in recent months, perhaps due to weather, and that we will need a significant uptick in sales just to reach 2013 levels.”

Come back next week for more on dealer-level trends related to the megatrends reported here.

For more details see “The Blue Sky Report” online.

 

– Mark Macesich

 

Dealertrack anticipates more growth in e-contracting for vehicle sales, leases

SantanderThe benefits of e-contracting can include a positive customer experience, increased confidence that the contract will be funded, and less lead time required to complete the sale, according to the NADA. Perhaps the most important benefit is that the platforms often enable the OEM to realize the vehicle sale or lease sooner.

While e-contracts are widely used and appreciated today, that wasn’t always the case.

Dealertrack Technologies of Lake Success, N.Y., is one of e-contracting’s most prominent success stories, operating what it says is the largest online credit application network in the country.

Dealertrack and RouteOne are Santander Consumer USA’s principal e-contract providers, enabling the auto finance company to support dealers by funding purchases quicker.

When Dealertrack launched the auto industry’s first e-contracting solution in 2002, skeptics worried that a paperless finance system wouldn’t fly. Dealers worried that digital signatures on contracts would not be accepted by either banks or customers.  But, those fears have proven groundless, and now e-contracting is an increasingly important tool for dealers.

Dealertrack has penetration in all 50 states for both lease and retail contracts, according to the company. The company currently has 19 participating lenders, with several more in the process of being implemented, according to Michael Collins, Dealertrack’s vice president of lender solutions.

“In regards to how Dealertrack e-contracting is growing, we continue to hear from dealers and lenders that they are looking to incorporate electronic contracting into their process,” said Collins.

In the days before e-contracting, it could take as long as five or ten days to get a deal funded. With e-contracting, that time has been slashed to as little as a few hours.

In a recent customer survey of e contracting subscribers, 93 percent of dealers who use Dealertrack’s service said they would recommend the use of e-contracting to other dealers.

The company’s vice president said dealers are seeing the product’s value – faster funding, reduced re-contracting and higher CSI scores from customers. About 98 percent of survey respondents that use e-contracting plan to continue using the technology going forward.

“We have seen from the utilization data that there is an uptick in the use of e-contracting,” said Collins. “Dealers and lender partners committed to the process and technology, are seeing the benefits.”

Dealertrack does not comment on volume or amounts of loans issued, said a company spokesperson.

– Cody Lyon

 

Have we reached peak age for vehicles on America's roads?

used carsWhat were your customers doing early in 2003?

If they are the proverbial average Americans, then they were buying a car. That’s right, the average car on the road is an astounding 11.4 years old, according to R.L. Polk & Co.

And that raises the question for dealers and remarketers: Has peak age been reached for cars on the road, or should drivers expect to share the road with ever-older vehicles?

The answer to that question depends on who you ask.

“I think the age of cars on the road is peaking,” said Tom Kontos, executive vice president, ADESA analytical services. He sees a surge in new car sales as the greatest force lowering average age.

“People tend to be unaware or forget that the average age of vehicles is driven significantly by new vehicle sales,” he said. “As those sales have recovered, and as they have resumed their normal pattern of exceeding vehicle scrappage, [the] average age will fall – even with vehicles lasting longer.”

Ricky Beggs, editorial director of Black Book, feels that we are over the hump in terms of vehicle age. The average age climbed significantly when hard times kept buyers out of the new car market in 2010 and annual sales plummeted to 10.3 million, Beggs said.

“We reached out to a significant number of franchised dealers in the second half of 2012 and asked them, ‘What was the average age of the trade-ins back in prerecession years?’” Beggs said. “The majority said it was a 3- to 4-year-old car. We then asked them what it was in 2011 and 2012 and the answer was most of the trades were 8 to 11 years old.”

The inquiry was repeated at the end of 2013.

“This time the answer was they were getting some 3- to 4-year-old trades and also still getting some 8- to 11-year-old vehicles,” Beggs said. “This is a sign more people are getting back into the more traditional trade cycles, while those who stayed out of the new car market are now coming back.”

The current growth of leases, which almost disappeared between 2009 and 2011, according to Beggs, also will help reduce the average age of cars out there.
Still, Eric Lyman, managing editor of ALG’s Residual Value Guidebook, sees a different future than Kontos and Beggs and believes that peak age has not yet arrived.

Lyman sees two major factors leading to this: First, vehicle quality is very high and improving steadily, and second, the number of miles being driven by U.S. drivers is declining.

“Millenials aren’t really into cars,” Lyman said. “Road trips are a thing of the past. Urban living is on the rise. Fuel costs are up. All these mean less miles being driven.”
These shifts are here to stay, and we’d do well to get adjusted sooner rather than later, Lyman said. “Better quality cars plus less miles being driven equals longer life of our vehicles.”

In any case, we’re at least several more years before we know the answer to our question.

– Philip Ryan, Royal Media

 

Buyer Spotlight: Santander's Jordan Cook

Santander Consumer USA

It’s a team effort between the sales team and buyers at Santander Consumer USA. We work together to make sure our dealers get the most out of every deal. Meet team member Jordan Cook. When it comes to buying deals, no one does it quite like Jordan.

Hometown: Dallas, TX

Tenure at Santander: Five years servicing the East Coast, from Maine to Florida

Siblings: Two younger brothers, Garrett and Logan. Garrett is a senior at Ole Miss, and Logan is a freshman at the University of Colorado

Favorite Food: Anything Tex-Mex

Favorite Movie: Groundhog Day starring Bill Murray. Groundhog Day starring Bill Murray. Groundhog Day starring Bill Murray.

What is on his playlist: “Talk radio, does that count as music? I do enjoy classic rock on occasion.”

Bucket List Vacation: Southeast Asia, Thailand and Cambodia

Favorite Pastime: Besides buying car deals, I’d say playing golf or softball

Work/Life Philosophy: “It’s great to be dedicated to your job, but I try to get outside for exercise and fresh air as often as possible.”

– LaQuenda Jackson