Archive for the ‘Industry’ Category

The future is now for improving car-buying process – and here’s how

Selling cars is not just about, well, sales.

Many dealerships know this, but an Autotrader study released earlier this year provides more clarity: Only 17 of 4,002 car shoppers and buyers surveyed prefer the current car-buying process.

That’s less than one-half of one percent – a percentage which dealers might find scary.

“While there is good work going on right now to adapt decades-old sales processes, consumers are telling us that we as an industry are not moving fast enough,” said Jared Rowe, president of Autotrader, an online automotive research tool and marketplace based in Atlanta.

090215 IL The future is now for improving car-buying process – and here’s how

Among other results, the Car Buyer of the Future study describes four areas in which major change is needed in the buying process, according to car shoppers and buyers surveyed. Those areas comprise test drives, deal structuring, financing paperwork and vehicle service.

Following is a summary of each of the areas in which consumers most want change:

TEST DRIVES

These will still play an important role, with 88 percent of consumers saying they would not purchase a car without test driving it first. But 81 percent of consumers prefer a different test-drive experience than the traditional test drive in which they are accompanied by a sales person. Instead, consumers want more convenience and less pressure, including the ability to test drive multiple vehicles in a single place and taking a test drive with a product specialist instead of a sales person.

DEAL STRUCTURING

Consumers indicate that they would like to see a big change in the way they go about negotiating, structuring deals online before arriving at the dealership. Of those who liked the idea of conducting the process online, 56 percent want the ability to start the negotiation on their own terms and 45 percent would like to remain anonymous until they lock in the deal structure.

FINANCING PAPERWORK

Seventy-two percent of customers want to complete their credit applications and financing paperwork online to save time at the dealership – a top frustration among car buyers – and about 71 percent to reduce pressure in filling out paperwork. Moving paperwork online and enabling consumers to complete it on their own time would greatly enhance the in-dealership experience and customer satisfaction, which another study showed begins declining after 90 minutes at the dealership.

VEHICLE SERVICE

When it comes to servicing their vehicles, 83 percent of consumers indicate that they would like to have the ability to access a network of local service centers that honor service agreements. Driven by a desire for convenience, 76 percent of those who prefer local service networks want to go to a service center close by and 63 percent want to be able to service the vehicle anywhere.

“In the future, while the actual components of car shopping and buying will remain the same, the execution will look different,” said the Autotrader report. “Convenience and shared control of the process will be essential to earning a car shopper’s business and loyalty. An important consideration … is that the future is imminent and the evolution of the process should begin today.”

The benefits are clear, according to Autotrader, “Dealers and manufacturers who focus on creating – and ultimately deliver – a better shopping and buying experience can reap significant benefits.”

Consumers want industry to move faster to improve dealer experience

You’re not moving fast enough.

That’s what consumers are telling the auto industry about the pace of change in its “decades-old sales processes,” according to Jared Rowe, president of Autotrader.

The conclusion came out of Autotrader’s annual Car Buyer of the Future study released earlier this year.

The study covered three myths about the future of auto sales, the four main areas in which change is needed and the benefits to dealers and manufacturers who adapt to new consumer demands.

083115 IL Consumers want industry to move faster to improve dealer experience

“By recognizing – and embracing – the need for change, we have a tremendous opportunity to surprise and delight our consumers,” said Rowe in referring to the results of the study, which showed that only 17 of 4,002 car shoppers and buyers surveyed prefer the current car-buying process.

Autotrader identified the following myths about the future of vehicle sales:

Sales people will be less important. Eighty-four percent of consumers in the study indicate that they want to buy a car in person, and 43 percent see the dealership as a place to learn – validating information they found online and finding out about specials, offers, warranty and service.

Consumers don’t want to negotiate. Fifty-six percent of consumers prefer to negotiate, including two of the most influential groups in car buying – millennials and females.

The lowest price will always win. While price is important to consumers, the dealership experience trumps the lowest price, with 54 percent of those surveyed saying they would buy their vehicle from a dealership that offered their preferred experience over the lowest price. And 73 percent said they would be willing to drive further for a great salesperson versus 65 percent willing to drive for the lowest price.

The areas in which change is needed most, according to Autotrader, are test drives, deal structuring, financing paperwork and service – all of which we’ll cover in our next post.

Meanwhile, Autotrader said, the benefits are clear: “Dealers and manufacturers who focus on creating – and ultimately deliver – a better shopping and buying experience can reap significant benefits.”

Of the consumers responding to the Autotrader survey:

  • Seventy-two percent would visit dealerships more often if the buying process improved.
  • Two-thirds would be more likely to buy from a dealership that offers their preferred experience.
  • Fifty-three percent would buy a vehicle more often if the buying process improved.

“The sales environment is expected to remain strong across new, used and CPO cars over the next few years,” Rowe said. “And it is exciting to see that we have several ways to enhance the consumer experience for the benefit of all involved – buyers, manufacturers and retailers.”

These are the automakers with the best quality in 2015, study says

Fiat Chrysler Automobiles (FCA), General Motors, Volkswagen Group of America and BMW/MINI all can claim bragging rights for their 2015 vehicle quality.

The four automakers were the big winners in a study by Strategic Vision of San Diego, CA.

Dodge Charger helped FCA to highest overall total quality score.

Dodge Charger helped FCA to highest overall total quality score.

FCA (formerly Chrysler LLC) received the highest overall total quality score, 859 on a 1,000-point scale, for the first time since the Strategic Vision study began 20 years ago. Volkswagen Group of America and General Motors Corporation were close behind FCA with 858 points.

BMW/MINI matched Fiat Chrysler’s total of six segment winners out of 35 named by Strategic Vision.

“FCA has incrementally risen from one segment leader in 2010 to six segment leaders in 2015,” said Christopher Chaney, senior vice president of Strategic Vision, which studies how and why consumers make buying decisions and what drives customer satisfaction and loyalty. “It’s hard to not be in admiration of the turnaround achieved by FCA company employees.”

The study measures more than 155 specific aspects of the customer experience, rather than just problems, to generate its “total quality” ranking.

Chevrolet Colorado was one of GM’s seven segment winners.

Chevrolet Colorado was one of GM’s seven segment winners.

Following is a summary of segment leaders for all brands rated by Strategic Vision:

  • GM had seven segment winners with the Chevrolet Corvette Coupe, Corvette and Colorado pickup, GMC Sierra 2500/3500 and Yukon XL, Buick Encore and Cadillac Escalade.
  • FCA scored six leaders – Fiat 500, Fiat 500e, Dodge Charger and Challenger, Jeep Wrangler Unlimited and Dodge Durango – and the title of best non-luxury brand with Ram trucks.
  • BMW/MINI winners are the i3, 3-Series Wagon, X4, X5, MINI Cooper Countryman and Roadster.
  • Despite its overall rating, Volkswagen Group had only one segment winner with the Tiguan.
  • Otherwise, Honda won four segments with the Crosstour, Accord Hybrid Sedan, Titan pickup and Odyssey minivan, while Nissan, Subaru and Mercedes-Benz each won two segment awards.

Strategic Vision actually named 35 winners in 28 categories ranging from micro car to luxury SUV and left little to the imagination about what the results mean.

“In 1997, only 15 percent of all car brands had less than a half a problem per vehicle, with a few ‘delinquent’ brands having more than two problems per vehicle,” said Alexander Edwards, Strategic Vision president. “In 2015, 100 percent of brands had less than half a problem on average per vehicle.”

Strategic Vision’s study comprised more than 46,000 customer responses on vehicle quality.

How service and parts can make the difference for your dealership

In today’s world of car shopping, there is nothing that sets dealerships apart more than customer service. While the focus usually is on the salespeople to carry the load, more and more dealerships are shifting the weight to their service departments.

Autodealer Today calls the service department “the lifeblood of your dealership, driving receipts and carrying dealers through the dicey periods.” Even during the good times, new car sales are usually outpaced by that of service and parts, Autodealer Today says.

Photo: aaahampton.mechanicnet.com

Photo: aaahampton.mechanicnet.com

“On average, 12 percent of a dealership’s annual sales are generated by service, parts and body shop,” says Chip Maher, dealership consultant for the National Automotive Dealers Association in an article in Automotive News.

So, when considering ways to improve your Customer Satisfaction Index (CSI), it makes sense to increase the role of the service department.

Today, nearly one-quarter of Americans are driving with some type of service plan. That makes the service and parts departments fertile ground for growth in loyalty and customer retention.

To help our dealers seize this opportunity, Santander Consumer USA (SCUSA) offers its S-Guard Vehicle Service Plan on both new and used vehicles. Additional benefits like roadside assistance, rental car reimbursement and trip interruption insurance make it an attractive package for customers and an easy sell for finance managers.

The convenience of having a service plan in place can lead them right back to your dealership.

Photo: billingsgazette.com Bill Underriner is putting his service department front and center.

Photo: billingsgazette.com
Bill Underriner is putting his service department front and center.

Bill Underriner says he wants to be ready to capitalize. That’s why the owner of Underriner Motors in Billings, Montana, told Automotive News that he’s building a new lot that will put his service department front and center.  He’s cutting the space of his showroom to accommodate his service business.

It’s the latest trend. The message: make the service customer to feel just as important as the buyer.

“I feel putting the emphasis on the service department where the customer always comes, they will eventually buy a new car,” Underriner says. “At least I get a shot at them again because of the great service that I do.”

So, if you’re looking to boost your CSI numbers, as well as the bottom line, look no further than service and parts. It’s not just for repairs any more.

Traditional car dealerships will face big challenge from … golf carts?

What’s an auto dealer to do?

There hasn’t been a better year for car sales in about a decade, but some experts see trouble on the horizon with electric vehicles, such as golf carts, that don’t come from traditional automakers.

That’s right. We said golf carts – and all-terrain vehicles.

Photo: ecomento.com Tesla Model E electric sedan.

Photo: ecomento.com
Tesla Model E electric sedan.

“When people think of electric vehicles, they think of Tesla,” writes Thomas Bartman in Harvard Business Review. “But if you want to see the future of EVs it’s important to look [beyond automakers]. Despite glowing media reports, Tesla is not disruptive, and will have trouble scaling as it seeks to grow.”

And disruption, or fundamental change, in the vehicle marketplace is what Bartman, a member of the Harvard Business School think tank Forum for Growth and Innovation, anticipates.

“There are two categories of disruptive EVs: low-speed electric vehicles and electric utility vehicles,” he writes, including vehicles built on platforms mostly used for golf carts and ATVs.

Photo: mtsassociates.com

Photo: mtsassociates.com

“For short trips around a development, [low-speed EVs] are actually more desirable than cars; they don’t create tailpipe or noise pollution; they’re slow, increasing pedestrian safety, and they’re cheap to buy and charge. Range and comfort limitations aren’t important factors because they’re only used for short trips in good weather. Full-size cars would be overkill in applications like this.”

But golfing communities, college campuses and residential developments aren’t the only places such low-impact vehicles may be useful, Bartman suggests.

“Small-format EUVs are increasingly replacing full-size combustion-powered delivery vehicles in congested cities,” according to Bartman, because “EUVs are small, which makes navigation and parking easier, they improve their performance in constant stop/start environments, and they are exempted from many congestion taxes because they emit no tailpipe pollution.”

072215 IL Traditional car dealerships will face big challenge from … golf carts_3

But before you scoff at the prospect of golf cars zipping around our roadways, consider this.

Bartman compares today’s auto industry to sailing ships of the past, which gradually were replaced by steam vessels as that technology developed from its initial limited uses.

“We’re witnessing a similar pattern develop in low-speed EVs and EUVs,” Bartman writes.

As if shared travel such as Uber and autonomous driving, which, Steve LeVine at Quartz writes “is on the verge of being rolled out on a major scale,” aren’t threatening enough, now it’s golf carts?

“Early generations of low-speed EVs were basically golf carts that could be driven on public roads. [But] manufacturers have added features like hard doors, stereos and even heaters and defrosters,” writes Bartman. “These improvements don’t seem like much compared to the features of traditional automobiles … but each improvement brings the disruptive product closer to the minimum performance requirements of the least-demanding mainstream customers.”

And, perhaps, auto dealerships that much closer to needing golf carts and ATVs in their showrooms.

Photo: azcentral.com

Photo: azcentral.com

Millennials may not turn backs on buying cars, after all, research suggests

New research by TransUnion, one of the Big Three credit bureaus, debunks a couple of modern myths about the car-buying habits of millennials, the generation of 18- to 34-year-olds so coveted by most marketers.

The myths are that the generation isn’t interested in driving or in cars, and that millennials can’t afford cars anyway because they have too much student debt.

The credit bureau’s research results are very good news for auto dealerships and lenders, alike.

072015 IL Millennials may not turn backs on buying cars, after all, research suggests

First, millennials are actually the fastest-growing group in autos, according to TransUnion, even though they have a reputation for being more interested in mobile devices than in automobiles.

After a late start – probably because of the Great Recession and not because of any great, lasting shift in attitude – millennials are starting to buy cars and get auto loans like previous generations did, said Jason Laky, senior vice president and automotive business leader for TransUnion.

Specifically, the credit bureau said millennials accounted for 27 percent of auto loans and leases in 2014, up from 16 percent in 2009. Their average opening loan balance grew 4.1 percent year over year, to $18,678 in 2014, from $17,942 in 2013, TransUnion said.

“The growth in millennials’ auto loan originations dispels the common myth that millennials are not buying cars,” Laky said in a written statement.

Second, TransUnion also said in a separate study published in May that student loans accounted for only a slight delay in auto purchases, despite some analysts worrying that heavy student loans could prevent young buyers from stepping up to a new car or truck.

In the long run, TransUnion said, consumers with student debt are actually more likely to have an auto loan than consumers with no student debt. Not only that, consumers with student debt perform better over time in terms of losses and delinquencies, TransUnion said.

“This is an important finding, because it shows lenders that rather than being concerned about student loan borrowers’ ability to manage new credit, this may actually be an attractive marketable group, both in terms of higher credit demand as well as potentially better repayment performance,” said Charlie Wise, co-author of the study and vice president in TransUnion’s Innovative Solutions Group.

“Lenders looking to attract and maintain relationships with millennials should find this news encouraging,” he said.

– Royal Media

Santander’s sizzling summer series may help bring your conversions to a boil

How do you turn a used-car shopper into a buyer?

It’s an important question for many franchised dealerships since used cars represent a large proportion of their sales – even during this sizzling summer for new-car sales.

070715 IL Santanders sizzling summer series may help bring your conversions to a boil

There is no simple answer as we learned in our series based on a white paper from CarStory, which provides independent reports about vehicles and features in specific markets. But our series does try to answer the question for you in ways that may help your business.

That white paper, How to Convert Used Car Shoppers to Buyers, reported on a CarStory survey of used-car shoppers that showed only one or two of eight shoppers on a dealer website become prospects.

The difference between one and two, however, can make a huge difference in your business.

Here are links to the series that appears on the Santander Auto Finance (SAF) dealer blog, Inside Lane:

Of course, SAF also is available to help you generate more business through our full-spectrum auto lending that includes nonprime and subprime borrowers turned down for financing by other lenders.

“Santander has been a great financing partner for quite some time now,” said the finance director at one dealership. “We would not be able to sell as many cars without their unique brand of auto finance. While other lenders give you turndowns, Santander always gives you a way to go.”

For more helpful content, visit the Inside Lane blog regularly during the sizzling summer of 2015.

And now the most important number when selling used cars (Part 3 of 5)

062215 IL And now the most important number when selling used cars (Part 3 of 5)_1

Consider nine your lucky number.

So suggests a white paper on results of a customer survey by CarStory, a company that provides independent reports about vehicles and features in specific markets.

“From our survey, we learned that most people who buy a used vehicle do so to save money, or at least to get more bang for their buck while minimizing depreciation,” says CarStory in its recent report. “Based on this, we looked at ways that dealers could price vehicles to improve consumer interest.”

RELATED: The first commandment for turning used-car shoppers into buyers (Part 1 of 5) and The most important three-letter word when selling used cars (Part 2 of 5)

And what pricing insight did the survey provide? That the number “9” is better than “0.” Seriously.

“We looked at ways that dealers could price vehicles to improve consumer interest,” says CarStory in its report, How to Convert Used Car Shoppers to Buyers. “We started with an obvious question: What effect does ending a price in 9 have on consumer interest and conversion? This, of course, is the oldest trick in the book and one that is detailed in the journal of Quantitative Marketing and Economics.”

“We found that dealers that end their prices in 99 convert shoppers from the search results pages to vehicle detail pages much more often,” reports CarStory. “Prices that end in 99 versus 00 showed a 16 percent lift in SRP-to-VDP conversion. Prices that end in 999 performed nine percent better than those ending in 000. … Take away: Always end your price with multiple 9s.”

But, apparently, the number nine isn’t just important in use-vehicle pricing, according to CarStory. It also comes into play in the number of photos dealerships should use to maximize impact on shoppers.

Classic “hero” shot of used truck for sale.

Classic “hero” shot of used truck for sale.

“The first best practice when it comes to images: represent the car accurately … [because] misrepresenting the car online will just lead to disappointment and frustration in person,” says CarStory. “Second best practice: Use fewer images [on non-dealer websites] that show the vehicle highlights, including the hero shot, dashboard, seating configurations and key features.”

And by fewer images, CarStory apparently means nine. Not 10. Not 20. Certainly not 30. Just 9.

“Using fewer photos may seem counterintuitive, but we looked at lead submission rates on vehicles based on the number of images the posting contained,” said the CarStory report. “We found that nine images offered optimal lead submission potential. Postings with nine images saw a 50 percent higher lead submission rate than those without any images, 56 percent higher lead submission rate than those with 20 images [and] 71 percent higher lead submission rate than those with 30 images.”

“It appears that consumers are suffering from image fatigue,” said CarStory. “We see some listings with 40 images. When you share so many images it forces the consumer to navigate the picture carousel to find the ones that best tell the vehicle’s story.”

Now, what’s your lucky number?

Next: Calls to action: When words matter most for your sales funnel

The most important three-letter word when selling used cars (Part 2 of 5)

The WOW factor.

That’s what car dealers must achieve in the used-car sales process.

Car shoppers today go through a lot of steps before deciding what they’re going to purchase, so grabbing and holding their attention are major challenges for dealerships.

Photo: thetimesweekly.com

Photo: thetimesweekly.com

“This implies that dealers have just a few opportunities to really wow potential buyers,” says CarStory, which conducted a three-week survey of used-car shoppers, and not much time to do it.

RELATED: The first commandment for turning used-car shoppers into buyers (Part 1 of 5)

“Today’s auto shoppers use 24 research touch points in their car-buying process,” says a CarStory, citing a Kelley Blue Book report, in a white paper, How to convert used car shoppers to buyers. “Every time a consumer leaves a dealer website to find more information, it is a lost opportunity.”

Following are the most common steps from CarStory’s own map of the buying process, in order, with the percentage of shoppers who referred to it in the survey (most frequent in boldface):

  1. Search for vehicles online, 86 percent
  2. Calculate the amount I can afford to spend, 68 percent
  3. Ask friends and family about purchasing a car, 36 percent
  4. Read online reviews, 53 percent
  5. Check vehicles’ market value, 59 percent
  6. Narrow down the search, 52 percent
  7. Consider other vehicles, 60 percent
  8. Sell or trade another vehicle, 31 percent
  9. Ask a dealer for recommendations, 14 percent
  10. Read auto magazines, 13 percent
  11. Check accident history, 59 percent
  12. Test drive a vehicle, 74 percent
  13. Call dealer to pre-negotiate, 20 percent
  14. Negotiate price at dealer, 56 percent
  15. Negotiating financing at dealer, 41 percent
  16. Drive the car home, 76 percent
  17. Share vehicle purchase on social networks, 7 percent

The process offers a key lesson to dealerships selling used cars, according to CarStory.

“The best way to capture most shoppers [is to] engage them in the online research phase,” says CarStory, referring to the most-typical first step by consumers in the used-car-purchase process. “But how long do dealers have to capture a buyer’s attention before that buyer moves from the online research phase to, say, Step No. 6, narrowing the search? Not long.”

“To better understand consumer attention span … we looked at the average number of search results pages (SRPs) and vehicle detail pages (VDPs) that consumers across our marketplaces view,” says CarStory. “And then we looked at how many leads, on average, consumers submit.”

The results show that out of 7.8 million unique consumers who viewed SRPs across 350 marketplaces, 4.1 million made it to at least one VDP, generating a total of 182,533 leads, says CarStory, which offers independent reports about the value of individual vehicles and features in specific markets.

That means eight visits to your website generate five VDP views and just one or two leads. So, go out and wow your prospects, then be prepared to make the most of those results.

NEXT: And now the most important number when selling used cars

What do you think about GreenLight Remarketing magazine?

Maybe you’ve seen it at the auction.

Or posted in PDF form here at the Inside Lane dealer blog.

060815 IL What do you think about GreenLight Remarketing magazine (1)That colorful, 12-page quarterly magazine GreenLight Remarketing from Santander Consumer USA Inc. and Royal Media which covers the auction world for the remarketing professional.

Well, now we want to know what you think of it so we can be responsive to your remarketing interests.

Maybe you’ve thought “I like this article” or “I wish it would provide more information about that” or “The magazine would be even more useful if it contained _ (fill in the blank)__”

Take a few moments – really, just a few – to give us your ideas, suggestions or other comments at http://bit.do/Greenlight-survey. As a thank you, the first 50 participants to respond will receive a limited-edition Santander Consumer USA baseball cap just as the season is heating up.

We ask just six multiple-choice questions about:
(1) whether the articles in GreenLight Remarketing are informative and relevant .
(2) the usefulness of the Active Auctions map.
(3) what you think of the length of articles.
(4) Tom Kontos column on wholesale used-vehicle price trends.
(5) if the magazine is easy to find at the auction.
(6) whether you read GreenLight Remarketing regularly, either in hard copy or in the PDF online.

The survey form also provides a space to register you overall opinion of the magazine if you wish.

That’s it. It’ll probably take you less time than it took to read this blog post about the survey.

You can find the magazine at more than 50 auction locations around the country – including ABC (5), ADESA (16), Brashers/Servnet (4), Manheim (21) and some independent auctions.

The second-quarter edition includes articles about electric vehicles beginning to trickle into the auction lanes, how mobile and imaging technology is remaking the repo business, auction experts’ top tips for getting the best auction returns, our Active Auctions map and more.

So let us know what you think and get your limited-edition baseball cap, great to wear to the auction.