Archive for the ‘Trends’ Category

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

Sizzling summer sales: Why higher-end cars, trucks, SUVs are bigger than ever

The sizzling summer sales season appears to be especially hot for higher-end luxury and mainstream car models, as well as trucks and SUVs.

And that trend won’t cool any time soon, according to an analysis by, as positive economic conditions “are encouraging shoppers to seek out bigger and more expensive vehicles.”

“The cost-conscious, fuel-efficient mentality from the recession and early recovery years has faded,” said Lacey Plache, chief economist, whose team analyzed two years’ worth of data from the website in compiling the report, “What car shoppers want now.”

American car shoppers are going bigger in 2015.

American car shoppers are going bigger in 2015.

“We expect these economic trends to continue into next year at least,” she added, “so there’s every reason to believe that shopper preferences for larger and more expensive vehicles will continue along the same path that we’ve seen emerge in the past year or so.”

That’s very good news for car dealerships in the midst of some of the biggest sales months of the year.

Positive economic trends include lower unemployment, higher consumer confidence and lower gas prices, as well as low interest rates, low inflation and heavy vehicle replacement.

Two of the biggest factors that are encouraging shoppers to get more expensive vehicles are cheaper credit and the movement toward leasing, according to Edmunds.

Leasing is on a record pace in 2015.

Leasing is on a record pace in 2015.

May figures show that 9.5 percent of buyers who financed new vehicles got zero percent loans – the highest percentage since last September. “And over 28 percent of new cars and trucks sold so far in 2015 were leased, putting the year on pace for the auto industry’s highest lease penetration rate ever.”

Industry experts are predicting that around 17 million new vehicles will be sold in 2015.

Meanwhile, the lower interest in fuel efficiency is driving car shoppers away from the two most popular segments of recent years – midsize and compact cars – as well as hybrids and electrics.

“The share of shoppers configuring higher-end, better-equipped vehicles has increased while the share configuring lower-end vehicles has decreased,” according to Plache.

“The upgrading of the new-vehicle market also is obvious when you consider that trucks and SUVs have outsold cars in each of the last 21 months, despite significant average price differences,” said Edmunds.

“In May, for example, the average transaction price for trucks and SUVs was nearly $37,000, while the average transaction price for cars was about $27,400. Most shoppers are not only more attracted to those bigger vehicles, but they are paying on average $9,500 more to own one.”

Now, that’s hot fun in the summertime.

Robust early auto sales pointing industry in direction of roaring-good year

April showered the auto industry with sales.

OK. Not as much as March. But more robust than April 2014, indeed, the strongest April in a decade. Last month also finished off a four-month stretch the likes of which haven’t been seen since 2001.

And the good news doesn’t end there. If industry analysts are correct, automakers will sell more than 17 million vehicles this year, making 2015 the sixth consecutive year of increasing sales. A streak like that hasn’t happened in almost a century (The Roaring Twenties).



“Overall, auto sales remain strong, a trend that is sustainable throughout 2015 due to consumer demand that is being fueled by 50 new or redesigned models in showrooms this year,” said Jeff Schuster, senior vice president of forecasting at LMC Automotive.

“High year-over-year growth will become more challenging over the next few months,” Schuster said. “But a slip in growth rates doesn’t change the underlying positive trend.”

“April isn’t traditionally the hottest sales month … as many consumers delay purchases until the summer selling season – a boom time for many car companies,” reported The Wall Street Journal. The period of May through August represents four of the top six months of the year for auto sales.

In April, General Motors Co., Nissan Motor Co. and Fiat Chrysler Automobiles all reported healthy sales growth of around 6 percent, while Ford Motor Co. reported a 5.4 percent increase. (Only Toyota among the biggest automakers didn’t perform up to expectations with a 1.8 percent gain.)



The boom is being led by “an incredible appetite” for crossovers, sport utility vehicles and pickup trucks, said Eric Lyman, vice president of industry insights for TrueCar, Inc., car-buying-and-selling marketplace. “Automakers with strong light truck offerings continue to gain [over other manufacturers].”

Light trucks, including crossovers, SUVs and pickups comprise about 56 percent of the light vehicle market, up from 52 percent in April 2005, the last time sales for the month were close to this year.

The continuing surge in sales, especially SUVs, has been particularly good for Fiat Chrysler.

“We launched the spring selling season with nine vehicle sales records and a 6 percent year-over-year increase that extends our sales streak to 61 consecutive months of sales gains,” said Reid Bigland of FCA. “Our new Jeep Renegade small SUV is off to an exceptional start with more than 4,200 units sold in its first full month in the market helping to propel our Jeep brand to its best monthly sales ever.”

Results like that have at least some in the industry seeming positively giddy at the prospects.

“If you’re not having fun in this business today,” Bob Carter, Toyota senior vice president for U.S. automotive operations, told Automotive News, “you’re never going to.”



J.D. Power survey provides insight about what car shoppers are thinking

020415 IL JD Power Survey Provides InsightWhat do car shoppers want?

The answers aren’t always easy to find for auto dealerships.

But J.D. Power provides some insight in a study just released that highlights – or should we say lowlights – the things 30,000 new-vehicle owners said they DON’T want, that is, why they avoid certain models.

“Exterior look/design is the top reason shoppers [30 percent] avoid a particular vehicle,” according to J.D. Power market research company in a summary of its 2015 U.S. Avoider Study.

Other top reasons vehicle shoppers at dealerships rejected certain vehicles include cost and interior look/design at 17 percent each and models lacking the latest technological features at  15 percent. Fuel economy was cited by only nine percent of shoppers as a reason for avoiding a purchase.

So, if a car isn’t good looking – outside and inside – and available with a good price and new technology, a significant percentage of shoppers will avoid purchasing it, moving on to something prettier. Fortunately for dealers, the automakers also recognize these demands.

(Indeed, a salesperson at a Dallas, TX, dealership said his company dramatically improved the technology in redesigning one model for 2015 specifically because consumers said they wanted it.)

Does all of this mean shoppers’ fuel mileage concerns have disappeared with lower gas prices?

“Consumers know that, although gas prices are low today, the cost of fuel will likely increase during the time they own their vehicle,” commented Arianne Walker of J.D. Power. “Clearly, consumers are considering the total cost of ownership when selecting their new vehicle.”

Indeed, as of last year, fuel mileage still was cited as the most influential reason that new-car owners actually selected the vehicle they ultimately purchased, J.D. Power said. “It’s an especially influential factor among buyers of compact, small and midsize cars and compact MPVs.”

And where total cost of ownership is concerned, shoppers can easily find that on websites such as (Kelley Blue Book) and, so transparency probably plays to a dealer’s advantage.

The 2015 Avoider Study – fielded between July and September 2014 – reports responses from nearly 30,000 owners who registered a new vehicle last April and May. Now in its 12th year, the study looks at reasons consumers purchase, reject or do not consider certain models when shopping for a new vehicle.

Next week, look for our two-part miniseries “Why car-buying experience pushes customers over the edge at many dealerships” and “What auto dealerships will need to do to keep customers coming back.”

How auto dealerships can meet regulatory compliance issues head on

Regulatory compliance.

They can be scary words to auto dealerships as they are to most businesses.

But they can be less frightening if dealerships proactively pursue resolution of consumer issues through a comprehensive regulatory compliance strategy and programs.

Lately, the concern has been generated by activity of the Consumer Financial Protection Bureau (CFPB) and its increasing level of scrutiny of consumer finance – from auto lenders to dealers.

“This increased scrutiny is not the regulation du jour – it’s here to stay,” write David Childers and Patty Covington in an article, “4 steps to CFPB Compliance,” at F&I and Showroom online. “And as ‘third parties’ to financial institutions, auto dealerships must do all they can to fill the compliance gaps, because regulators are asking tougher questions and demanding that they dig deeper to prove their compliance with an ever-widening collection of obligations.”

“What regulators are most concerned about is whether there is a ‘structure’ around compliance, and whether it is integrated into dealership operations,” Childers and Covington write.

Key areas of concern among regulators include handling of customers’ private data, credit programs and advertising practices. The writers urge dealers to “embrace CFPB’s recommendation for a compliance management system” and take action to ensure they are seen making a good-faith effort.

The four steps covered by Childers and Covington are:

Creating executive oversight – Senior management must lead the way, setting expectations for the company and its service providers, and appointing a compliance champion, “a dedicated individual or someone serving in a split role that manages the compliance mandates the board establishes.”

Establishing a compliance program – This comprises approved written policies and procedures, training, monitoring and corrective actions. “It should give accurate information to help make informed decisions about the organization’s ongoing compliance posture and activities,” the authors write.

Providing a complaint resolution program – This is necessary to “log, track, investigate and resolve complaints in a timely manner … to identify and understand underlying issues and business risks.”

Conducting objective compliance audits – The aim of an audit is to make sure the dealership’s operations are meeting legal requirements as well as the company’s policies and procedures, and, if not, that the dealership is able to take appropriate corrective action.

“The beauty of a [compliance management system] is that it can proactively address the risks relevant to your organization while meeting multiple regulatory requirements,” according to the writers. “It brings to light problems that may be symptomatic of deeper issues within a dealership. Properly administered, it can fix those issues before they explode into something more costly.”

It’s a brave new world of regulatory compliance but it doesn’t need to be as frightening as it sounds – meeting the challenge even can be an opportunity to make the business better.

Interest in automotive technology varies across brands, customer segments

auto technologyTechnology plays a larger role than ever before in customers’ selection of vehicles, and interest in technology cuts across drivers of different car brands just as it cuts across generations.

However, as with age, certain trends can be seen when viewed overall.

Specifically, drivers of non-premium brands tend to show less interest in technology than premium drivers, primarily due to price considerations, according to J.D. Power & Associates data.

Among non-premium brands, drivers of Honda, Mitsubishi, Ford and Volkswagen showed the most interest in technology as part of their driving experience. On the opposite side of the coin, drivers of MINI, Subaru, Mazda and Kia showed the least interest in in-vehicle technology.

For premium brands, Audi, BMW and Cadillac drivers showed the most interest in technology on average, while drivers of Volvo, Lincoln, Infiniti and Lexus showed the least.

Of course, “technology” may well have different meaning to different categories of drivers.

J.D. Power compiled a list of “premium” technology features in cars, and then asked non-premium and premium drivers which were of interest to them. In all cases, premium drivers showed more interest in the features, often, as mentioned, because of price.

The five items where interest diverged least between premium and non-premium drivers follow. The percentage after each item indicates the differential between the two groups:

  1. Near field communication ($200) – 1 percent
  2. Solar glass roof ($2,000) – 2 percent
  3. Cylinder deactivation ($200) – 4 percent
  4. Device/application link ($150) – 4 percent
  5. Active wheel shutters ($150) – 4 percent

The items where interest diverged the most between premium and non-premium drivers follow. Again, the percentage indicates the difference in interest between premium and non-premium drivers:

  1. Hand gesture activated door ($200) – 17 percent
  2. Enhanced collision mitigation system ($750) – 16 percent
  3. Blind spot detection and prevention ($1,000) – 15 percent
  4. Lane departure prevention system ($500) – 14 percent
  5. Smart intersection ($400) – 14 percent
  6. Vehicle communication system ($750) – 14 percent

A challenge facing the auto industry is that, for the population as a whole, those most interested in technology skew younger and tend to be least able to afford the bells and whistles. However, this J.D. Power data indicates that the ability to afford technology and interest in that technology tend to correlate closely.

– Philip Ryan

When automakers use social media to promote brand loyalty – and sales

Social media


Sometimes all you need to sell a car is 140 characters or less – at least that’s what Twitter is suggesting after teaming up with a marketing analytics to find the effects of tweets on car sales.

Twitter and MarketShare determined that the social media channel drove $716 million in auto sales among 20 nameplates in 2013 through the use of Twitter Ads, positive brand mentions, amplification of TV advertising and the Twitter activity of the automakers themselves.

The study found that the return on investment for the campaign was 19 percent higher when used to amplify television advertising compared to running TV ads alone.

“In addition to its merits as a stand-alone platform, Twitter is very powerful as an amplification tool for TV and other media,” said Abe Mezrich, head of marketing communications for MarketShare.

This is not the first time the social media giant has researched the impact it has on car buyers:

It announced in February that households with Twitter users were twice as likely to purchase a new car as households without them, and that Twitter users that engaged with promoted tweets from auto advertisers were 32 percent more likely to purchase new vehicles.

Car sales in general have been steadily on the rise in recent years, and has projected an estimated Seasonally Adjusted Annual Rate (SAAR) of 16.3 million after healthy October sales.

The auto industry has been vocal about capturing the millennial generation, many of whom have opted for urban living and avoided purchasing vehicles by using car sharing and ride services such as Uber. Some industry experts and manufacturers hope Twitter can provide insight into gaining their interest.

Speaking recently about the Twitter study, Mezrich referenced Audi’s summer campaign for the 2015 Audi A3, which was launched in connection with the ABC Family’s show, “Pretty Little Liars.” According to Audi, the show is “the most tweeted scripted series ever,” thanks to its 2.46 million Twitter followers.

During the campaign, the car brand was mentioned nearly 30,000 times, an article on reported, and made 487 million impressions on networks, including Twitter, Snapchat and Facebook.

While Audi conceded it was difficult to find a direct correlation between the Twitter campaign and sales, a Nielsen brand-effect study based on two control groups – one that had watched the show and one that had not – found that opinions of Audi became 56 percent more favorable in the exposed group.

Other brands that have launched coordinated Twitter and TV promotions include Jaguar in 2013 and Acura as recently as this past August.

– Larissa Padden


What car sales data says about anticipated results for 2014 – and after

car salesThis year isn’t over yet, but there already is enough car-sales data on record to gauge the year’s winners and losers.

Overall new-automobile sales were up 5 percent over 2013 through September, and are expected to reach 6 percent for the year as a whole, according to LMC Automotive.

Fiat-Chrysler has been a surprisingly good performer, with sales up about 16 percent year over year, according to LMCA, and Subaru also continues to outperform the rest of the industry. Mitsubishi will finish up 18 percent for the year, but still is struggling to regain the market position it formerly held. Ford will be down slightly for 2014, LMCA predicts, as the F-150 changeover hurt volumes.

In terms of sales within vehicle classes this year, LMCA made the following observations:

  • SUVs – 28.2 percent share of the market, up 1.2 percent in 2014. Non-premium SUVs gain share on weakening compact demand.
  • D-segment (larger or family vehicles) – 15.3 percent share, down 0.3 percent, contracting on SUV demand.
  • Pickup – 13.3 percent share, down 0.4 percent. Pickup segment is a battleground.
  • Premium – 12.2 percent share, up 0.1 percent. Premium holds share.
  • Sporty – 3.0 percent share, up 0.2 percent. Sporty cars are back

LMCA also considered the future in terms of what generations might want. It considered three key classes of car-buyers: Baby boomers, Gen Y/millennials and Gen Z. There is no precise agreement on dates for Gen Z, but the term generally applies to people born in the mid to late 1990s and later.

Baby boomers are delaying retirement due to the Great Recession, and many want to continue working for some time, or even restart their careers on their own terms. That might mean baby boomers will continue to purchase cars, albeit smaller ones, LMCA reports.

Gen Y or millennials were hit hard by the recession and experienced a delay in reaching life goals compared to previous generations. Student loans and slowed job growth may negatively affect their decision to invest in vehicles.

Gen Z are nonconforming buyers that are deeply immersed in mobile and social communication technology. According to LMCA, they show more individualism as consumers than Gen Y, and demand customization beyond what car manufacturers are currently prepared to deliver.

With gas prices remaining low, SUVs are expected to continue gaining share of the market in 2015 – but those pesky Gen Z buyers may think those cars are what mom and dad drive.

– Philip Ryan

Improving staff’s phone etiquette could increase your sales

phone etiquetteSelling cars isn’t what it used to be.

In years past, selling a car meant walking the lot and being prepared for potential buyers that showed up at the dealership. And while some of the parking lot prowl is still necessary, a car salesperson must have a few more skills with today’s shopper. One of these skills is working the phones effectively.

Sounds simple enough, right? Apparently not.

A study of 1,000 mobile phone calls to dealerships showed that staffers didn’t ask for the prospective customer’s contact information in 66 percent of the calls and didn’t attempt to make an appointment in 63 percent of calls, according to Marchex Inc. and reported recently in Automotive News.

In another article from, a similar survey found that 72 percent of dealers did not ask for an appointment, 35 percent did not suggest alternatives if the caller’s first vehicle of interest was sold and 24 percent of dealer voicemail systems were full or not functional, so customers were unable to leave a message.

This at a time when phone leads are outpacing Internet/email leads by a 4-1 ratio, Cobalt, a digital marketing solutions provider, reported to Automotive News based on data collected from more than 10,000 dealership and automaker websites.

Phone skills take on added significance for dealerships that use lead generators, which provide those dealership with potential buyers.

Companies like supply dealers with leads that are pre-approved for financing and are ready to buy. But it’s up to a salesperson to call and set up an appointment with the prospect to move to the next step in the sales process.

“More customers are providing their mobile numbers on the application, so you are able to reach the customer quickly and more efficiently than in the past,” says Scott Rundle, vice president of direct originations with RoadLoans.

That’s where training comes in, with more and more dealerships turning to vendors like Century Interactive and Phone Ninjas to monitor, evaluate and provide feedback on how sales staff could have handled a call better, reported Automotive News.

“If you’re doing nothing [in phone training your sales staff], you’re leaving a lot of opportunities out there,” one dealer told Automotive News.

Rundle said effective phone etiquette is the key when it comes to converting prospects into buying customers. “Having a strong effective phone etiquette opens up your opportunity to close loans … Our RoadLoans customers are thankful to be approved and are open to the opportunity to hear from our dealers, so they can drive off in the car of their dreams. [A dealer’s] positive tone and approach to our customer makes all the difference and will result in sales!”

So, whether phone calls are inbound or outbound, they matter to your business.

Summit provides glimpse into the automobile market of 2020

auto industryWhat will it be like to buy or sell a car in the year 2020?

A lot different than it is today, according to the closing presentation on the future of the auto industry in 2020 at the recent Auto Finance Summit in Las Vegas, NV.

Besides the technology in vehicles themselves – including self-driving capability – it will enable consumers to have more control over the shopping and buying experience, and the ability to do just about everything from a mobile device or laptop in the comfort of their living rooms.

This look into the future is particularly relevant now, as many dealers budget for 2015 and beyond.

The customer in 2020 will arrive at the dealership (if at all) with a pre-arranged line of credit or financial commitment. That shopper will have done much research online, on an internet-enabled device, and is likely to have decided which brand, model and other features are desirable. The shopper even may have taken the vehicle of choice on a virtual test drive before trying out the genuine article.

The way a customer connects with a dealer also will be quite different.

Some market observers think the consumer of 2020 in most cases will first connect with a dealer online, through text chat or videoconferencing, and confirm transaction details before going to a dealership.

The consumer will provide the dealer with a secure financial transaction code, which will provide access to payment and available credit information, according to the 2020 presenters. And confirmation of loans or leases also will be provided electronically to all parties involved.

Contracts of all kinds will be universal and available to sign electronically at any time. The dealer and manufacturer welcome letters, including relevant attachments, will be sent to the buyer electronically. It also will be normal for car buyers to purchase vehicles from sellers located out of state, even thousands of miles away, and receive prompt delivery after they make their purchase.

Lease penetration, which recently has reached 25 percent, will be more than 50 percent in 2020, one lender suggested. This will mean a continuous flow of used vehicles, keeping used prices stable.

The overall message of the presentation was that technology can not only disrupt the auto industry, but that it also can help those selling vehicles to do so more efficiently and cost-effectively.

Oh, and one more prediction, Jetsons fans: There still will be no flying cars.

– Philip Ryan