Archive for the ‘Trends’ Category

Falling gas prices lifting trucks, sinking hybrids, other ‘green’ vehicles

gas prices

Perhaps “liquid gold” should be downgraded to “liquid silver.”

That’s because the average price for a gallon of liquid gold – gasoline – at the end of October stood at just $3.003, according to AAA, down 10 percent from the beginning of the month.

In fact, gasoline prices are lower in real terms than they have been in 20 years, and all indications point to prices at least holding steady, or even continuing to drop in the near future.

That sounds like great news – unless you’re trying to sell a Prius.

While truck sales have risen 17 percent and SUVs have risen 20 percent on the year, sales of hybrids such as Prius, plug-ins and EVs are down 5 percent, according to a National Public Radio report. Sales of green segment cars are down for the fifth straight month this year, Autoblog says, falling 11 percent year over year in August and 9.6 percent in September.

Trucks make up 53.5 percent of the model mix currently on the road, according to data, while cars make up 46.5 percent. A year ago, when the average price for a gallon of gas was around $3.50, the mix was evenly split between cars and trucks. The red-hot crossover SUV segment, incidentally, makes up 20.4 percent of market share through September 2014, Edmunds indicates.

The Toyota Prius, meanwhile, which leads the green segment in annual sales, has seen its sales volume drop 11.4 percent on the year through September.

“If you were to turn back the clock seven years, Prius was at the height of its game,” said John Krafcik, president of TrueCar, the car-buying and selling platform. “Demand was high, inventory was limited, and incentives were practically non-existent. Fast forward to this year: Hybrid popularity is waning, and the country’s love of the full-size pickup truck is remarkable.”

“Last month, incentives for the main Prius model … averaged $2,309 per vehicle,” according to TrueCar. “By comparison, in September 2007, the Prius sold with average incentives totaling only $91.”

And the outlook on gas prices doesn’t provide much consolation for prospective sales of green vehicles.

Tracy Noble, AAA’s mid-Atlantic region spokeswoman, said demand for gas is lower and supplies are higher than in recent years. The price has dropped at the pump 34 percent since its 2014 high in July, and a price of $2.50 or $2.60 is a possibility going forward, she said.

“Right now,” said Krafcik, “automakers with a heavy mix of hybrid vehicles, like Toyota, are feeling the effects associated with this turning of the hybrid-popularity tide.”

– Philip Ryan

Some car technology makes sense, some not so much for today’s busy drivers

car technologyJ.D. Power & Associates has been analyzing the quality of cars for more than twenty years, and over that span the company has seen the gap between the highest-rated vehicles and the lowest-rated vehicles shrink drastically.

Quality is increasingly seen as a given, or table stakes, for buyers of new vehicles, and differentiators have to be found elsewhere, according to Mike VanNieuwkuyk, executive director of the global automotive business for J.D. Power.

One of those areas is improving the in-vehicle experience, and technology is playing a major role here. The average American spends more than 20 hours a week in his or her vehicle, VanNieuwkuyk said, and with smartphones now nearly ubiquitous, the desire to safely bring the smartphone into the driving experience is of major importance.

A J.D. Power study of emerging technologies conducted earlier this year found that certain technologies “just made sense” to customers. The number in parentheses indicates what percentage of customers want and would generally be willing to pay for that feature.

  • Surround view/rear-vision camera system (72 percent)
  • Wireless charging station (66 percent)
  • Near field communication (63 percent)
  • Smartphone voice integration (57 percent)
  • Wireless connectivity system (55 percent)
  • Voice-activated personal assistant system (47 percent)

The value of other technologies was not as clear:

  • Eye tracking controls (22 percent)
  • Tactile touch screen (22 percent)
  • Laser headlights (19 percent)
  • Hand gesture controlled cockpit (15 percent)

But the increasing complexity of available tech features means that salespeople will have a tougher challenge educating customers about new features.

Smartphone integration is a given – consumers understand it and want it. Two other technologies with the potential to be game-changers, in VanNieuwkuyk’s view, are voice recognition and autonomous or self-driving vehicles.

For example, about 77 percent of survey participants indicated they would be interested in using their voice to activate features in the vehicle. But if they learn that the feature costs $500, interest drops to 44 percent. VanNieuwkuyk believes voice recognition will improve safety by keeping the driver’s attention on the road. But audio, communication, entertainment and navigation (ACEN) problems routinely top consumer complaints about vehicles, and difficulty with voice recognition is the most commonly reported ACEN problem.

Technology may have the potential to simplify matters for today’s busy driver, but it seems at the moment that the wide and growing array of options is only making things more complicated.

– Philip Ryan


‘Cautious optimism’ for auto industry in 2015, J.D. Power analyst suggests

auto industryThe auto industry is headed for a record-breaking year in 2015, according to Joe Derkos, director, consulting and analytics with J.D. Power & Associates.

New vehicle spending is forecast to hit $407 billion in 2014, equal to the GDP of Austria, and exceed that figure in 2015. The average transaction price for new vehicle sales is expected to exceed $30,000 by the close of 2014, and retail sales – excluding fleet sales – are set to hit 13.8 million vehicles in 2015, at least matching a record set back in 2004.

The numbers indicate that the auto industry is enjoying good times, but Derkos pointed out that numerous risk factors threaten that growth. Each factor in and of itself is not a major threat to the overall health of the industry, but if more than one risk slips in the wrong direction simultaneously, they can combine with damaging effect, he said.

Here are some of the risks Derkos described at a recent auto industry event in New York City:

Manufacturer incentives are on the rise. In 2014, they may reach an average of $2,975, close to 2008′s figure of $3,018 — but since transaction prices also have grown, the newer number represents a smaller percentage of the MSRP.

Interest rates are due to rise over the next several years. A rise in interest rates of 100 basis points could mean as many as 300,000 lost sales or $8 billion in lost revenue for the industry as a whole. Rising interest rates also mean the mergers and acquisitions boom of the past several years among dealerships and suppliers likely will slow, as financing becomes pricier.

Longer loan terms allow buyers to finance more expensive cars for the same payments as a shorter loan on a less expensive vehicle. Monthly payments have held steady since 2008, while transaction prices have steadily risen. Longer loans tend to be favored by riskier buyers.

Leasing and Used Cars. Leasing is expected to account for 26 percent of all car financing by the close of 2014, close to the 30 percent seen before the recession. As more off-lease vehicle hit the market, residual values take a hit.

Production discipline by vehicle manufacturers. OEMs must maintain production discipline to keep supplies at rational levels. In 2015, new vehicles are expected to take 60 days to turn, up from a low of 49 days in 2011, but still not the 73-day mark set in 2009. Market volatility and rapid changes in consumer preference can make production discipline difficult.

The future is impossible to predict with certainty, but Derkos maintained that “cautious optimism” is still the watchword for the automotive industry today.

– Philip Ryan


Auto industry can look forward to a solid year in 2015, economist says

car sales


It might still be 2014, but 2015 is already looking as though it will be a solid year for car sales.

That’s the forecast from William Strauss, senior economist at the Federal Reserve Bank of Chicago, arguably the Federal Reserve Board’s top auto industry economist.

Light vehicle sales should rise to 16.7 million in 2015, up from 16.4 million expects this year, according to Strauss, not a spectacular total, but a strong one nevertheless. His 16.7 million forecast is not as buoyant a figure as some analysts in the automotive space are predicting, but that’s because Strauss doesn’t think the economy is strong enough to support greater growth.

Still, most signs are good for the coming year in the auto industry.

The economy has been expanding, Strauss said, though just barely. Unemployment is falling, and inflation is held in check by “slackness” in the economy – underused capacity. Growth in manufacturing output is expected to be slightly positive in 2015. The Great Recession officially ended in June 2009, and the U.S. gross domestic product increased 2.6 percent in 2013. (2014 figures are not final, of course.) GDP growth is among the strongest in the world, but that is not saying much, Strauss said.

Several factors are combining to put more money into consumers’ pockets, which is good for auto sales.

Home values are rising after falling 40 percent since the height of the boom, and this is delivering more equity for consumers. Debt service payments have fallen to 10 percent for U.S. households, the lowest level since the statistic was first measured in 1980. The stock market is near historical highs, and the overall net worth position for U.S. households has markedly improved over recent years, Strauss said. Oil prices are lower in adjusted dollars than they were 30 years ago, as well.

Light vehicle sales are above pre-recession levels, and light vehicle inventories are at or near desired levels, according to the Fed analyst. Furthermore, loan delinquency is extremely low, despite credit for cars becoming more broadly available to less-affluent customers.

So why isn’t Strauss sunnier on the state of the economy?

Put simply, the current recovery has been extremely modest compared with past recoveries. The 2.2 percent average annualized growth in the current economy is just half that of the recovery of 1974-75 (4.3 percent), and less than half of the recovery of 1981-82 (5 percent).

The economy has now recovered all of the 8.7 million jobs lost in the recession, Strauss pointed out. But it means that for more than five years, there has been essentially no job growth. Manufacturing, in particular, has recovered just 31 percent of the jobs lost in the recession.

The U.S. economy today indeed is getting better, Strauss said, but he – and auto dealers – would like to see the pace of improvement pick up.

– Philip Ryan

Why auto dealerships’ websites must be attractive to women shoppers


women shoppersEven in an increasingly connected world, an auto dealership’s Web presence is no guarantee of success in generating sales to women shoppers.

While dealership websites ranked as the No. 1 stop for women researching new vehicles – clearly providing those businesses opportunities to boost sales – 41 percent of women responding to a survey said the dealer’s website “was not helpful.”

The report did not indicate why the women surveyed did not find certain websites unhelpful, and the website did not respond to a request for more information about the results.

The other top websites women use for shopping research are, in order, Kelley Blue Book, manufacturer sites, Consumer Reports, AutoTrader, Edmunds,, Carfax, Craigslist and J.D. Power.

The results are important to dealers because women buy more than half the new cars sold and influence 80 percent purchases, the website reported separately. Survey results came from’s study “2014 Women’s Car Buying Report: Shopping, buying, leasing + service trends at car dealerships.”

Recommendations to dealers for improving their websites, in general, include:

Providing fresh content regularly. “Blogging is a very effective way to inform your customers, bring a wealth of SEO value to your site and establish ‘the voice’ of your dealership,” according to Blog posts should be informative and professional to supplement marketing strategy, but lively and interesting with original content, tags and images to keep the reader engaged.”

Diversifying your content. While vehicle inventory is the “heart and soul” of a car dealership, said Speed Shift Media, “make sure to talk about your service center, finance department and parts store so that visitors understand the full breadth of your dealership’s capabilities.”

Selling your people, not just your cars. “At the end of the day, people buy from other people,” according to Speed Shift Media. “Personalizing your website with staff profiles and opinions contributes to improving a car dealership website experience by ‘humanizing’ your business and building trust with your prospects before they even set foot on your lot.”

Building new Web pages each month. “New content is looked upon very highly by search engine algorithms,” said Speed Shift. “If you have a special promotion going on or want to talk about a new vehicle model that has recently been released, creating a new page with good content will help you attract people through search and give them the information that they need very quickly.”

Of course, all of that must be done keeping in mind the differences between women and men shoppers. See Auto Remarketing, Kruse Control and Jean Knows Cars for more on attracting women shoppers.

“Women are leading the way being sophisticated users of new technology solutions,” wrote Anne Fleming, president and car buying advocate of, in Auto Remarketing online. “Her most prized possession is her smart phone and, with mobile usage now mainstream for her, she expects her favorite brands, including her car dealership, to be a tap away.”

And to address her interests and concerns.

Remarketers need to be aware of the CFPB and its enforcement actions

CPFB remarketersRemarketing is such an integral part of the overall automotive finance business that all those dealing with used vehicles need to be aware of the new regulations soon to take effect from Consumer Financial Protection Bureau (CFPB).

That’s the word from attorney Jason McCarter of Atlanta-based Sutherland Asbill & Brennan in a discussion with Subprime Auto Finance News.

With auto loans and leases coming under intense regulatory scrutiny and the class of nonbank lenders coming under CFPB supervision, remarketers must be up to speed on the latest rules and regulations concerning contracts and collections. This means maintaining a document trail for possible audits or investigative actions by regulators and ensuring employees are trained in compliance.

CFPB enforcement actions are strictly limited to lenders themselves, but those lenders may require documentation from vendors and partners to ensure all processes are fully compliant.

For example, the recovery departments of auto finance companies, McCarter said, can impose “reporting requirements on the auctions themselves as well as other parties they deal with. Their whole compliance program needs to consider third-party service providers and the role they play in their indirect auto loan business. They pass on those requirements and compliance issues to the rest of the industry. There has to be some reporting.”

So far, McCarter’s firm has not seen direct inquiries from the CFPB into the auction space, but dealers have been important players in recent CFPB investigations leading to enforcement actions.

Collections are of particular interest to the CFPB, and practices for recovering assets from subprime borrowers featured prominently in The New York Times this week.

“It seems to me if the CFPB and other consumer regulators are focused on protecting consumers from loan abuses – and that certainly seems to be a focus – then it doesn’t seem like long until they direct their attention to what happens on the back end of the transaction when the collateral is liquidated,” McCarter said. “To me, it seems like it’s got to be part of an overall compliance program – what are you doing with the collateral and how that’s going to affect the consumer on the front end.”

Financing on used vehicles and to less reliable borrowers grows in importance all the time, and it may be only a matter of time before the CFPB shines a light onto everyone in the space.

“If one of these regulated indirect lenders is under an investigation or otherwise is in a dispute with the CFPB,” McCarter said, “then the remarketers could become witnesses in that and could receive subpoenas and [be] pulled into it as a third party.”

– Philip Ryan

Lenders look to location-based technology to get a step up on dealers

location-based technologyThe early bird gets the loan: it’s a theory that auto lenders are testing, using GPS-based, mobile technology.

Location-based loans offered via mobile app have not hit the mainstream yet, but they’re getting there, according to Paul Schaus, president and chief executive of CCG Catalyst, a Phoenix, AZ-based bank consulting firm.

“In the past 12 months, it’s really been a hot subject,” Schaus said. “All of a sudden, you’ve seen this trend where banks are beefing up their infrastructure, utilizing new technologies, making themselves more efficient. They don’t want to hire people, they want technology to be more efficient.”

CUneXus Solutions, a California-based startup that builds relationship-management software for financial institutions, has developed a white-label application called Credit Concierge.

“In our case, what we do with geolocation, as it pertains to auto lending, is a mobile app that allows lenders to present pre-approved offers of credit at the dealership, at the point of purchase,” Dave Buerger, president of CUneXus said. “Meaning, if an individual walks onto any new or used auto lot in the US, they’ll receive a push notification on their phone that alerts them to the fact that they have pre-approved funds available. And then when they click on that alert, you actually facilitate the acceptance of that loan offer through their bank.”

The app doesn’t just offer pre-approved car loans, it also gives the customer the ability to scan a vehicle’s VIN number, breaks down monthly payments, and even shows the average price people have paid for that vehicle in the area around where they are physically standing.

“It gives the consumer some ammunition to go in and negotiate with,” Buerger said. “It makes the process very simple, and for the lender, it positions them at the right place, at the right time. It gives them an edge in getting to their customer at the opportune moment.”

The geolocation trend that’s on the rise could be a welcome change, Schaus suggested, because most consumers don’t enjoy the traditional car-buying process.

He added that this also may be a way for lenders to get a head start on dealers.

“All of a sudden, the dealer is going to get less opportunity for doing financing and collecting more money,” he said. “The financing is going to be pre-approved before the dealer even knows you wanted that car for sure. And so now the dealer is taken out of the equation, from the financing point of view.”

But change doesn’t come overnight, even when the technology is available.

“I think that the innovation that’s happening in the auto lending group, while it’s exciting, still moves slowly,” Schaus said. “What drives innovation, or speed-to-market, is money. That’s still the driver.”

– Larissa Padden

Car shopping millennials are going mobile, AutoTrader study shows

millennialsMillennials are leading the way to mobile car shopping.

That’s just one of the findings of a study by HIS Automotive for

Use of mobile devices – i.e., not desktop or laptop computers – rose to 32 percent this year from 23 percent last year, according to the study, but the total is expected to soar to 80 percent by 2020.

“As dealers and OEMs look to capture the attention of millennials in 2014 and beyond, the importance of mobile cannot be emphasized enough,” said Isabelle Helms, vice president at “Automotive advertisers who don’t start putting mobile first could be at risk of coming in last.”

Millennials, the generation born between 1980 and 2000, are becoming the largest U.S. consumer group comprising 74 million or about 31 percent of the total population.

Of course, the data on showing increasing use of mobile also means millennials are spending most of the 17.6 hours they research car purchases online, with 95 percent using the Internet for car shopping, compared to 79 percent of all buyers, according to the study.

“Millennials are spending the vast majority of their time online,” said Helms.

And a lot of that time is spent on third-party sites such as AutoTrader and Kelley Blue Book (51 percent), compared to dealers’ websites (15 percent) and manufacturers’ sites (10 percent).

“The most striking use of smartphones was seen amongst the millennial generation – 50 percent reported using a smartphone to shop for their next vehicle,” the study revealed. “This has increased significantly since 2013 when 34 percent of millennials used their smartphones to shop for cars.”

“Over the last year alone, we have seen a tremendous surge in mobile,” Helms said in an interview with CBT News (Car Biz Today). “Desktop and laptop has declined year over year.  … Where they are allocating their time today is on the smartphones and tablets. … Forty-four percent of millennials are using two or more devices when shopping for a car.”

One possible surprise from the research: Social media sites are rarely used by millennials (5 percent), usually characterized as the most connected generation, in the process of car shopping.

Millennials also are apathetic about whether auto websites or brands have a social presence, according to the study, with 78 percent indicating that their feelings about a brand/website would not change based on whether the brand has a social networking presence.

The 2014 Automotive Buyer Influence Study was conducted among nearly 1,900 car buyers and ran from December 2013 through February 2014. To qualify for the study, participants must have purchased a light vehicle within the past 12 months and have been the primary decision maker in the purchase. The study used a combination of online and offline survey methods.

Respect now top factor for women when shopping for a vehicle

respectRespect from a dealership and salesperson has become the most important factor to women when shopping for or buying a new vehicle.

That’s what said following analysis of the latest data compiled by the website.

“R-E-S-P-E-C-T! Aretha Franklin couldn’t define it better. Respect is now the No. 1 prerequisite to trust in the formula to selling to women,” wrote Anne Fleming, president and car buying advocate at Respectfulness of salespeople was cited by 54.08 percent of women surveyed.

Other important factors in the website’s analysis and their percentages were:

Trustworthiness, the former No. 1 factor, cited by 53.56 percent, followed by a salesperson’s likeability, 48.19 percent, knowledge, 46.03 percent, and understanding, 41.60 percent.

Where did vehicle price come into play? Sixth, according to the website’s survey.

“It means that having a personal, empathetic, real, approachable, open and friendly engagement is paramount,” according to the analysis. Only then – after passing the Emotional Quotient (EQ) test – will a woman entertain discussion of vehicle price with a salesperson.

Why is that so important to salespeople and the dealerships for which they work?

“Women are becoming the most powerful and largest segment of car buyers, presenting a plethora of opportunities for dealerships and salespersons to capture more sales,” reported Auto Remarketing online, which cited the “2014 U.S. Women’s Car Buying Report” by

Commenting on the latest website results in AR, a female salesperson wrote: “I have found the EQ test to be true. Many of my customers specifically ask for a female because they are looking for someone they can trust who will understand their needs and issues and guide them in the right direction.”

“Dealers who ‘get it’ know that the key distinction is having exceptional sales advisers who continually offer exceptional service,” wrote Fleming in a previous report in Auto Remarketing. “How women are treated by their sales adviser really matters. In fact, it’s the only thing that matters, initially. Very often, without respect, nothing else gets too close to a purchase.”

Results were compiled “from thousands of reviews on, [where] women customers are telling exactly what works for them when interacting with a sales agent,” Fleming wrote.

The process “begins as soon as women visitors walk into a dealership,” she wrote recently.

“How the sales professional treats shoppers matters greatly, as it has a huge impact on their buying decisions. Dealerships that consistently train their sales team to greet women buyers respectfully and pleasantly have higher chances of closing sales.”

Consumer satisfaction with auto industry hits five-year low, survey says

consumer satisfactionConsumer satisfaction with automobiles and light vehicles declined for a second straight year in 2014 to its lowest level in five years, according to a national survey.

The survey, conducted by the American Customer Satisfaction Index (ACSI), rated the automobile industry at 82 points on a 100-point scale, down from 83 points in 2013.

“The dip in customer satisfaction mirrors sluggish industry growth – year-to-date sales through July were up 5 percent compared with 8.4 percent through the same period of 2013,” ACSI said, attributing that at least in part to automakers reducing incentives compared with those during the recession.

The decline among automakers was widespread: Among 21 nameplates tracked by ACSI, 80 percent lost ground in customer satisfaction, with only 10 percent improving and 10 percent holding steady compared to a year ago, according to the ACSI report on the survey.

All three segments – domestic, Japanese/Korean and European – hit five-year lows in satisfaction.

Ironically, a General Motors product, Chevrolet, was the biggest gainer in the ACSI ratings, rising to 82 points from 79, although that still left the nameplate ranked just 10th overall, while Buick, another GM product, increased to 83 points from 82 last year, finishing No. 7 in the rankings. General Motors has recalled about 30 million vehicles, including Chevrolets and Buicks, during 2014.

Two other nameplates – Volkswagen (84) and Kia (82) – rated the same as 2013, while six of the top 10 rated lower in the satisfaction survey. Those rating lower in customer satisfaction compared to last year were Mercedes-Benz (86), Subaru (85), Lexus (84), Toyota (83), Honda (83) and GMC (82).

The biggest losers in the ACSI rankings were Acura, which fell to 77 points from 83, and Cadillac, another GM product, which fell to 80 points from 85 last year.

Overall, however, the Automobile and Light Vehicles industry ranked sixth of more than 43 industries listed by the ACSI. The industry’s customer satisfaction rating of 82 points – tied with Full-Service Restaurants – ranked behind only Televisions and Video Players (85), Credit Unions (85), Soft Drinks (84), Personal Care and Cleaning Products (83) and Life Insurance (83).

The lowest ranked industries were Internet Service Providers (63), Subscription Television Service (65), Airlines (69), Internet Social Media (71) and Wireless Telephone Service (72) and U.S. Postal Service (72).

The “ACSI Automobile Report 2014”is based on interviews with 4,360 customers, chosen at random and contacted via telephone and email between April 22 and May 29, 2014. Customers were asked to evaluate their recent purchase and experiences with automobiles.

The full ACSI report on the auto industry, including overall rankings, is available online. For another report on the ACSI auto industry report, see Auto Remarketing online.