Impact of the CUV may not be ‘sudden,’ but it’s still significant


They are the “sudden impact” at least 28 years in the making.

At the turn of the millennium in 2000, fewer CUVs were sold than minivans or SUVs, according to data from IHS Automotive, and the car still was the most popular vehicle on four wheels – although models like the AMC Eagle already had been around for more than a decade by then.

But the CUV’s time was coming.

The RAV4 and other CUVs have come a long way over two decades.

The RAV4 and other CUVs have come a long way over two decades.

WardsAuto data showed CUVs had grown from 24.5 percent of light-vehicle sales by 2010 and to nearly 34 percent so far this year, while cars have declined from nearly half to under 37 percent.

“This was the harshest move in consumer preference the industry has ever seen,” Bob Carter, executive vice president-sales, Toyota Motor North America, told WardsAuto at the Center for Automotive Research Management Briefing Seminars in Traverse City, MI.

Even if it’s not “sudden,” occurring over the span of two decades, it’s still a tectonic shift since the introduction of vehicles like the RAV4 and the Honda CR-V.

CUV sales for July (452,412) beat all other categories, including pickup trucks, and approached total cars sales (525,020) – small, midsize, large and luxury combined. And it’s growing faster (7.5 percent year to date) over the same period last year than any other category.

The minivan? Miniscule by comparison. And true SUVs? About one-third the sales YTD.

“This year, automakers will offer nearly 80 different CUVs,” WardsAuto reported, with the “vast majority of [vehicle] introductions” coming in the Crossover category.

Some industry watchers think all of this means the writing is on the wall for the midsize sedan.

Headlines for the last several years have wondered “Is the slow death of the sedan happening right before our eyes?” ( and “Could the family sedan be driven to extinction?” (Forbes) or even proclaimed “The sedan is dead” (Jalopnik) and “The family sedan is dead” (Business Insider).

But predicting the death of the category probably is a bit much.

Even The Truth about Cars “Midsize Sedan Deathwatch” series allows that “the midsize sedan as we know it … isn’t going anywhere any time soon.”

While the midsize sedan category is down 14.5 percent YTD compared to last year, sales still come in second only to crossovers at about 1.65 million. Even if sales declined at the same rate in coming years, it still would take more than a decade for the sedan category to shrink to the size of current luxury sales.

And by that time, we’ll all be car-sharing anyway, right?

Ford F-Series getting the job done despite overall decline in vehicle sales

If vehicle sales were a horserace, 2017 would be a runaway.

Not very different than any other time in the last three-plus decades.

Ford F-Series pickup trucks fell just shy of a half-million in sales through July, nearly 200,000 ahead of the second-place Chevrolet Silverado pickup at 309,000 year to date.

The F-150 for 2018 is the latest in a long line of Ford pickups.

The F-150 for 2018 is the latest in a long line of Ford pickups.

“Ford continues to update and improve its highly capable, tough-yet-luxurious trucks,” said Kelley Blue Book’s review of the F-Series, which also receives a 9.2 consumer rating out of 10.

What a way to celebrate Ford’s 100 years of producing trucks, which started in 1917 with the TT pickup.

“Ford trucks show that new thinking and new technology help get the job done,” said KBB, the car-shopping website. “It’s for these reasons that the F-Series has been the best-selling truck in America for 40 years and the best-selling vehicle for 35 years and counting.”

The Dodge Ram pickup is a close third in sales this year (290,000), but it also is the fastest-growing vehicle in the top five (14.6 percent), second-fastest-growing in the top 10, behind the Nissan Rogue (25.2 percent), and fourth-fastest in the top 20, trailing the Toyota Highlander (22.5 percent) and Jeep Grand Cherokee (15.7 percent), based on data published online by The Wall Street Journal.

Falling in line behind the trio of pickups are the Nissan Rogue (228,000) and Toyota RAV4 (226,600), while the remainder of the top 10 were to Honda CR-V (219,000), Honda Civic (212,400), Toyota Camry (211,000), Toyota Corolla/Matrix (192,000) and Honda Accord (191,000).

Despite its sales, the Silverado is the only pickup in the top 10 to decline year to date compared to 2016.

All four cars in the top 10 have lost ground, the data showed.

The strength of F-Series, Silverado and Ram pickups sales is reflected in total vehicle sales so far this year with pickups trailing only crossovers in growth year to date, despite a slight sales decline overall.

“Henry Ford had no idea what he’d begun when he had the TT engineered specifically to be a truck at a time when most pickups were modified cars,” reported the Detroit Free Press. “He intended the Model TT for farmers, another tool like the Fordson tractors he built for the rural life he idealized.”

The F-Series pickup line descends directly from the Model TT, according to the Free Press.

“From the Model TT to the 450-hp 2017 F-Series Raptor off-road racer, they’ve taken the truck from humble beginnings to its illogical and wonderful extreme,” one industry insider told the Free Press.

That being said, it doesn’t look like the F-Series track record will change any time soon.

How your dealership can avoid leaving profits on the table

What happens next?

That may depend on your most-profitable department.

As new-vehicle sales appear to be slipping in 2017 for the first time in years – and prospects for more of the same next year – a brighter spotlight than normal shines on the service department.

That department already accounts for about 44 percent of the average dealer’s profit, according to the National Automobile Dealers Association (NADA) trade group, and yet “when it comes to maintenance and repair services, dealerships are leaving money on the table.”

At stake are thousands of dollars in revenue (and potential profits) over the life of every vehicle if a customer does not return to your dealership for service and parts to maintain his/her vehicle, based on cost-of-ownership calculations by and Popular Mechanics.


Service excellence, communication separate ‘best’ brands from the rest – J.D. Power

Why most customers are leery of your service center – and how to fix it

And in most cases they don’t return.

Only 30 percent of total vehicle-service visits occur at a dealership, NADA reported, with 50 percent going to general repair and service stations, quick lube and tire stores.

That’s a lot of lost revenue and unrealized profit for dealerships when clouds are gathering.

So why does this happen?

The top five reasons service customers don’t go to a dealership are perceptions that:

  1. Total cost will not be reasonable.
  2. Dealerships will overcharge.
  3. Labor charges will be unreasonable.
  4. Parts charges will be unreasonable.
  5. Distance/location are not convenient.

But giving customers fewer reasons to go elsewhere could provide an important advantage to dealerships when times get tougher because of declining new-vehicle sales.

“While perceived lack of value is a top reason for not using a dealership for maintenance and repair services, actual spend[ing] for services such as an oil change suggest that dealership pricing is competitive with third-party providers,” says the trade association.

And that means “dealers have an opportunity to compete with independent service providers by offering and promoting competitive pricing and price-match guarantees, while focusing on advertising messages about high-quality service, parts and certified technicians.”

While not every business condition is under your control, you still can affect what happens next.

NADA, consumer group fuel CAFE debate citing customer impact

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Someone is wrong.

And we may not know who until 2025.

The National Automobile Dealers Association (NADA) thinks that failing to adjust corporate average fuel economy (CAFE) standards will mean fewer Americans will be able to afford new cars.

The Consumer Federation of America (CFA) says leaving targets in place will help Americans more.

And both organizations contend they speak for consumers as the federal government re-examines a mandated 54.5 mpg CAFE target for 2025 for all automakers.

Of course, they aren’t the only ones debating fuel-economy standards, just two of the most recent.

What consumers want

“We know something about what consumers want,” Peter Welch, NADA president, said recently during at Center for Automotive Research Management Briefing Seminars session in Traverse City, MI. “Affordability is everything; it’s the whole game from the consumers’ perspective.”

Meanwhile, the CFA cited a survey it said shows that 79 percent of Americans support current targets the group says will put $626 back into consumer pocketbooks each year.

“One reason for the widespread support of higher standards is that a large majority of those intending to purchase a motor vehicle in the future think that the vehicle’s fuel economy is important,” said the CFA in a press release announcing results of a July survey of 1,008 American adults.

But that doesn’t make NADA less skeptical about the impact of CAFE standards on new-vehicle costs.

Who’s right, who’s wrong?

“Every day at dealerships, people wonder if they can afford the monthly payments of a car they are considering buying,” said Welch, citing a $34,000 average transaction price of a new vehicle – up 57 percent from 20 years ago. “We need to make it possible for people to afford cars.”

The EPA says the 2025 regulations would cost $875 per vehicle, and that increased costs would be offset by fuel savings of $1,650 over the life of a vehicle, reports WardsAuto, referring to one of the federal agencies that is gathering input for a review of existing CAFE standards.

“But NADA and others predict the figure would run into the thousands of dollars,” WardsAuto reported.

“Customers are smart, do the math and know how to stretch a penny,” said Welch. “Getting it back in four or five years is not how customers think at dealerships.”

‘A guy trying to buy a car’

Meanwhile, a survey by the Alliance of Automobile Manufacturers (AAM) indicates that about two-thirds of consumers are willing to pay under $2,500 to meet government fuel-economy standards, “which would likely not cover the cost of updates.”

Based on the survey, “even if adults were given additional money when purchasing a vehicle, more would choose extra safety features over increased fuel efficiency,” the trade group said. The alliance, which represents a dozen large auto manufacturers, has called for a compromise that would “modernize” and ease CAFE targets, suggesting that it would be “the right thing to do.”

“You look at the world of one of [NADA’s] dealerships,” Mitch Bainwol, the alliance’s president and CEO, told WardsAuto, “and there’s just a guy there trying to buy a car.”

The EPA has said it will make a final decision on any changes in the standards by April 1, 2018.

Mainstream vehicles closing the appeal gap with premium models

Mainstream vehicles are getting more appealing.

At least that’s what J.D. Power’s 2017 Automotive Performance, Execution and Layout Study (APEAL)

purports to show.

The rise is due to rapid improvements in vehicle technology and safety features, making them more comparable to premium products, according to the study.

The Chrysler Pacifica ranked as most-appealing minivan.

The Chrysler Pacifica ranked as most-appealing minivan.

This year’s index showed that 32 brands averaged 810 points on a 1,000-point scale with 19 of 32 making positive gains in their performance, compared with 2016, said the report from J.D. Power (JDP). Mainstream brands averaged 804 points and premium brands averaged 845.

However, that 41-point difference is nine points less than it was in last year’s study, JDP said.

‘Better and better’

“Many automakers are getting better and better at giving consumers what they want in a vehicle,” said Dave Sargent, vice president of the well-known data research company.

“The industry is doing a very good job of creating vehicles customers like across every segment, and the APEAL study identifies why this is. One clear reason is that non-premium vehicles are increasingly offering technology and safety features found in premium vehicles.”

Top mainstream brands

Seven mainstream brands – MINI (838), Honda (820), Ford (819), Chrysler (815), Ram (815), Nissan (811) and Chevrolet (810) – scored at or above the industry average. And five more brands – Volkswagen (809), GMC (808), Kia (808), Buick (805) and Subaru (805) all scored above the mainstream average. Seven non-premium brands scored below the segment average in the study.

Top premium brands

Among premium brands, Porsche (884), Genesis (869), BMW (855), Audi (854), Mercedes-Benz (851) and Lincoln (849) all scored above the premium average, the JDP study reported. Another seven premium brands – Cadillac (843), Lexus (842), Jaguar (838), Land Rover (837), Volvo (836), Infiniti (832) and Acura (812) – scored above the overall industry average. Despite the APEAL gains by non-premium brands, 12 of the top 13 still were premium brands, the study showed.

Model-level winners

At the model level, Volkswagen AG came up big on the strength of its premium Audi and Porsche brands, despite finishing just under industry average overall. The six VW winners were Audi A3, Audi A4, Audi A7, Porsche 911, Porsche Cayenne and Porsche Macan.

Brands that won multiple awards, along with their winning models, were:

  • BMW AG (4) – BMW 2 Series, BMW X1, MINI Clubman and MINI Cooper
  • Ford Motor Co. (3) – Ford F-150, Ford Super Duty and Lincoln Continental
  • General Motors Co. (3) – Cadillac Escalade, Chevrolet Bolt and Chevrolet Tahoe
  • Hyundai Motor Co. (3) – Kia Cadenza, Kia Niro and Kia Soul
  • Fiat Chrysler Automobiles (2) – Chrysler Pacifica and Dodge Challenger
  • Honda Motor Co. (2) – Honda CR-V and Honda Ridgeline
  • Nissan Motor Co. (2) – Nissan Altima and Nissan Murano

Based on responses from almost 70,000 purchasers and lessees of new 2017 model-year vehicles after 90 days of ownership, the APEAL study measures owners’ emotional attachment and level of excitement across 77 attributes, ranging from “the power they feel when they step on the gas to the sense of comfort and luxury they feel when climbing into the driver’s seat,” said JDP.

The latest results of the survey reflect the vehicle-manufacturing equivalent of walking a tightrope.

“Manufacturers are making ever-higher quality vehicles,” Sargent said, “but this is not coming at the expense of performance, styling, utility or features.”

Visit the J.D. Power website for more details of the 2017 APEAL study.

Another swing for the fences before closing the summer scorebook

Almost time to close the scorebook.

But not before your post-season push and a wrap-up of a Sizzlin’ Summer that hasn’t been, well, quite as sizzlin’ as some hoped it might be after record-setting sales last year.

“The comparison with 2016 … causes 2017 to appear worse than it really is,” wrote analyst Timothy Cain in The Truth about Cars, but that doesn’t mean it wasn’t a struggle. Through June, total light vehicle sales had slipped 2.1 percent for the first half of the year, and July continued that trend.

IL-BLOG_70404-12 (Sizzlin' Summer III Logo)_300x300And even that level of sales came with a cost for the industry in the form of incentives.

“Auto sales are presently being propped up by average incentives equal to roughly 10 percent of the average transaction price,” wrote Cain. That average transaction price is pegged at around $33,000 by and more than $34,500 by

Of course, this means that dealerships must make the most of the opportunities they get, whether they’re selling new or used vehicles.

Our baseball-themed Sizzlin’ Summer III email series aimed to help:

The First Pitch proposed adding Santander Consumer USA to your team as a “smart roster move.”

Game On showed dealerships how to come out consistent winners with the Dealer Extranet.

Homerun Ball was about hitting deals out of the park more often with the Rehash Tool.

League Leader sent up Direct Mail as a designated hitter to achieve high-average results.

All-Star Team suggested your ASM should be a major player in your sales lineup.

In the Zone featured the new Lead Exchange Program from RoadLoans.

Clutch Hit told how the SC Dealer Advocacy group aims to drive home win-win solutions.

These tools, products, programs and people empower dealers to swing for the fences through the end of summer, the fall and beyond.

We’re (world) serious.

Automotive ‘icon’ Fiat 500 finds parking place in art museum’s collection

The Fiat 500 is a piece of work.

Art work, that is.

Just ask the Museum of Modern Art (MoMA) in New York which has added a 1968 Fiat 500 in original condition to its small collection of automobiles that cross over into the world of art.

“The Fiat 500 is an icon of automotive history that fundamentally altered car design and production,” said Martino Stierli, The Philip Johnson Chief Curator of Architecture and Design at MoMA, when the museum announced the Fiat 500’s addition earlier this month.

Iconic Fiat 500 “has never been just a car.”

Iconic Fiat 500 “has never been just a car.”

“Adding this unpretentious masterpiece to our collection will allow us to broaden the story of automotive design as told by the museum,” Stierli said of the vehicle, the eighth in the MoMA collection.

The “Berlina,” which was produced from 1965 through 1972 “exemplifies a clear expression of form following function,” said the museum in a press release about the acquisition.

In addition to the Fiat 500F Berlina, commonly referred to as the Cinquecento, the collection comprises the Cisitalia 202 GT Car (1946), a Jeep Truck: Utility 1/4 Ton 4 x 4 (M38A1) (1952), a Volkswagen Type 1 Sedan (1959), a Jaguar E-Type Roadster (1961), a Ferrari Formula 1 Racing Car (641/2) (1990), a Smart Car “Smart & Pulse” Coupé (1998), and a Porsche 911 Coupé (1965).

The MoMA appears to be one of the few art museums in the country to recognize cars in this way. An Internet search, which included Business Insider’s compilation of 25 of the best museums in America, turned up just two others – the Minneapolis Institute of Art (MIA), which possesses a Czechoslovakian-made Tatra T87 four-door sedan (1948), and the Detroit Institute of Arts (DIA).

The DIA’s collection, which has been “warehoused in plastic bubbles away from public viewing for years,” according to one writer, includes a Ford Mustang II show car, Chrysler Turbine car, Stout Scarab, Ford Cougar II concept car, two Packard Pan American show cars, John and Horace Dodge’s personal 1919 Dodge Brothers cars, and company founder Henry Leland’s personal Cadillac (1905).

(We didn’t count the Smithsonian Institution, which collects everything, including art and cars. SI’s collection of 73 cars includes about 20 postwar road cars and nine racers, most of them under wraps.)

“It is not common for art museums to have cars as part of their collections,” said Paul Galloway, collection specialist for the Museum of Modern Art’s Department of Architecture and Design. “It is one of the things that sets MoMA apart – our belief in the diversity of modern creativity in all its myriad forms and the importance of showing all of them together in one place.”

All of which makes the MoMA’s recognition of the Fiat pretty special.

“It has never been just a car,” said Olivier François, Head of Fiat Brand and Chief Marketing Officer, FCA Group, adding that the Fiat 500 has entered “the collective imagination.”

Just the place for an iconic art work.

New cars getting less affordable as average price climbs – Bankrate

Can the average American afford a new car?

There’s a good chance he/she can’t, based on a study by

With the average price of a new car now more than $33,000, according to Kelley Blue Book, the median income in all U.S. cities but one, Washington, D.C., falls short.

Residents of the district, on average, can afford a vehicle costing $37,223, based on Bankrate’s study.

The Ford Explorer SUV sells for about the average price of new vehicles.

The Ford Explorer SUV sells for about the average price of new vehicles.

Even the average used-car price of just over $19,000 would be hard for households to afford in eight of the 25 biggest U.S. markets based on the 20/4/10 rule, according to Bankrate.

“The 20/4/10 rule says you should aim to put down at least 20 percent of a vehicle’s purchase price, take out a car loan for no longer than four years, and devote no more than 10 percent of your annual income to car payments, interest and insurance,” Bankrate explains.

“If you can’t stay within those lines, you can’t afford the car,” says Bankrate.

That may go a long way toward explaining why about 40 percent of sales by franchised dealerships are used cars and why more than twice as many used cars as new are sold overall annually.

So, how much could residents of average means afford in other U.S. cities used in the study?

San Francisco finishes second to the nation’s capital, with the average resident able to afford a vehicle of $32,286, followed by Boston ($30,863), Seattle ($26,771), Minneapolis-St. Paul ($26,606), Baltimore ($26,355), Denver ($24,485), San Diego ($23,440), Chicago ($23,386) and Portland, OR ($23,209).

The other cities in which the average resident can afford to purchase a vehicle costing more than the average used car are Philadelphia; New York; Atlanta; Charlotte, NC; Los Angeles; St. Louis, and Phoenix.

And the cities in which the average resident can’t afford the average used-car price, let alone a new car, are Dallas and Houston, TX; Riverside-San Bernardino, CA; San Antonio, TX; Orlando, FL; Tampa-St. Petersburg, FL; Detroit, MI, and Miami, FL.

“In Miami, the metro area worst for affordability, a typical household can afford to pay only about $13,600 without breaking the 20/4/10 rule,” according to Bankrate.

“In the past 35 years, the cost of a new car has gone up 35 percent, a used car is up 25 percent, and, at the same time, the median household income is only up 3 percent,” said Michelle Krebs of Autotrader.

One result has been the increasing length of car loans to as long as eight years.

“The length of an auto loan may not seem important, especially with today’s more reliable autos routinely going well beyond 100,000 miles without major issues,” says Bankrate. But it “can make a big difference” in a customer’s long-term financial well-being.

Auto dealerships headed for a plunge? Depends on who you believe

Thelma and Louise.

It’s an iconic movie that ends with the duo driving off a cliff.

And that’s where car dealerships – and much of the existing automotive industry – are headed in the next four to seven years, according to an analysis by think tank RethinkX.

In its report, “Rethinking Transportation 2020-2030,” the think tank sees a near-term future with plunging sales to individual owners starting in 2020 and no new individual-owner [IO] car sales from 2024 onward, just fleet sales to transportation service companies such as Uber and Lyft.

080317 IL Auto dealerships headed for a plunge- Depends on who you believe

“Vehicle fleet size will drop by over 80 percent, from 247 million vehicles in 2020 to 44 million in 2030,” the think tank contends in its report, which, at 77 pages, is the length of a short novel. “This could result in total disruption of the car value chain, with car dealers, maintenance and insurance companies suffering almost complete destruction.”

“Just 26 million vehicles will deliver the 5.7 trillion passenger miles traveled via [transportation services] in 2030, with the remaining five percent of miles attributed to IO vehicles.”

And those that already are owned by individuals will “plunge to zero” in value.

Cars worth less than zero?

“The rising cost of maintenance, gasoline and insurance; the cost of storing or taxing worthless vehicles, and the lack of a used car market might mean that prices go to zero or even below,” according to RethinkX. “That is to say, owners may need to pay to dispose of their cars.”

In its report, the think tank said that “97 million [internal combustion engine] vehicles will be left stranded in 2030, representing the surplus that will be in the vehicle stock as consumers move to [transportation services],” and warned that “these vehicles may eventually become entirely unsellable as used IO vehicles supply soars and demand disappears.”

Will this grim scenario happen and the industry drive off the cliff in 2024 as RethinkX envisions?

A nod to mainstream thinking

Mainstream thinking is a bit less dire – which RethinkX concedes in its report – predicting that “vehicle ownership will continue as the principal consumer choice … This is due to a number of reasons, including the belief that ‘we love our cars’ (like we loved our horses).”

Those mainstream analyses overall suggest that the existing fleet of internal combustion engine cars “would take decades to replace, with sales continuing into the 2040s and beyond,” said the think tank. And those analyses “generally see no mass stranding of existing vehicles.”

Mainstream industry forecasts also show that vehicle-ownership disruption as a multi-decade process, RethinkX observed, not as a “shift that would happen quickly and change the business model of the entire industry altogether … that wipes out the existing industry.”

Questioning the grim scenario

But healthy skepticism may be required – and that’s what we found in one stock market analyst.

“It’s always easy for think tanks and other similar organization[s] to throw out estimates for popular ideas in order to attract attention,” he wrote. “But when it’s observably nonsensical, such as in the case of the latest prediction from think tank RethinkX, that within about 13 years ‘self-driving electric cars will dominate the roads,’ it has to be challenged, because some investors might actually take it seriously, and make decisions based upon the faulty premises of the conclusions of the study.”

So, unlike Thelma and Louise, who nosedived into the Grand Canyon, there may be more to this story than meets the eye – and it may have a happier ending.

Why you need to seal the deal on improving your website

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Not everybody is coming to your website to buy a vehicle – right away.

But if you provide a good online experience when they do visit your site, there’s a chance you will get them back and, perhaps, convert them to a customer later.

“If you can reach all stages of shoppers – not just later stage leads who are ready to buy – you will edge out your competition,” wrote Ilana Zur of AutoLeadStar. “Building relationships with customers early in their process encourages loyalty and builds future sales.”

That may be easier said than done, but previous installments of our series, “The Net Effect,” have provided a lot of guidance on accomplishing your online objectives.

IL-BLOG_70630-11 (The Net Effect Logo)_WordPressThose installments, which you can reach through the following links, covered Why a great website is so important to the success of your dealership, What your prospects are doing online before visiting your dealership, How to make your website stand out to shoppers exploring online landscape, and What your dealership’s website needs to deliver to online shoppers.

Not only should that advice help you reach all stages of shoppers/buyers, but, according to Zur, making those efforts should ensure that you:

Raise engagement for all shoppers. Even late-stage shoppers – or service customers or previous customers – need something from your site. If you provide quality content onsite for all stages of the buying cycle, customers will turn to you again and again.

Build loyalty and establish your dealership as a resource. Why should shoppers turn to someone else when your site offers them everything they need? This is the kind of convenience that creates loyal shoppers who will recommend you to their friends.

Demonstrate values customers care about, such as honesty (offering expertise that demands nothing in return), transparency (helping customers find what they need), accessibility (providing information conveniently) and flexibility (not trying to fit everyone into the same sales box).

“The bottom line? Not every shopper … [is] coming to your dealership website to convert,” writes Zur. Most aren’t. “They’re coming to learn, do research, and decide whether or not to walk into your dealership for their next vehicle. Implement high engagement for more leads and more sales and track this success to optimize your website for every kind of shopper.”

Now, it’s up to you to seal the deal.