NADA: U.S. Dealers Employ More Than 1 Million People

MCLEAN, Va. — A rebounding U.S. economy and rising auto sales are having a positive impact on the employment outlook at franchised new-car dealerships across the country, according to the National Automobile Dealers Association.

According to the group’s NADA Data 2014 report, which contains dealership sales and financial trends, employment at U.S. franchised dealerships topped one million people last year after falling during the recession in 2009. The exact count in 2013 was 1,008,800 people employed, up 3.4% from the previous year.

New-car dealerships employed an average of 57 people. Average payroll in 2013 was $3 million, up 3% from the prior year. Total payroll for all new-car dealerships in the U.S. last year was $53.7 billion.

“The economic recovery is continuing, and we expect a stronger housing market, improving job prospects and continued low interest rates for auto loans to boost sales this year,” said NADA Chief Economist Steven Szakaly.

New-car dealerships, on average, had a net, pretax profit of 2.2% in 2013 — unchanged from the previous year. As a percentage of total sales, the 2.2% figure represents sales in the new- and used-vehicle departments and service-and-parts sales. New-car dealerships, on average, posted a net, pretax profit of $923,248, up 10.5% from the prior year. Total revenue at new-car dealerships reached $730 billion in 2013, an increase of 8.8%.

“Profitability at new-car dealerships remained flat in 2013,” Szakaly noted. “Fierce price competition — whether from online research, a network of competing franchised dealers or compelling new vehicles — continues to dominate an industry with slim retailing margins.”

Gross margins on new-car and light-truck sales continued to decline in 2013 — falling to 3.8% from the previous year.

Sales in the service, parts and body shop at new-car dealerships increased 4.8% in 2013. Warranty work performed by new-car dealers totaled $14.4 billion in service and parts last year — all at no cost to the customer.

New-car dealers spent $7.6 billion on advertising in 2013, up 6.1%. Dealerships, on average, spent 33% of their advertising dollars on Internet ads, up from 26.5% the previous year. Television advertising accounted for 21% of dealership spending, a slight increase.

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Sales Pick Up in Late May

BANDON, Ore. — The first 15 days of May showed a modest 6% increase in vehicle deliveries, but the pace picked up toward the end of the month, according to CNW Research. The firm said deliveries were on pace to increase 11% from a year ago.

CNW pointed to a decrease in its Jitter Index as a reason (down .73% from April and down 1.12% from a year ago). It measures consumer sentiment regarding home-centric economic issues. “Americans are less jittery about their home-centric plight than either last year or last month — a positive sign that they are willing to open the bank vault and spend a little more,” wrote CNW’s Art Spinella in the firm’s monthly newsletter.

Another positive sign, the firm noted, was the 7.6% increase in dealership visits. “And those walk-ins are clearly qualified buyers,” Spinella wrote, noting that closing rations were up 14.4% from a year ago and up 1.4% from April.

The firm did note that subprime approvals were down 7.8% from a year ago, but on a month-over-month-basis, approvals appeared to edge up. “The average FICO score of those who bought a new vehicle in the first half of May stood at 641.8 compared to 645.2 a year ago,” Spinella wrote. “Financial institutions are cracking open the approvals for slightly less qualified shoppers.”

The average MSRP for vehicles sold in May topped $38,300, a 1.2% gain. Transaction prices, however, were depressed by 0.6%. The reason, Spinella noted, were total discounts — including manufacturer incentives and dealership spiff to consumers from profits — increased more than 10% vs. one year ago.

According to the firm, manufacturer per-unit incentives, including lease promotions, loyalty programs, dealer incentives, added equipment and more, topped $4,600. “That’s a 3% jump just since last month and plays an important role in the strength of the May sales figures,” Spinella noted.

“As we pointed out two months ago, this spring and summer should provide great sales environments,” Spinella added. “What will be interesting is to see the GM sales figures considering all the recall coverage.”

Source: http://www.autodealermonthly.com/news/story/2014/05/sales-picks-up-in-late-may.aspx

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Cars.com: Service Department Reputation a Key Factor in Car-Buying Decision

By: Cars.com

CHICAGO — A majority of consumers seek out online reviews about a dealership’s service department before making a car-buying decision, according to results from a survey commissioned by Cars.com

In an independent Harris Poll, 64% of in-market shoppers indicated that a service department’s reputation is a factor when choosing where to purchase a vehicle. Furthermore, the research revealed more than half (57%) of shoppers would seek out a dealership’s service department reviews before purchasing a vehicle.

“These new findings show that reputation management can’t be limited to the sales floor; it needs be embraced throughout the entire dealership, especially in the service department,” said Jack Simmons, manager of dealer training for Cars.com. “Car shoppers read online reviews for both sales and the service department before buying because they want to know that the dealership will be a reliable, long-term partner for the entire life cycle of their new car.

“For dealers to earn shoppers’ trust, they must build their service department’s brand presence online and effectively communicate their positive reputation through a variety of digital channels, where today’s consumers are shopping most.”

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Cars.com: Service Department Reputation a Key Factor in Car-Buying Decision Cars.com: Service Department Reputation a Key Factor in Car-Buying Decision

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Car Shoppers Don’t Focus on Rock-Bottom Price

By: Edmunds

SANTA MONICA, Calif. — About 20% of car shoppers consider themselves “extreme price grinders” who will take as much time as they can to get the lowest possible price on a new or used car, according to a new report released by Edmunds.com.

In fact, according to Edmunds.com officials said, a clear majority of car shoppers (64%) value the importance of saving both money and time in the shopping process.

“These findings dispel the myth that car shoppers will do whatever it takes to pay a rock-bottom price,” said Edmunds.com President Seth Berkowitz. “The feedback we’ve received from shoppers is clear: They’re more than willing to limit their efforts to haggle if they can get a fair deal without the difficulty and stress of long negotiations.”

The balance of time vs. money is just one of the interesting findings of the 2014 Car Shopping Trends Report, which was released this week by Edmunds.com. The report is based on a survey of 500 in-market and recent new- and used-car shoppers from across the United States.

According to the study, 66% of shoppers said that they are likely to request guaranteed upfront pricing on a new car, and 82%of shoppers said they prefer to have a price guarantee on a VIN-specific new car as opposed to a vehicle configuration that may or may not be on the dealer’s lot.

When it comes to mobile, 100% of smartphone owners surveyed say they used their device to perform some sort of car-shopping activity, typically for vehicle and pricing info. During the shopping process, shoppers will, on average, visit two dealers and take two test drives — although only 58% of respondents said they test-drove a vehicle before they made their most recent purchase. Additionally, 83% of car shoppers said that they come away very or somewhat satisfied with their dealership experience.

Source: bit.ly/1wfkULD

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Car Shoppers Don’t Focus on Rock-Bottom Price

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Study: Moms Prefer to Shop Online and Negotiate in Person

Source: Auto Dealer Monthly

CHICAGO — Nearly three of four (73%) moms consider themselves to be the “sole decision-maker” in the vehicle shopping process, according to a study conducted by C+R Research and commissioned by Cars.com.

As a growing number of consumers turn to online resources for information and transparency when making major purchases, women with children have emerged as a highly engaged group of shoppers.

The study found that 71% of moms agree that shopping online for a new or used vehicle makes the process much easier, but more than half (68%) still prefer to conduct negotiations in person. Women with children desire long-term relationships with dealers, as the research shows that the majority (59%) of respondents prefer to purchase multiple vehicles from the same lot.

“It’s important for dealers to remember that moms have done the same amount of research, if not more, than any other customer before stepping onto the lot,  and they’re confident in their ability to navigate the car-buying process,” said Jack Simmons, manager of dealer training at Cars.com.  “More than 60% of moms surveyed said they trust the information they find online more than what they’re told from dealers, which means dealers need to go above and beyond to prove their authenticity and value. The good news is that moms are very loyal customers, and a great first impression can make a fan for life.”

Although more than half (56%) of moms describe their overall feelings about auto dealerships as positive or somewhat positive, the majority (75%) still feel dealers are pushy and aggressive.

The study surveyed more than 1,000 shoppers, including 367 moms who were planning to purchase a vehicle within the next six months or had done so within the previous six months.


Source: http://www.autodealermonthly.com/news/story/2014/05/study-moms-prefer-to-shop-online-and-negotiate-in-person.aspx

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Study: Moms Prefer to Shop Online and Negotiate in Person

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