Tag Archive | "Edmunds"

Auto Loan Interest Rates Soar to Eight-Year High

SANTA MONICA, Calif. — Interest rates on new-vehicle loans were expected to soar to their highest point in eight years in February, Edmunds said last week. The annual percentage rate (APR) on new financed vehicles averaged 5.2% in February. That’s up from 4.9% in 2017 and 4.4% five years ago.

Edmunds experts point to an expected decrease in the number of loans in the 2% to 3% APR bracket and an expected increase in loans in the 4% to 7% range as the driving force behind this rise in the average.

Because this shift is happening in the mid-range of APRs, it means car buyers who qualify can still find deals, and the market isn’t facing a flood of subprime buyers. The percentage of loans with interest rates between zero percent and 2% is expected to remain steady at 22% in February, compared to 21% in February 2017. On the opposite end, the number of loans with interest rates above 7% is also expected to remain steady at 19% in February, compared to 18% in February 2017.

“We’re starting to see a trickle-down effect from the rate increases happening at the federal level,” said Jessica Caldwell, Edmunds executive director of industry analysis. “The Fed rate hikes directly affect unsubsidized loan rates offered by third-party lending institutions such as credit unions and banks, and, as a result, we’re seeing loans that were formerly between 2% and 3% being pushed up into higher APR brackets. Additionally, dealerships can match these independent loan rates brought in by shoppers.”

Edmunds analysts say that higher interest rates and near record-high lease returns could also be a contributing factor toward lease penetration levels hitting an all-time high of 33.5% in February.

“Car shoppers tend to have tunnel vision when it comes to their monthly payments,” said Caldwell. “As average transaction prices and interest rates rise, we’re likely going to see more consumers explore the option of leasing. In some cases, this is a result of consumers simply seeking a way to cut down monthly payments, but for many others, this may be the only option available when they discover that they can no longer afford the costs of a new vehicle.”

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Lease Volume Reaches Record High in 2016, Edmunds Reports

SANTA MONICA, Calif. — Automotive lease volume reached an all-time high of 4.3 million vehicles in 2016, according to the latest Lease Market Report from Edmunds, account for 31% of new-vehicle sales in 2016. That’s up from 29% in 2015.

Over the past five years, lease volume has grown by 91%. And as the popularity of trucks and SUVs grows — SUV sales surpassed passenger car sales for the first time ever in 2016 — consumers are turning to leasing to help them afford these higher priced vehicles.

“Leasing has long been the gateway for car shoppers who are looking to get a nicer vehicle than they could if they financed,” said Jessica Caldwell, Edmunds executive director of industry analysis. “Because SUVs and trucks are holding their values so well right now, it makes them much more accessible for a much wider swath of the market, further fueling their popularity.”

The average lease payment in 2016 was $120 less than the average finance payment. For large SUVs, the average lease payment was $125 less, and for large pickup trucks the difference was $206, thanks, in large part, to high residual values. Lease terms have hovered at a fairly constant average of 36 months over the past five years, while the average finance term is continuing to creep upward — averaging 69 months in 2016 (compared to 64 months in 2011).

While millennials still only leased 12% of all vehicles leased in the United States in 2016, they opt to lease more proportionally than all other age groups. Nearly one-third of all millennials who purchased a new vehicle in 2016 chose to lease — up from 21% in 2011. Millennials also accounted for the highest share of lessees with a household income under $50,000, which, according to the vehicle information site, presents a significant opportunity for automakers looking to capture the hearts and wallets of these likely first-time car buyers.

“Leasing hits a sweet spot for millennials — they can enjoy the benefits of owning a new vehicle at a low price point with the latest features they crave,” Caldwell said. “If automakers make a positive first impression with this influential group, they have a great opportunity to build lasting relationships as brand loyalty rates are much higher among shoppers who lease vs. buy.”

Luxury brands still capture the most lessees, but brands that have a heavy truck and SUV lineup are starting to play catch up. Brands like RAM, GMC and Chevrolet, which historically had lease penetration rates hovering between five and twelve percent five years ago, have seen lease rates jump more than 100%.

“While we think overall lease penetration will start to level off to 30% in 2017, the shift from passenger cars to trucks and SUVs shows no signs of slowing down,” Caldwell said. “As long as gas prices remain low and residual values on trucks and SUVs stay high, that segment of the lease market is likely to continue to expand this year.”

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Last Chance: Podium to Present Webinar on Online Review Management

TORRANCE, Calif. — On Thursday, February 16, 2017, at 11:00 PT/2:00 p.m. ET, Podium will host a free webinar “7 Quick ways to drive purchase decisions with online reviews,” with Director of Automotive Sales Dan Wright and Vice President of Marketing Nico Dato.

We all know that selling cars is a competitive business, so standing out among your peers can be difficult. You spend thousands of dollars on advertising and billboards. But what happens when they research you online? If you have a bad rating, odds are they’ll keep looking because a vast majority of car buyers now trust online reviews as much as personal recommendations. But reviews do more than just enhance your online reputation. They can also help you get noticed on sites like Google, Cars.com, DealerRater, and Edmunds and drive purchase decisions from customers.

Join us for this webinar to learn how online reviews can help you build a loyal customer base and sell more cars. Key takeaways include:

  • Why online reviews are important for your business
  • How online reviews influence buying behavior
  • Tips for building your online reputation on the sites that matter most

To sign up for the webinar, click here.

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Edmunds Updates App with Messaging Platform

SANTA MONICA, Calif. — Edmunds.com has updated its mobile app with a new feature that allows shoppers to send text messages to dealers.

Edmunds texting solution uses a phone’s native texting platform, meaning all smartphones are capable of messaging dealers without relying on any other apps. Edmunds says that 34% of car shoppers told the company that they would prefer text messaging with dealers over phone calls and email.

“More and more shoppers are turning to text messaging for their customer service needs,” said Seth Berkowitz, Edmunds.com president. “Edmunds.com’s app seamlessly integrates text messaging to thousands of dealers nationwide, so now consumers can text a sales or service inquiry and receive a timely, customized response from a dealership representative.”

Users of the app can also receive instant video and picture messages from dealerships for vehicles on the dealer’s lot. When a shopper no longer wants to text with a dealer they can opt out of a conversation at any time by typing “STOP.”

In addition to the new messaging feature, the Edmunds app allows shoppers to browse and identify inventory in their area, get upfront price guarantees on cars in stock through Edmunds Price Promise and crunch numbers using the monthly payment calculator.

Download the Edmunds free car shopping app here.

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Edmunds Pulls Ad Campaign, Says It ‘Missed the Mark’

SANTA MONICA, Calif. — Edmunds today pulled an online advertising campaign designed to promote its Price Promise program after backlash from dealers. The campaign, which was launched Monday, included four YouTube videos that depict a cashier trying to overcharge customers for items at a grocery store, then haggling with shoppers who refused to pay.

At least one dealer group, Cincinnati-based Jeff Wyler Automotive Family, canceled its subscription to Edmunds after the videos were released — meaning the dealer group’s inventory will no longer be listed on the third party lead provider’s site.

“We did cancel Edmunds across the board, and this was kind of the straw that broke the camel’s back,” E-commerce Director Kevin Frye told F&I and Showroom, noting that the cashier in the videos was clearly meant to portray an unscrupulous dealer. “We’ve been utilizing the Price Promise leads. We have sold cars, but we really haven’t found any return on investment. So as we plan for 2015 ad budgets, they were already on the fence. And this campaign was … kind of the final decision maker.”

Edmunds’ Price Promise program issues shoppers a locked-in price for a vehicle to prevent haggling at the dealership. All four videos associated with the program were pulled from the company’s YouTube channel today.

“Our digital videos illustrating the ‘Absurdity of Haggling’ missed the mark,” said Edmunds in a statement issued to F&I and Showroom. “Some of our partners were deeply insulted, expressing that our attempt at humor reinforced outdated stereotypes. That was obviously never our intent. It has created a distraction from our business of helping to make car shopping easier.

“We are terminating the videos and getting back to working with our dealer partners to improve the car buying process for car shoppers around the country.”

Despite Edmunds’ decision to pull the campaign, the Jeff Wyler Automotive Family does not plan to reconsider its subscription cancellation.

“It’s really struck a chord,” Frye said. “There are a lot of dealers just like ourselves that work incredibly hard to improve the industry and raise it to a higher level and it just feels like … we get caged into this negative stereotype no matter what we do, because they can financially gain from it.”

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Edmunds No. 4 Most Trusted Review Site, New Study Shows

St. Louis — When it comes to review sites, consumers trust larger, more established ratings sites such as TripAdvisor and Zagat than smaller, newer sites, according to a new study from Maritz Research. In the automotive category, Edmunds was the only site to crack the Top 5.

The 2013 Online Customer Review Study, which examined 13 high-profile ratings sites, found that consumers aren’t all that trusting of feedback shared online. The Top 5 sites claiming the highest trust levels included:

  1. TripAdvisor
  2. Zagat
  3. OpenTable
  4. Edmunds.com
  5. Yelp

The study found that one in four people believe the information available on ratings sites is unfair. And while the older, highly visited sites were generally perceived as more trustworthy, more than a third of visitors were still cautious of the information posted on these sites.

“Many people we surveyed expressed concern over reviews on customer ratings sites being biased or even fake,” said David Ensing, vice president of Voice of the Customer Integration for Maritz Research. “Many site visitors tend to believe that ratings sites select which reviews are posted, that employees post fake positive reviews for the companies they work for and that raters only share their positive or negative experiences instead of sharing a balanced opinion.”

For those who felt ratings sites were generally fair, many reported they still have to separate trustworthy reviews from non-trustworthy ones based on their own intuition. Specific survey respondents noted that they:

  • Can usually tell when a review is fake if it is overly positive.
  • ”

  • Try to determine if the review is legit or if the writer is out for revenge.”
  • Read between the lines to see what the reviewer is really saying and discount reviews that feel unfair.”
  • Try to read a range of reviews. If there are not enough reviews, [they] don’t take it seriously.”

The research indicates that there may be a credibility crisis on the horizon for online review sites, said Ensing. If the lack of confidence in customer reviews continues, these sites could become obsolete. To address trust issues, companies and ratings sites should consider more secure and credible ways to provide customers with reviews that have been verified and aren’t skewed.”

The Maritz Research 2013 Online Customer Review Study surveyed 3,404 people about the use of 13 dedicated customer review and ratings sites, including TripAdvisor, Zagat, OpenTable, Edmunds.com, Yelp, Urbanspoon, Google+, Hotels.com, Room Key, Foursquare, Priceline.com, Citysearch, and DealerRater. The online panel study was conducted from April 3 to April 24, 2013.

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