Tag Archive | "National Automobile Dealers Association"

NADA: Used Vehicle Values to Peak in March

McLean, Va. – Extremely cold weather during the first two weeks of February and more moderate temperatures over the second half of the month correlated exactly with used price movement, according to the National Automobile Dealers Association (NADA) Used Car Guide in the March edition of Guidelines, a monthly report on new and used vehicle sales trends and price movement.

“Used prices grew by 0.7% over the first half of the month, but more favorable weather over the second half of the month allowed prices to grow 2.2% by month’s end, which is in line with NADA’s forecast of 2.1%,” said Jonathan Banks, executive automotive analyst, NADA Used Car Guide.

NADA’s seasonally adjusted used vehicle price index remained unchanged for the third month in a row at 124.6, tied for the third highest figure ever recorded. The index measures the change in prices for used vehicles up to eight years old.

Price movement was positive across all mainstream segments with prices increasing between 1% and 3.2%. Compact and mid-size car price growth outpaced all segments per the seasonal norm. Compact and mid-size utility prices grew by 2.2% and 1.7%, respectively, and mid-size van prices increased by 2%. Nearing the bottom of the mainstream pack, large pickups and SUVs recorded respective increases of 1.7% and 1%, which are figures similar to each segment’s five-year February average of 1.7% and 1.1%.

Luxury utility prices increased in the month of February for the first time since 2011, although only by a marginal 0.3%, while luxury car prices dipped by a slight 0.1%, similar to historical movement.

NADA expects the seasonal uptick in used auto demand to continue for another month before dissipating in the second quarter of the year. NADA’s forecast has prices rising by an additional 1% in March and then falling by an average range of 2.5% to 3% per month from April through June. Prices are forecast to be 0.5% to 1% lower than 2013 levels by the end of year.

Prices are expected to be strongest for vans and pickups (both mid-size and large), compact utilities and luxury utilities in March.

In the second quarter, luxury car, mid-size utility and luxury compact utility prices are expected to drop closer to the upper end of NADA’s forecast range, while mid-size and large pickup depreciation should remain below the overall market average. Downward movement for other segments is expected to fall between the former and latter groups.

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The Light at the End of the Tunnel

After spending a week in New Orleans for the American Financial Services Association (AFSA) conference and the National Automobile Dealers Association (NADA) convention, there is no doubt in my mind that the future is bright for the success of the F&I office. There was plenty of talk, recommendations and insight concerning the federal oversight looming over the finance reserve issue, and the buzz for inside the F&I office is and will continue to be technology. According to the “experts”, the industry saw changes in the market; some were good and some do raise concerns. Depending on your view of the impending changes in our industry, the light at the end of the tunnel may be one of two things – however there is a third.

If you have been in the automotive industry for any length of time, you know the one constant of our industry is change. Things change. The product, the customer, the dealerships, the owners, the laws, the credit, the finance companies – regardless of the changes, we adapt and overcome. We are now seeing the changes in real time. In the past the change would happen and it would filter down into the dealerships and then into the F&I office. Today we see it coming by reading it, hearing it and seeing on the news. Being able to see the changes in real time gives us the opportunity to make adjustments in our processes, so when we have no choice in the matter, we are already prepared.

If you have not started preparing for the loss of finance reserve as we have known it, the time is now. It is happening with some finance companies already, and soon all will be required to comply. This is not an option for the finance companies. I heard it directly from the Assistant Director of the CFPB: discretionary pricing at the dealership level should not be allowed. The good news is that dealerships will continue to be compensated fairly for the work and effort to secure a loan for the customer, as long as it is not based on a discretionary form.

There were several recommendations given to compensate the dealership:

  • A flat fee – With factory-incentivized rates, many dealerships are accustomed to this already.
  • A percentage of Line 5 (amount financed) – Many of our finance companies
    already offer this model.
  • A hybrid – This was the new one. A mix between a basic flat, a
    percentage of line 5 and compensation based off of the term of the loan.

The last day of the NADA convention, there was a workshop that handed out a Fair Credit Compliance Policy & Program. It outlined the recommendations from NADA on how dealerships may want to handle finance reserve for the time being. This is a fantastic initiative encouraging a written process at the dealership level. This sends a message the federal agencies that we, as an industry, want to do what is right to discourage any type of discrimination.

In my opinion – and I hope I am wrong on this – the federal oversight hammer will come down, and the ability to negotiate the sell rate from the buy rate will no longer be an option. My advice: take the flat and focus on your product sales. I know this is not the most popular position, however, for the dealerships that focus on reserve the light at the end of the tunnel will be a train.

The Changing Face of F&I
Technology is a major focus by the factories on the sales floor; more and more factories are requiring the sales team to be equipped with a tablet to assist in the sale of the vehicle. We know many of our customers are becoming accustomed to technology in their everyday life as well, and the retail automobile industry is responding. When it comes to the F&I office, the move to more technology is not always embraced at the same level as the sales floor. Do not be afraid of the technology: it can help, and as time moves forward, it may make our lives, as F&I managers, a bit easier.

Many companies have introduced tablet-based F&I presentation tools and solutions, and these have come with mixed emotions, with good reason. One thing is clear though, the customers want to be involved, and tablet technology facilitates that involvement, but how involved is the business manager? This is where many F&I managers have a severe disconnect.

As a dealer, general manager, finance director or business manager, you may be looking at a tablet or digital piece for your F&I office and I encourage you to look; however, you need to find the right fit for situation. The wrong tablet or digital technology has proven to be as detrimental to the success of the F&I office as the right technology is helpful.

Many of the tablets are almost designed to be a digital F&I manager, reducing the amount of interaction between that person and the customer. This is the primary objection of many F&I managers. If you have an F&I office that is struggling, and the talent pool available in your dealership is shallow, this is a viable option. If you have good or even strong F&I manager, make sure you go with a tool that is more of an electronic menu. I saw a new one at NADA that will be released this month that is a great “split the difference” between something the customer can work with and something familiar enough to the F&I manager that they will be comfortable using it. Do you need a solution or a tool: there is a distinct difference between the two, and you need to find the one that will work best in your F&I office. The light at the end of this tunnel is the glow from a backlight.

The Stats Don’t Lie
There was a fair amount of statistics about the automotive industry from the finance side at NADA. Looking at the numbers, we have to be prepared for the direction the industry is moving: longer term loans, the popularity of leasing and the amount of disposable income are all factors that directly impact our industry and, more specifically, the F&I office.

All of the economic indicators show another strong year for 2014, with an increase of disposable income. What has helped this is less debt per household, less debt overall and more money, which allows for more cars sold and customers able to afford more F&I products.

A few interesting numbers: 84.8% is the finance and lease penetration on new vehicles, while that number is 54.6% on pre-owned. This shows that the finance companies have the money to lend and, more importantly, are willing to do so. This is being pushed by higher credit scores averaging 716 for new and 648 for pre-owned; the increase comes from less debt and more disposable income. This is a double bonus for our industry.

The average loan amount for 2012 was $26,685 with an average payment of $459, and an average term of 65 months. The interesting point here is that the average loan amount and payment stayed about the same for 2013 however the length of term increased, and now 72 months is normal for new car loans.

With longer-term loans more accessible, 19.3% of all new car loans exceeded 72 months last year. For the sales department, this increases the length of time to have a customer come back into the buying cycle, however for the F&I office this generates plenty of need for GAP and service contracts. From a statistical outlook, the light at the end of the tunnel is a bright and shiny opportunity for the F&I office.

2014 has all the indicators for a strong year in the automobile industry. The factories are producing fantastic products with the marketing behind them to drive customers into the dealerships. The credit scores are up, the finance companies have money to lend out and the customers have more disposable income. Drop in some technology, and the F&I office will have a strong – if not another record breaking–year.

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NADA Names Jonathan Collegio Head of Public Affairs

McLean, Va. – Jonathan Collegio was named vice president of public affairs for the National Automobile Dealers Association (NADA). Collegio will report to NADA President Peter Welch, and is responsible for the organization’s communications and marketing efforts.

“NADA is working to take our communications efforts to the next level, and hiring Jonathan Collegio to run our public affairs division is a great step forward,” said Welch. “Collegio is one of the sharpest, most well-regarded and well-connected public affairs and communications executives in the country, and we are excited to have him join our team.”

Collegio, who was named Public Affairs Executive of the Year by PR News in 2009, has extensive experience in public affairs spanning both political and corporate work. He starts at NADA on March 21. “America’s new-car and -truck dealers are the most entrepreneurial and hard-working business owners in the country,” he said. “Their products keep America moving; their good-paying jobs propel local economies, and it is an honor to advocate on their behalf.”

Since 2010, Collegio has served as communications director for American Crossroads in Washington, D.C., the largest Republican “Super PAC.” As one of the group’s first hires, Collegio built its communications department and has been one of Washington’s most quoted spokespeople over the last several years. He previously served as vice president of strategic initiatives for the National Association of Broadcasters. There, he designed and implemented the television industry’s multi-platform, $1.2 billion digital television (DTV) transition public affairs campaign, and managed the DTV Transition Coalition of more than 240 organizations supporting the transition. He later directed grassroots lobbying for the broadcast radio and television industries.

Earlier in his career, Collegio served as chief spokesman for the U.S. House Republicans during the 2006 elections, and as deputy chief of staff for Congressman Patrick McHenry (R-N.C.), now chairman of the House Financial Services Subcommittee on Oversight and Investigations. He has worked on dozens of political campaigns at the federal, state and local levels.

Collegio earned his master’s degree in public affairs from Rutgers University, where he was a graduate fellow at the Eagleton Institute of Politics. He graduated Phi Beta Kappa from the University of Oregon in 1999. He lives in Falls Church, Virginia, with his wife, Rebecca, and their three children.

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Digital Air Strike Announces the Winners of the 2nd Annual Social Media and Reputation Awards

Sunnyvale, Calif. – Digital Air Strike, a full-service social media, reputation management and lead response company in the automotive industry, announced the winners of the 2nd annual Social Media and Reputation Awards at the National Automobile Dealers Association (NADA) convention in New Orleans, Jan. 25, 2014.

The Social Media and Reputation Awards showcase auto dealers’ and manufacturers’ social media performance, and recognize the best-in-class marketers on the social Web. Data for the awards was compiled from Digital Air Strike dealership clients’ Facebook Insights, the top five review sites (as ranked by car buyers in the 2013 Automotive Social Media and Online Reputation Trends Study: Cars.com, Edmunds, Google+ Local, Yelp and Yahoo! Local), and monitoring social Web mentions/YouTube views.

“It is exciting to see the growth in social media marketing and review site activity over the past twelve months. This is the second year that we have accumulated the data for the Automotive Social Media and Reputation Awards and we are extremely impressed at how many of the nation’s dealerships and OEMs are leveraging the benefits of using sites such as Facebook, Yelp and YouTube in their marketing mix,” said Alexi Venneri, co-founder and CEO, Digital Air Strike. “Our team at Digital Air Strike work personally with every one of our individual dealerships and OEM groups to ensure that they maximum their on-line exposure by staying engaged with their consumers, managing their social reputation, and ultimately selling more automobiles.”

The 2013 ‘Individual Dealer’ winners are:

Best Facebook Contest & Ads Campaign
This award recognizes an individual dealer with the best Facebook advertising performance, and who has created the most engaging dialogue with its fans. Contestants were ranked in five categories: click through rate, cost per click, cost per impression, cost per Like and cost per action.

  • Platinum Award Winner: Bob Stall Chevrolet
  • Gold Award Winner: Anchorage Chrysler Dodge Jeep Ram

Best Reputation
This award demonstrates superior reputation management performance across the top five online review sites, and measured effectiveness at driving Web traffic from these review sites to the dealership Web site. The total number of ratings and scores in 2013 were collected to create an aggregate score. Dealers needed at least 100 reviews to qualify, must have 10+ reviews from each key review site (Cars.com, Edmunds, Google+ Local, Yahoo Local, Yelp), and must have 100+ customer surveys completed.

  • Platinum Award Winner: Paradise Chevrolet Cadillac
  • Gold Award Winner: Norm Reeves Honda Superstore

Customer Sales Satisfaction
This award goes to the dealer that has customers who have provided overwhelmingly positive feedback regarding their car buying experience. To qualify, a dealer must have over 100 customer surveys completed, and 90% of all submitted sales surveys are 4 – 5 star ratings.

  • Platinum Award Winner: Karl Chevrolet
  • Gold Award Winner: Al Serra Chevrolet

Customer Service Satisfaction
This award goes to the dealer that has customers who have provided overwhelmingly positive feedback regarding their car servicing experience. To qualify, a dealer must have over 100 customer surveys completed, and 90% of all submitted service surveys are 4 – 5 star ratings.

  • Platinum Award Winner: Bob Brown Chevrolet
  • Gold Award Winner: Milton Ruben Toyota

Greatest Local Facebook Reach
This award recognizes the dealer with the greatest local reach and largest in-market fan base within a 50-mile radius.

  • Platinum Award Winner: Paragon Honda
  • Gold Award Winners: Sutton Ford Lincoln Mercury & Peters Auto Mall

Increase In Facebook Likes and Engagement
This award showcases the best single auto dealer performance using Facebook as an effective marketing tool. Qualifications included at least 1000 Fans by the end of 2013, and Liker growth exceeding 5000 Likers.

  • Winner: Merced Toyota

Most Improved Social Media Reputation
This award demonstrates superior reputation management performance across the top five online review sites, and measured effectiveness at driving Web traffic from these review sites to the dealership Web site. The winner must have reviews posted to 4 out of 5 review sites, and must have shown an increase in ratings on 4 out of 5 review sites.

  • Winner: Tim Lally

Most Positive Yelp Page Actions
This award recognizes the dealer that has leveraged the popularity of Yelp to drive dealership interest and traffic. To qualify the dealers must have at least a 4 star rating, at least 500 customer leads, and at least 2,000 page views.

  • Winner: Hyundai Serramonte

The 2013 ‘Auto Manufacturer’ winners are:

Highest Average Star Rating
This award recognizes the auto manufacturer that has the highest positive reviews in 2013.

  • Winner: General Motors

Highest Average Yelp Rating
This award recognizes the auto manufacturer that has leveraged the popularity of Yelp to drive dealership interest and traffic. To qualify the OEM must have at least 50 stores available to review, and at least 3,000 reviews in 2013.

  • Winner: Hyundai

Most Positive Reviews Per Store
This award goes to the auto manufacturer with the highest positive reviews per store, and who has at least 1,500 positive reviews in 2013.

  • Winner: Honda

Best Sales Survey Rating
This award goes to the auto manufacturer that has at least 8,000 customer sales surveys complete, and has customers who have provided overwhelmingly positive feedback regarding their car buying experience.

  • Winner: General Motors

Best Service Survey Rating
This award goes to the auto manufacturer that has at least 8,000 customer service surveys complete, and has customers who have provided overwhelmingly positive feedback regarding their car buying experience.

  • Winner: Hyundai

Biggest Increase in Engaged Likers
This award showcases the auto manufacturer with the best performance using Facebook as an effective marketing tool. To qualify for this award, OEM must have at least 50 stores available to review, and Likers must be engaged – at least 500 “people talking about this” per dealer.

  • Winner: Ford

Most Popular Automotive Viral Ad
This award goes to the auto manufacturer that created an ad that generated the greatest traffic on YouTube in 2013.

  • Winner: Volvo

Most Popular Automotive Viral Ad Series
This award goes to the auto manufacturer that created an ad series that generated the greatest traffic on YouTube in 2013.

  • Winner: Dodge

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NADA Presents Five ‘Best in Show’ Awards to Convention Exhibitors in New Orleans

McLean, Va. – The National Automobile Dealers Association (NADA) presented five “Best in Show” awards to companies that exhibited at the 2014 NADA and American Truck Dealers (ATD) Convention & Expo in New Orleans.

The first annual “Best in Show” awards, which are categorized by exhibit size, recognize companies for excellence in design and construction, including the use of innovative materials and creativity in color, lighting and attractions. The exhibits were also evaluated on branding, company imagery, messaging and incorporating the theme of the NADA convention.

Here are the 2014 “Best in Show” winners:

  • Cree Inc. – Best Linear Booth (100 to 400 square feet);
  • Chrome Data Solutions – Best Small Island Booth (400 to 1,000 square feet);
  • TD Auto Finance – Best Medium Island Booth (1,000 to 2,000 square feet);
  • Reynolds & Reynolds – Best Large Island Booth (2,000 square feet and above); and
  • Procede Software – ATD “Best in Show” award.

“It was an honor to present the first ever ‘Best in Show’ awards to this year’s exhibitors,” said Donovan Bertsch, chairman of NADA’s convention committee for 2015, and owner of Theel Inc., Chevrolet and Buick in Bottineau, N.D., who announced the winners on Jan. 27. “This award recognizes the dedication, creativity and significant investment that our convention exhibitors make each year to support the work of NADA and ATD on behalf of dealers.”

There were 566 companies exhibiting at the 2014 NADA and ATD convention, which occupied 700,000 square feet on the Expo floor at the convention center in New Orleans from Jan. 24-27. The winners were determined by officials from NADA and Freeman, a provider of integrated services for face-to-face marketing, specializing in convention and trade show management.

The “Best in Show” awards were a direct result of NADA’s annual Wheelhouse Innovation Sessions, which is hosted by Freeman, and includes a cross-section of exhibitors for a roundtable discussion that explores new ways to make the convention and expo more valuable and relevant to all participants, said Connie Mikels, NADA director of Expositions.

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Industry Groups Question Study on Discrimination in Auto Lending

Durham, N.C. — The Center for Responsible Lending (CRL) released findings that show negotiation does not help African American and Latino car buyers secure better interest rates on auto loans. However, industry associations such as the American Financial Services Association (AFSA) and the National Automobile Dealers Association (NADA) discounted the study, claiming it lacks data to support its claims.

According to the study, 39% of Latinos and 32% of African Americans reported making attempts to negotiate their interest rate, compared to only 22% of white respondents — yet minority buyers received higher interest rates. The report, “Non-Negotiable: Negotiation Doesn’t Help African Americans and Latinos on Dealer-Financed Car Loans,” is based on a telephone survey of 946 consumers conducted in October 2012.

“The CRL report is based on a sample size of less than 900 borrowers self-reporting that they purchased a vehicle at a dealership in the last six years,” said Chris Stinebert, president and CEO, AFSA, in a statement, who noted that 86 of the 946 car buyers polled received loans from buy-here, pay-here dealerships. “In 2013, 15.6 million new and nearly 42 million used vehicles were sold in the United States, hardly making this a representative sample. The report author even notes that ‘using self-reported survey data has limitations compared to loan-level data derived from the records of individual transactions.’”

The AFSA will be conducting its own study over the next several months, examining loan-level data of millions of loans, Stinebert noted. The intent of the study is to evaluate the indirect lending model and analyze the costs and benefits of alternatives.

The CRL study was discussed at the Consumer Financial Protection Bureau (CFPB)’s first public forum on auto lending. It was held in November at the bureau’s headquarters in Washington, D.C. Chris Kukla, senior counsel for government affairs at the CRL, said the study would show that disparities do exist in the auto lending market, and that those disparities are not mitigated by shopping around or negotiation, something CFPB officials have been claiming since the bureau issued a fair lending bulletin in March.

However, CFPB officials have also stated that the bureau is relying on data collection techniques employed by its sister agencies like the Department of Justice, an approach designed to allow finance sources to replicate it on their own.

“The CFPB repeatedly stated — even as recently as our Vehicle Finance Conference last week — that the bureau is only interested in data-driven studies,” Stinebert said. “The CRL study certainly does not fall into that category.”

The NADA also issued a statement that questions the results of the CRL study. “The phone survey responses are consumer opinions, not statistically valid data,” read the statement. “For example, the report relies on participants to recall details such as ‘trade-in allowance’ and ‘down payment’ for transactions that occurred as long ago as ‘six years.’ If the survey participant didn’t recall the answer, the survey accepted ‘their best guess.’”

“If anything, CRL’s report shows that if all consumers lose their right to negotiate for lower monthly payments, minorities would disproportionally pay the price.”

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