Tag Archive | "new vehicle sales"

Average Transaction Price Rises in January


IRVINE, Calif. — The average transaction for a new vehicle increased by $1,123, or 3.3%, from a year ago to $34,968, according to Kelley Blue Book estimates. The average, however, was down by $453, or 1.3%, from December 2016.

Driving the year-over-year strength in pricing was a sales mix in favor of utility vehicles, with the Detroit Three among the greatest beneficiaries, the vehicle information site said.

“The changing mix of sales in favor of utility vehicles is the primary driver for the year-over-year strength, as average prices in SUV segments climbed modestly, while the prices of subcompact SUVs declined,” said Tim Fleming, analyst for Kelley Blue Book. “Demand for subcompact SUVs, one of the hottest segments in 2016, appears to be slowing down, although new models from Ford, Nissan and Toyota could help spark interest in the segment.”

The Detroit Three continue to perform well with some of the greatest year-over-year increases. In particular, General Motors climbed 4% in January 2017, as all of its brands reported increases in transaction prices. Cadillac had the greatest gain at 7%, thanks to the new CT6 sedan and XT5 crossover.  Chevrolet rose 3%, with the new generation Camaro showing the most improvement, up 10% year-over-year.  GMC increased 5% on a strong mix of its full-size SUVs, the Yukon and Yukon XL.

Nissan North America also continues to show gains in average transaction price, which was up 5% for January 2017. A sales mix in favor of SUVs and trucks is partially responsible, as well as the new Armada SUV, which recorded an average transaction price increase of 18%. The new Titan also is performing well, up 9%. Infiniti climbed 2% with help from the Q50 (up 9%) and its new lineup of engines, including the 400 horsepower Red Sport trim.

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NADA: 17.4 Million Units Possible for 2017


LOS ANGELES — Noting that the economic outlook is a little less certain than a week ago, the National Automobile Dealers Association’s Steven Szakaly called for a 17.1 million-unit year in 2017. But the NADA’s chief economist said he’ll have a better read by the end of February, beginning of March.

By that time, Szakaly added, the industry could be on pace to sell more than 17.1 million new vehicles. The key will be whether President-elect Donald Trump sticks to his promises of tax reform, increased infrastructure spending, and reducing the regulatory burden in the banking, automotive, and energy sectors.

“These will all be net benefits. The question, of course, is, will these net benefits be outweighed by possible net negatives, which are, of course, the outlook on immigration and the outlook on free trade,” said Szakaly today at an economic briefing ahead of the Los Angeles Auto Show. “At this point, it’s really difficult to determine which set of factors are going to win out.”

As for 2016, Szakaly said new-vehicle sales are on pace for a 17.4 million-unit year with seven weeks remaining. That would be 200,000 units less than 2015’s all-time sales record of 17.5 million units.

The chief economist described the market as stable but not growing, noting that pent-up demand is “effectively spent.” What’s sustaining auto sales momentum is that the overall economic outlook for 2017 remains strong, with projected gross domestic product growth at 2.6%, employment growth between 150,000 to 180,000 per month, and the price for regular-grade gasoline at less than $2 per gallon.

The easing of fuel economy regulations would benefit the economy even more, he added. Rising wages, which have been stagnant in many sectors, would also help. Szakaly said wages have been rising steadily for college-educated workers.

The chief economist listed rising interest rates as a concern, but said that even a 2% increase would add only $30 dollars to a monthly car payment. Currently, he noted, average interest rates are running at 4.8%, with monthly payments averaging between $485 and $500.

“That’s really not much when we think about what most of these vehicles are running and costing,” he said if rates were to rise by 200 basis points. “I think consumers will be able to pay that as we look at least out into 2017. I think what we’re looking at a 50 basis-point rise by the end of 2017.”

Szakaly also listed ever-increasing loan terms and higher vehicle transaction prices as concerns. As for the latter, Szakaly believes higher transaction prices will likely be offset by manufacturer incentives, which he described as “stable at a very high level.”

Incentives, he noted, have reached $3,900, on average, per unit, representing 10.8% of MSRP. The only time the industry has seen incentives that high was in 2008. The problem is high incentives tend to push down used-vehicle prices, which could push down trade-in equity for car buyers.

Szakaly said he also expects new-vehicle dealership to retail 15.3 million used vehicles in 2017, compared to an expected 15.1 million used sales in 2016. The total used-vehicle market will exceed 40 million retail sales in 2017, he added.

“I tend to favor the idea that we will see some significant reforms on the tax side. We will see some fairly large spending in terms of infrastructure, and I think we will see a reduction in the regulatory burden far sooner than we will see the negative consequences in immigration crackdown … reductions in free trade,” Szakaly said of the new administration. “Overall, I believe the second half of 2017 could very well surprise both for gross domestic product growth and for motor vehicles. If all of these policies come to fruition, we could see a year in the 17.3 or 17.4 million [range].”

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New-Vehicle Registrations Return to Prerecession Levels


SCHAUMBURG, Ill. — New-vehicle registration volumes for light-duty vehicles reached the highest point in nine years, with more than 17 million new vehicles registered within the United States between Nov. 1, 2014 and Oct. 31, 2015, according to Experian Automotive.

The highest number of new registration volumes on record was 17.4 million in 2006, while the lowest point was during the Great Recession, when volumes fell to 10.2 million in 2009.

“It’s encouraging to see new registrations return to prerecession levels, with lower interest and higher employment rates driving vehicle demand,” said Brad Smith, Experian’s director of automotive market statistics. “While I’m sure the auto industry would like to continue this growth annually, it is important to continually monitor data trends and economic indicators to identify shifts in demand and adjust business strategies accordingly.”

Experian’s data also revealed a shift in what consumers are buying, with crossover utility vehicles now accounting for nearly 24% of the market this year — up more than 100% from 2006.

“The crossover utility vehicle segment, with popular entries like the Ford Escape, the Honda CR-V, the Chevrolet Equinox and the Toyota RAV4, provides consumers with a nice balance between utilitarian need and fuel economy,” Smith added. “All-wheel drive versions and roof racks provide the recreational sportsman with the fit and function needed for weekend getaways, while the rear hatch makes these vehicles a viable grocery-getter as well.”

The Top Five brands by market share during the reporting period were Ford, Chevrolet, Toyota, Honda and Nissan. They accounted for 54% of the 17 million new-vehicle registrations. By model, the Ford F-150 led the way with a 2.9% share of the market, followed closely by the Chevrolet Silverado 1500 and Toyota Camry with shares of 2.6% and 2.5%, respectively. The Toyota Corolla, Honda CR-V and Honda Accord tied for fourth with shares of 2.1%.

States leading the way in new-vehicle registrations were California (11.8% share), Texas (9.2%), Florida (7.6%), New York (6%), Illinois (4%).

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New-Vehicle Transaction Prices Rise More Than 1% in October


IRVINE, Calif. — Kelley Blue Book reported today that the estimated average new-vehicle transaction price for light vehicles was $34,023 in October, with new-vehicle prices rising $458 from a year ago and $233 from September.

Leading the way were full-size SUVs, high-performance cars, mid-size trucks and vans, the vehicle information site noted. By brand, Chevrolet, Hyundai, Lincoln, Ram and Subaru lead the way in terms of month-over-month and year-over-year price gains.

“These brands had growth from different segments across their lineups, a promising sign given the increasing popularity of SUVs and trucks in the market,” said Akshay Anand, a Kelley Blue Book analyst.

One of the few brands to show a dip in average transaction prices from the prior month (down 3.6 percent) and on a year-over-year basis (down 1.8 percent) was Volkswagen. “In fact, Volkswagen had the largest month-over-month drop as the diesel emissions issue continues to impact the automaker,” said Anand. “Six out of the eight vehicles within its lineup were down from last month, while only the Golf is up from this time last year, potentially reflecting Volkswagen’s need to offer its vehicles at slightly lower prices since consumer perceptions of the brand may be impacted.”

As a whole, Volkswagen Group is down 1.6 percent from September 2015, but up 2.9 percent from last year.

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KBB Predicts 12% Increase in New-Vehicle Sales


IRVINE, Calif. — Kelley Blue Book said this week it expects new-vehicle sales to increase nearly 12% year over year to a total of 1.43 million units in October, a predication that would put the seasonally adjusted annual rate at 197.9 million if realized. It would also be the highest October sales total since 2001.

Fueling the vehicle information site’s double-digit growth prediction is new-vehicle sales continue to roll off dealer lots after the industry experienced its strongest sales month in over a decade in September. Employment and fuel prices are other drivers of KBB’s prediction.

“Key economic indicators for auto sales are still strong, including jobless claims at a historic low as the national unemployment rate approaches 5%, fuel pricing nearing six-year lows, and interest rates that remain near zero,” said Alec Gutierrez, senior analyst for Kelley Blue Book. “This momentum has pushed Kelley Blue Book’s forecast to 17.4 million for 2015, a 5.6% year-over-year improvement.”

Sales Volume 

Market Share 2

Manufacturer

Oct-15

Oct-14

YOY %

Oct-15

Oct-14

YOY %

General Motors (Buick, Cadillac, Chevrolet, GMC)

250,000

226,819

10.2%

17.5%

17.8%

-0.3%

Ford Motor Company (Ford, Lincoln)

219,000

187,897

16.6%

15.3%

14.7%

0.6%

Toyota Motor Company (Lexus, Scion, Toyota)

198,000

180,580

9.6%

13.8%

14.1%

-0.3%

Fiat Chrysler (Chrysler, Dodge, FIAT, Jeep, RAM)

191,000

170,480

12.0%

13.4%

13.3%

0.0%

American Honda (Acura, Honda)

135,000

121,172

11.4%

9.4%

9.5%

0.0%

Nissan North America (Infiniti, Nissan)

120,000

103,117

16.4%

8.4%

8.1%

0.3%

Hyundai-Kia

110,000

94,775

16.1%

7.7%

7.4%

0.3%

Volkswagen Group (Audi, Volkswagen, Porsche)

50,000

49,130

1.8%

3.5%

3.8%

-0.3%

Total 3

1,430,000

1,277,821

11.9%

Historical data from OEM sales announcements

While General Motors is expected to lead the way in sales volume, Ford Motor Co.’s expected 16.6% increase in new-vehicle sales from a year ago would be the biggest gain in October. Expected to lead the way, according to KBB, is the F-150, which is pushing overall F-Series volume to new levels of growth this year. Ford’s refreshed Explorer should also be a solid driver of growth this year for the automaker.

The Volkswagen Group is also expected to show a slight gain in sales volume, despite its recent troubles, the site noted. “With most brands experiencing growth this month, Volkswagen Group should report fairly even sales totals in the wake of their diesel emissions issue,” said Gutierrez. “Audi and Porsche will be driving the sales growth for the manufacturer, as the Volkswagen brand posts negative figures, largely due to the stop-sale of its diesel models, which previously made up nearly 20 percent of the brand’s sales volume.”

By vehicle segment, compact utility vehicles are expected to lead the way for the third month in a row with nearly 40% growth. This segment has seen five new models enter the segment in the past year, which has resulted in more than 20,000 units sold per month. Still, the rest of the segment continues to strengthen at double the rest of the industry’s pace.

With low fuel prices and exploding popularity of small utilities, small and mid-size cars will continue to lose market share in October. These are already two of the most competitive segments in the market, and year-to-date sales in both segments have declined. While Kelley Blue Book said it expects an increase in volume in October, due to strong overall sales momentum in the automotive industry, it also believes market share will drop by more than a full percentage point for these car segments.

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Lithia’s Drop in New-Vehicle Gross Per Unit Offset by Q1 F&I Performance


MEDFORD, Ore. — Lithia Motors’ F&I operations realized a $52 increase in F&I profit per vehicle retailed, which settled in at $1,233 in the first quarter of 2015.

The group’s F&I performance, coupled with the $97 increase in used-vehicle gross profit per vehicle retailed ($2,602), helped the 130-store dealer group offset lower new-vehicle gross profit per unit, which fell $90 to $2,160.

“In the first quarter, the blended overall gross profit per unit was $3,646 compared to $3,599 last year, or an increase of $57 …,” said Bryan Deboer, Lithia’s president and CEO, during the group’s quarterly investor call on Tuesday. “While we continue to see lower new-vehicle gross profit per unit, this was more than offset by improvement in used-vehicle gross profit per unit and F&I per vehicle.”

Lithia Motors not only posted its best quarterly results since 2006, it also realized its highest first quarter adjusted net income in company history, which rose from $27.1 million in the year-ago period to $36.9 million. On per-share basis, earnings increased 35% from a year ago to $1.38 per share.

Revenue increased 66% from a year ago to approximately $1.8 million, with the group realizing double-digit increases in all of its four business lines on a same-store basis.

Total sales increased 11%, while new-vehicle revenues increased 11.3% on a same-store basis to $639,501. The average selling price increased 3%, while unit sales increased 8.5% from a year ago to 18,567 units.

Used-vehicle revenues increased 11.1% to $333,300, while the average selling price increased 4%. The dealer group also retailed 6% more used vehicles than a year ago, with the group selling 0.9 used vehicles for every new-vehicle sold.

Revenue from service, body and parts increased 11.1% from a year ago to $1.2 million, with revenues from customer pay and warranty-related work increasing 19% and 31%, respectively. Wholesale parts revenues also increased 5%, while body shop revenues showed a slight decrease of 3%.

“We delivered the best first quarter earnings in our company’s history, and the second best quarterly earnings ever,” Deboer noted. “For the fourth consecutive quarter, we achieved double-digit growth in same-store sales in all business lines. We remain focused on capturing additional market share, improving existing store results, and the continued success, integration and growth of DCH and actively seeking accretive acquisitions.”

Last June, Lithia agreed to buy DCH Auto Group, a 27-store operation with stores in California, New York and New Jersey. The acquisition made Lithia the fifth largest dealer group by store count.

“We believe that the integration of DCH has gone very smoothly,” Deboer said on Tuesday, noting that the group continues to explore other acquisitions.

“We are not solely looking at $500 million or $1 billion acquisition,” he added. “We’re still looking at our typical strategies where we buy $50 million to $70 million store size. And there is a pretty active market in that arena both in our exclusive markets and now in the metropolitan market.”

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