CNW Research Report July 2012

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State of the Industry – July, 2012:
Delivery Rate Bounces to 14.3 Million
Hailing the recovery of the new-car industry may well be good for the soul and the bottom line,
but there is a long way to go to recapture the true strength automakers had just a decade ago.
Based on new-car sales as a share of total U.S. population, the industry remains well off the mark.
Even at 14.2 million units in 2012, sales would represent only 4.5 percent of the U.S. population
making an acquisition.
Compare that to over 7.5 percent in 1986 and 6.2 percent in 2000. In the year just prior to the
recession – 2007 – sales were fully 5.4 percent of the population.
Conversely, for the industry to hit the cy2000 share would require selling 19.5 million new units.
While it could well be
said these lower shares
are caused by people
acquiring a used car
instead of a new one.
cy12 US est
cy11 US
cy10 US
cy09 US
cy08 US
cy07 US
cy06 US
cy05 US
cy04 US
cy03 US
cy02 US
cy01 US
cy00 US
cy99 US
cy98 US
cy97 US
cy95 US
8.00%
7.50%
7.00%
6.50%
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
cy90 US
C
New-Used Combined
New Sales to Population
cy86 US
3.77%
24.70%
That would be a solid alternative explanation and to
some degree, true.
But a look at the combined new and used sales as a share
of population shows there has been a significant
deterioration here as well.
(Click Chart Box “C” at right.)
C
Page 2… CNW Research: Retail Automotive Summary July 2012
(continued from previous page)
As the graph at the right shows, combined new and used
sales from 1997 through 2004 held reasonably steady in the
21 percent range.
At the height of the recession in 2009-2010 it had fallen to
under 16 percent and remains under 18 percent this year
even with a strong used-car market.
CONTEXT: Double digit increases in new and used sales are
unquestionably worth a cheer or two. But the industry is far
from the healthy, robust athlete it was just a few years ago.
The key hold back among consumers remains having wellpaying jobs and solid confidence in the economy. Today, the
industry is feeding off of those who need a car, not want one.
19.27%
11.55%
New-Used Sales to Population
22.00%
21.00%
20.00%
19.00%
18.00%
17.00%
16.00%
15.00%
July Outlook
As for July, the first half of the month had some strong
positives. Floor Traffic is up as was same-store sales vs. year ago.
Both of those metrics were offset only a little by a slightly
lower closing ratio.
Combined, a double digit increase in sales – hitting 1.28 million
or about 20 percent higher than last year – is likely.
BUT HERE’S THE RUB: The CNW Jitters Index jumped 3.8
percent with double-digit increases for Federal Taxes,
Meeting Day to Day Needs, and Condition of Investments. Food concerns can’t rise much more since they
are already at 9.48 on a 10-point scale..
The only metric below a year ago is concern about gas prices;
down 15.8 percent. (Doc. 102m on CNWbyWEB.com)
Also working in the auto industry’s favor this month was a
massive 24-plus percent spike in the number of sub-prime loan
application approvals.
As we said last month when approvals were down, this rollercoaster for sub-prime will continue at least until December when
C
-1.64%
21.4%
Page 3… CNW Research: Retail Automotive Summary July 2012
JITTERS INDEX
Fed
Gas
Child’s
Job
Day to Day
Condition of
Food
Local
Jitters
Taxes
Prices
Edu
Stability
Needs
Investments
Prices
Taxes
Index
Vs Previous Mo.
1.46%
-8.29%
-0.42%
2.95%
1.06%
0.14%
0.64%
0.61%
-0.11%
Vs Mo. ‘11
11.85%
-15.81%
1.71%
2.43%
12.15%
16.83%
4.29%
0.41%
3.77%
financial institutions get a clearer picture of medium-term economic activity and conditions. Today it’s a matter of keeping the
portfolio flexible and conservatively balanced.
Used Days’ Supply
Finance Only
Prime
Near
Prime
Sub Prime
% Change v year ago
3.0%
3.2%
24.7%
% Change v previous month
0.70%
0.22%
17.35%
C
Car V Truck Days' Supply
130.0%
120.0%
110.0%
100.0%
90.0%
Detroit Brands’ Inventory Building
Car
80.0%
Truck
70.0%
60.0%
Sept Nov
Jan
Mar May July Sept Nov
For Franchised New-Car Dealers, improving new
sales have brought a welcome number of trade ins,
replenishing badly depleted inventory.
That, along with a shortage of five-year-old and
newer models at independent dealerships has
boosted the overall industry to 47.5 days’ supply.
And the change in attitude about gasoline prices
has succeeded in shifting the mix of cars and trucks.
When gasoline prices were rising, trucks sat on lots
longer and cars were in short supply. Now the reverse
is true with trucks’ Days’ Supply at 90 percent of the
overall average and cars at 120 percent.
Jan.
12
Mar May July
C
The U.S. makes now are above the Days’ Supply
average with 48 days while Asian makes are at 47.2
days and European brands at 46.9 days.
A glut of lower-priced, budget and economy cars is
hampering some dealers while older full-size cars such
as Crown Victoria and Mercury Marquis are in fairly
high demand with younger used-car shoppers.
Page 4… CNW Research: Retail Automotive Summary July 2012
Used Vehicle Inventories
95
Note: This is a Graphs Page.
Days' Supply
Throughout this issue you will see a C symbol
in a table, graph or chart which will take you
to an appropriate Graphs Page.
81.25
67.5
53.75
40
Jan '02
Apr
July
Oct
Jan '03
Apr
July
Oct
Jan '04
Apr
July
Oct
Jan '05
Apr
July
Oct
Jan '06
Apr
July
Oct
Jan '07
April
July
October
Jan '08
Apr
July
Oct
Jan '09
Apr
July
Oct
Jan '10
Apr
July
October
Jan '11
Apr
July
October
January '12
Apr
July
Days'
Supply - Used
Days’
% Chng v
Days’ Sup
Days’
Sup
Supply
Prev. Yr.
Car
January
'12
44.16
-12.9%
Feb
44.82
Mar
% Truck
Detroit
Asian
Euro
May
40.91
44.87
52.36
June
41.57
43.79
52.74
July
41.06
43.92
50.03
August
43.34
41.28
48.62
Sept
44.97
42.05
46.32
Oct
45.62
42.09
46.58
Nov
45.05
44.28
45.32
Dec
45.08
46.39
45.47
Jan. 12
43.22
44.92
45.76
Feb
43.71
45.02
45.66
Mar
44.82
46.87
45.61
Apr
45.36
46.72
45.29
% Car
Truck
% Dif
Car vf
Trk
45.92
42.37
7.7%
52.01%
47.99%
-9.9%
43.28
46.01
-6.3%
48.47%
51.53%
45.22
-6.3%
41.02
48.36
-17.9%
45.89%
54.11%
Apr
45.51
-5.2%
41.17
48.52
-17.9%
45.90%
54.10%
May
44.27
-2.57%
42.34
47.29
-11.69%
47.24%
52.76%
May
44.06
45.22
44.97
June
46.18
2.78%
45.62
44.01
3.53%
50.90%
49.10%
June
44.51
46.29
45.71
July
47.51
11.55%
49.13
45.29
7.82%
52.03%
47.97%
July
48.06
47.24
46.94
Page 5… CNW Research: Retail Automotive Summary July 2012
Economy, Budget Cars Continue to Trend Downward
Leasing is sending many Budget and Economy car intenders into bigger and somewhat less fuel efficient models, CNW’s monthly
Purchase Path surveys show.
In June, Budget cars had their lowest share of total sales of 2012, 1.54 percent vs. 2.13 in February, the high-water mark for the
segment. Economy cars were down to 12.13 percent of total sales, off from March’s high of 13.81.
That trend looks to be holding into July, early sales returns indicate.
For those segments’ intenders, a new-vehicle budget is a given. And the budget is measured in monthly payments not overall
price of the car or truck. Enter leasing. For the same budget, a somewhat nicer vehicle is within reach and a large share of those
consumers are making
Budget Car
Economy Car
the leap from a Honda
13.81%
2.13%
2.09%
1.93%
Fit to a Civic, for
13.45%
1.96%
1.70%
example.
1.54%
12.54%
12.34%
12.41%
12.13%
Electric Vehicles
Entry-Level Utility
12.21%
12.09%
11.87%
0.21%
11.78%
0.14%
11.40%
11.31%
0.13%
0.16%
0.17%
0.18%
Luxury, Pickups Rise
After stumbling in April,
Luxury cars are once
again having
consecutive monthly
increases and
registered the best
month of the year to
date.
Commercial vehicles
such as pickup trucks
and full-size vans also
had a good month, both
registered
improvements in share
of total sales.
Page 6… CNW Research: Retail Automotive Summary July 2012
Luxury Car
Full-Size Pickup
1.52%
10.90%
1.46%
10.58%
10.56%
1.38%
10.46%
10.37%
1.32%
10.19%
1.35%
1.33%
Premium Car
Full-Size Van
0.37%
1.56%
1.71%
1.68%
1.99%
2.05%
2.05%
0.28%
Touring Car
2.07%
1.75%
2.19%
2.43%
0.30%
0.29%
0.31%
0.26%
Sport Utility Pickup
2.39%
2.64%
0.19%
0.17%
0.16%
0.15%
0.17%
0.14%
Page 7… CNW Research: Retail Automotive Summary July 2012
Standard Mid-Range Car
Near Luxury Car
3.70%
3.52%
3.35%
3.35%
3.51%
12.87%
12.56%
3.06%
12.43%
12.42%
11.54%
11.21%
Traditional Car
Small Pickup
0.07%
2.54%
2.23%
2.07%
1.91%
1.91%
1.93%
0.05%
0.03%
0.03%
0.02%
Upper Mid-Range Utility
1.81%
1.61%
1.54%
1.37%
1.90%
1.88%
0.02%
Page 8… CNW Research: Retail Automotive Summary July 2012
Lower Mid-Range Utility
Lower Mid-Range Car
8.51%
8.34%
12.44%
8.20%
11.96%
11.87%
7.99%
11.43%
10.78%
11.04%
Midi-Van
Large Utility Vehicles
1.62%
1.46%
1.33%
1.49%
1.66%
1.74%
0.29%
0.24%
Mid-Range Utility
2.27%
1.98%
0.20%
0.21%
0.24%
0.21%
Minivan
2.66%
2.32%
8.28%
8.20%
4.14%
2.70%
4.01%
2.17%
3.86%
3.85%
3.72%
3.47%
Page 9… CNW Research: Retail Automotive Summary July 2012
Ultra-Upscale Car
0.02%
0.02%
0.02%
Ultra Luxury Sporty Car
0.02%
0.02%
0.05%
0.04%
0.04%
0.05%
0.04%
0.04%
0.01%
Ultra-Premium Utility
Upper Mid-Range Utility
1.61%
1.81%
1.54%
1.90%
1.88%
0.06%
1.37%
0.05%
0.04%
0.05%
0.04%
0.02%
Upper Premium Sporty Car
0.17%
0.18%
0.16%
0.12%
Premium Mid-Range Car
4.64%
0.19%
0.16%
4.63%
4.52%
4.39%
4.24%
4.05%
Page 10 CNW Research: Retail Automotive Summary July 2012
Document 106m
Franchised
Dealer Sales
Independent
Dealer Sales
Casual (Private)
Sales
Total Sales
Anticipated July
Actual July
% Chng
YTD
YTD
% Chng
cy12
cy11
12v11
cy2012
cy2011
12v11
1,767,000
1,666,687
6.0%
8,720,074
8,387,250
4.0%
1,500,000
1,651,778
-9.2%
7,987,992
8,402,552
-4.9%
1,275,000
4,542,000
1,177,739
4,496,204
8.3%
1.0%
7,247,694
23,955,760
6,323,876
23,113,678
14.6%
3.6%
Used Sales Bump into July: Franchised Dealers, Casual Up; Independents Down
Getting some of May and June trade-ins through the
reconditioning process and onto the lots has helped franchised
dealers post a six percent gain in sales vs. year ago (based on
the first 20 days of July). That’s well ahead of the year-to-date
increase of 4 percent.
For Independent dealers, the story wasn’t quite as bright.
They had a 9.2 percent decline thus far in July and if the figures
hold for the month, it will mean a near 5 percent decline in
year-to-date vs. 2011.
As pointed out elsewhere in this edition, part of the issue is the
ability to receive loan approvals for sub-prime borrowers. The
9.2 percent shortfall for Independents this month is linked to
the ability in some major states to get the loan through
financial institutions. Add to that the demand for more trucks
and lower interest in small, older cars and the net result is an
unbalanced inventory compared to the desires of the local
market.
Private Party sales are bouncing like a rubber ball. Weak one
month, sky high the next.
One major factor in the casual market is the run-up in used
prices registered earlier this year. Many private sellers are basing
their current asking price on the inflated values of late 2011 and
early 2012. Not able to get what these sellers expected has forced
many to reconsider selling a car or truck.
But that was last month. This month, a wave of repriced models
hit the likes of craigslist.com and sales volumes picked up by more
than 8 percent. While still running behind the year-to-date figure
of 14.6 percent, the Private Party market is now back on track.
Prices Slip Again
Retail used-vehicle prices continued to be soft with Franchised
dealers seeing their transaction prices drop a touch – 0.37 percent
even though they were asking 4.5 percent more than a year ago.
Independent dealer transaction prices slumped 8.5 percent vs. a
year ago and 1.4 percent vs. June.
C
Page 11… CNW Research: Retail Automotive Summary July 2012
Franchised
Doc 107m
Independent
Franchised
Franchised
Independent Independent
Asking Price Asking Price
Trans Price
% of Asking
Trans Price
% of Asking
Jan. '12
$11,516
$10,483
$10,855
94.26%
$9,715
92.67%
Feb. '12
$11,653
$10,516
$11,090
95.17%
$9,784
93.04%
Mar '12
$11,826
$10,592
$11,254
95.16%
$9,874
93.22%
Apr ’12
$11,507
$10,216
$10,958
95.23%
$9,576
93.74%
May '12
$12,119
$9,987
$11,296
93.21%
$9,071
90.83%
June '12
$11,684
$9,937
$10,802
92.45%
$9,069
91.27%
July '12
$12,136
$9,842
$11,185
92.16%
$8,943
90.87%
July '11
$11,619
$10,246
$11,226
96.62%
$9,778
95.43%
August '11
$11,458
$10,172
$11,021
96.19%
$9,598
94.36%
Sept '11
$11,253
$10,219
$10,807
96.04%
$9,572
93.67%
Oct. 11
$11,394
$10,384
$10,952
96.12%
$9,744
93.84%
Nov. '11
$11,186
$10,148
$10,654
95.24%
$9,452
93.14%
Dec '11
Percent
Change Yr
over Yr
Month Over
Month Price
$11,058
$10,039
$10,547
95.38%
$9,384
93.48%
4.45%
-3.94%
-0.37%
-4.62%
-8.54%
-4.78%
3.87%
-0.96%
3.55%
-0.31%
-1.39%
-0.44%
Page 12… CNW Research: Retail Automotive Summary July 2012
June 2012 Kontos Kommentary
Current Used Vehicle Market Conditions
Summary
Wholesale used vehicle prices continued to soften cyclically and seasonally.
The average sales price for all vehicles sold at auction fell below $10,000 for
the first time since February, signaling an end to this year’s characteristically
strong Spring/Tax season.
Details
According to ADESA Analytical Services’ monthly analysis of Wholesale Used
Vehicle Prices by Vehicle Model Class1, wholesale used vehicle prices in June
averaged $9,893 – down 3.7% compared to May and down 3.6% relative to
June 2011. As gasoline prices softened in June, prices for car segments fell
more dramatically (down 4.4% month-over-month and 6.9% year-over-year)
than for truck segments (down 3.0% and 0.9%, respectively).
Manufacturers registered a 1.9% month-over-month price increase and a
5.6% year-over-year rise, reflecting continued tight supplies of late-model
off-rental and off-lease vehicles. Fleet/lease consignors experienced a 5.7%
sequential price decrease and a 2.4% annual decrease. Dealer consignors
saw a 1.6% average price decrease versus May and a 4.4% downturn versus
June 2011.
Based on data from CNW Research, retail used vehicle sales in June were up
8.1% month-over-month and 1.9% year-over-year for franchised dealers,
but down 1.6% and 8.0%, respectively, for independent dealers – an
indication that both inventory and traffic favors franchised dealers in the
current used vehicle market environment. June sales of certified used
vehicles were up 3.3% month-over-month and 8.9% year-over-year based
on data from Autodata.
Wholesale Used Vehicle Price Trends
Average Prices ($/Unit)
Jun-12 May-12 Jun-11
Latest Month
Versus:
Prior
Month
Prior
Year
Total All
Vehicles
$9,893 $10,271 $10,259
Total Cars
$9,121 $9,546
$9,793
-4.4%
-6.9%
Compact Car
$6,955 $7,280
$7,605
-4.5%
-8.5%
Midsize Car
$7,703 $8,142
$8,356
-5.4%
-7.8%
Fullsize Car
$5,779 $6,449
$5,970
-10.4%
-3.2%
Luxury Car
$13,552 $13,782 $14,253
-1.7%
-4.9%
Sporty Car
$12,935 $13,728 $13,582
-5.8%
-4.8%
Total Trucks
$10,708 $11,038 $10,761
-3.0%
-0.5%
-3.7%
-3.6%
Mini Van
$7,184 $7,757
$7,405
-7.4%
-3.0%
Fullsize Van
$9,731 $9,711
$8,869
0.2%
9.7%
$10,247 $10,561 $10,470
Mini SUV
-3.0%
-2.1%
$9,736
-4.8%
-0.8%
Fullsize SUV
$13,510 $13,752 $12,614
-1.8%
7.1%
Luxury SUV
$18,745 $18,891 $19,820
-0.8%
-5.4%
$7,376
-3.2%
-3.2%
Fullsize Pickup $11,056 $11,123 $10,833
-0.6%
2.1%
Midsize SUV
$9,662 $10,147
Compact Pickup $7,139 $7,373
Page 13… CNW Research: Retail Automotive Summary July 2012
It was a Good Quarter for New and Used vs. Year Ago
On the whole, new and used sales had a decent second quarter. New sales were up 16.3
percent vs. the second quarter of last year while used sales climbed a more modest 1.4
percent. Overall, the light-duty transportation segment of the economy was up 4.6 percent.
Considering the state of the economy, both figures are acceptable and
Q2-11 New
at least point upward. Neither, however, is the kind of barnstormer one
3,269,497
would prefer.
The problem with the data is that it provides
little if any solid foundation on which to build a
plan into the future. “Fragile” would be the best
way to describe what the industry is going through.
Nothing in these numbers or ancillary metrics
give a good indication of future sales.
For example, the consumer confidence numbers
as well as CNW’s Jitters Index show an underlying
deep-seated concern about home-centric
economic issues. That results in a very strange
phenomenon: A Vacillation Factor.
Vacillation Factor
CNW measures how many times a new-car
intender changes his or her mind about making the
acquisition before actually buying a car or truck.
In 2000, a new-car buyer had a change of heart
1.61 times during the Purchase Process. In 2012,
that figure is 4.92 times.
The result: The slightest shift in the economic
breeze can send a shopper home. Such thin ice
produces an outrageously fickle market.
Percent Change
Q2-12 New
3,803,224
15,579,285
16,288,031
4.55%
% Change v 11
16.32%
Total
3,689,102
4,126,844
4,493,842
12,309,788
Franchised
1,367,997
1,503,084
1,653,644
4,524,725
36.8%
Independent
1,345,577
1,490,749
1,601,990
4,438,316
36.1%
Casual
975,528
1,133,011
1,238,208
3,346,747
27.1%
Apr '12
May
3,792,604
4,309,684
1,367,543
1,579,133
1,237,725
1,479,055
1,187,336
1,251,496
June
4,382,519
1,684,843
1,474,409
1,223,266
Total Q
12,484,807
4,631,519
4,191,189
3,662,098
37.1%
33.6%
29.3%
Used
Can’t Build on Current Data
Total New/Used
Q2 ‘11
Total New/Used
Q2 ‘12
Apr '11
May
June
Total Q
Shr for Qtr
Shr for Qtr
6
5
4
3
Vacillation Buy-No Buy
New
Used
2
1
0
cy2000 cy2001 cy2002 cy2003 cy2004 cy2005 cy2006 cy2007 cy2008 cy2009 cy2010 cy2011 cy2012
Page 14… CNW Research: Retail Automotive Summary July 2012
FLEET COMMERICAL SALES
All Sales
Percent Change v Previous Year
Fleet and Commercial Use
Total Fleet (Monthly
Approximates)
Percent Change v Previous Year
Jan
Feb
March
April
May
June
912,874 1,148,975 1,404,100 1,184,069 1,334,150 1,285,005
Share Retail
70.00%
11.4%
15.7%
12.7%
2.4%
25.9%
22.0%
62.50%
39.52%
36.48%
36.92%
38.09%
36.41%
38.25%
55.00%
360,768
419,146
518,394
451,012
485,764
491,514
47.50%
32.7%
40.5%
31.6%
22.4%
63.5%
77.2%
FLEET COMMERCIAL VALUE -Per Unit
$27,219
$27,254
$27,614
$27,943
$27,904
$28,147
FLEET COMMERCIAL VALUE -Total $Bllns
$9.82
$11.42
$14.31
$12.60
$13.55
$13.83
Percent Change v Previous Year
40.92%
48.55%
39.68%
30.13%
69.34%
84.70%
Government Fleet
Retail Share Up in July v Last Year
18,805
23,439
28,222
24,747
25,616
25,315
Share Gov't of Total Sales
2.06%
2.04%
2.01%
2.09%
1.92%
1.97%
Percent Change v Previous Year
-27.6%
-17.5%
-16.7%
-18.0%
3.3%
10.8%
Small Business Fleet and
Commercial Use
35,967
47,338
59,815
51,152
59,770
58,082
Share Small Business of Total
Sales
3.94%
4.12%
4.26%
4.32%
4.48%
4.52%
Total retail sales are on track to represent 60.5
percent of total sales in July compared to 61.29
percent in June, but well ahead of the 53.3 percent of
last year.
Translated into units, the July retail sales are set to
be in the neighborhood of 787,580 units compared to
564,174 in July of last year.
Percent Change v Previous Year
34.3%
29.1%
24.1%
13.1%
72.4%
81.4%
40.00%
June Fleet Sales
Medium Business Fleet and
Commercial Use
88,731
116,736
150,520
124,682
142,887
124,388
Share Medium Business of Total
Sales
9.72%
10.16%
10.72%
10.53%
10.71%
9.68%
Percent Change v Previous Year
-3.6%
57.5%
67.6%
48.5%
104.6%
88.1%
Large Business Fleet, Daily
Rental, Commer.
217,264
231,633
279,837
250,431
257,491
283,729
Share Large Business of Total
Sales
23.80%
20.16%
19.93%
21.15%
19.30%
22.08%
71.0%
45.5%
26.1%
19.8%
53.5%
81.5%
Percent Change v Previous Year
With a total value of $13.83 billion, fleets saw an
85 percent increase over last year thanks in large part
to a higher fleet-vehicle core value (excluding
upfitting).
Government fleets were up 10.8 percent – best
showing of the year – while small business commercial
sales were higher by 81 percent (on a share of total
sales basis).
Other segments in the fleet/commercial sales arena
also had significant gains over year ago.
Page 15… CNW Research: Retail Automotive Summary July 2012
Mobile Devices Part 2: Massive Growth as a Source of Auto Information
There is no question consumers are using their mobile devices
for automotive (and other product) searches. But just how fast
has it grown? And does the medium have any legs?
cy08 saw only 2.4 percent of new-car shoppers turning to their
smartphone or iPhone to collect information. During the first half
of this year, that figure skyrocketed to nearly 27 percent.
Looking at individual markets and brands, Los Angeles is
among the strongest for use of a smartphone for auto data
searches. In L.A. including the entire DMA and the San Fernando
Valley, Chevrolet buyers, for example, climbed from just below 9
percent in 2008 who used a smartphone for car or truck
information searches to well over 41 percent in the first half of
this year. (CNW has data for most of the country’s DMAs. Call or
email for details.)
Average Over Purchase Funnel
30.00%
26.78%
25.00%
20.00%
16.03%
15.00%
11.41%
10.00%
5.00%
4.94%
2.44%
0.00%
CY08
Mobile’s Problem
For automakers, getting to these shoppers poses a number of
hurdle. First, consumers are vehemently opposed to unsolicited
“pop up” ads or any mobile text messages.
While not against solicited texts, the vast majority – over 90
percent – say they would prefer and will visit automakers or
dealers who have a clean, easy to use, mobile-specific web site
adapted for the small screen.
As we pointed out last month, the mobile user also has a
fluctuating use of this device depending on where he or she is in
the purchase funnel.
Finally, mobile marketing has to be consistent and well
funded. For more details, see the Purchase Path White Paper this
Fall. (The complete spreadsheet is on PurchasePathOnline.com)
CY09
CY10
CY11
CY12 1st h
Chev/LA AVG.
41.55%
45.00%
40.00%
33.24%
35.00%
30.00%
25.00%
16.61%
20.00%
15.00%
10.00%
18.73%
8.82%
5.00%
0.00%
CY08
CY09
CY10
CY11
CY12 1st h
Page 16… CNW Research: Retail Automotive Summary July 2012
Median Age of Primary Drivers: Mixed Bag, but Industry Gets Older
When it comes to reaching the person who will buy a new car
or truck, many marketers concentrate on who signs the contract,
not necessarily the person who will become the Primary Driver of
the vehicle and holds great sway in the make/model selected.
Yet the two are often distinctly different people.
A key metric is age. For example, the average age of the typical
Mercedes buyer is nearly five years older than the average age of
the typical Mercedes primary driver.
Why? In many cases, a vehicle is acquired and financed jointly
by husband and wife, but for a majority of vehicles the first signer
on the contract is the one who is calculated in age demographics
even if the car is being driven by a spouse, son, daughter, or other
household member.
Overall Age Climbs
Since 2000, the average age of the primary driver of a new
car or truck has risen approximately 1.5 years. (See Doc 1088.)
Some automakers have strived to lower the age of primary
drivers with excellent success. Ford, for example, has seen a 16
percent drop in the age of its car buyers in the first half of this
year vs. 2005 to 45.2 years.
Conversely, Toyota Car is up 9 percent to 54.7 years of age.
Honda Car is up 12.2 percent to 55 years.
Hyundai Continues to Increase
Hyundai has been seeking higher demographic consumers in
order to round out its lineup with more expensive and upscale
models. That requires older shoppers with greater incomes. And
the Korean brand has succeeded.
C
Ford car
Ford truck
Lincoln car
Lincoln truck
All Total
cy00
cy05
Median Age
51.7
45.7
62.6
Median Age
53.9
48.7
65.8
61.2
58.4
55.1
Chevrolet Car
Chevrolet Truck
Buick car
Buick truck
Cadillac car
Cadillac truck
GMC truck
49.8
46.4
58.7
cy12 1st H Cy12 v ‘05
Median
Age
45.2
-16.1%
45.1
-7.4%
60.2
-8.5%
61.7
0.8%
-9.1%
53.1
59.8
49.2
47.1
60.6
58.3
61.7
57.3
55.5
48.2
49.3
57.6
58.2
58.2
59.1
54.4
-2.0%
4.7%
-5.0%
-0.2%
-5.7%
3.1%
-2.0%
All Total
50.5
55.7
55.0
-1.3%
Chrysler car
Chrysler truck
Dodge car
Dodge truck
Jeep truck
All Total
63.6
48.1
55.9
49.2
40.4
51.4
58.1
54.7
52.3
47.5
42.6
51.0
55.4
53.4
47.9
48.7
42.5
49.6
-4.6%
-2.4%
-8.4%
2.5%
-0.2%
-2.9%
59.7
CNW’s latest tabulation shows Hyundai Car’s primary drivers are
now 42.4 years of age, up 15 percent from 36.7 years in ‘05 and
32.3 years old in cy2000.
Also noteworthy is Chrysler Corp’s nearly 3 percent decline in
age since ‘05 to 49.6 years, the first time below 50 years of age
since 1995.
(continued next page)
Page 17… CNW Research: Retail Automotive Summary July 2012
(Continued from previous page)
Cadillac has, for the first time in many years, been able to reduce its primary driver age
below that of Mercedes. The luxury GM brand is likely to continue this trend with a
steady stream of younger-oriented models.
Euro Models Also a Mixed Bag
For Volkswagen, after years of
seeing the age of its primary drivers
climb because of the high number of
“legacy” buyers, the age for both VW
and Audi have fallen nearly 8 percent
to below 50. This once had been a
brand that had an average primary
driver age below 30.
Volvo, on the other hand, has
seen a significant increase – 16
percent – in primary driver age, well
above the industry’s uptick.
CONTEXT: While age is hardly the
most important metric, it does
provide a hint of who is being
attracted to a particular brand.
And it is equally telling how
different manufacturers are
addressing their aging owner/driver
base. Toyota, for example, has finally
realized that plain vanilla is fine for
its legacy buyers, but when the age
of its car buyers is approaching that
of Cadillac, somethin’s gotta give.
cy00
cy05
cy12 1st H
Median
Median Age Median Age
Age
Volvo car
49.3
48.2
55.9
All Total
49.3
48.2
55.9
BMW car
46.3
46.8
45.8
49.3
47.9
46.3
46.3
48.6
Mini
39.9
45.9
All Total
39.9
45.9
Land Rover
52.6
58.3
All Total
52.6
58.3
55.3
58.9
62.1
59.4
59.7
55.3
60.5
59.6
BMW truck
All Total
Mercedes car
Mercedes truck
All Total
Jaguar car
62.7
59.1
58.6
All Total
62.7
59.1
58.6
Porsche car
41.2
43.21
49.2
All Total
41.2
43.21
49.2
Audi car
42.7
58.2
56.3
40.9
60.6
58.9
38.5
54.6
53.3
All Total
52.4
53.5
49.3
VW car
VW truck
16.0%
16.0%
5.3%
4.6%
5.0%
15.2%
15.2%
10.8%
10.8%
0.8%
-3.9%
-1.6%
-0.8%
-0.8%
13.9%
13.9%
-5.9%
-9.9%
-9.5%
-7.9%
Toyota car
Toyota truck
Lexus car
Lexus truck
Scion car
All Total
Honda car
Honda truck
Acura car
Acura truck
All Total
cy00
Median
Age
cy05
Median
Age
cy12 1st
H
Median
Age
44.3
42.7
52.3
50.2
47.3
53.6
55.8
31.2
47.6
54.7
50.9
59.5
57.6
33.9
51.3
9.0%
7.6%
11.0%
3.2%
8.7%
7.8%
49.2
45.8
51.2
52.2
49.6
55.2
49.8
54.7
56.3
54.0
12.2%
8.7%
6.8%
7.9%
8.9%
38.8
38.6
47.9
50.2
43.9
-8.3%
-5.6%
9.4%
6.6%
0.9%
46.4
46.1
52.8
49.5
Nissan car
Nissan truck
Infiniti car
Infiniti truck
All Total
44.4
42.3
40.9
43.8
47.1
43.5
Mazda car
Mazda truck
All Total
41.8
36.7
39.3
39.6
39.1
39.4
37.6
41.2
39.4
-5.1%
5.4%
0.0%
Mitsubishi car
Mitsubishi truck
All Total
44.4
44.4
46.3
47.8
47.1
48.8
49.7
49.3
5.4%
4.0%
4.6%
Subaru car
All Total
47.7
47.7
38.44
38.4
41.5
41.5
8.0%
8.1%
Suzuki car
Suzuki truck
All Total
32.2
32.2
35.7
36.3
36
37.9
38.4
38.2
6.2%
5.8%
6.0%
36.7
38.4
37.6
42.4
43.7
43.1
15.5%
13.8%
14.5%
38.1
37.5
37.8
36.6
36.7
36.7
-3.9%
-2.1%
-3.0%
Hyundai car
Hyundai truck
All Total
Kia car
Kia truck
All Total
45.3
40.2
47.8
32.3
32.3
Page 18… CNW Research: Retail Automotive Summary July 2012
Electric, Hybrid, Diesel Demand Slows
Electric Consideration
Seeing headlines that electric or hybrid sales have hit
all-time peaks may sound good, but a better measure of
where these two alternative powerplants – as well as
diesel – are going can be found in consumer consideration
and what those consumers believe is a fair price for the
technology.
5.40%
Electrics Need Fleets
4.40%
Consideration of an all-electric model has deteriorated
among new-car intenders since January from a bit over 5
percent to approximately 4.5 percent. While that may
seem like a relatively small decline, it can translate to a
25,000 to 40,000 smaller base of potential buyers.
Considering the low volumes of electrics, the impact is
proportionately quite damaging.
Even more telling, among those who say they would
consider an electric, they are are saying the premium they
would be willing to pay over a like-sized ICE model is
around $800 (after tax credits and incentives). That’s
down from $850 in January.
Should gasoline prices continue to decline, expect
consideration and premium metrics to similarly fall. Is it
any wonder that EV makers are promoting their vehicles
to fleet and commercial and small-business owners?
4.20%
Diesel a Solid Alternative to Gas
New-car intenders are almost as likely to consider a
diesel as they are a hybrid.
Fully 29 percent of new-car intenders say they would
5.20%
5.00%
4.80%
4.60%
4.00%
Jan '12
Mar
Apr
May
June
Electric: Premium Willing to Pay
$860
$850
$840
$830
$820
$810
$800
$790
$780
$770
Jan '12
C
Feb
Feb
Mar
Apr
May
June
buy diesel if the price were right and the engine came in a model they
felt met their particular driving needs. Premium: Note quite what
diesel automakers would like to see, but getting better.
Page 19… CNW Research: Retail Automotive Summary July 2012
Hybrid Consideration
Diesel Consideration
45%
32%
40%
30%
35%
28%
30%
26%
25%
24%
20%
22%
June
May
Apr
Mar
Feb
Jan '12
December
November
October
September
August
July
June
May
April
March
Feb
Jan '11
15%
20%
Hybrid: Premium Willing to Pay
Diesel: Premium Willing to Pay
$1,000
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
$660
$640
$620
$600
$580
$560
$540
June
May
Apr
Mar
Feb
Jan '12
December
November
October
September
August
July
June
May
April
March
Feb
Jan '11
$520
$500
Page 20… CNW Research: Retail Automotive Summary July 2012
Jean Halliday’s
Stars Come Out for Buick/Ditto for Dart
Automakers are releasing a slew of online videos, sometimes more
than one a day.
General Motors' Buick brand likes using big names in its advertising.
Remember the marriage with golfer Tiger Woods? That lasted from
1999 through 2008. Aimed at helping to reel in younger buyers, Buick
probably got some decent traction, getting golfers to take a look at the
brand or at least participate in the many sweepstakes tied to Tiger.
Some things never change. Of course Buick isn't the only car brand
that does this. It's fine for special events like an over-the-top Super
Bowl ad. But feeling the need to get a star in your ad is just borrowed
interest. It can really detract from your brand, with the celeb getting the
most attention.
Now Buick has signed star NFL quarterback Peyton Manning for a
new :30 television commercial to push the 2012 Verano.
Manning “calls plays” while driving the Verano, using the car's voiceactivated OnStar for navigation and IntelliLink to call a friend.
Have a look
http://www.youtube.com/watch?v=2URz_fApsC0
Tim O'Neill, Buick's ad manager, was on site for the filming of the
spot. He explained Buick's reasoning for connecting with Manning in
the behind-the-scenes video about the production. “Manning is perfect
for the Verano because he embodies everything Buick is about,” says
O'Neill. “He's authentic. He's genuine. He's a leader in what he does,
which is what Buick has been about both in the past and also looking
into the future.”
Okey Dokey then.
Buick will no doubt get some attention from pro-football
fans. But it's sad the brand feels it needs to hire a big name
to get attention for its ads.
Like it did this past spring with retired NBA star Shaq
O'Neal for this LaCrosse ad.
http://www.youtube.com/watch?v=6NrUFG80O4c
Buick and its ad agency, Leo Burnett USA, did a few
touch-ups to this commercial for a July 4th holiday sale,
Page 21… CNW Research: Retail Automotive Summary July 2012
smartly making a bigger deal out of the car's 36 mpg.
Then there was this Verano commercial from last fall that didn't
use any big names, called “Running in Place” to tout the eAssist
feature and its gas-saving technology
http://www.youtube.com/watch?v=1j1MIqzww3A
Now this ad is more like it. It's visually arresting and holds
viewers' attention as they wait for the punch line. It shows off the
smart technology in a smart way. Although it does remind me of
Goodby, Silverstein & Partners' break-through, cool 2004
commercial for Saturn called “Sheet Metal,” down to the simple
piano music used in both ads. Here’s the Saturn version:
Running in place is
more like it…
Viewers wait for the
punch line…
http://www.youtube.com/watch?v=_yh3Gi8gcZw
Buick's work still isn't where it needs to be. Like other GM
brands, the word from my sources is that the clients at GM
headquarters in the Ren Cen aren't giving their ad agencies good
direction. Those clients need to have a clear understanding what
their brands stand for in order to write a decent creative brief for
the agency.
(continued next page)
Page 22… CNW Research: Retail Automotive Summary July 2012
(continued from previous page)
Buick, which celebrated its centennial in 2003, needs to figure out its niche.
A recent press release described the brand like this : “Buick is a modern luxury brand offering vehicles with sculpted designs,
luxurious interiors with thoughtful personal technologies, along with responsive-yet-efficient performance.”
That's pretty general. You could say that about quite a few other auto brands.
In spite of this below-average advertising, Buick sales are improving. Last month, it reported its best June in 6 years, with total
US sales up almost 28% to 18,851 vehicles. For the year, Buick sales are up just 3.6% to 90,198.
Buick's sales chief Brian Sweeney says buyers are coming from outside GM's four brands at a rate of as high as 1 in 2 for models
like the Verano.
At least they're going in the right direction. Now if they could just get the advertising to be as good as the products.
Meantime, over at Chrysler Group, Wieden+ Kennedy, Portland, tapped a few big names for the launch of the new Dodge Dart.
The :90 launch commercial spotlights the song “No Church in the Wild,” by J-Z and Kanye West. And see if you can spot the
champion athletes with cameos in the commercial.
http://www.youtube.com/watch?v=lOclC9bbeQU
(Click on photos below)
Unlike Buick, Dodge and W+K and Dodge knocked it out of the park for this commercial. Like Buick, Chrysler isn't shy about
tapping stars for its ads. The difference is even though Chrysler has really outpaced Buick in that department it has managed to
get more oomph from its celebrity work because of a willingness to take risks, along with the the overall narration, tone and
theme.
Dodge and W+K are creating some of the industry's best advertising these days.
Is anyone taking notes?
Page 23… CNW Research: Retail Automotive Summary July 2012
Back Page
*Deliveries not sales
July 1-15
July 1-15
% Chng
Actual Sales
July '12
Full Mo
cy2012
cy2011
12 v 11
July '11
Sales
Change
New Cars
Extension
Detroit 3
134,194
115,050
16.6%
165,801
193,390
16.6%
Asian
154,361
117,688
31.2%
279,452
366,533
31.2%
European
37,042
33,162
11.7%
73,501
82,101
11.7%
Ttl Pass. Cars
325,597
265,900
22.5%
518,754
642,023
23.8%
209,472
169,172
23.8%
338,417
419,034
23.8%
7.1%
174,450
186,795
7.1%
35,830
29.5%
New Trucks
Detroit 3
Asian
42,111
39,328
6,207
4,792
29.5%
27,662
Ttl Lt. Trucks
257,790
213,292
20.9%
540,529
641,659
18.7%
Ttl Industry
583,387
479,192
21.7%
1,059,283
1,283,682
21.2%
July 1-15
Full July
% Chng
Prev Mo
Prev Mo
% Chng
cy2012
cy2011
12 v 11
cy2012
cy2011
12 v 11
26.9%
25.2%
6.7%
26.9%
24.6%
9.3%
Floor Traffic - New
91.5
66.04
38.6%
90.35
66.79
35.3%
Floor Traffic - Used
87.24
76.97
13.3%
86.31
77.07
12.0%
July 1-15
Prev Yr
% Chng
% Chng
Pent Up Demand
Units
European
Lease Share
cy2012
Full July
Same Mo '11
Prev Mo
June '12
98,250
Avg. New MSRP
$37,124
$34,186
8.59%
0.48%
June '11
169,500
Total Discounts
$4,941
$4,526
9.17%
1.62%
% Change
-42.0%
Manufacturer Incentives
$3,604
$3,006
19.89%
2.13%
Dealer Incentives
$1,337
$1,520
-12.04%
0.29%
Purchase Delay
Months
Core Transaction Price****
$32,183
$29,660
8.51%
0.31%
June '12
3.19
% Mfg Incentive of MSRP
9.71%
8.79%
10.4%
June '11
5.11
% Ttl Discounts of MSRP
13.31%
13.24%
0.5%
% Change
-37.6%
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