utomotive update - THE MEDIACENTER

January 2011
UTOMOTIVE UPDATE
brought to you by THE MEDIACENTER
IT’S NOT SPYING . IT’S ADVERTISING RESEARCH!
E
very auto dealer wants to be number one in their market.
While you can still be profitable being in second or third
place in the sales race, there’s definitely something special
about having that top-spot bragging right. If your dealership is
tired of being the first loser, there are ways you can narrow the
gap or even pass the top dog. One of the most effective ways
to gain ground is to look at you competitor’s advertising.
Aside from location and convenience, not much differentiates
your dealership from any other. Customers will have good
and bad shopping experiences at every dealership, and every
dealership will have amazing and lousy salespeople. Many
times, however, it is the marketing message that is delivered to
the potential customers that takes them to one places versus
the other.
Take a good look at your competition’s advertising messages
across all marketing medium, including TV, print, radio and
online. There’s a good chance that the messages in all of
these ads are consistent with each other, with a similar look,
message, and incentive across the board. What are they
saying that your dealership is not? What are they promising
that appeals to more people than your ads? What incentives
or offers to they promote, and how do they promote them?
Really sit down and look at every aspect of the ad, down to the
verbiage and images they use. When you have a side-by-side
comparison of a successful ad versus a not-so-successful ad,
sometimes the difference will become quite apparent.
Now that you’ve seen what the others are doing, it’s time to
beat them at their own game. One easy trap you can fall into is
by simply copying the message verbatim and sticking your logo
on the ad instead of theirs. While this is not a terrible strategy,
you may be pulling the chute a little too early. Imitation is the
most sincere form of flattery, but you don’t want to flatter your
competition, you want to flatten them! Use their successful
strategy and turn it against them. If they are offering $500 off
MSRP for a specific vehicle, you should offer $1000 off MSRP.
If they are advertising a free oil change with every test drive,
you should give away a free iPod. This “anything you can do,
I can do better” strategy will help draw more attention to your
dealership and take those leads away from the competition.
This tactic is especially effective on your search engine
marketing campaigns, where you can instantly change your ad
copy to beat any other advertised price on the search engine
results page. Imagine how powerful it could be to post the
lowest price on a search term in a matter of seconds, sending
more clicks to your website.
Keep an eye on your competition. You don’t have to send
undercover employees over to their dealership or set up phone
taps in order to find out their sales secrets. All you have to do is
keep a close eye on their advertising messages, and use your
tools to beat them at their own game.
UTOMOTIVE UPDATE
January 2011
brought to you by THE MEDIACENTER
Poll: U.S. car firms to gain market share
Global auto execs say innovation,
quality advances spur change
U.S. auto companies will boost market share during the
next five years, according to a survey of global automobile
executives released today.
The 12th annual global automotive survey by KPMG LLP, the
U.S. audit, tax, and advisory firm, predicted growth among
U.S. automakers would be spurred by product innovation,
restructuring and continued improvement in product quality.
The outlook marks a dramatic turnaround in their expectations
from a year ago, according to the polling of 200 senior
executives in the global auto industry.
When asked to predict global market share winners over the
next five years, the executives picked Ford. About 43 percent
saw Ford gaining market share, compared with 29 percent in
2010 and 13 percent in 2009.
That was above the 40 percent that predicted Toyota Motor
Corp. would gain market share.
Ford’s market share grew to 16.7 percent in 2010 from 15.5
percent in 2009.
General Motors Co. saw the most significant climb among the
respondents in this year’s survey. Forty percent of executives
expect its market share to increase over the next five years,
up from 13 percent in 2010 and 15 percent in 2009.
GM’s market share declined last year to 19.1 percent from
19.8 percent in 2009.
Chrysler Group LLC also saw a double-digit increase in the
percentage of executives predicting improvement — finishing
at 24 percent compared with 7.5 percent in 2010.
Chrysler’s share of the market increased to 9.4 percent in
2010, up from 8.9 percent in 2009.
“It was quite astounding,” said Gary Silberg, national
automotive industry leader for KPMG. “The reality is the data
is starting to support that.”
The results “demonstrate that the restructuring efforts of the
past several years have helped U.S. auto manufacturers
emerge more efficient and more competitive,” he said.
About half of the executives polled were from Europe, while a
quarter each came from Asia and North America.
Silberg noted that auto executives are predicting a bigger
rebound for the U.S. auto market of as much as 13.3 million
vehicles sales in 2011 after sales jumped to 11.6 million
vehicles in 2010 from 10.4 million vehicles in 2009.
UTOMOTIVE UPDATE
January 2011
brought to you by THE MEDIACENTER
USED CAR PRICES STAY STRONG
When hit by the new-car sales decline, dealers began placing
greater emphasis on their used-car operations, particularly
certified pre-owned programs. Those offer cars that are
inspected and reconditioned when necessary. They come with
auto-maker warranties.
Used-car prices are expected to stay strong this year for two
time-tested reasons: low supply and high demand.
“We’ll see a good used-car market in 2011 and possibly three
years from now,” says Ricky Beggs, managing editor of the
Black Book, a pre-owned vehicle price guide.
There is a shortage of late-model used vehicles, “and it is
going to stay that way,” says Bob Graham, vice president-asset
marketing for ARI, an auto remarketing firm.
Supplies are low in part because of the drop in new-car sales.
Those deliveries declined from 16.1 million units in 2007 to
13.2 million in 2008 to 10.4 million in 2009. The new- and usedcar markets are inextricably linked. A saying in the pre-owned
business is that all used cars start out as new cars.
“When we are not producing a lot of new cars, we are not
producing a lot of used cars for the future,” says Linda
Silverstein, Ford Motor Co.’s manager-remarketing and
rental operations.
That will change as new-car sales rebound, but it won’t
change immediately, says Eric Lyman, OEM practice director
for ALG Inc., a forecaster of vehicle residual prices.
“As used-car supply continues to be an issue, we’ll see used
prices stay strong going forward,” he says. “When we see a
significant increase in used-car supplies around 2015, we’ll
see a decline in used-car strength.”
Another reason he cites for today’s relatively low used-car
supplies is that car rental companies are keeping their fleet
units longer – up to 18 months as opposed to six months
previously.
Consumer frugality spurred by the recession has led many
former new-car buyers to switch over to less-costly used
vehicles. “Many consumers are stepping down from new to
used,” Lyman says.
“We’ve heard from dealers that CPO is the last frontier where
they can make money,” Juan Flores, Kelley Blue Book’s
director-vehicle valuation, says at the National Remarketing
Conference here.
“Customers in our market are coming in and asking
for certified cars,” says Craig Martinez, general sales
manager at JM Lexus in Margate, FL. “But it is getting
harder to stock these vehicles.”
Certified cars sell at a premium. But buyers are willing to pay
only so much, says
James O’Brien, general manager of TrueCar.com, a research
firm. “Consumers see CPOs as $600 to $1,000 higher than a
car that’s not certified. If the CPO is more than $1,000, you
won’t get the phone call.”
Success in selling used cars requires a firm knowledge of
values for individual makes and models in particular markets,
says James O’Brien, general manager of TrueCar.com, a
research firm.
Dealers buying vehicles wholesale and selling them retail
“need to make decisions on individual cars, not on aggregate
prices,” he says.
Adds Beggs: “Every used car is unique and every
dealer market is unique, with different overheads
and different customers.”
UTOMOTIVE UPDATE
January 2011
brought to you by THE MEDIACENTER
Correct pricing reigns supreme, says Chuck Yaeger, CPO
manager for Toyota Motor Sales U.S.A.’s Lexus luxury brand.
“Dealers do an amazing job in researching used cars that are
cream of the crop,” he says. “But most important is whether
you have the car priced right. That’s what the customer is
interested in.”
Although used-car values will remain strong this year, there
probably won’t be the pricing volatility seen in some vehicle
segments at various times during 2010, experts say.
2010 will be forever known as the year after that really bad
year. 2009 was a horrible string of days for just about everyone
who had two pennies to rub together, but automakers were
hit particularly hard.
The only good thing for automakers about such a bad
2009 is that it made every month in 2010 look good in
comparison. And so it is that those green bills earned from
all those extra car sales are represented on our Yearly
Automobile Sales Chart, where most brands posted yearend results in the black.
“We’ll see more normality in prices,” O’Brien says. “We saw an
overreaction.”
■
The four remaining “Core” brands of General Motors
sold more in 2010 than the eight brands of Old GM
sold in 2009: 2,202,927 to 2,084,492.
If consumers think used-car prices are high on the retail lots,
dealers likewise beef about wholesale-auction prices.
■
Ford Motor Company outsold Toyota Motor Company
to regain its No. 2 sales position by General Motors.
“Dealers complain the price of used cars is bumping into
the price of new,” says Dan Kennedy, General Motors Co.’s
general manager-remarketing.
■
But a natural barrier separates used- and new-car prices. If
they get too close to one another, consumers typically opt for
the new vehicle.
If Hyundai and Kia were counted together in the U.S.,
their combined sales of 894,496 units would make
them the seventh-largest automaker. Separately they
are the seventh- and eighth-largest and the largest
single-brand automakers in the U.S.
■
Used-car prices are expected to come in at 37 million units
for 2010, says Tom Webb, chief economist for Manheim
Consulting. That compares with expected new-car sales of
about 11.5 million units.
Subaru, one of the best performing brands of the
past two years, sold more vehicles in 2010 than
Volkswagen, Europe’s largest automaker: 263,820
to 256,830.
■
Buick sales increased the most in 2010 with a
51.89-percent increase, while Smart sales fell the
farthest with a 59.39-percent decline.
■
The three best performing brands of 2010 are from
General Motors (Buick, Cadillac and GMC)
■
Audi sold over 100,000 vehicles in the U.S. for the
first time ever.
Graham adds: “With the shortage of inventory, buyers were out
there trying to get any vehicle they could.”
The vibrant and sometimes-volatile used-car market is not for
the faint-hearted.
“This is about the most complex business I’ve ever seen,”
O’Brien says. “It’s a hard business to understand and to perfect.”
Dealers must work at it, says Greg Miller, CEO of Larry H.
Miller Group of Companies, a Sandy, UT-based firm with 41
dealerships.
“It takes skill, knowledge and effort to profitably run a used-car
operation,” he says. “You can win and lose there faster than
any other part of a dealership. You need to be good to survive.”
Yet, survivors abound, says Jack Fitzgerald, a multi-franchise
dealer based in Bethesda, MD. “The used-car business keeps
on humming.”
UTOMOTIVE UPDATE
January 2011
brought to you by THE MEDIACENTER
YEARLY AUTOMOBILE SALES CHART
Volume
%
Volume
2010
DSR
2010
DSR
2009
Buick
51.89
155,389
102,306
Cadillac
34.68
146,925
109,092
52.88
508
332
35.56
480
GMC
28.95
334,981
354
259,779
29.79
1,095
Porsche
28.55
843
25,320
19,696
29.39
83
Infiniti
64
27.53
103,411
81,089
28.36
338
263
Acura
26.37
133,606
105,723
27.20
437
343
Jeep
25.65
291,138
231,701
26.47
951
752
Hyundai
23.71
538,228
435,064
24.52
1,759
1,413
Audi
22.86
101,629
82,716
23.67
332
269
Subaru
21.77
263,820
216,652
22.57
862
703
Ford
21.49
1,756,439
1,445,742
22.28
5,740
4,694
Land Rover
21.13
31,864
26,306
21.92
104
85
Volkswagen
20.32
256,830
213,454
21.11
839
693
Kia
18.73
356,268
300,063
19.51
1,164
974
Mercedes-Benz
18.05
225,007
190,604
18.82
735
619
Dodge
17.13
383,675
327,574
17.89
1,254
1,064
Nissan
16.86
805,159
689,014
17.62
2,631
2,237
Chevrolet
16.44
1,565,632
1,344,629
17.20
5,116
4,366
BMW
12.02
220,113
196,502
12.75
719
638
Jaguar
11.59
13,340
11,955
12.31
44
39
Chrysler
11.54
197,446
177,015
12.27
645
575
Mazda
10.49
229,566
207,767
11.21
750
675
Ram
9.14
212,952
195,112
9.86
696
633
Lexus
6.18
229,329
215,975
6.88
749
701
Honda
4.96
1,096,874
1,045,061
5.64
3,585
3,393
Mitsubishi
3.82
55,683
53,636
4.50
182
174
Lincoln
3.60
85,828
82,847
4.28
280
269
Mercury
0.97
93,195
92,299
1.63
305
300
Mini
0.93
45,644
45,225
1.59
149
147
Toyota
-1.28
1,534,266
1,554,174
-0.64
5,014
5,046
Volvo
-12.19
53,948
61,435
-11.61
176
199
Saab
-37.26
5,446
8,680
-36.85
18
28
Suzuki
-37.98
23,994
38,689
-37.58
78
126
(Hummer)
-57.86
3,812
9,046
-57.58
12
29
Smart
-59.39
5,927
14,595
-59.12
19
47
(Saturn)
-95.42
12,300
268,686
-95.39
40
872
(Pontiac)
-99.34
1,182
178,300
-99.33
4
579
GM (Core)
21.32
2,202,927
1,815,806
22.11
7,199
5,895
Ford Mo Co
19.41
1,935,462
1,620,888
20.19
6,325
5,263
Jaguar Land Rover
18.15
45,204
38,261
18.92
148
124
Nissan NA
17.98
908,570
770,103
18.75
2,969
2,500
Chrysler Group
16.51
1,085,211
931,402
17.28
3,546
3,024
BMW Group
9.94
265,757
241,727
10.66
868
785
American Honda
6.93
1,230,480
1,150,784
7.62
4,021
3,736
GM
6.27
2,215,227
2,084,492
6.97
7,239
6,768
Toyota Mo Co
-0.37
1,763,595
1,770,149
0.28
5,763
5,747
Brand
Volume
DSR*%
2009
Companies
THE MEDIACENTER
THE TV AUTHORITY
www.mediacenteronline.com
*Brands and companies are
displayed in descending order
according to their percentage
change in volume sales. There
were 306 selling days in 2010
versus 308 selling days in 2009,
so the change in monthly sales
volume will be different than the
change in average daily sales rate
(DSR) for each brand/company.
Also, brands are combined and
reported as companies only if
their sales figures are released
jointly.
SOURCES: WARDS, DETROIT
FREE PRESS, DEALER
MARKETING MAGAZINE,
AUTOBLOG