Tag: J.D. Power

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EFG Companies

Subscription Training Boosts PRU

Market indicators are certainly trending up these days for retail automotive dealers. According to J.D. Power and LMC Automotive, new-vehicle retail sales for May 2021 are expected to be the highest ever recorded for the month of May. Total new-vehicle sales for May 2021, including retail and non-retail transactions, are projected to reach 1,555,600 units, a 39.6% increase from May 2020. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 16.7 million units, up 4.7 million units from 2020.

Rising costs do not seem to be impacting consumers yet. While labor and inflationary concerns are capturing headlines and many people are just beginning to emerge from their pandemic bunkers, consumers are on track to spend $53.1 billion on new vehicles in May, the highest on record for any month. Total retailer profit per unit, inclusive of grosses and finance & insurance income, are on pace to reach an all-time high of $3,245, an increase of $1,678 from a year ago and the first time above $3,000 on record. Coupled with the strong retail sales pace, total aggregate retailer profits from new-vehicle sales will be $4.5 billion, the highest ever for the month of May and up an astounding 162% from May 2019.

The used vehicle market is also showing record numbers, with average trade-in values rising to $6,201, an increase of $3,229 (up 108.7 percent) from a year ago. According to the Manheim Used Vehicle Value Index, April delivered three straight months of records as wholesale car prices came in at 194.0, which beat year-ago figures by 54.3 percent and was nearly a 15-point jump from the prior record set a month before (179.2). The value for pick-up trucks alone jumped 77.9 percent!

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Recruiting

On The Hunt For Talent

Good news! The retail automotive industry just notched the strongest March sales in 20 years! According to J.D. Power, first quarter retail sales climbed 26 percent, a 70.7 percent increase as compared to March 2020. A few other indicators climbed as well. The average price of a new vehicle rose to $37,314 in Q1, nearly $3,000 more than in 2020. Retail profits from new vehicles are also expected to reach record levels of $2,225 profit per unit, up $786 from 2020. Analysts at J.D. Power forecast that March will likely be the second most profitable month on record as total retail vehicle purchases trend towards a total of $48.0 billion.

These indicators clearly signal a positive trend for the first half of 2021. But there is a potential wrinkle. Will you have enough staff – and the right staff – to support those customers driving cars off the lot? People are a dealership’s greatest asset – and often its greatest challenge. In an EFG study conducted among retail dealers across the U.S., 65 percent of respondents said recruiting and hiring high-quality people was their number one challenge.

Every dealer and general manager has made a poor hiring decision in the past, and chalked it up to “we’ll do better next time.” But what did that decision cost you? Our research found that every Poor Hiring Decision® (P.H.D) cost the dealership $75,000!

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Economy Industry Trends

Are Today’s Vehicles and Buyers Mismatched?

Contributing Author: John Stephens Executive Vice President EFG Companies
Contributing Author:
John Stephens
Executive Vice President
EFG Companies

On October 3, General Motors made an announcement that many in the retail automotive space had been anticipating.  GM reported a 12 percent year-over-year increase in total sales in September to 279,397 units, driven by a 17 percent increase at Chevrolet and a nine percent increase at GMC. Crossover deliveries were up 43 percent and trucks were up 10 percent. Passenger cars were down 11 percent. Retail deliveries, which accounted for about 80 percent of sales, were up eight percent for GM’s best September retail performance since 2007. Not to be outdone, Ford Motor Co. said its sales rose nine percent, with a 21.4 percent increase in its F-150 pickup truck.

Some of this strong growth can be directly attributed to the recent natural disasters from Hurricanes Harvey and Irma. Economist Jonathan Smoke at Cox Automotive has said that 600,000 vehicles lost to the hurricanes in Texas and Florida will need to be replaced. Sales prompted by prior weather disasters generally increase within two months of the start of the recovery.

But there is more to this story. While truck sales have surged, passenger cars are down across the board, minus Toyota whose sales rose 15 percent thanks to the redesigned Camry sedan. So this begs the question – why are car sales stalled? Car manufacturers continue to throw money at the problem, offering incentives of over $3,500 per vehicle. Could the retail lot inventory be mismatched for consumer demand?

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