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Alpha Warranty MarketingQ2 2023 ~ Industry Report
2023 June Consumer Sentiment• As gas falls or stabilizes, consumer sentiment rises.Data from Cox Automotive
2023 June – Dealer Sentiment IndexData from Cox Automotive
2023 June – Dealer Sentiment IndexData from Cox Automotive
2023 Forecasts, 1st Half UpdateNote: For context, final 2022 forecasts are included.Data from Cox Automotive
New Sales + Inventory• New Inventory – nearly 790,000 units more than Q2 2022• 51 Days’ Supply (down 8.9% from Q1 2023)• $48,528 (May 2023) Average listing price (up 6.6% YOY)• New Vehicle Sales- June 2023 sales finishes near 15.3 M units (down .64% from Q1)- Up 74% from Q2 2022Industry Metrics17.711.618.21415.417.613.215.713.515.317.716.612.714.117.516.913.113.82019 2020 2021 2022 2023Q1 Q2 Q3 Q4Millions of unitsData from Cox Automotive
Used Sales + Average Used PriceIndustry Metrics• Used Sales- Total used-vehicle sales in June are near 2.2 million units- Down -10% from June 2022• Average Used Price- Just above $27,000- Down -3% from June 2022Data from Cox Automotive
Affordability & Credit Availability• Credit Availability Index: June 2023- All-Loans Index decreased 0.4% to 96.4 in June- Loan access was tighter by 8.0% YOYData from www.coxautoinc.com• Affordability Factors- Median income rose 0.3%- Price paid for new vehicles increased 0.5% MOM- Average price paid for new vehicles: $48,528- Incentives increased to 3.9% of avg. transaction price - Avg. Interest rate increased 3 basis points to 9.57%- Avg. monthly payment increased 0.1% to $768Industry MetricsVehicle Affordability IndexData from Cox Automotive
2023 June – Electric Vehicle SalesData from Cox Automotive
2023 June – Electric Vehicle InventoryData from Cox Automotive
Industry Need to Knows…EV Consideration at Record High, but Dealers Feel UnpreparedATLANTA, June 27, 2023 – Despite growing interest, a gap exists between consumer enthusiasm for electric vehicles (EVs) and their actual purchasing decisions, according to new research released today by Cox Automotive. The 2023 Path to EV Adoption: Consumer and Dealer Perspectives study also reveals a lack of EV readiness among U.S. automotive dealers regarding sales and service. As EV inventories continue to climb, dealers must bridge this gap.[READ MORE]Consumers Will Switch Brands for EVsIn order to get an electric vehicle that they want, buyers are switching brands, an Edmunds study found.The online car-shopping resource surveyed shoppers, 85% of whom said they’re willing to buy an EV from a maker whose models they don’t or haven’t owned before.The sentiment seemed to be reflected in Edmunds' first-quarter sales data, which show 63% of EV purchases that involved trade-ins were of different brands than the trade-ins’ brands.Edmunds said that percentage is falling as legacy automakers scale EV production but that a significantly higher percentage of EV shoppers are willing to switch brands than across the industry as a whole. In the first quarter, 51% of all vehicle transactions with trade-ins involved those of the same brand as the new purchase.[READ MORE]
More Industry Need to Knows…Dealerships the Employ Fixed-Ops Digital Get More Service ProfitsAutomotive dealer service departments that deliver a personalized ownership experience saw an average 28% higher service profit change in the past 12 months and were 42% more efficient, according to a recent study by Cox Automotive, The Forward-Thinking Dealership Study.Cox Automotive surveyed more than 500 dealerships at various stages of implementing future-forward strategies designed to help them overcome future challenges. A total of158 dealerships responded specifically to how digitization has impacted their service operations. The study uncovered that most dealers aren't as advanced in their digital capabilities for their fixed operations as they are in other aspects of their business. Those achieving success with high-performing service departments share the following traits: transparency, optimization, and integration.[READ MORE]2023 New-Car Sales Could Leave Pandemic Behind• Thanks to revived inventory, combined with manufacturer incentives and price cuts, U.S. new-vehicle sales are on track to surge this year by about 8% to 15 million in what could be a post-pandemic turning point, Cox Automotive says.• Based on a healthier-than-expected first half of the year, Cox increased its full-year estimate, despite the pressures of still-high prices and high interest rates. It forecasts sales in the first half of the year to be up about 12% to 7.65 million and anticipates only a “minor” slowdown in the last six months.[READ MORE]
Even More Industry Need to Knows.June, Q2 Sales Surge on Pent-Up Demand• June and second-quarter new-vehicle sales forecast show business was brisk and easily exceeded volume a year earlier, according to joint tallies by J.D. Power and GlobalData• Retail and nonretail sales combined will total nearly 1.4 million units in June, up 23% year-over-year, and 4.1 million for the quarter, up 18%, according to the forecast.• June’s seasonally adjusted annual rate is 15.8 million, well above 12.9 million a year earlier.• The projection for the first half of the year is 7.7 million, up about 14% year-over-year.• Retail sales alone are expected to reach 1.1 million in June, up about 17% year-over-year, and 3.3 million in the quarter, up 11%. Half-year retail deliveries will hit 6.2 million, up 6%.[READ MORE]Subprime Auto Loans May Be Harder for Dealerships to Place with Lenders • NASHVILLE, Tenn. — It's likely more difficult for a dealership to place a subprime auto loan with a financial institution than it was less than a year ago, a chief risk officer for a subprime lender explained at a conference last month.• But the type of vehicle being financed, the speed at which it delivers equity and the existence of a service contractcan make a borrower a better credit risk, according to an executive for a large regional buy-here-pay-here dealership group.• These experts took part in a subprime lending forum at the Auto Finance Summit East conference on May 12, following a first-quarter decline in the percentage of credit-challenged subprime customers obtaining auto loans and leases.[READ MORE]
F&I NEWS & UPDATESAuto loan delinquency rate surpasses recession-era highsAuto loan delinquency exceeded recession-era highs in Q1 2023, S&P Global Mobility said. The spike is mostly contained within the subprime tier.• Auto loandelinquency exceeded recession-era highs in the first quarter of this year, a TransUnion/S&P Global Mobility AutoCreditInsights report released on Tuesday found.• Loans more than 60 days past due reached 1.69 percent in the first three months of 2023. That tops recession-era highs of about 1.46 percent in 2009 and 2010, and the 1.43 percent recorded in the first quarter of 2022.• The spike is mostly contained within the subprime tier, with independent lenders focused on subprime loans for used-vehicle purchases most feeling the squeeze, according to the report.• Inflation and high interest ratesmay be partly to blame for the increase, the report said.•But it's not all bad news when it comes to auto loans.• Vintage performance, which measures how an account performs over a certain period after the loan is originated, shows relative strength in the new-vehicle segment. Recent vintage performance levels are at pre-pandemic lows, performing better than pre-pandemic portfolios at the same age, according to the report.[READ MORE]
F&I TRENDS – NEWS & UPDATESDigital Retail Could Hurt Dealer F&I Revenue• Digital retail platforms have mushroomed as car shopping steers online.• But the trend could stall a profit engine for auto dealerships — finance and insurance income.• About 70 percent of in-store car sales at Tim Dahle Nissan Southtowne carry an extended service agreement, said Tyler Slade, operating partner at the suburban Salt Lake City store.• "We're not even half that on vehicle sales via the Nissan@Home digital platform," Slade told Automotive News.• Nissan's digital tool, launched in 2021, allows customers to shop for vehicles, schedule test drives, complete purchase paperwork and take delivery without stepping inside a brick-and-mortar store.• Slade echoes an industrywide concern that dealerships could leave F&I money on the table without face-to-face discussions with the customer.• Slade said 75 percent of his store's vehicle gross profit comes from F&I sales.• "If we don't figure this out profitably, dealers will not embrace digital retailing," he said.• Dealer financing income per vehicle can take a hit on digital platforms because buyers can more easily shop interest rates online, said Scott Smith, CEO of Smith Automotive Group, which operates four Nissan stores in metro Atlanta.[READ MORE] from AutoNews
Technology DevelopmentsAlpha Warranty Services Launches VSC Program• Alpha Warranty Services, a provider of automotive finance-and-insurance products to franchise and independent auto dealerships, launched Budgetcare, a cost-effective vehicle service contract program designed to provide customers with another affordable option during the F&I process. In challenging economic times, the program protects both the customer’s wallet and their lifestyle.• Budgetcare offers eligibility for vehicles from the last 20 years, with no mileage restrictions. With terms from three months and 3,000 miles to 84 months and 84,000 miles, the program is ideal for customers on a budget and is a direct result of dealer and agent feedback.[READ MORE] from F&I Magazine2023 Service Technology Trends to Know• Finding innovations to help your service department stay efficient can pay big dividends to your dealership. To give you a head start in your hunt for the most impactful technologies, check out these trends, specifically meant to help you get more cars through the service lane faster, make it easy for customers to say yes to recommendations, and drive profits in 2023 and beyond.• Technologies that build trust• Technologies that maximize service capacity[READ MORE] from F&I Magazine
Technology DevelopmentsShip.Cars Launches AI-Powered Transporation-Management SystemShipCars.com, an auto logistics technology provider in the car-hauling industry, launched the artificial intelligence-powered SmartHaul TMS transportation management system. The smart-technology platform incorporates a full suite of features using data-driven insights, machine learning and AI tools to save time, increase efficiency, meet consumer demand, and drive carrier profitability.Auto transport remains a critical lynchpin for the automotive industry, serving as the backbone of the inventory supply chain. Taking a tech-first approach that also speeds dispatch and delivery processes is essential for carriers to compete and to keep automotive sales moving. SmartHaul TMS includes intuitive features to help company owners, dispatchers and drivers work smarter and haul faster, helping them improve operations. The digital platform optimizes finding a load, booking and processing it, helping carriers efficiently meet the needs of their shippers, including dealerships, auctions and retail individuals.[READ MORE] from F&I Magazine
Industry DevelopmentsEpicVIN Intros Unlimited Vehicle History for DealersEpicVIN launched of an exclusive Unlimited Vehicle History Package, which offers auto dealers an unlimited number of vehicle history reports for a monthly fee. The package gives auto dealers the ability to get frequent access to comprehensive vehicle history reports, saving them significant money and time.The Unlimited Vehicle History package provides auto dealers with significant cost savings compared to leading competitors, EpicVIN says. Auto dealers are encouraged to take advantage of the special offer that grants them unlimited access to vehicle history reports free of charge for three months.Time and Money SavingsFollowing the three-month trial period, customers with a dealer account can have continued access to unlimited vehicle history reports for an affordable fixed monthly cost that can be canceled and reinstated at any time.All of EpicVIN’s subscription-based vehicle history report packages are designed with auto dealers in mind so that they can have the quick, affordable access to the data they need before making multiple vehicle purchases. Auto dealers can choose from the Unlimited Vehicle History Package, or to receive a limited number of 10, 25 or 50 vehicle history reports per month. After choosing an option, auto dealers simply enter any vehicle’s VIN into EpicVIN's decoder and are granted access to an easy-to-read report in less than a minute, without the hassle of having to re-enter their card details each time.[READ MORE] from F&I Magazine
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