A Seller's Market for Those With Cars to Sell

First Up 07/27/20

A Seller's Market for Those With Cars to Sell

Pent-up demand from coronavirus lockdowns has brought car and truck buyers back to the market, but once there, they may see little wiggle room on price. With limited inventory, dealers are often taking top dollar for the vehicles they do have, reports Automotive News. For several weeks, the average industry gross, or the gross profit dealers get on new-vehicle sales, has been climbing rapidly. It stood at $1,028 for the week ending July 12, compared with just $404 a year earlier, according to J.D. Power. And it's up from $353 for the week ending April 19, when the industry was in the midst of the coronavirus outbreak. Keating Auto Group President Ben Keating has seen his dealerships' average grosses climb, but he said "it's not because we're charging MSRP — it's still a competitive market." There's simply a lack of vehicles. "It is a very imperfect analogy that new cars in July are as scarce as toilet paper was in April in grocery stores," said Tyson Jominy, vice president of data and analytics at J.D. Power. Read more here. 

4 More Years of Trump-China Clashes, or Will the Tone Shift?

President Donald Trump, true to his "America First" promise in the 2016 campaign, has confronted China over its trade practices, treatment of intellectual property, and alleged currency manipulation, reports Automotive News. His tenure has been marked by a two-year trade war with escalating tit-for-tat tariffs, followed by a compromise with Beijing — and a resumption of tensions over matters political and pandemic. As this year's election season ramps up, the stakes are high for an auto industry in turmoil as it faces the COVID-19 pandemic and ensuing recession while also untangling a new North America trade arrangement. While China remains a potentially attractive place to sell vehicles or source parts, companies must make major investments knowing that Washington or Beijing may quickly ruin their plans. Trump has been a strong proponent of tariffs to prompt the reworking of trade arrangements, a sentiment frequently expressed in speeches and on Twitter. Republican U.S. Rep. Mike Kelly, an auto dealer in Pennsylvania, said the focus should not be so much on what the president has said, but on his policy. "He spoke very clearly: His message was, 'America first,' " said Kelly, co-chairman of the Automotive Caucus. Read more here. 

Ghosn's Son Paid $500K in Cryptocurrency to Help Dad Escape Japan

The son of former Renault-Nissan-Mitsubishi Alliance boss Carlos Ghosn used $500,000 in cryptocurrency to help his father flee from Japan where he was facing trial for corruption, according to new documents filed in federal court in Boston, reports The Detroit Bureau. The allegation emerged as prosecutors move forward in a case made against former Green Beret Michael Taylor and his son, Peter, both accused of playing a key role in Ghosn’s escape from Japan last December. The two men were themselves arrested in May and face the prospect of being extradited to Japan. Prosecutors in that country hope to gain custody of a number of people who allegedly assisted in the bold escape plan that reportedly saw Ghosn sneak out of Japan by hiding in a box loaded onto a Turkish cargo carrier. Once he reached Turkey, the 66-year-old executive was believed to have transferred to another plane bound for his ancestral home in Lebanon where he now resides. Read more here. 

It Was the Best of Cars, It Was the Worst of Cars

Say what you will about fuel economy, reliability, and creative placement of charging ports and cupholders, the fact is, reports WardsAuto, the best-selling vehicle in America is a 5,000-pound (2,268 kg) pickup truck that few owners regularly use for hauling or towing. Americans are infatuated with rugged SUVs and crossovers that rarely go off-pavement. And the most appealing car is one that is far from having the fewest number of reported problems during the first 90 days of ownership. That last example refers to the bifurcated performance of Tesla as the poorest-scoring manufacturer evaluated in the recent 2020 J.D. Power Initial Quality Study (IQS) and yet the highest-scoring manufacturer evaluated in the just-out 2020 J.D. Power Automotive Performance, Execution and Layout (APEAL) Study. The phenomenon is an extreme version of what we often see in this era of rapid-fire expansion of vehicle lineups and technological innovation, but it does illustrate the challenge manufacturers face in finding the balance between the practical and emotional needs of buyers. Read more here. 

Pandemic Pushes Travelers to Take the Road in RVs

During the economic recovery that followed the financial crisis of 2008, sales of recreational vehicles like motor homes boomed for several years. According to CNBC, the coronavirus pandemic appears to be sparking another boom in the industry as travelers concerned about the risks of flying are packing their families into RVs and seeking out campgrounds around the country. Dealers and RV manufacturers, such as Thor Industries, Winnebago, and Forest River, have reported spikes in demand during the spring and summer of 2020, and industry analysts say several good months could be ahead. A lot of these buyers are first-timers and many are purchasing lower-cost units, which are often favored by younger consumers. “All dealers are reporting a high mix of first-time buyers as evident by lack of trade-in units,” said Wells Fargo analyst Tim Conder in a July 15 note. “Dealers are saying as high as 80% of customers are first-time buyers . . . vs. the typical 25% mix. The pandemic is driving the purchase decision for new-entrants.” Read more here

Webinar: Drive Your Online Reputation, CSI, & SSI scores 

Listen to Acura Columbus Dealer, John Connelly give his firsthand experience of implementing some best practices. He will be joined by Thomas Clawson of Podium to discuss the following

  • Understanding how to effectively text customers from search to sold to service

  • Looking at the newest sales and service satisfaction reports to understand the impact of texting

  • Driving your online reputation through communication best practices

Click here to register.

Around the Web

Someone is Selling a 16-Foot Porsche Dealership Sign on Facebook Marketplace [USA Today]

10 Times Great Carmakers Made Horrible Cars [HotCars]

Bugatti is Selling a $35K Electric Car for Kids [CNN Business]

FCA, Waymo Grow Autonomy Partnership [WardsAuto]