You've heard about it, read about it, and probably experienced it. Q1 for the auto industry was a pretty rough one. Experts are diving into what the problems may be, and evaluating what industry professionals can do moving forward to change the course of 2017. 

I chatted with Jason Knight, the co-founder and COO of LotLinx, to see what he had to say about the Q1 inventory glut. This topic was much discussed at the recent NY Automotive Forum, and Jason discussed his insights there as well.

Maddy: In your opinion, what are some of the reasons for the inventory glut in Q1?

Jason: With declining sales, manufacturers are offering high levels of incentives to prospective car buyers. The pressure is on, as we're not only seeing record (and increasing!) levels of lease returns but continued new vehicle production is contributing to rising inventory pressures. The industry is going through a shift right now, and overproduction, especially of specific models, is certainly a problem automakers need to address. 

Maddy: How is this affecting everyday Joe at a car dealership?

Jason: Most dealers have the ability to pass through most of the lease returns, but are feeling pressure to move the new vehicles.  However, their ability to do this IS impacted by increasing used vehicle inventory, the corollary negative impact on vehicle pricing and increasing new vehicle incentives (currently near/at record levels).  

Additionally, many OEMs are smartly increasing their focus on CPO programs as a way to keep more lease-returns in the franchise, retain ownership share AND protect residual values.  OEMs that have retained equity ownership in the “paper,” on lease returns, have additional downside risk because of that ownership; this translates to additional pressure to NOT send the vehicles to auction.

Maddy: What can dealers do today to combat this problem?

Jason: Dealers have the opportunity to be very opportunistic on pre-owned vehicles and focus on dominating new vehicle share.  With the trends in this market, it is critical that dealers leverage quality data, especially around shopper distribution and cost, to drive efficiencies in all facets of their business. Getting smarter with big expense items like advertising, will not only make them more profitable, but better prepared to weather any market corrections.

Maddy: Talk about sales numbers in Q1 and how they are connected to inventory, why they are low, etc.

Jason: While the situation is very complex, between continued production of vehicles, increasing lease returns, downward pricing pressure on used vehicles, more restrictive credit and interest rates, etc., the math is very simple:  Flat to down sales numbers + growing lease returns results + addition of newly produced vehicles is swelling inventories at most dealerships.  The interesting reality is that the average age of the American fleet continues to increase, so there is significant potential demand, but existing product, sales programs and incentives have not moved the sales needle as much as hoped.

Maddy: Will we see these low numbers in Q2?

Jason: There is no predicted jump in vehicle sales in Q2 of this year. The projections from Q2 2016 were starkly different than what we're seeing now, and they mostly held true. Incentive levels are already incredibly high, on average, so increasing them may not have the positive sales effect hoped. I believe that getting the programs and product in front of consumers, where they are shopping, when they are “ready,” is a critical strategy that will help move the needle.  Aside from offering thousands of dollars worth of incentives, today's dealers can combat this slowdown by being smarter in regards to marketing their under engaged inventory. 

Jason Knight, LotLinx Co-Founder and COO 

A reformed engineer and Detroit native with auto in his blood, Jason’s first job was conducting crash-test dummy research on safety restraints. Contrary to popular belief, he was NOT the dummy. After a successful executive career in Consumer Products, Adult Beverages and Manufacturing, Jason co-founded LotLinx to help dealers more effectively and efficiently connect to in-market car shoppers. Through patented technology, the LotLinx Shopper Targeting Platform matches in-market shoppers to VIN specific listings on hundreds of online sites. During his tenure at LotLinx, Jason has held nearly every role from CEO to cold-call salesman to night janitor, sometimes at the same time.

TORRANCE, Calif., April 24, 2017 /PRNewswire/ -- Less than two months before its U.S. launch, the 2017 Honda Civic Type R has claimed the title of world's fastest production front-wheel-drive (FWD) production car, setting a new benchmark lap time at Germany's legendary Nürburgring. On April 3, 2017, a Civic Type R lapped the 12.9-mile Nordschleife (north loop) in a record 7 minutes 43.80 seconds. This new benchmark time represents an improvement of nearly 7 seconds compared to the previous-generation (European market) Type R, and over 3 seconds faster than the previous FWD record. Video footage of the benchmark lap can be viewed on Honda's YouTube channel at Honda.us/TypeRLapRecord.

Multiple factors contribute to the new Civic Type R's benchmark time including its high-performance 2.0-liter VTEC TURBO engine – with peak output of 306 horsepower (hp)1 and 295 lb.-ft. of torque2. The engine, which makes the new Civic Type R the most powerful Honda ever sold in America, is manufactured in the U.S. at Honda's Anna, Ohio engine plant3. The Type R's six-speed manual transmission with new, lower gear ratios further improves the car's acceleration, while the new Type R's comprehensive aerodynamic package delivers outstanding high-speed stability with an optimal balance between aerodynamic stability and drag.

2017 Civic Type R Claims Title as World’s Fastest Front-Wheel-Drive Production Car with Record Nürburgring Lap Time

The highly rigid body of the all-new Civic Type R is over 35 lbs. lighter than the previous-generation (European market) model, and boasts a 38-percent gain in torsional stiffness. The 10th-generation Civic platform's new multi-link rear suspension enhances stability under braking and reduces the total roll movement of the car, enabling later braking into corners and helping to achieve higher cornering speeds during the lap.

Ryuichi Kijima, the lead chassis engineer for the Honda Civic Type R development explains the model's most significant improvements around the Nürburgring compared to the previous-generation car: "The cornering speed achieved in the new Type R is higher because the car features a wider track and tires, a longer wheelbase, a new multi-link suspension in the rear and optimized aerodynamics that improve stability. For example, drivers typically enter the corner after Metzgesfeld at around 150 km/h (93 mph). Even at this medium-speed corner, the speed is around 10 km/h (6 mph) higher due to the new Type R's excellent stability. So, with improved cornering performance, we can increase the speed throughout the lap, helping the new Type R to achieve a much quicker lap time."

The pre-production development Civic Type R that achieved the lap time was technically representative of production specification. A full floating roll cage was installed for safety reasons, but did not provide any additional rigidity to the body frame. The extra weight of the cage was compensated for by the removal of the Display Audio system and rear seats. The car was using street legal, track-focused tires.

The new Civic Type R, the very first production Honda Type R model for America, is the final piece in the 10th-generation Honda Civic launch that began in the fall of 2015 with the Civic Sedan, named 2016 North American Car of the Year. The Civic lineup, featuring the most ambitious and extensive remake in the model's 44-year history, includes the premium and sporty Civic Sedan and Coupe; the versatile and Euro-inspired Civic Hatchback; the fast and agile new Civic Si Sedan and Coupe, launching next month; and the ultimate representation of Civic performance, the new Civic Type R.

Production of the new Civic Type R began in March 2017 at Honda of the UK Manufacturing (HUM) in Swindon, England – the global manufacturing hub for the tenth generation Civic hatchback.

About Honda
Honda offers a full line of reliable, fuel-efficient and fun-to-drive vehicles with advanced safety technologies through approximately 1,000 independent U.S. Honda dealers. The Honda lineup includes the Fit, Civic, Accord and Clarity series passenger cars, along with the HR-V, CR-V and Pilot sport/utility vehicles, Ridgeline pickup truck and the Odyssey minivan. Honda has been producing automobiles in America for 32 years using domestic and globally sourced parts and currently operates 19 major manufacturing facilities in North America.

For More Information 
Consumer information is available at automobiles.honda.com/future-cars/civic-type-r. To join the Civic Type R community on Facebook, visit facebook.com/hondacivic. Additional media information including high-resolution photography of the 2017 Honda Civic Type R is available at hondanews.com/honda-automobiles/channels/civic-type-r.

Mobile Device Compatibility and Greater Depth of Intuitive Analytics Improves Underwriting Performance in Dealerships
 

AutoZoom announces the most impressive enhancements to date to its Buy-Here-Pay-Here (BHPH) online Risk-Management SaaS and underwriting guide. AutoZoom ANGL and ANGL Lite are in production and available now. AutoZoom ANOVA which combines extracted historical dealership DMS data and cumulative system-wide data in building scoring models will be launched very soon. 
 

AutoZoom, now in its fifteenth year, offers used-car financing dealerships an incredible, cost effective, and simple solution to their credit underwriting challenges. This revolutionary design offers both BHPH Analytics and custom-fit Scoring Models in a user-friendly environment which streamlines underwriting processes in all dealerships.

Scott Carlson, founder of AutoZoom, has put his five decades of sales and auto-financing experience towards the advancement of this proprietary scoring system. Scott recently shared, “With AutoZoom, BHPH dealers have simple to use tools that allow them to make decisions based on actual performance results of more than two million consumers who were scored with our system.”

AutoZoom’s ANGL and ANGL Lite integrate with qualified dealership management systems (DMS) and provide browser accessibility on most mobile devices.  These benefits, along with periodic scoring model adjustments, means AutoZoom clients have the most current and flexible scoring models in the industry. For dealerships, this means more sales, greater control of repossession rate and frequency, better collateral recovery economics, and improved bad debt ratios.

Scott Carlson continued, “Arming underwriters with a dealership’s very own custom-fit AutoZoom scoring model improves their ability to identify and turn down career credit-abusers. And, now underwriters don’t have to involve the dealer or upper-management in every deal, so the store is better equipped to offer financing options to the majority of applicants while dealing with each customer’s limited financial resources and instability factors.” 

Most importantly, BHPH underwriters are able to skillfully increase sales by extending attractive credit offers to those qualified applicants desiring to pay minimal down-payments on higher priced vehicles. 

AutoZoom is offering interested dealers an online demonstration of their solution so they can see firsthand how easy it is to score prospective customers and scope the metrics necessary to maximize sales and profitability. 

Dealers can call (888) 493-6891 to schedule a demonstration tour, or they can register on the website, www.autozoom.com. 

About: Auto Loan Technologies, LLC. 
Auto Loan Technologies’ programs, AutoZoom ANGL and ANGL Lite, are web-based scoring and BHPH analytics applications designed to meet the underwriting and analytics challenges of the buy-here pay-here industry in today’s economy.

AutoZoom’s RESTful API (AutoZoom DMS SoftLink) is now available to all qualifying Dealership Management Software companies.

How well does dealership VDP engagement correlate to car sales?

What do you measure your online marketing on? I'm sure lead form submissions are near the top of your list.

Yet many dealership marketing experts are now saying: Lead forms are dead and Shoppers don't like filling out forms and that it's VDP engagement that should the main metric to measure - not lead submissions.

But without the form submission, how can we be certain that someone is interested in our inventory?

We aim on to find out how well VDP engagement correlates to vehicle cars sales.

Ian has spent over 10 years in Marketing and Digital Advertising. As the VP of Sales & Marketing for Speed Shift Media, he is the head of all revenue generating activities. With a Masters in Business and IT Management and as an Adjunct Professor at the University of British Columbia he is regularly called on to present and lecture on a variety of Information Technology and Digital Marketing concepts.

                                                                                
SANTA MONICA, Calif. — April 26, 2017 — Edmunds, the leading car shopping and information platform, forecasts that 1,431,695 new cars and trucks will be sold in the U.S. in April for an estimated seasonally adjusted annual rate (SAAR) of 17.0 million. This reflects nearly an 8 percent decrease in sales from March 2017, and a 4 percent decrease from April 2016.

“The industry has been holding its breath to see if the days of peak sales are over, and while Q1 sales managed to remain stable, we’re starting to see the slowdown in 2017 we’ve been anticipating,” said Jessica Caldwell, Edmunds executive director of industry analysis. “These year-over-year declines may become more typical as the year progresses, but there’s no reason to be in panic mode. Historically, car sales are still strong.”

SALES VOLUME FORECAST, BY MANUFACTURER

*NOTE: April 2017 had 26 selling days, April 2016 had 27 and March 2016 had 27.

Edmunds estimates that retail SAAR will come in at 13.6 million vehicles in April 2017, with fleet transactions accounting for 19.5 percent of total sales. An estimated 3.6 million used vehicles will be sold in April 2017, for a SAAR of 38.4 million (compared to 3.4 million – or a SAAR of 38.4 million – in March).

MARKET SHARE FORECAST, BY MANUFACTURER

More insight into recent auto industry trends can be found in the Edmunds Industry Center at http://www.edmunds.com/industry-center/.

About Edmunds
Edmunds is the leading car information and shopping platform, helping millions of visitors each month find their perfect car. With products like Edmunds Your Price, Your Lease and Used+, shoppers can buy smarter with instant, upfront prices for cars and trucks currently for sale at more than 13,000 dealer franchises across the U.S. Edmunds’ in-house team of unbiased car shopping experts provide industry-leading vehicle reviews and shopping tips, as well as welcome all car-shopping questions to the free Shopper Advice line at 1-855-782-4711, via email at help@edmunds.com, via text at ED411 and on Twitter and Facebook. The company is regarded as one of America's best workplaces by Fortune and Great Places to Work. Edmunds is based in Santa Monica, Calif. and has a satellite office in downtown Detroit, Mich.

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Prioritize Your Prospects: Uncover Clues to Predict Who Will Buy Next

Each year, the average customer test drives fewer vehicles. Given the fewer opportunities and limited time available to sales people, the key question for them is: which prospects do I contact first? AutoLoop surveyed over 50K customers in 2016 who didn't buy on their initial visit to a dealer and we found significant differences in post-visit purchase rates based on a variety of factors, including the advertising they were exposed to, the reason they didn't buy on their initial visit, and even the color of vehicle they were seeking. Armed with a better understanding of who is likely to buy and when they will make a decision, sales associates will increase the effectiveness of their follow-up communications and convert more leads to sales after their initial visit to a dealer.

This will increase revenue from unsold prospects by over $1M per year, increase sales person effectiveness, and reduce days in inventory.

At AutoLoop, Doug is responsible for using customer analytics and insights to improve digital and multi-channel acquisition, retention and loyalty programs across leading OEMs and dealer groups. Prior to AutoLoop, Doug developed innovative marketing programs for automotive dealers and aftermarket providers as VP of strategy at DMEautomotive and VP of analytics at 3Birds Marketing. Doug also established the customer insights and online marketing functions at Dick's™ Sporting Goods, and he provided performance improvement consulting to Fortune 500 companies while at Ernst & Young Management Consulting. Doug earned his BS from Miami University in Ohio and his MBA from Indiana University.

Using Artificial Intelligence to Prioritize Customer Engagement

If only one salesman came to work today, what is the first opportunity he should act upon that is most likely to sell a car today?. If two salespeople show up, who show perform the task?

Using a combination of public service 911 to dispatch customer engagement one at a time and deep machine learning to select the highest Sales Result Probability (SRP) activity, customer engagement increases by 50% daily per salesman and it follows that sales increase immediately by the same amount. By knowing which customers have the intent to buy in the next 90 days, marketing is laser focused and marketing budgets slashed by half or more. Aligning the right customer with the right salesperson maximizes the result. It's Moneyball for the car business.

Check out Jim's interview:

About Jim Roach: 44 Years in Automotive from Salesman to Dealer Principal to Founder of 5 Auto related companies. I wrote the foundations of modern reporting systems such as StoneEagle and Ristken, have multiple patents filed in DMS data extraction. I was a pioneer in predictive artificial intelligence for use in auto retail in the 1990's and created the first reserve chargeback insurance policy. After 6 years of pioneering work in data mining with AutoAlert I created the industry first Human Capital Management System using deep machine learning to triage sales opportunities and prioritize execution of tasks. the system is based on modern 911 public service dispatch systems.

Listen to what Patrick McMullen from MAXDigital has to say about the future of automotive, what dealers can do today to prepare, and how DrivingSales Presidents Club is proving chances for innovation.

SANTA CLARA, Calif., April 21, 2017 /PRNewswire/ -- The global automotive aftermarket startup ecosystem is witnessing rapid growth. Original equipment manufacturers (OEMs) such as Toyota, BMW, Tesla, GM, TVS Automobile Solutions and Mahindra, are constantly scouting, investing in, and acquiring startups that enable speed to market, long-term business sustainability, and the development of end-to-end automotive solutions for customers. Startups focusing on service aggregators, eCommerce platforms and telematics are driving growth and technological penetration globally.

New Frost & Sullivan analysis titled, Competitive Benchmarking of Select Startups in the Global Automotive Aftermarket, analyzes the global startup ecosystem for passenger vehicle automotive aftermarket. The study shares insight into the product and service channel stakeholders in segments such as electric vehicle infrastructure, telematics, in-vehicle technologies and ePlatforms. In addition, key funding patterns, OEM interests, partnerships, product capabilities, business strategies and future investment avenues are also discussed and assessed.

To know more about Frost & Sullivan's research and sign up for our Growth Strategy Dialogue, a complimentary one-hour interactive session, with Frost & Sullivan thought leaders please visit: https://goo.gl/1S4L0s 

"Autonomous technologies are ensuring the growth of startups in the artificial intelligence and augmented reality segment," said Frost & Sullivan Mobility Research Analyst Benson Augustine. "These nascent technologies are poised to disrupt the future market once their prototypes are market-ready. However, government policies, safety regulations, and real-world behavior still need addressing."

Developments and trends driving aftermarket startup growth include:

• Service aggregators and aftermarket telematics will act as innovation partners for existing part eRetailers in targeting do-it-for-me (DIFM) customers.
• Telematics-focused startups are triggering application developments for the mobility segment, while insights and real-time monitoring open up channels for connected maintenance and repair services.
• China and India will continue to drive startup evolution in the Asia-Pacific region as they integrate unorganized aftermarket distribution networks with existing businesses.

"From a funding perspective, electronic vehicles driven by a $370.6 million investment in Boston-Power, was the highest funded startup segment in 2016. ePlatforms such as Your Mechanic, Navdy, Tuhu, Zubie Sparesbox, Click Mechanic, and Mojio garnered the greatest number of investors, and Boston-Power, Zubie Sparesbox, as well as Your Mechanic, witnessed the most funding rounds in their respective segments," noted Augustine.

Competitive Benchmarking of Select Startups in the Global Automotive Aftermarket is part of Frost & Sullivan's Automotive & Transportation Growth Partnership subscription.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Contact us: Start the discussion

Hear from Mark Brown, sales director at Grappone Auto, about what he thinks is coming for the auto industry, how dealers can prepare, and how the DrivingSales Presidents Club is helping dealers achieve their goals.