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LANE CHANGE Navigating What's Next
LANE CHANGENavigating What's Next
Jonathan Smoke
VP / Chief Economist,
Cox Automotive
Dale Pollak
Executive Vice President,
Cox Automotive
Founder, vAuto
Chris Hanna
Performance Manager
vAuto
Chase Abbott
Dealer Software
Solutions
PR
ES
EN
TE
RS
Agenda
COVID-19 Market Update
Essential things dealers should do with inventory
Essential digital capabilities dealers should have in place
Essential things dealers should do with new vehicle inventory
Lance Helgeson
Moderator
2
Housekeeping
Listen only mode
Submit questions via Questions panel
Recording available tomorrow on
coxautoinc.com
3
COVID-19 Market UpdateEconomic & Industry Insights
Jonathan Smoke
VP / Chief Economist, Cox Automotive
4
NEW AND USED VEHICLE SALES INCREDIBLE RECOVERY
Source: vAuto /Cox Automotive VMA Database
USED MARKET AGAIN RUNNING ABOVE 2019 LEVELS WHILE NEW SALES ARE STILL MUTED IN LAST WEEKEND OF JULY
5
-17.1%
21.3%
-70.0%
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
Y/Y % Change in 7-Day Moving Average of Retail Sales
New Used
SUPPLY BUILT UP BUT IS NOW BELOW NORMAL
Source: Cox Automotive/vAuto 6
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
Market Days' Supply
Used New
ZERO PERCENT FINANCING DECREASES
Source: Cox Automotive 7
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
Jan-
17
Feb
-17
Mar
-17
Ap
r-17
May
-17
Jun
-17
Jul-
17
Au
g-17
Sep
-17
Oct
-17
No
v-1
7
Dec
-17
Jan-
18
Feb
-18
Mar
-18
Ap
r-18
May
-18
Jun
-18
Jul-
18
Au
g-18
Sep
-18
Oct
-18
No
v-1
8
Dec
-18
Jan-
19
Feb
-19
Mar
-19
Ap
r-19
May
-19
Jun
-19
Jul-
19
Au
g-19
Sep
-19
Oct
-19
No
v-1
9
Dec
-19
Jan-
20
Feb
-20
Mar
-20
Ap
r-20
May
-20
Jun
-20
Jul-
20
0% APR Finance Share
BANK DEPOSITS SOARED BY $2.3 TRILLION FOLLOWING THE CARES ACT
Source: Federal Reserve Board Deposits at Commercial Banks 8
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
$16,000.00
$18,000.00
Weekly Deposits at Commercial Banks
Bank Deposits (SA) Savings Deposits (SA)
PURCHASE INTENTION PEAKED IN APRIL
Source: 2020 Cox Automotive COVID-19 Consumer Impact Study 9
22%
15%
0%
5%
10%
15%
20%
25%
Mar5-6
Mar13-14
Mar20-22
Mar27-28
Apr3-4
Apr10-11
Apr17-18
Apr24-25
May1-3
May15-16
May29-30
June12-13
June26-27
July10-11
July24-25
Plans to Purchase/Lease a Vehicle in the Next 6 Months
USED PRICES NOW AT NEW HIGH POINTS
Source: Cox Automotive 10
80%
85%
90%
95%
100%
105%
110%
115%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
MY 2017 Retail and Wholesale Price Indices (wk1=100)
2019 Retail Index 2020 Retail Index 2019 Wholesale Index 2020 Wholesale Index
COVID-19 OUTBREAKS LEADING TO HIGHER RISK IN MOST REGIONS
Source: Cox Automotive 11
NEW SALES NOW HAMPERED BY SUPPLY — 2.5 MILLION UNITS AT END OF JUNE
Source: Cox Automotive 12
2,000,000
2,200,000
2,400,000
2,600,000
2,800,000
3,000,000
3,200,000
3,400,000
3,600,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
Active New Vehicle Inventory by Week
2019 Active Inventory 2020 Active Inventory
Source: BLS
14.7 MILLION NET JOBS LOST SINCE FEBRUARY, MAY AND JUNE ADDED 2.7 AND 4.8 MILLION RESPECTIVELY; UNEMPLOYMENT
RATE 11.1%
13
0.0
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15.0
20.0
25.0
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Unemployment Rates
Headline Unemployment % (U3) Underemployment Rate % (U6)
MAY STARTED THE JOBS RECOVERY; HOW FAST WILL IT BE?
114.23
113.8
81.23
85.87
60
70
80
90
100
110
120
ICS Value (7-Day Average)
CONSUMER SENTIMENT DOWN AGAIN LAST WEEK
Source: Morning Consult
MORNING CONSULT’S INDEX OF CONSUMER SENTIMENT ON MONDAY WAS DOWN 24.2% SINCE FEBRUARY 29
14
155.9
90
95
100
105
110
115
120
125
130
135
140
145
150
155
160
Jan-95 Jan-98 Jan-01 Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 Jan-19
January 1995 = 100
CONTINUED RECORD-SETTING PERFORMANCE IN WHOLESALE PRICES
Source: Manheim
PRICES IN THE FIRST 15 DAYS OF JULY INCREASED 4.4% FROM JUNE 2020 AND WERE UP 11% COMPARED TO JULY 2019
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Balancing your inventory equation in transition…as the year progresses
Dale PollakExecutive Vice President, Cox AutomotiveFounder, vAuto
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Balancing your inventory equation in transition
Period Sales Pace Current StockNeed(+/-)
30 days 94 79 15
14 days 85 79 6
10 days 87 79 8
7 days 95 79 16
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Top 5 essential things dealers should do with new vehicle inventory…as the year progresses
Chris Hanna Performance ManagervAuto
18
Top 5 essential moves to make with your new car inventory
#1: Recognize no one is going to run out
of cars
#2: Track dealer days supply
#3: Address your “unwants”
#4: Manage sales rate
#5: Focus on your best price:
manage sales rate
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RETAIL
#1: Recognize No One Is Going to Run Out of Cars
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1. Inventory levels/pipeline vary by OEM
2. Every store has inventory that isn’t selling (frozen capital)
3. Unsold cars reduce ability to get right cars
RETAIL
#2: Track Dealer Days Supply
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1. Calculation (How many you sold, how many you have)
2. Identifies vehicles you’re selling too quickly or too slowly
3. Helps shape attack plan for unsold inventory
RETAIL
#3: Add ss You “Unwants”
22
1. Make sure merchandising is ship-shape
2. Be creative (Banners, payments, etc.)
3. Offer “unwants” as alternatives/switch cars
RETAIL
#4: Manage Sales Rate
23
1. Market doesn’t stop selling when you run out
2. Use DDS to know when to be more/less aggressive
in model/trim configurations
3. Focus on in-market customers
RETAIL
#5: Focus on Your Best Price
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1. OEM covenants have moved pricing offline (to lead management process)
2. Use DDS to set best price (sell aggressive/fast if you must, not because you can)
3. Offer best price based on in vs. out-of-market customers
Top 5 essential moves to make with your new car inventory
#1: Recognize no one is going to run out
of cars
#2: Track dealer days supply
#3: Address your “unwants”
#4: Manage sales rate
#5: Focus on your best price:
manage sales rate
25
Essential digital deal-makingcapabilities dealers should have in placeTake-away checklist
Chase AbbottDealer Software Solutions
26
Essential digital deal-making capabilities
✓ Get the online merchandising right
✓ Tell the world about your digital retailing
experience
✓ Connect online to in-store
✓ Fly your F&I flag
✓ Dial in to the digital data
✓ Bonus: be social, and kind
27
RETAIL
Get Online Merchandising Right
28
1. Elemental step that goes beyond good photos, descriptions
(360s, videos, etc.)
2. Make sure rates, incentives are accessible, accurate
RETAIL
Tell the World About Your Digital Retailing Experience
29
1. If you build it, they come faster - if you tell them
2. Be clear, complete about what you offer (hybrid or all-digital)
3. Set expectations for choice, experience (FaceTime, Zoom)
RETAIL
Connect Online to In-store
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1. Get your team on board—culture, responsibilities, roles change
2. Start where customers stop online
3. Beware of the pitfalls—systems don’t talk, double-entry deals
RETAIL
Fly Your F&I Flag
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1. Provide opportunity to self-explore and select
2. Put your people out there
3. Work faster with lenders, partners (e.g. approvals, titles)
RETAIL
Dial In to Digital Data
32
1. Be aware of AI opportunities
2. Use insights to prioritize cars, customers
3. Develop pre-conversion market
RETAIL
Bonus: Be Social, and Kind
33
Essential digital deal-making capabilities
✓ Get the online merchandising right
✓ Tell the world about your digital retailing
experience
✓ Connect online to in-store
✓ Fly your F&I flag
✓ Dial in to the digital data
✓ Bonus: be social, and kind
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Q&ANavigating What's Next
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Thank You
Dale Pollak
Executive Vice President, Cox Automotive
Founder, [email protected]
dalepollak.com
Jonathan SmokeChief Economist, Cox Automotive
@SmokeonCars
VISIT COXAUTOINC.COM FOR THE LATEST COVID-19 BUSINESS UPDATES & RESOURCES
Balanced Inventory Report Instructions
1. From your vAuto app, Select Pricing,
View Inventory
2. On the menu bar, select Filters
3. Select Condition – Used, Disposition – Retail
4. In the Left Inventory section, select either a preset number of days or enter a date range
(necessary to obtain a 10-day period)
5. Select Search
6. Your Vehicle Inventory window will now
display the vehicles sold in the specified time period and the number of vehicles will be
displayed in the bottom right corner
7. You can save this report by selecting Saved Filters, Save (or Save As) and naming the
report for future use
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