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Six Consecutive Red Months, but the Next Six Could Be Brighter...buyers across the country and for...

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1 JULY 2019 www.mediagrouponlineinc.com Total June 2019 US light-vehicles sales decreased 2.6%, compared to June 2018, recording six consecutive months of declines, or the entire first half of the year, in which sales decreased 2.4%. (See the complete table on page 5.) Despite the red numbers for General Motors, Ford, Toyota, Honda and Nissan, the SAAR (seasonally adjusted annualized rate) continued to exceed expectations. For June, it was 17.29 million, a number many industry experts and commentators didn’t think would be achievable during the year – and many still do. Just prior to the publication of the June sales numbers, Edmunds was predicting a SAAR of 16.9 million by the end of the year while AlixPartners’ longer-term forecast is even fewer, or 16.3 million for 2020 and 15.1 million for 2021. Many in the industry are relying on a number of industry trends and possible economic decisions that could result in sales during the second half of 2019 outperforming the first half. The first positive industry trend is the first half of the year wasn’t as bad as many predicted. The Federal Reserve cutting interest rates, and thus reducing financing costs, is the major economic decision. The industry is also basing its positive outlook on continued consumer confidence, overall economic growth, new-job increases as well as some new models, especially light trucks. The automotive industry could also be headed into perilous times, as explained in the article on page 4, The Severe Pain of Change. DECLINE IN QUALITY COULD BE ANOTHER REASON FOR SLOWING SALES No improvement in new-vehicle quality since 2014, according to the J.D. Power 2019 Initial Quality Study, may be another major reason new light-vehicle sales have been decreasing. Not only was there no improvement in overall new-vehicle quality, but also more brands had a worst ranking than 12 months ago. Three Korean manufacturers, Genesis, Kia and Hyundai, had the highest-ranked brands for the second consecutive year – and Hyundai had 16 of 10 models positioned in the top three in their particular categories. While Ford, Lincoln, Chevrolet, Dodge and Buick exceeded the industry average, all 10 European models in the study scored less than the average. The rankings are based on how many problems per 100 vehicles 2019 surveyed buyers experienced. As more driver-assistance systems are included in new vehicles, owners/lessees are citing them as a major problem. Infotainment systems are first among quality problems, but improved the most from 2018. Six Consecutive Red Months, but the Next Six Could Be Brighter
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Page 1: Six Consecutive Red Months, but the Next Six Could Be Brighter...buyers across the country and for which they are willing to travel ... future success requires auto dealerships, all

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Total June 2019 US light-vehicles sales decreased 2.6%, compared to June 2018, recording six consecutive months of declines, or the entire first half of the year, in which sales decreased 2.4%. (See the complete table on page 5.)

Despite the red numbers for General Motors, Ford, Toyota, Honda and Nissan, the SAAR (seasonally adjusted annualized rate) continued to exceed expectations. For June, it was 17.29 million, a number many industry experts and commentators didn’t think would be achievable during the year – and many still do.

Just prior to the publication of the June sales numbers, Edmunds was predicting a SAAR of 16.9 million by the end of the year while AlixPartners’ longer-term forecast is even fewer, or 16.3 million for 2020 and 15.1 million for 2021.

Many in the industry are relying on a number of industry trends and possible economic decisions that could result in sales during the second half of 2019 outperforming the first half. The first positive industry trend is the first half of the year wasn’t as bad as many predicted. The Federal Reserve cutting interest rates, and thus reducing financing costs, is the major economic decision.

The industry is also basing its positive outlook on continued consumer confidence, overall economic growth, new-job increases as well as some new models, especially light trucks.

The automotive industry could also be headed into perilous times, as explained in the article on page 4, The Severe Pain of Change.

DECLINE IN QUALITY COULD BE ANOTHER REASON FOR SLOWING SALESNo improvement in new-vehicle quality since 2014, according to the J.D. Power 2019 Initial Quality Study, may be another major reason new light-vehicle sales have been decreasing. Not only was there no improvement in overall new-vehicle quality, but also more brands had a worst ranking than 12 months ago.

Three Korean manufacturers, Genesis, Kia and Hyundai, had the highest-ranked brands for the second consecutive year – and Hyundai had 16 of 10 models positioned in the top three in their particular categories.

While Ford, Lincoln, Chevrolet, Dodge and Buick exceeded the industry average, all 10 European models in the study scored less than the average. The rankings are based on how many problems per 100 vehicles 2019 surveyed buyers experienced.

As more driver-assistance systems are included in new vehicles, owners/lessees are citing them as a major problem. Infotainment systems are first among quality problems, but improved the most from 2018.

Six Consecutive Red Months, but the Next Six Could Be Brighter

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MARKETING FORWARD

Media Group Online has been touting the use of videos for years as one of the most effective marketing content forms for B2C and B2B businesses and Prime Motor Cars Mercedes-Benz in Scarborough, Maine is proving it.

Daniel Doucette, the dealership’s general manager, and his sales team may be at the cutting edge of this concept, but it’s certainly a tool more dealers should seriously consider to remain competitive.

Sales team members appear in short videos personalized for prospective buyers as a follow-up to an earlier inquiry or conversation, which are then uploaded to the Prime Motor channel on YouTube. Within a recent 28-day period, the channel

produced 663,000 impressions, a 6.7% click-through rate and 50,500 unique views.

The videos work so well for Prime Motor Cars primarily because it creates interest in unique, previously owned Mercedes among buyers across the country and for which they are willing to travel thousands of miles and pay top dollar.

Prime Motor Cars has two videographers on staff and uses professional recording and editing equipment, which may make the idea cost-prohibitive for mainstream dealerships. Nonetheless, it represents one of the new directions in retail automotive marketing and will likely prove to be beneficial for many other dealerships during the coming years.

Personalized Sales Videos on YouTube Are a Winner for Maine Dealership

Using Texting as an Effective Marketing ChannelFor Hawkinson Nissan in Matteson, IL, sending texts to its service customers generated almost $168,000 in new sales during a 2018 seven-month period. Despite the concern that marketing texts are unlikely to reach many older consumers, future success requires auto dealerships, all retailers and even B2B businesses to use the channel to reach younger adults who will be tomorrow’s primary consumers.

Hawkinson Nissan sent a text with a basic coupon for an oil and filter change to approximately 2,400 customers who had opted in for the coupon via the dealership’s Website. Approximately 1,000 customers used the coupon, or a 40% redemption rate.

The cost of text marketing seems quite reasonable. Text2Drive (Chicago) is Hawkinson’s service provider, charging $349 to $499 per month, plus the cost of creating the coupon art and any dealership personnel time. (Cox Automotive’s Xtime and MobileDealer are two other text marketing vendors.)

After two years of texting to service customers, the dealership has benefited from a 38% increase of customers approving additional service work they had previously declined. Because text marketing is a relatively new tool, dealerships must be aware of any legal restrictions and understand the subtleties of its use to generate maximum results without creating disgruntled customers.

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Change of any kind typically includes some unpleasantness and even pain – sometime severe. This is a likely scenario for the automotive industry, especially automakers (and dealerships by proxy), as the industry faces the greatest challenge of its existence.

Automakers are standing at the edge of a chasm. Behind them is the long past of success based on the internal combustion engine, which is coming to an end. On the far side of the chasm is the future for which they are spending billions to develop electric vehicles (EVs) and autonomous vehicles (AVs), about which governments and consumers are only mildly enthusiastic.

The pain the industry is starting to feel is the inevitable decline from the “high” of the past 5+ years of record-breaking sales and the long-term investment required to bridge the chasm.

The investment forecast through 2023 to develop new technologies for EVs is $225 billion and $85 billion for autonomous vehicles (which will eventually require much more). To put those amounts in perspective, total 2018 retail sales at new-car dealerships, according to the US Census Bureau, was $927.8 billion.

Unfortunately, the investments they must make to transition from a 20th century assembly-line manufacturer to a 21st

century transportation service provider will also cause pain for the many autoworkers who will be laid off, the factories that will shut down and the dealerships that will close.

This may be a sobering discussion to have with your dealership clients, but before basking in the sunlight of the future of EVs and AVs, they must withstand the immediate pain of change.

The Severe Pain of Change

ROAD SIGNS

The Pavement Goes Digital in UtahTo create the future of autonomous vehicles and greatly improved driving safety, Panasonic will start working with the Utah Department of Transportation to initiate a smart-highway project, similar to one Panasonic created in Colorado.

The technology is based on vehicles being equipped with sensors that will interface with the smart highway to share data with other vehicles and the general infrastructure about road and traffic conditions, accidents, navigation, weather, etc.

Although most vehicles don’t yet have the appropriate sensor, there is an aftermarket part that can be attached and more automakers are installing the tag on new vehicles. In addition, the government is expected eventually to require the tags.

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RANK AUTO BRAND JUNE 2019% CHANGE FROM

JUNE 20182019 YEAR TO DATE

% CHANGE FROM 2018 YEAR TO DATE

#1 Ford 209,922 -4.6% 1,180,539 -3.3%

#2 Toyota 179,305 -3.5% 1,016,373 -3.6%

#3 Honda 123,735 -6.3% 703,228 -1.7%

#4 Nissan 113,665 -15.4% 653,978 -7.7%

#5 Jeep 76,826 -11.7% 456,281 -7.8%

#6 Ram 75,227 +45.4% 333,168 +28.0%

#7 Hyundai 64,202 +1.5% 333,328 +1.7%

#8 Subaru 61,511 +2.8% 339,525 +5.2%

#9 Kia 56,801 +0.4% 304,844 +3.8%

#10 Dodge 38,561 -16.9% 228,099 -9.1%

#11 Volkswagen 31,725 +9.6% 184,608 +6.8%

#12 BMW 31,627 +7.5% 156,440 +2.0%

#13 Mercedes-Benz* 29,201 +0.7% 163,421 -7.0%

#14 Lexus 23,047 -3.0% 135,735 +0.5%

#15 Mazda 22,828 -15.1% 138,555 -15.5%

#16 Audi 19,409 -0.3% 101,440 -6.0%

#17 Chrysler 12,941 -4.0% 64,422 -27.3%

#18 Mitsubishi 12,317 +10.5% 71,097 +5.6%

#19 Acura 12,148 -16.4% 73,767 +1.5%

#20 Tesla† 12,000 +55.8% 57,000 +23.4%

#21 Volvo 9,934 +0.7% 50,120 +5.2%

#22 Infiniti 9,839 -8.0% 63,058 -12.6%

#23 Lincoln 8,769 -8.0% 50,915 +1.3%

#24 Land Rover 6,593 -5.6% 46,123 +3.0%

#25 Porsche 5,205 +6.4% 30,257 +2.8%

#26 Mini 3,235 -22.0% 17,583 -22.3%

#27 Jaguar 1,892 -19.6% 16,282 +10.1%

#28 Genesis 1,887 +137.1% 10,007 +37.8%

#29 Alfa Romeo 1,595 -29.1% 9,037 -26.3%

#30 Fiat 933 -34.6% 5,103 -38.4%

MONTHLY AUTOMOBILE SALES CHARTNOTE: General Motors and Ford have decided to announce light-vehicle sales quarterly instead of monthly. GM brands are not included in this month’s sales table, but Ford brands are, based on Automotive News estimates. Fiat Chrysler Automobiles (FCA) will also start to announce sales quarterly instead of monthly as of July 2019.

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Source: Automotive News, July 2019

* Includes Mercedes-Benz vans

(GM estimate based on Automotive News calculations)

† Includes Aston Martin, Ferrari and Lotus estimates

‡ Includes Audi, Bentley, Porsche and Volkswagen brands, but not Lamborghini

© 2019 Media Group Online, Inc. All rights reserved.

Sources:Automotive News Website:https://www.autonews.com/best-practices/finding-buyers-far-and-wide-youtube

https://www.autonews.com/fixed-ops-journal/promotional-text-messages-boost-service-business-save-dealers-money-targeting

https://www.autonews.com/sales/us-sales-drop-again-yet-saar-remains-strong

J.D. Power Website:https://www.jdpower.com/sites/default/files/2019088_u.s._iqs.pdf

Forbes Website:https://www.forbes.com/sites/peterlyon/2019/06/29/record-layoffs-loom-in-shadow-of-industry-push-for-electrification-and-self-driving/#3ce6051cffac

Venture Beat Website:https://venturebeat.com/2019/06/25/panasonic-to-build-smart-roadways-for-connected-cars-in-utah/?utm_campaign=Daily%20Roundup&utm_medium=email&utm_source=Revue%20newsletter

CNBC Website:https://www.cnbc.com/2019/06/26/edmunds-warns-of-a-tough-2019-for-us-auto-industry-as-sales-slide.html

RANK AUTO BRAND APRIL 2019% CHANGE FROM

APRIL 20182019 YEAR TO DATE

% CHANGE FROM 2018 YEAR TO DATE

#31 Maserati 925 -2.6% 5,550 -0.2%

#32 Lamborghini 232 +85.6% 1,392 +85.6%

#33 McLaren 180 +55.2% 1,206 +77.4%

#34 Bentley 169 +2.4% 1,014 +3.3%

#35 Rolls-Royce 110 +1.9% 660 +2.0%

#36 Smart 74 -41.3% 496 -23.7%

#37 Other† 328 +2.2% 1,968 +2.2%

General Motors 254,658 -0.9% 1,411,185 -4.3%

Ford Motor Company 218,691 -4.7% 1,231,454 -3.2%

FCA/Chrysler Group 207,008 +1.9% 1,101,660 -1.7%

Toyota Motor Corporation

202,352 -3.5% 1,152,108 -3.1%

American Honda Motor Company

135,901 -7.3% 776,995 -1.4%

Nissan Motor Company/Infiniti /

Mitsubishi 135,821 -13.1% 788,133 -7.1%

Hyundai-Kia Automotive Group

122,890 +1.9% 648,179 +3.1%

Volkswagen Group‡ 56,740 +5.9% 318,711 +2.2%

BMW Group 34,972 +3.9% 174,683 -1.1%

Daimler AG 29,275 +0.5% 163,917 -7.1%

Jaguar/Land Rover 8,485 -9.1% 62,405 +4.8%

TOTAL 1,513,574 -2.6% 8,417,804 -2.4%


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