Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- New car dealership revenues forecast to decline 21% in 2009
- Domestic automakers losing share over ten years
- New vehicle sales dominate revenue, but losing market share
- Used vehicle sales increase market share
- Older cars on the road leading to increased share of service/parts
- Banks creating tighter credit market, resulting in slower sales
- President Obama’s automotive task force forcing cuts in dealerships
- Consumer findings
Insights and Opportunities
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- Transition dealership to sell, promote niche electric-only vehicles market
- Education seminars
- Quick service battery charging
- Why wait? Start selling electric cars today
- Move new cars by promoting them as more affordable, reliable than used
- Battling financial fears by directly connecting to consumers
Inspire Insights
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- Trend 1: Simplicity and Convenience
- Convenience means more ease and portability
- Dealerships benefit by allowing convenience to start from home
- Trend 2: Ego Is All
- Let’s be honest with ourselves: ego is (still) all
- Dealerships massaging consumer ingenuity at their own expense
Market Size and Forecast
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- Key points
- After gradual declines, revenues plummet starting in 2008
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- Figure 1: Total sales at new car dealerships, at current prices, 2003-09
- Figure 2: Total sales at new car dealership, at inflation-adjusted prices, 2003-09
Competitive Context
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- Third-party online sites selling or auctioning new vehicles
- eBay experimenting with selling new cars at discounted prices
- Costco brokering both new and used vehicles in auto program
- Growth in scooter sales suggesting potential threat to automotive market
Segment Performance
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- Key points
- U.S. dealership units in continual freefall over the past 21 years
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- Figure 3: Number of U.S. new car dealerships, 1987-2008
- New vehicle sales dominate, but losing share to used
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- Figure 4: New car, used car, and service and parts revenues, 2005 and 2007
Segment Performance—New Vehicles
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- Key points
- New vehicle revenue declining, corresponding to rising sticker price
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- Figure 5: Number of new vehicles sold and average selling price, 1997-2007
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- Figure 6: U.S. sales of new vehicles at new car dealerships, 2001-07
Segment Performance—Used Vehicles
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- Key points
- Dynamic between new, used vehicles dependent on supply, demand
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- Figure 7: U.S. sales of used vehicles at new car dealerships, 2001-07
Segment Performance—Service and Parts Sales
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- Key points
- Service and parts revenue increasing as consumers hold on to cars longer
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- Figure 8: U.S. sales of service & parts at new car dealerships, 2001-07
Market Drivers
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- Lenders raising down payment rates
- Excess inventory of older models, shuttered brands, hurting dealerships
- Automakers offering rebate programs, dealer cash to help move old stock
- President Obama’s automotive task force pressuring automaker cuts
- Obama stimulus package includes incentives to drive up car buying
- “Cash for Clunkers” bill expected to award consumers with cash for going green
- Used vehicles boost dealers although increased prices threaten longevity
Leading Companies—Domestic
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- Key points
- Domestic automakers losing share to imports over ten years
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- Figure 9: U.S. new vehicle unit sales and market share, by domestic manufacturer, 1997-2008
- General Motors
- Chrysler
- Ford
Leading Companies—Imports
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- Key points
- Import U.S. unit sales increased 56% between 1997-2007
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- Figure 10: U.S. new vehicle unit sales and market share, by import manufacturer, 1997-2008
- Toyota
- Honda
- Nissan
Brand Qualities
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- Luxury dealers target clientele through full-purpose Manhattan showroom
- GM provides incentives to dealerships to move old inventory
- Mitsubishi dealers given green light to cut costs through shared space
- BMW invests in U.S. showrooms through renovation, expansion
Innovation and Innovators
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- AutoNation bolsters consumer confidence with payment loan program
- Smart USA launches program to streamline inventory to expectant buyers
- Start-up steps in to help automotive dealers restructure financing
- Online research site targets women through tailored features
- Dealership website launched to help stem consumer financing fears
Advertising and Promotion
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- Ad spends declining since 2003; newspapers struggle to retain media lead
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- Figure 11: Dealership media spend, by segment and annual total, 2002-07
- Interactive media allow dealerships personal relationships with buyers
- Redesigning websites for the portable screen
- Creating special sites that cater to niche consumer groups
- Dealerships forced to combat public negativity/media misinformation
- Ford dealerships launch campaigns to rectify consumer perception regarding bailout
- Analysis of television commercials
- Heritage, patriotism emphasized over brand to help massage consumer perception
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- Figure 12: Northern California Auto Dealers ad, 2008
- Turning recessionary fear into a positive by promoting recession-based deals
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- Figure 13: Greater New York Automobile Dealers Association ad, 2008
- Dealership associations emphasize Obama stimulus plan incentives for consumers
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- Figure 14: National Automobile Dealers Association ad, 2009
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- Figure 15: Colorado Automobile Dealers Association ad, 2008
- Fuel efficiency tops incentives to get consumers motivated to purchase new
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- Figure 16: Bob Rohrman’s Arlington Nissan ad, 2008
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- Figure 17: Acura of Pembroke Pines ad, 2008
Automotive Retail—Consumer Preferences
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- Key points
- Brand loyalty drives buys at dealerships, but economic crisis threatens
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- Figure 18: Source of last new vehicle purchased, by gender, February 2009
- Youngest consumers most open to non-traditional channels
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- Figure 19: Source of last new vehicle purchased, by age, February 2009
- Highest household incomes prefer branded dealerships
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- Figure 20: Source of last new vehicle purchased, by household income, February 2009
Automotive Retail—Trade-In Experience
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- Key points
- The largest group of new-vehicle buyers don’t trade in at all
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- Figure 21: Trade-in experience, by gender, February 2009
- Buyers aged 18-24 least likely to trade-in
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- Figure 22: Trade-in experience, by age, February 2009
- Households earning the least are also the least confident making trade-ins
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- Figure 23: Trade-in experience, by household income, February 2009
Automotive Retail—How Consumers Prepare
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- Key points
- Most respondents prefer independent resources over retailers’ information
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- Figure 24: Research sources used before buying last new vehicle, by gender, February 2009
- Respondents aged 25-34 more tech-savvy and open to retailer marketing
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- Figure 25: Research sources used before buying last new vehicle, by age, February 2009
- Lowest-earning households least likely to research
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- Figure 26: Research sources used before buying last new vehicle, by household income, February 2009
Automotive Retail—Reasons To Visit Other Than Vehicle Purchasing
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- Key points
- Men more likely to return to dealerships following purchase
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- Figure 27: Reasons for visiting dealership other than vehicle purchase, by gender, February 2009
- Respondents aged 18-34 more likely to return for dealer service
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- Figure 28: Reasons for visiting dealership other than vehicle purchase, by age, February 2009
- The likelihood of service repair increases steadily with household income
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- Figure 29: Reasons for visiting dealership other than vehicle purchase, by household income, February 2009
Automotive Retail—Consumer Attitudes
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- Key points
- Nearly half of all respondents expect more incentives
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- Figure 30: Attitudes towards new car incentives, by gender, February 2009
- Most think retailer facilities should be more comfortable
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- Figure 31: Attitudes towards dealership facilities, by gender, February 2009
- Respondents less into fun, more into facts
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- Figure 32: Attitudes towards entertainment factor at dealerships, by gender, February 2009
- Respondents tend not to see sales people as obnoxious
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- Figure 33: Perception of new car sales personnel as obnoxious, by gender, February 2009
- Personnel judged on an individual basis
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- Figure 34: Attitudes towards trustworthiness of new car personnel, by gender, February 2009
- Price and service most relevant issues for majority of respondents
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- Figure 35: Attitudes towards disclosure of price and service information, by gender, February 2009
Automotive Retail—Factors Influencing Purchasing
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- Key points
- A good ear – and a customized pitch – help make the sale
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- Figure 36: Factors influencing new car purchasing, by gender, February 2009
- Test drive and financial incentives most important to younger respondents
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- Figure 37: Factors influencing new car purchasing, by age, February 2009
- Lower-earning households value warranties more than time, efficiency
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- Figure 38: Factors influencing new car purchasing, by household income, February 2009
Race and Hispanic Origin
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- Key points
- Whites most likely to buy at branded dealership
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- Figure 39: New vehicle distribution channel preference by race/Hispanic origin, February 2009
- Blacks and Hispanics least likely to trade in used vehicles
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- Figure 40: Trade-in experience, by race/Hispanic origin, February 2009
- Hispanics more active in internet research
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- Figure 41: Use of research, by race/Hispanic origin, February 2009
- Blacks more likely to use repair and quick services
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- Figure 42: Reasons for visiting dealership other than vehicle purchase, by race/Hispanic origin, February 2009
- Blacks most likely to view sales personnel favorably
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- Figure 43: Attitudes towards new car sales personnel, by race/Hispanic origin, February 2009
- Hispanic mistrust sales personnel significantly more than other groups
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- Figure 44: Attitudes towards trustworthiness of new car personnel, by race/Hispanic origin, February 2009
- Convenience of location a bigger factor for Hispanics
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- Figure 45: Factors influencing new car purchasing, February 2009
Cluster Analysis
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- Confirmers
- Who they are
- Opportunity
- Frequenters
- Who they are
- Opportunity
- Reasoners
- Who they are
- Opportunity
- Cluster characteristics
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- Figure 46: Auto retail clusters, February 2009
- Figure 47: Source of last new vehicle purchased, by auto retail clusters, February 2009
- Figure 48: Research sources used before buying last new vehicle, by auto retail clusters, February 2009
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- Figure 49: Reasons for visiting retailer other than vehicle purchasing, by auto retail clusters, February 2009
- Figure 50: Factors influencing new car purchasing, by auto retail clusters, February 2009
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- Figure 51: Attitudes towards incentives, facilities and personnel, by auto retail clusters, February 2009
- Cluster demographics
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- Figure 52: Auto retail clusters, by gender, February 2009
- Figure 53: Auto retail clusters, by age, February 2009
- Figure 54: Auto retail clusters, by household income, February 2009
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- Figure 55: Auto retail clusters, by race, February 2009
- Figure 56: Auto retail clusters, by Hispanic origin, February 2009
- Cluster methodology
Appendix: Trade Associations
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