Blog

It’s shaping up as another big year for the auto industry. If projections hold true, it’d make six consecutive years of growth for car makers. Experts forecast 17 million sales for 2015. This bright outlook extends across the board for auto makers. Yet, one stands above with an incredible boost in first-quarter operating profit.

American dealerships report a rise in new-car sales, and also a drop in profit margin. It’s a perplexing contrast for sure. The direction for both numbers remains consistent for all five publicly traded dealership groups. It’s worth an examination and a handful of theories. Interpretation of the numbers will influence how the groups proceed.

Short of projection, but ahead of 2014 numbers, light-vehicle sales continue to rise. Carmakers Fiat Chrysler, Honda, Nissan and Toyota lead the way. According to a report from AutoNews.com, sales climbed 3.9% in June 2014. This trend continues a banner year for light vehicles. June numbers registered below May’s, but above the same month in 2014.

Dealerships lease new vehicles at a greater pace than ever. It's a trend no one from finance to insurance to accessories can afford to ignore. Global information services company Experian revealed a record 31.46% new-car transactions come as leases. The Q2 mark eclipses the 30.22% reported in Q1. Average lease payments dropped in Q2 to $405, $7 less than the same quarter in 2014. Other data from the report gave shape to a movement of larger scope.

Addressing the issue of lease vehicle personalization is fast becoming more relevant to dealers’ profit margins. According to Automotive News on April 23, 2015;

“GM Financial posted $3 billion in lease originations in the U.S. and Canada combined for the first quarter, up from $773 million a year earlier. Leases accounted for 57 percent of GM Financial originations in North America for the first quarter, up from 36 percent a year ago.”

So how different are Millenial consumers' spending habits when compared to the Boomer or Silent generation? Research says Millennials aren’t spending as much as their grandparents. It’s getting close, though.

Buying a 2015 model is a much different ballgame than it was in 1995. Or even in 2005.

Strides in commerce in general push retail sales to a quicker, simpler, user-friendly experience. That stands in contrast to the customary model for the auto industry, which relied on a sales force jockeyed for customers in an experience that moved at the dealership’s pace.

When your Q1 earnings rise, people listen. That’s the case with four publicly traded auto dealership groups. Asbury, AutoNation, Lithia, and Sonic all have initiatives in play. All four keys to ease of sale and a streamlined buying experience. Some have encountered setbacks. They all remain on track to transform the way consumers shop for cars, though

Convenience and entertainment are fine in a new vehicle. Consumers want safety technology most, though, according to a J.D. Power study. J.D. Power is a marketing information services firm. Its inaugural U.S. Tech Choice Study identified five car technologies customers want most. Three relate to safety features, especially collision protection. Auto makers must focus on safety as driving autonomy becomes mainstream.

What’s your go-to offering for vehicle personalization? We’re talking lead-in products. As dealerships develop a plan for vehicle customization, a lead-in product ought to emerge. With an emphasis on accessory sales, a dealership can play to its strengths at a crucial juncture.