Chicago Automobile Trade Association
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CATA Bulletin
October 1, 2012

 

New-car buying by young rises after years of decline

September 28, 2012

Young buyers are inching back into the new-vehicle market after several years on the sidelines, helped by easing credit and a slightly improving job market.

"Younger buyers have returned to market at a higher rate than any other age category," according to a recent report by J.D. Power and Associates’ Power Information Network.

The young buyer group, from teen years through age 35, is a hefty 23 percent of so-called retail buyers, the highest since 2008, according to Power. The retail sales category excludes multiple-vehicle sales to fleet buyers, such as rental-car and taxi companies.

Data from Polk, which tracks new-vehicle registrations, not sales, found a similar trend, showing buyers ages 18 through 34 are 12 percent of all new-vehicle registrations from January through July this year — the highest since 16.4 percent in 2007.

Power’s Thomas King said that high used-car values could be helping younger buyers who have something to trade-in or sell. Credit is also easier to get, and "We are also seeing growth in longer-term loans, 72 months and over," which reduces monthly payments, he said.

Long loans, however, can lock buyers into long ownership. It takes years before the loan balance is less than the value of the car, delaying the next purchase.

Still, the rebound is huge for car companies, which depend on an influx of youthful customers as their lifeblood:

Younger shoppers don’t buy high-profit vehicles at first. But if they can be well-served and kept loyal, automakers believe they’ll move up to very profitable models as they get older and richer.

Big gainers with young buyers: Hyundai and Kia. Polk says together they had 11 percent of the new-vehicle registrations by young buyers, up from just 5 percent in 2007. European makers, mainly Volkswagen, also grew, edging up to 4 percent.

Polk says Detroit makers, meanwhile, fell 3 points to 37 percent of the group. And Japanese brands tumbled 6 points, to 41 percent.

Tom Libby, an auto analyst at Polk, said the theory that younger consumers just lost interest in new vehicles and are interested instead in being online is false.

"They are as interested as ever," said Libby, "and when economic conditions improve, they’ll come back."

 

 

Trade-in equity up on used cars

September 28, 2012

A declining supply of used vehicles, strong consumer demand and improving vehicle quality have resulted in higher trade-in equity on many used cars and light trucks.
 
“Higher trade-in equity on used vehicles will help facilitate the release of pent up demand for a growing number of consumers making the jump off the sidelines and into a vehicle purchase,” said Jonathan Banks of the National utomobile Dealers Association. “The equity position that consumers find themselves in today is better, and in some cases dramatically better, than it was three years ago.”
 
For example, in 2006 it took a consumer who bought a new Ford Explorer XLT 4WD with a 6-cylinder engine 41 months of loan payments to reach a positive equity position. After 45 months of ownership, equity in the vehicle reached $2,895.
 
Fast forward three years. In 2009 it took a consumer who purchased a new Explorer XLT 4WD with a 6-cylinder engine just 26 months to reach an equity position. The equity stake after 45 months of ownership jumped to $6,830, nearly $4,000 more than three years earlier.
 
The NADA estimates that used-vehicle depreciation averaged just 13.1 percent  from 2009 through 2011, or about nine percentage points better than the 22 percent average rate of loss recorded over the past 10 years.
 
 

Successful Hispanic marketing examined at CATA seminar

September 28, 2012

With Hispanics in the U.S. accounting for one in six persons — and growing – sensible retailers don’t overlook that market segment. But even if you succeed in attracting them to your store, are you prepared to negotiate with them there?
 
Sara Hasson of Univision Communications spoke at a CATA seminar in September about how to reach the 2 million Hispanics who are widely disbursed in the Chicago market. Indeed, while 29 percent of Chicagoans identify themselves as Hispanic, that percentage is 47 percent in Elgin, 55 percent in Waukegan, and 42 percent in outlying Harvard.
 
And more are on the way: one in four babies born in Illinois is Hispanic, according to National Vital Statistic Reports. Nielsen projects that from 2012 to 2017, Hispanics will represent 100 percent of the total population growth in Chicago and Illinois.
 
Among Chicago Hispanics, 11 percent speak only Spanish and 10 percent speak only English. A whopping 79 percent are bilingual and they consider speaking Spanish to be a choice, not a necessity. Yet among the 25 top-rated TV shows among bilinguals, 24 appear on a Spanish language network.
 
The top three sports for Hispanics—soccer, soccer and soccer—air year-round on Univision’s Chicago station, WGBO-TV, and the ratings exceed those scored by the Cubs, the White Sox and the Blackhawks.
 
Polk reports that Hispanics make new-vehicle purchases more frequently than all others, 35 months to 39 months, respectively. Polk also found that Chicago Hispanics spent an average $25,300 on new vehicles, compared to $28,100 overall.
 
An attraction to auto makers seeking to reduce the ages of their first-time buyers, the median age of Illinois Hispanics is 26, compared to 37 overall. Hasson said marketing to Hispanics “is a great way to achieve that.”
 
But how is that done best? Hasson said that while non-Hispanics typically view buying a car as a business transaction like any other, Hispanics consider it to be a family event. And while they can be wary of the process, the salesperson is seen as a trusted advisor who can help the family reach a team decision. Spanish-speaking salespeople have an advantage in becoming that trusted advisor.
 
To be able to do that, negotiation areas must exist to accommodate families. Some dealerships, Hasson said, convert the employee lunchroom into such an area on Saturdays, when traffic is greater.
 
A Hispanic-friendly showroom, she added, should include Spanish signs, POP and brochures; “Se Habla Español” on all entrances; (Spanish Spoken Here); “Yo Hablo Español” on employee name tags (I Speak Spanish); and a children’s section with small desks and chairs with coloring materials.
 
Hasson said F&I managers who speak Spanish often enjoy greater closing ratios. “It eases the stress in the negotiating process,” she said. “It also presents opportunities to increase product sales.”
 
 

Dealers increase charitable giving

September 28, 2012

Automobile dealers serve as pillars of strength in their communities across the United States, particularly when it comes to charitable giving, according to a recent survey by Ally Financial.
 
Survey data shows that nearly two-thirds of U.S. dealers increased their charitable contributions this year compared to 2011. In addition, more than half of those who responded said they plan to increase their charitable contributions in 2013.
 
Ally Financial conducted a random sample survey in August 2012 and received more than 300 responses from U.S. dealers. Survey questions focused on dealer levels of involvement in charitable giving and volunteerism in communities. The survey found:
 
• 98 percent of dealers surveyed contribute to local organizations, with 25 percent of dealers and their staffs volunteering more than 100 hours in their community annually.
 
• About 45 percent of dealers contribute more than $20,000 a year in their respective communities.
 
When asked about factors motivating dealers to contribute, 68 percent said it was to make a positive impact in the community, while 21 percent said it was due to a personal cause.
 
“Automobile dealers do a tremendous job supporting their local communities,” said Ally Financial’s Tim Russi. “Ally will sponsor the Time Dealer of the Year program again this year to recognize dealers from every state who donate their time and money to important causes.”
 
To acknowledge dealer contributions throughout the year, Ally launched AllyDealerHeroes.com, a new website highlighting the philanthropic efforts of dealers across the country.
 
“AllyDealerHeroes.com features inspiring stories about how dealers are making a difference in the communities where they live and work,” said Andrea Riley of Ally. “The site is a perfect complement to the Time program and will serve as an online community for dealers, local leaders and even consumers to share stories and collaborate on how to get involved and make a difference.”
 
“It is truly inspiring to read these stories and see the tangible impact dealers are making in their communities every day.”
 
 

75% of drivers say technology in cars goes too far

September 28, 2012

A new Harris Interactive poll of 2,634 adults reveals 76 percent think in-car connectivity is too distracting and even dangerous. More than half think manufacturers have taken interior auto technology too far.
 
But it turns out the poll reveals more than people’s thoughts about the dangers of driving while distracted. Six in 10 of those polled are also worried about their privacy, including where they’ve been and how they drove while getting there.
 
And 41 percent of U.S. car owners think that their insurance rates could increase because of what in-car technology reveals about their driving habits.
 
That’s more of a concern among younger drivers between 18 and 35 (46 percent) and men (46 percent).
 
Motorists are ambivalent overall about gadgets in their rides, though. 61 percent see their car as a haven from the outside world and don’t wish to be connected to the outside world. At the same time, more than half say in-car connectivity makes driving more enjoyable and makes them feel safer while on the road.
 
Men in particular enjoy having connectivity in their cars (64 percent) more than women (53 percent) and feel safer with technology on-board (61 percent) compared to women (54 percent).
 
Age, unsurprisingly, determines whether or not you’re a fan of more info in a car. Boomers find technology a yawn, with only 39 percent of those aged 50 to 66 saying they think tech is important in their rides, while 58 percent of those 18 to 35 responded similarly.
 
It’s not even a matter of “thinking” distractions make driving dangerous, though, is it?
 
Once upon a time, common driver distractions while driving were limited to shaving, applying makeup, looking for something in the back seat or playing air guitar.
 
 

Northwood's 2012 auto show is Oct. 5-7

September 28, 2012

Under the theme “Driving the Dream,” the 2012 Northwood University International Auto Show runs Oct. 5-7 at the school’s Midland, Mich., campus.
 
The theme, said show General Chairman Patrick Faber, “focuses on the idea that with each vehicle sold, the buyer has a ‘dream’ for that particular vehicle. The theme also expresses each vehicle’s ability to provide a unique experience that fulfills the expectations of its buyer.
 
“By displaying a wide variety of vehicles, it is possible to showcase many dreams, whether it is to drive an exotic sports car, obtain basic transportation, or enjoy the use of recreational vehicles.”
 
The show features more than 500 new domestic and imported cars, trucks, recreational vehicles, vans, experimental and specialty vehicles, plus various exciting automotive aftermarket products.
 
The Northwood show attracts about 50,000 visitors annually. For more information and a schedule of events, go to www.northwood.edu/autoshow or call (989) 837-4823.
 
 

'13 Presidents Day is Oaklee's Family Guide Day at Chicago Auto Show

September 28, 2012

The 2013 Chicago Auto Show is partnering with a suburban Chicago quarterly guide to area children’s activities to present the auto show’s first-ever Family Day.
 
Oaklee’s Family Guide, launched in 1999 by suburban mothers who wanted to know about nearby children’s activities, will organize kid-friendly activities and entertainment for the whole family at McCormick Place on Feb. 18.
 
The print and online guide also will highlight the Chicago Auto Show in its winter 2013 edition, with a front-page cover and a special section inside.
 
Dealers might be interested in advertising opportunities in Oaklee’s Family Guide. The publication’s media kit indicates that it reaches more than 1 million readers, that more than half its readers are ages 35 to 44, and that its audience has an average household income of $96,906.
 
To discuss advertising, contact sales@oakleesguide.com or (847) 478-9692.
 
 

In Memoriam: George Zouganelis

September 28, 2012

George Zouganelis, who started dealership work in 1953 and later became sole proprietor of a General Motors dealership in Wilmington, died Sept. 16 at age 88.
 
Mr. Zouganelis served in the U.S. Air Force before working for the Douglass family, who owned Community Motors. He bought Community Oldsmobile-Pontiac in 1967, and added GMC in 1993. The dealership currently operates as Community GMC, under the direction of his sons George Jr. and Peter.
 
Mr. Zouganelis was a member of All Saints Greek Orthodox Church in Joliet, and he enjoyed vegetable gardening.
 
In addition to his sons, survivors include Helen, his wife of 58 years; two grandchildren; and two step-grandchildren.
 
Memorials appreciated to Kuzna Care Cottage in Wilmington, (815) 476-2030; and to several Wilmington and Joliet schools and churches.
 
 
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