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2 0 18 A PUBLICATION OF THE NATIONAL INDEPENDENT
AUTOMOBILE DE ALERS ASSOCIATION
F E A T U R I N G T H E 2 0 17 N A A A
YEAR IN REVIEW
4 2018 N I A DA U S E D C A R I N D U S T RY R E P O R T
2 0 18 USED CAR INDUSTRY REPORT
TABLE OF CONTENTS
SECTION 01 - NIADA MEMBERSHIP DATA ...................................................................6 SECTION 10 - SHOULD YOU CONSIDER
SECTION 02 - NIADA Q2 BUSINESS CONFIDENCE SURVEY......................................12 ALTERNATIVE LOAN BORROWERS?...........................................................................44
SECTION 03 - BUY HERE-PAY HERE...........................................................................14 SECTION 11 - CONSUMER EXPERIENCE....................................................................48
SECTION 04 - NADA USED CAR SALES BY MONTH BY CHANNEL..............................22 SECTION 12 - USED CAR MARKET VEHICLE HISTORY TRENDS.................................50
SECTION 05 - AUTO BUYING PATTERNS BY BODY STYLES.......................................24 SECTION 13 - IMPOUND STORAGE FEES, A BILLION-DOLLAR PROBLEM...............54
SECTION 06 - TESLA: COMING IN HOT!.....................................................................28 SECTION 14 - BLOCKCHAIN: TRANSPARENCY, INTEGRITY, RELIABILITY................58
SECTION 07 - 2018 CAR BUYER JOURNEY STUDY.....................................................32 SECTION 15 - MARKETING EFFECTIVENESS..............................................................62
SECTION 08 - AUTOMOTIVE FINANCE MARKET.........................................................36 SECTION 16 - RETENTION VALUES ANALYSIS............................................................66
SECTION 09 - SUBPRIME CREDIT & LENDING TRENDS ...........................................40 SECTION 17 - 2017 NAAA YEAR IN REVIEW...............................................................71
INDUSTRY CONFIDENCE REMAINS STRONG AMID GROWING RETAIL DEALERS MEASURE OPTIMISM AGAINST
INCREASING WHOLESALE COSTS AND A 10-
SALES, LOW UNEMPLOYMENT AND COMPETITIVE INTEREST RATES YEAR HIGH IN CONSUMER WAGE GROWTH
By Steve Jordan, like NADA, NAAA and NABD are vital to our CARFAX summarizes vehicle history trends in
advocacy efforts.
NIADA CEO We are proud to work include the 2017 NAAA
Section 12, as well as providing a second year of
data on vehicle recalls by state.
The 2018 Used Car Industry
Year in Review within this report (Section 17), The chart on page 52 shows the number of
Report picks up the industry
including a summary of the annual Manheim recalled vehicles has dropped in nearly every
narrative as it rebounds from
Market Report and Outlook for the rest of 2018. state, illustrating how successful CARFAX and
the fluctuations in automotive
In Section 3, NABD provides in-depth analysis NIADA have been in moving toward the goal of a
lending and underwriting over
of the Buy Here-Pay Here segment for the year 100 percent completion rate for open recalls.
the past couple of years.
past, along with forecasts for what BHPH dealers Dealers can alleviate consumer concerns
Prime and near-prime lenders are
can expect for the rest of 2018 and beyond. about recalls by repairing and/or disclosing open
normalizing their marketplace positions and
The Used Car Industry Report is also filled recalls during the purchase process, boosting
competing for customers with stronger incomes,
with invaluable data from several of NIADA’s trust and making your dealership stand out from
and by extension are placing tighter restrictions
industry vendor partners and leading nationally the competition.
on auto finance contracts for non-prime and
recognized automotive brands. These companies We’re pleased to offer a new section of data
subprime customers.
spend millions of dollars on research of the used about impound storage fees and their costly
Auto lenders lending in their normal channels
vehicle industry, including dealer and consumer effect to the bottom line of dealers nationwide,
is good for the industry, especially Buy Here-Pay
studies and while papers, contributing to the presented in Section 13 by another NIADA
Here dealers and operators.
overall perspective and confidence we all have in industry partner, GoldStar by Spireon.
The report opens with detailed statistics and
the automotive industry. Another new section providing data on
demographics from NIADA’s members, a great
In Section 4, J.D. Power/NADA Used Car blockchains and the effects alternative
tool to see how your dealership compares to
Guide provides a breakdown of used car sales by currencies such as bitcoin will have on the used
other dealer members nationwide.
channel by month. In Section 5 industry partner auto industry is provided by another new NIADA
Special thanks to those who take the time to
CarGurus goes a step further and details auto industry partner, Acertus. See Section 14 for that
complete our membership surveys. Your time
buying patterns by body style. And in Section 6, fascinating narrative.
and effort is extremely important, ensuring
Dominion gives us details on Tesla vehicles and Dealer marketing is again included in this
statistical relevance and creating a benchmark
other electric vehicle sales. year’s report, but with a fresh perspective
for NIADA membership.
Autotrader, Dealer.com and KBB teamed up presented in Section 15 by NIADA industry
The NIADA Business Confidence Survey
once again to present the 2018 Car Buyer Journey partner DealerCenter. It details website traffic
(Section 2) continues to add a unique, real-time
Study in Section 7, an important look at the and lead generation, where dealers are posting
dealer perspective on the state of the industry
customers are who purchase used vehicles and inventory online, Google search results, mobile
and its confidence regarding key business
how they shop. search and much more.
indicators.
NIADA has partnered again with Experian and And as always, industry partner Black Book
The quarterly results, compiled with the
Equifax to provide a detailed analysis of the used provides its yearly retention values analysis
assistance of industry partner Equifax, are a
automotive finance and subprime markets and (Section 16).
great educational tool to pass on to legislators,
credit trends (Sections 8 and 9). I’d like to thank all of our industry partners
regulators, media and others who seek better
In Section 10, one of our newest industry who help us make NIADA’s annual Used Car
insight into the industry on a timely, consistent
partners, TransUnion, details its insights on Industry Report a must-have in understanding
basis.
consumers and the alternative credit market. our industry.
As NIADA continues to educate national, state
More consumer data is presented by RouteOne And I want to thank you, our dealer members
and local officials about the used auto industry,
in Section 11, taking a deep dive into consumer and our allied industry partners for your ongoing
our strong alliances with industry associations
digital workflow experiences. feedback and support of our shared goals.
A Publication Of The National Independent Automobile Dealers Association. Used Car Dealer (ISSN# 0279425X)is published monthly with one additional special issue, Used Car Industry Report, that is published in October by the National
Independent Automobile Dealers Association Services Corporation, 2521 Brown Blvd., Arlington, TX 76006-5203; phone (817) 640-3838. Annual subscription rates for NIADA members: $8. Non-member subscription rates are $150. Periodicals postage
paid at Dallas, TX. POSTMASTER: Send address changes to Used Car Dealer, 2521 Brown Blvd., Arlington, TX 76006-5203. The statements and opinions expressed herein are those of the individual authors and do not necessarily represent the
views of Used Car Dealer or the National Independent Automobile Dealers Association. Likewise, the appearance of advertisers, or their identification as member of NIADA, does not constitute an endorsement of the products or services featured.
Copyright© 2018 by NIADA Services, Inc. All rights reserved.
2018 N I A DA U S E D C A R I N D U S T RY R E P O R T W W W. N I A DA .CO M 5
NIADA MEMBERSHIP DATA
Section 01
One of the best ways to gauge the success of your dealership • More than 53% of our membership sell vehicles in the
and its operations is to compare your dealer demographics and 6-10 year old range.
your dealer data to those of other NIADA members around the • More than 60% of our dealer members sell vehicles in the
country. Each year NIADA surveys its members on a quarterly retail price points of $5,000 to $10,000.
basis on a variety of topics covering demographic and business • 71% of our dealer members have annual sales volumes of
data. $2.5 million or less.
In addition, we were able to pull six key data points of our • 72% of our dealer members sell 400 units or less per year.
dealer members from our InfoGroup data on page 7 of this • 96% of our dealer members are single location dealers.
section. The six charts on page 7 are derived from over 10,700 • 64% of our dealer members have 1-4 employees.
confirmed dealer member records within our InfoGroup data, • NIADA Dealer Members overwhelmingly rely on online
providing a 100% confidence level in the validity of the data on advertising as their main advertising avenue. Also, dealer
this particular page of the report. members reported an 18% increase in mobile advertising.
Age of Vehicles Sold What is the Nature of Your Business?
(PERCENTAGE OF RESPONDENTS) SOURCE: NIADA MEMBER SURVEY
• 2016
• 2017 (PERCENTAGE OF RESPONDENTS) SOURCE: NIADA MEMBER SURVEY
• 2016
• 2017
55 NOTE: NUMBERS WON’T
70 NECESSARILY ADD UP TO 100%
50 BECAUSE DEALERS CAN CHOOSE
MORE THAN ONE CATEGORY.
45 60
40
50
35
30 40
25
30
20
15 20
10
6.2%
4.3%
4.2%
10
3.9%
4.5%
5
3.4%
45.0%
68.9%
35.8%
25.6%
23.0%
14.6%
91.4%
53.2%
29.1%
2.1%
57.8%
12.1%
49%
38%
8.8%
30.5
0 0
Retail
Parts
BHPH
Wholesale
Rental
Leasing
Service
Dept.
Dept.
1-2 3-5 6-10 11+
YEARS YEARS YEARS YEARS
Average Vehicles in Inventory Average Retail Price
(PERCENTAGE OF RESPONDENTS) SOURCE: NIADA MEMBER SURVEY
• 2016
• 2017 (PERCENTAGE OF RESPONDENTS) SOURCE: NIADA MEMBER SURVEY
• 2016
• 2017
35
60
30
55
50
25
45
40
20
35
30
15
25
10 20
15
5 10
2.9%
60.4%
54.5%
33.6%
14.5%
13.3%
10.7%
1.2%
15.7%
13.5%
16.4%
5
8.4%
2.8%
12.2%
16.7%
0.7%
12.7%
19.5%
10.7%
1.1%
11.9%
15.7%
1.1%
7.6%
7.2%
35%
0 0
1-10 11-20 21-30 31-50 51-75 76-100 101-200 200+ $0-5,000 $5,001-10,000 $10,000-15,000 $15,001-20,000 $20,001+
vehicles
6 2018 N I A DA U S E D C A R I N D U S T RY R E P O R T
NIADA INFO GROUP DATA Section 01
Annual Sales Volume Annual Retail Sales by Unit
SOURCE: INFOGROUP
• 2016
• 2017 SOURCE: INFOGROUP
• 2017
35 30
30
25
25
20
20
15
15
10
10
5
3.3%
3.5%
5
26.4%
28.7%
34.8%
36.0%
35.0%
35.0%
13.6%
13.0%
17.7%
6.2%
8.0%
8.0%
7.1%
7.1%
8.7%
7.9%
0 0
less than $1 $1-2.5 $2.5-5 $5-10 more than 0 - 100 101 - 250 251 - 400 401 - 550 551 - 700 701 - 850 851 - 1000 1000+
million million million million $10 million
Number of Years in Business Multiple Locations Number of Employees
SOURCE: INFOGROUP
• 2016
• 2017 SOURCE: INFOGROUP SOURCE: INFOGROUP
• 2016
• 2017
• 2016
• 2017
30 90 70
80
60
25
70
50
20 60
50 40
15
40 30
10 30
20
20
10.0%
10.0%
8.0%
9.0%
5
10
4.0%
10
4.3%
96.0%
20.0%
62.3%
18.0%
16.0%
64.0%
10.0%
28.4%
23.4%
27.0%
20.8%
95.7%
27.0%
16.4%
11.0%
18.7%
0 0 0
1-5 years 6-10 years 11-15 years 16-20 years 21+ years single multiple 1-4 5-9 10-19 20+
location locations
Advertising Spend Annual Dealership Size by Square Footage
SOURCE: INFOGROUP
• 2016
• 2017 SOURCE: INFOGROUP
• 2016
• 2017
35 65
60
30 55
50
25
45
40
20
35
30
15
25
20
10
15
7.0%
7.5%
5 10
4.0%
4.2%
28.0%
33.3%
35.0%
23.0%
66.0%
65.4%
28.0%
22.4%
22.9%
5
22.0%
8.0%
8.4%
7.0%
7.9%
0 0
less than $10K $10-20k $21-50k $51-100k more than $100k less than 2,500 2,500-10k square 10k-40k square feet more than 40k
square feet feet square feet
W W W. N I A DA .CO M 7
Section 01 NIADA MEMBERSHIP FINANCING
How do you Finance/Floorplan your Inventory? What Finance Options do you Supply to your Customers?
(PERCENTAGE OF RESPONDENTS)
• 2016
• 2017 (PERCENTAGE OF RESPONDENTS)
• 2016
• 2017
NOTE: NUMBERS WON’T
NECESSARILY ADD UP TO 100%
BECAUSE DEALERS CAN CHOOSE NOTE: NUMBERS WON’T
65 MORE THAN ONE CATEGORY. NECESSARILY ADD UP TO 100%
BECAUSE DEALERS CAN CHOOSE
60 MORE THAN ONE CATEGORY.
55 55
50 50
45 45
40 40
35 35
30 30
25 25
20 20
15 15
10 10
5
49.6%
36.4%
5
46.8%
45.5%
62.5%
48.2%
55.5%
32.6%
50.2%
27.5%
61.4%
18.5%
27.5%
51.3%
0 0
banks auction floorplanning cash BHPH finance company banks credit union
Advertising Media Used Average Down Payment
(PERCENTAGE OF RESPONDENTS)
• 2016
• 2017 (PERCENTAGE OF RESPONDENTS)
• 2016
• 2017
NOTE: NUMBERS WON’T
NECESSARILY ADD UP TO 100%
80 BECAUSE DEALERS CAN CHOOSE
MORE THAN ONE CATEGORY. 50
70 45
40
60
35
50
30
40 25
20
30
15
20
10
10
3.0%
5
4.1%
25.6%
4.1%
1.0%
80.0%
23.5%
49.4%
8.4%
34.4%
45.5%
14.0%
14.3%
76.6%
19.8%
21.0%
21.3%
11.8%
14.8%
21.1%
12.2%
7.5%
1.3%
9.1%
1.2%
5.7%
0 0
TV
newspaper
radio
specialty
pubs
online
magazine
mobile
other
up to $1,000 $1,001-$1,500 $1,501-$2,000 $2,001-$2,500 $2,501+
Average Term of Contract If you are a BHPH Dealer, 2016 2017
(PERCENTAGE OF RESPONDENTS)
• 2016
• 2017
do you have a Related
Finance Company?
35
(PERCENTAGE OF YES
30.9% YES
RESPONDENTS) 19.4%
30 NO
69.1% NO
80.6%
25
20
15 Separate F&I Department 2016 2017
(PERCENTAGE OF
RESPONDENTS)
10 YES
20.1% YES
20.2%
5
3.0%
NO
79.9%
20.4%
22.6%
32.2%
14.9%
14.8%
NO
27.3%
26.1%
31.3%
7.3%
79.8%
0
0-12 months 13-24 months 25-36 months 37-48 months 49+ months
8 2018 N I A DA U S E D C A R I N D U S T RY R E P O R T
W W W. N I A DA .CO M 9
Section 01 NIADA MEMBERSHIP AUCTIONS, SERVICE, AFTERMARKET
Where do you Buy your Vehicles? How do you Wholesale your Vehicles? How Often Does your Dealership Attend
(PERCENTAGE OF RESPONDENTS) (PERCENTAGE OF RESPONDENTS)
Auctions Per Month? (PERCENTAGE OF RESPONDENTS)
• 2016
• 2017
NOTE: NUMBERS WON’T
• 2016
• 2017
NOTE: NUMBERS WON’T • 2016
• 2017
NECESSARILY ADD UP TO 100% NECESSARILY ADD UP TO 100%
90 BECAUSE DEALERS CAN CHOOSE
90 BECAUSE DEALERS CAN CHOOSE 45
MORE THAN ONE CATEGORY. MORE THAN ONE CATEGORY.
80 80 40
70 70 35
60 60 30
50 50 25
40 40 20
30 30 15
20 20 10
10 10 5
46.6%
46.8%
41.8%
43.5%
23.0%
18.6%
28.4%
83.8%
37.0%
2.0%
11.9%
31.9%
22.9%
27.7%
15.9%
30.4%
88.0%
97.4%
81.1%
47.1%
43.7%
12.7%
0 0 0
8 or more times
5-7 times
none
1-4 times
auctions
auctions
online
online
other dealers
wholesalers
other dealers
What do you Spend per Unit How Many Service Bays do you Operate?
50
Reconditioning your Vehicles? 35 (PERCENTAGE OF RESPONDENTS)
45 (PERCENTAGE OF RESPONDENTS) • 2016
• 2017
40 • 2016
• 2017
30
35 25
30
20
25
20 15
15 10
10
5.0%
5
3.2%
5
39.4%
35.3%
41.5%
18.2%
47.5%
32.7%
22.5%
27.6%
22.6%
25.1%
35.6%
16.7%
17.2%
9.9%
0 0
$501-$1,000
$1,001-$2,000
$2,001+
0-$500
0 1-2 3-5 6+
Do you Sell Warranties/ If Yes, How Many Warranties/ Do you Use GPS Devices? If Yes, What Functions
Service Contracts? Service Contracts do you Sell • 2016
• 2017 are Included?
• • Per Month?
64 %
2016 2017
.8%
.3
.3%
70%
65
.6%
53
60%
50%
48
YES NO YES NO 50%
61.8% 38.2%
YES 40% 37.5% 62.5% YES
56.2% 46.6%
NO NO 40%
18 9%
43.8% 30% 53.4%
.0%
.2%
12 .5%
.
21
30%
29
28
4.9 %
130%
20%
.4
.7%
.
7.9 %
20%
%
%
10
8.8
%
10%
%
7.0
5.7
10%
0
1-5 6-10 11-20 21-30 31+ 0
GPS STARTER PAYMENT
INTERRUPT REMINDER
Do you Sell Aftermarket Products? Do you Offer Certified Pre-Owned Vehicles? Do you Have a Rental Car Operation?
• 2016
• 2017
• 2016 • 2017
• 2016 • 2017
YES YES
14.7% YES 11.8% YES
YES
30.6% YES 15.5% 11.2%
25.7%
NO NO NO
69.4% 85.3% 88.2%
NO NO NO
74.3% 84.5% 88.8%
10 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 11
NIADA Q2 BUSINESS
CONFIDENCE SURVEY
INDUSTRY
NEWS
Section 02
The economic and corresponding retail sales growth expectations of Second, used vehicle inventory costs remain high – the latest Manheim
independent used vehicle dealers continued to be very conservative in Used Vehicle Value Index rose to 134.9, a 4.3 percent increase from a year
NIADA’s business confidence survey for the second quarter of 2018. ago and the highest level since last October.
Economic growth expectations were down 7 percent from the first That’s also reflected in the Q2 business confidence survey, as 67 percent
quarter survey, with only 39 percent expecting improvement, and retail of respondents said they expect their dealership costs will increase this
sales growth expectations rose slightly to 53 percent. Customer traffic quarter.
expectations took a larger jump, with 49 percent of dealers saying they The escalation of business expenses is also due in part to the significant
anticipate more customers coming into their dealership in the current investment independent dealers must make to compete in the digital
quarter. showroom. The survey shows dealerships continuing to increase the
Those results align with the current environment of high consumer digital component of their sales and marketing budgets.
confidence, unemployment at its lowest rate since 2000, wage growth at a On a positive note, U.S. retail sales rose solidly in June as households
10-year high and still historically competitive interest rates. boosted purchases of automobiles and other goods, cementing
There are two major challenges to independent dealers taking advantage expectations for robust economic growth.
of those positive trends. The Commerce Department reported retail sales increased 0.5 percent
First is a retrenchment of auto finance funding, particularly in the in June and data for May was revised to show sales rising 1.3 percent,
subprime and nonprime credit tiers, as noted by the 40 percent of the largest since September 2017, instead of the previously reported 0.8
respondents to the NIADA survey who indicated auto finance companies percent gain.
were placing tighter restrictions on auto finance contracts. BY SCOTT LILJA
To deal with that and to capitalize on the expected increase in customer Scott Lilja is NIADA’s senior vice president
traffic, dealers can be more creative with pre-approvals and credit checks. of member services. He can be reached at
Equifax’s latest Auto Consumer Credit study showed 52 percent of scott@niada.com.
prospective purchasers have undergone a credit check but just 15 percent
intend to get pre-approved for their desired vehicle and 32 percent do not BY JENNIFER REID
plan to seek approval during the shopping process. Jennifer Reid is Equifax’s vice president
Dealers can play a larger role in helping or encouraging pre-approvals, of Automotive Marketing and Strategy
which can create a less adversarial negotiating environment and a faster Leader. She can be reached at
jennifer.reid@equifax.com.
shopping process.
Overall, does your dealership expect economic What is the single most important problem facing your business today?
conditions to improve, stay the same, or decline in Q1 Q2
the auto industry over the next quarter? ECONOMIC LACK OF LACK OF LACK OF
5% 5% CONDITIONS QUALITY QUALITY CUSTOMER
Q4 Q1 Q2 6% 10% WHOLESALE RETAIL PROSPECT
IMPROVE 50% 42% 39% 14% 10% 9% GOVERNMENT INVENTORY INVENTORY TRAFFIC/
11% REGULATIONS/ LEADS
STAY SAME 39% 48% 46% 12% RED TAPE INCREASED LACK OF
8%
DECLINE 11% 9% 15% 17% COST OF FINANCING/ OTHER
12% HEIGHTENED DOING CREDIT
10%
Does your dealership plan to expand its business 23% COMPETITION BUSINESS RESOURCES
FROM
over the next quarter? (i.e. add new equipment, 22% 8% 9%
FRANCHISE
8%
enhance your building/property) DEALERS
Q4 Q1 Q2
YES 38% 34% 29% Do you anticipate your dealership’s retail sales to Which of the following factors are making it more difficult
NO 62% 66% 71% grow, stay the same or decrease over the next quarter? for dealers to secure loans for their customers?
What percentage of the following categories makes Q4 Q1 Q2 Factors
up your total retail automobile sales? GROW 67% 50% 53%
STAY SAME 26% 40% 35% Tighter restrictions 40%
Q4 Q1 Q2 to qualify buyer loans (credit tiers)
PRIME 40% 36% 42% DECREASE 7% 10% 12%
BHPH 36% 40% 34% Less access to number of lenders 25%
SUBPRIME 24% 24% 24% Do you see your dealership’s cash flow improving, More verification of buyers background
14%
(employment, income, residence address, etc)
Do you expect your dealership’s credit availability to staying the same, or declining over the next quarter?
Q4 Q1 Q2 Worsening terms affecting ability to 25%
expand, stay the same or reduce over the next quarter? effectively compete with Franchise Dealers
IMPROVE 56% 45% 44%
Q4 Q1 Q2 STAY SAME 33% 37% 33% Other 15%
EXPAND 31% 21% 26% DECLINE 11% 18% 23%
STAY SAME 67% 73% 72% It’s not more difficult for dealers 15%
REDUCE 2% 6% 3% to secure loans for customers
Does your dealership expect customer traffic to
Do you anticipate your dealership’s total expenses increase, stay the same or decrease over the Note: Numbers won’t necessarily add up to 100%
(cost of business) to increase, stay the same or next quarter? because dealers can choose more than one response.
Q4 Q1 Q2 In which department does your dealership anticipate hiring
decrease over the next quarter? INCREASE 63% 41% 49%
Q4 Q1 Q2 STAY SAME 28% 42% 40% new staff over the next quarter?
INCREASE 57% 66% 67% DECREASE 9% 17% 11% Q4 Q1 Q2
STAY SAME 37% 29% 31% SALES 50% 23% 21%
DECREASE 9% 5% 3% FINANCE 8% 7% 6%
Considering the following SERVICE 29% 22% 26%
Increase Hold Decrease Increase Hold Decrease OTHER 13% 6% 5%
marketing channels, please
indicate the level of investment *DIGITAL 49% 46% 6% NEWSPAPER 4% 68% 28% DON’T - 42% 41%
your dealership plans to make TV 2% 64% 34% OUTDOOR 10% 59% 31% ANTICIPATE
over the next quarter. RADIO 10% 63% 27% DIRECT MAIL 9% 58% 33% HIRING
*ONLINE AND MOBILE
12 2018 N I A DA U S E D C A R I N D U S T RY R E P O R T
In partnership withW W W. N I A DA .CO M 13
BUY HERE-PAY HERE
2017
INDUSTRY
BENCHMARKS
Section 03
For 2017, The National Alliance of Buy Here, Pay Here these statistics provide a comprehensive look at the financial
Dealers (“NABD”) and Subprime Analytics, with the approval and operating performance of the BHPH industry, and
and participation of the National Independent Automobile important trend information.
Dealers Association (NIADA), prepared these industry
benchmarks from a database of dealer/operators nationwide. Effective January 1, 2018, NIADA purchased the assets
The financial benchmarks included herein were prepared and and operations of NABD and merged the two organizations.
contributed by SGC Certified Public Accountants (“SGC”). Subprime Analytics has contracted to provide analytical
The financial information they used represents a composite services, including periodic benchmark data, to NIADA in the
of the “best performing” operators and not an average future to support important legal and regulatory positions for
of the entire industry. These benchmarks also include the used car industry. On June 18-21 NIADA and NABD hold
operating information on sales, collections and recoveries, a combined used car conference in Orlando at Rosen Shingle
and inventory management, supplied by NCM and NIADA Creek Resort, where we discussed these benchmarks and
20 Groups from composites of their BHPH members. Also trends to help operators understand the changing subprime
included are portfolio performance metrics which were auto finance market. For further information, visit www.
compiled electronically by Subprime Analytics (“Subprime”) bhphinfo.com or www.niada.com. Industry benchmark
which, to date, has analyzed approximately $20 billion reports for the past five years can be downloaded free of
(nearly 2.0 million deals) of subprime installment contracts charge at www.subanalytics.com.
to identify loss rates, patterns, and trends. In the aggregate,
2017 Year In Review!
The financial benchmarks for 2017 continue to reflect a 3) Operators who did not increase the cost of vehicles
high level of competition within the deep subprime market they sold, lower their down payments, increase their
that began in 2013. The more significant factors that sales prices and the corresponding amounts financed,
impacted deep subprime performance in 2017 were: enjoyed higher returns on their portfolio investments
1) Unit sales were generally flat from 2016 volumes and stronger collection results.
However, operators increased sales prices and the 4) Recovery values for repossessed vehicles which were
related amounts financed in an attempt to maintain not retailed stabilized in 2017, but remain more than
profitability. Absent corresponding increases in the 50% lower than realizations from a few years ago.
down payments and repayments the terms of these This caused increases in net charge-offs and lowered
originations were lengthened. Individual operators the average recoveries expressed as a percentage of
were affected by varying levels of competition in delinquency balances.
their local markets. Rural markets again were less 5) Financing rates which approximated 20% per annum
competitive than major urban cities. A few operators have remained relatively consistent for the last three
added lots in an attempt to gain market share but their years in those states that do not have a mandated
growth was restrained by capital availability. Experian interest rate cap.
automotive market data indicated a modest increase 6) A comparison of the business models used by the
of only 0.4% in outstanding receivables for the BHPH independent operators surveyed, compared with
industry in 2017 with larger increases in used financing those models used in deep subprime auto bond
shifting to captives and to credit unions. Wall Street securitizations, indicated lower amounts financed,
auto securitizations of deep subprime paper slowed shorter terms, and lower average monthly payments by
dramatically in 2017. Securitizations previously fueled the independents.
significant growth in finance company portfolios 7) “Cash in deal,” which measures portfolio risk, increased
during the last three years. Wall Street securitizers in by approximately 12% when operators increased the
2017 tightened underwriting criteria and shifted their average cost of the vehicles they sold.
emphasis to prime and near prime customers as the 8) Overall profitability improved slightly in 2017 due to
year progressed. higher financing income from new originations and
2) Defaults on deep subprime auto bond securitizations reduced operating expenses from cost-cutting.
in 2017 created a tightening of credit availability for
subprime auto. Banks and other regulated capital BY KENNETH SHILSON, CPA
providers implemented more stringent underwriting Ken Shilson (ken@kenshilson.com)
is president of Subprime Analytics
criteria and shifted to higher credit quality customers. (www.subanalytics.com) and
Unregulated capital providers, like hedge funds and NABD (www.bhphinfo.com).
specialty finance companies, are entering the subprime
financing market to supplement the capital needs.
14 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TSection 03
What’s Ahead For 2018?
Although 2017 was a challenging and
COST OF GOODS SOLD AND
competitive year, some new profit opportunities
are ahead for independents in 2018 as follows:
1) Although capital availability for subprime
OPERATING EXPENSE DETAIL
auto will be tighter, competition from
finance companies and captives will
decline as they shift to higher credit quality
customers. This creates an excellent
COST OF VEHICLE SALES opportunity for independents to regain
% OF VEHICLE SALES
market share if they have capital available to
2014 2015 2016 2017 fund the growth.
2) Cash efficient business models will provide
Cost of Vehicles 50.06% 49.59% 49.24% 49.47% higher returns on portfolio investments and
Reconditioning Costs 7.63% 8.31% 8.39% 7.87%
Other 2.72% 2.44% 3.13%
reduce portfolio risk.
2.66%
3) Customer relationships are needed to regain
TOTAL COST OF VEHICLE SALES 60.41% 60.34% 60.76% 60.00% and to retain the best subprime customers.
Operators who proactively use social media
TOTAL OPERATING EXPENSE to connect and collect with customers will
do better. Advance tax refunds and irregular
2014 2015 2016 2017 payments also help regain market share.
4) In order to control operating costs,
Advertising 3.82% 3.93% 3.74% 3.53%
Bank Charges implementing new technology to improve
0.28% 0.18% 0.17% 0.17%
Contributions 0.03% 0.02% 0.03% 0.03% efficiencies is recommended. The biggest
Depreciation 0.46% 0.52% 0.49% 0.43% historical BHPH “game changers” have been
Dues and Subscriptions 0.12% 0.14% 0.15% 0.21%
Insurance pay portals (ACH, debit cards, etc.), GPS to
0.29% 0.32% 0.31% 0.39%
Legal and Accounting 0.45% 0.28% 0.24% 0.22% improve recoveries and collections, and the
Outside Services 0.20% 0.38% 0.79% 0.46% use of related finance companies to reduce
Office Expense 0.83% 0.90% 0.79% 0.76%
Rent
federal income taxes on “phantom income.”
2.20% 2.27% 2.28% 2.09%
Repairs and Maintenance 0.16% 0.34% 0.15% 0.31% Texting is the next “game changer” to
Salaries (Non-Owners) 10.56% 11.36% 11.97% 11.00% connect with and collect from
Taxes - General 0.18% 0.07% 0.09% 0.12% subprime customers.
Other Operating Expense 0.03% 0.23% 0.16% 0.06%
Taxes - Payroll 0.84% 0.52% 0.51% 0.50%
5) As Congress enacts changes at the CFPB,
Utilities and Telephone 0.67% 0.42% 0.59% 0.41% compliance still remains very important.
Travel / Training 0.43% 0.38% 0.33% 0.31% The state Attorneys General will become
TOTAL OPERATING EXPENSE 21.55% 22.26% 22.79% 21.00% the new enforcers as the CFPB transfers its
enforcement power to them.
6) Competition for the best subprime
LOSS STATISTICS 2014-2017
customers has diluted their overall credit
(STATISTICS SUPPLIED BY SUBPRIME ANALYTICS)
quality. Therefore, tighter scrutiny of
2014 2015 2016 2017 customer stipulations will be needed to
SUBPRIME SUBPRIME SUBPRIME SUBPRIME “keep subprime vehicles sold.”
ANALYTICS ANALYTICS ANALYTICS ANALYTICS 7) While recovery rates stablized in 2017,
BENCHMARKS BENCHMARKS BENCHMARKS BENCHMARKS
further declines should be expected in later
Average Gross Dollar Loss (Before Recoveries) $8,408 $8,111 $7,771 $9,175 model inventory where off lease and off
Average Net Dollar Loss (After Recoveries) $5,749 $6,061 $5,916 $7,034 rental vehicles remain in abundant supply
Average Default Rate (% of Loans Written Off) 31.16% 31.45% 33.96% 34.97%
Average Gross Dollar Loss Rate (% of Principal) 38.57% 37.35% 38.76%
Operators must educate themselves on new
40.66%
Average Net Dollar Loss Rate (% of Principal) 26.37% 27.91% 28.42% 29.29% market developments and market changes,
Average Recovery (% of Principal Charged off) 31.60% 25.30% 23.87% 23.33% the newest technology, state regulatory
Highest Cumulative Default (Month After Origination) 18th Month 21st Month 22nd Month 22nd Month
Highest Frequency of Default (Month After Origination) 7th Month enforcement actions, and capital market
7th Month 7th Month 7th Month
Worst Periodic Loss (Month After Origination) February February February February availability to prosper on the
opportunities ahead.
THE ABOVE REFERENCED LOSS DATA WAS DETERMINED BY ELECTRONICALLY ANALYZING
APPROXIMATELY 1.7 MILLION LOANS, AGGREGATING APPROXIMATELY $15 BILLION, BY KENNETH SHILSON, CPA
TO IDENTIFY LOSS RATES AND TO UNDERSTAND WHY THEY OCCURRED.
Ken Shilson (ken@kenshilson.com)
(FINANCIAL STATISTICS SUPPLIED BY SGC CERTIFIED PUBLIC ACCOUNTANTS) is president of Subprime Analytics
(www.subanalytics.com) and
NABD (www.bhphinfo.com).
W W W. N I A DA .CO M 15Section 03
2014-2017 DEALER OPERATING INFORMATION (STATISTICS SUPPLIED BY NCM ASSOCIATES, INC. AND NIADA)
2014 2015 2016 2017
NCM NCM NIADA DEALER 20 NIADA DEALER 20
BENCHMARKS BENCHMARKS GROUP BENCHMARKS GROUP BENCHMARKS
SALES
Average Units Sold Per Dealer (BHPH Deals Only) 550 635 708 612
Average Cash In Deal Per Vehicle Sold $5,777 $6,353 $6,466 $5,922
Average ACV Per Vehicle Sold (Includes Recon) $6,237 $6,403 $7,438 $6,838
Average Reconditioning Cost Per Vehicle Sold $1,207 $1,221 $811 $824
Average Gross Per Vehicle Sold $4,484 $4,675 $5,868 $5,013
Average Down Payment
NIADA DEALER Average Amount Financed
Average Term Of Loan (In Weeks)
$1,089
$10,567
$1,091
$10,909
$972
$12,862
$916
$10,935
20 GROUP COLLECTIONS /
153 159 186 182
BENCHMARKS RECOVERIES
$92
WERE USED FOR Average Weekly Payment Amount $89 $91 $98
Percentage Of Accounts Past Due 16.3% 17.6% 17.9% 17.3%
101 82 94 88
2016 & 2017
Average # Of Past Due Accounts Per Collector
Average Loss Per Charge Off $4,820 $5,058 $6,807 $5,393
IN COMPARISON Average Portfolio Delinquency 83.80% 83.10% 82.10% 82.70%
Current 8.60% 9.70% N/A N/A
TO PAST NCM 0-10 Days N/A N/A 10.50% 10.00%
BENCHMARKS 1-15 Days 3.90% 3.90% N/A N/A
11-29 Days N/A N/A 3.60% 3.10%
16-29 Days 2.30% 1.90% 2.30% 2.40%
30-59 Days 0.90% 0.80% 0.80% 0.90%
60-89 Days 0.50% 0.60% 0.70% 0.90%
90+ Days 100.00% 100.00% 100.00% 100.00%
INVENTORY MANAGEMENT
Vehicle Days Supply (Units) 91 84 59 53
Average Inventory Aging 42.40% 41.30% 48.70% 44.60%
0-30 Days 23.70% 22.20% 23.50% 24.80%
31-60 Days 15.50% 14.70% 14.30% 14.00%
61-90 Days 18.40% 21.80% 13.50% 16.60%
91+ Days 100.00% 100.00% 100.00% 100.00%
BHPH Financial Trends BHPH Financial Trends
Average Cost Per Vehicle 2014-2017 SOURCE: SUBPRIME ANALYTICS Average Customer Down Payment 2014-2017
SOURCE: SUBPRIME ANALYTICS
7,000 900
800
6,000
700
5,000
600
4,000 500
400
3,000
300
2,000
200
1,000
100
$6,397
$7,201
$7,268
$7,150
$714
$801
$784
$835
0 0
2014 2015 2016 2017 2014 2015 2016 2017
16 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 17
Section 03
RATIO COMPARISONS, COMBINED BUY HERE-PAY HERE (STATISTICS SUPPLIED BY SCG CERTIFIED PUBLIC ACCOUNTANTS)
2014 2015 2016 2017
COMBINED BUY HERE-PAY HERE BALANCE SHEET AVERAGE AVERAGE AVERAGE AVERAGE
(Inventory X Days) / Cost Of Vehicle Sales 55.82 days
6.54x
53.44 days
6.73x
53.21 days
6.89x
50.54 days
7.02x
Cost Of Vehicle Sales / Average Inventory Dollars
Vehicle Sales / Average Inventory Dollars 11.47x 11.55x 11.39x 11.72x
Vehicle Sales / Total Assets 0.93x 0.89x 0.89x 0.87x
Total Assets / Total Liabilities 1.97x 1.78x 1.63x 1.63x
Allowance For Bad Debts / Finance Receivables* 23% 24% 26% 28%
Total Debt / Total Assets 51% 56% 62% 62%
* FINANCE RECEIVABLES ARE NET OF UNEARNED FINANCE CHARGES
COMBINED BUY HERE-PAY HERE INCOME STATEMENT 2014 2015 2016 2017
AVERAGE AVERAGE AVERAGE AVERAGE
Bad Debts / Vehicle Sales 26% 25% 27% 30%
60%
Cost Of Vehicle Sales / Vehicle Sales 60% 60% 61%
Gross Profit*** / Vehicle Sales 31% 31% 29% 29%
Operating Expense / Vehicle Sales 22% 22% 23% 21%
Interest Expense / Financing Income 18% 19% 18% 16%
Operating Income / Vehicle Sales 9% 9% 6% 8%
Financing Income / Vehicle Sales 17% 16% 17% 19%
Compensation** / Vehicle Sales 11% 11.4% 12% 11%
Reconditioning Cost / Vehicle Sales 8% 8.3% 8.4% 7.9%
NOTES TO RATIO COMPARISONS:
**COMPENSATION EXCLUDES THOSE OF THE OWNERS
***GROSS PROFIT IS NET OF BAD DEBTS AND FINANCING INCOME
X = TIMES
RATIO COMPARISONS, BUY HERE–PAY HERE INDUSTRY
BENCHMARKS PREPARED FOR NABD BY SGC CERTIFIED PUBLIC ACCOUNTANTS
THE NABD RESULTS - COMBINED DEALER AND FINANCE AFFILIATE NUMBERS - BREAK DOWN BALANCE SHEETS AND INCOME STATEMENTS INTO 16 CATEGORIES.
IT ALSO COMPARES 2017 TO THE PAST THREE YEARS SO DEALERS CAN EXAMINE INDUSTRY TRENDS.
BHPH Financial Trends Costs/Expenses 2014-2017 BHPH Financial Trends BHPH Financial Trends
NOTE: ALL EXPENSES ARE EXPRESSED AS A PERCENTAGE OF TOTAL SALES
Average “Cash In Deal” Average Amount Financed
• COST OF VEHICLES
• OPERATION EXPENSES
2014-2017 AVERAGE CASH IN
DEAL PER UNIT SOLD
2014-2017
60
55
6,500
50 6,000 12,000
45 5,500 11,000
40 5,000 10,000
35 4,500 9,000
4,000 8,000
30
3,500 7,000
25
3,000 6,000
20
2,500 5,000
15
2,000 4,000
10 3,000
1,500
5 1,000 2,000
60%
60%
21%
61%
22%
23%
60%
22%
$11,951
$10,765
$11,015
$11,090
$6,400
$5,683
$6,484
$6,315
0 500 1,000
2014 2015 2016 2017 0 0
2014 2015 2016 2017 2014 2015 2016 2017
SOURCE: SUBPRIME ANALYTICS SOURCE: SUBPRIME ANALYTICS SOURCE: SUBPRIME ANALYTICS
18 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 19
Section 03
BUY HERE-PAY HERE INDUSTRY BENCHMARKS
BHPH Financial Trends
BHPH LOSS METRICS-2017
Average Vehicle Cost, Cash Down Payment, Cash in Deal: 2016 2017
Two-Year Snapshot SOURCE: SUBPRIME ANALYTICS
BENCHMARK BENCHMARK
Average gross dollar loss (before recoveries) $7,771 $9,175
2016 2017 Average net dollar loss (after recoveries) $5,916 $7,034
7,000 7,000
Average default rate (% of loans written off) 33.96% 34.97%
Average recovery (% of vehicle cost) 23.87% 23.33%
6,000 6,000 Highest cumulative default month after origination 22nd Month 22nd Month
Highest frequency of default (month after origination) 7th Month 7th Month
5,000 5,000
Worst periodic loss month after origination February February
4,000 4,000 SOURCE: SUBPRIME ANALYTICS
3,000 3,000
2,000 2,000
3,000 3,000
$714
$801
$6,400
$5,683
$7,201
$6,397
1,000 1,000
0 0
BHPH BHPH
• AVERAGE VEHICLE COST
• AVERAGE CASH DOWN
• AVERAGE CASH IN DEAL
AVERAGE VEHICLE COSTS, CASH DOWN & AVERAGE CASH
IN DEAL AMOUNTS INCREASED DRASTICALLY FROM 2016-2017
BHPH Financial Trends BHPH Financial Trends NOTE:
Average Recovery Dollars Per Charge Off 2014-2017 Bad Debts 2014-2017 PERCENTAGES
ARE BASED AS
SOURCE: SUBPRIME ANALYTICS SGC CERTIFIED PUBLIC PERCENTAGE OF
ACCOUNTANTS VEHICLE SALES.
30
3,000
25
2,500
20
2,000
15
1,500
1,000 10
500 5
$1,855
$2,050
$2,659
$2,141
27%
25%
26%
30%
0 0
2014 2015 2016 2017 2014 2015 2016 2017
BHPH Financial Trends BHPH Financial Trends
Average Weekly Payment Amount Average Original Term (Months)
2014-2017 SOURCE: NCM, SUBPRIME ANALYTICS 2014-2017 SOURCE: NCM, SUBPRIME ANALYTICS
90
45
80 40
35
60 30
25
40 20
15
20 10
5
$89
$90
$88
$89
43
42
40
44
0 0
2014 2015 2016 2017 2014 2015 2016 2017
20 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 21
NADA USED CAR SALES BY
MONTH BY CHANNEL
2018
FULL-YEAR
EXPECTATIONS
Section 04 USED UNITS SOLD BY NEW CAR DEALERS
2015 2016 2017
2018 J.D. POWER VALUATION SERVICES
USED VEHICLE PRICE UPDATE January 719,904 785,159 816,509
The used vehicle market has performed exceptionally well in 2018. February 660,171 756,414 810,355
Through July, the J.D. Power Valuation Services’ Seasonally Adjusted March 916,664 813,834 844,694
Used Vehicle Price Index reached 119.3, a figure 4.7-percentage April 1,298,815 1,371,871 1,344,962
points above year-ago levels and 4.8-points above January 2018. May 1,558,152 1,534,867 1,479,451
Used vehicle prices really started showing strength in the middle June 1,601,582 1,670,202 1,615,366
half of 2017, and the trend has continued deep into the summer July 1,625,629 1,687,580 1,636,852
selling season this year. August 1,485,028 1,527,600 1,551,214
Most of the used market’s strength has been driven by September 1,363,032 1,383,885 1,683,582
mainstream car growth. Compact car prices are up 9% from October 1,153,571 1,182,376 1,122,971
January’s level, followed by midsize and large car gains of 7%, November 1,118,468 1,142,912 1,102,685
respectively. Mainstream SUV prices have also shown significant December 1,146,519 1,111,505 1,099,194
positive movement, but not to the same degree as cars. For example, Annual 14,647,535 14,968,206 15,107,834
compact utility and midsize utility prices have increased 3%. While
things are primarily positive on the mainstream side of the market, USED UNITS SOLD BY USED CAR DEALERS
large SUV has registered a 2% decline, which can be largely explained
by a 28% increase in 0-5-year-old wholesale volume. 2015 2016 2017
Luxury segments are not performing as well as nearly all have
experienced declines so far this year. Luxury large utility prices have January 649,520 728,477 787,664
deteriorated the most and are down 6% from January’s level, while February 585,753 692,694 732,974
luxury compact utility prices are down ~2%. Other luxury segment March 828,143 845,755 841,737
losses haven’t been as severe as prices for the collective are down April 1,165,797 1,193,325 1,257,944
by roughly 1%. May 1,380,956 1,384,316 1,358,257
There are a few drivers behind the overall strength of the used June 1,440,989 1,557,425 1,527,458
market, including an increased dealer focus on used vehicle July 1,434,379 1,550,679 1,525,680
operations and vehicle affordability. August 1,309,380 1,355,591 1,389,770
Consumers can save money buying a well-maintained late-model September 1,275,535 1,313,715 1,620,229
used vehicle, while dealers can capitalize on used vehicle sales October 1,110,777 1,129,856 1,062,191
where profit margins are higher than for new vehicle sales. Many November 1,040,714 1,075,138 998,386
of the country’s top public dealership groups are capitalizing on December 1,097,073 1,065,952 1,004,248
this dynamic and the benefits were apparent in their latest earning Annual 13,319,015 13,892,922 14,106,537
reports. In their Q2 2018 earnings reports, Penske Automotive
Group Inc., Group 1 Automotive Inc. and Sonic Automotive Inc. each USED UNITS SOLD BY PRIVATE PARTY SALES
increased used vehicle sales by sizeable amounts, up 10%, 13% and
17%, respectively. Each dealer group also credited used sales for the 2015 2016 2017
increase in profits and they continue to state plans for even bigger
investments in used operations in the future. January 563,671 585,720 614,600
While the used market is doing well, the year’s improvement February 513,622 606,364 606,154
highlights the need for stakeholders to maintain diligence in their March 704,595 721,436 717,570
understanding of market dynamics and trends expected in the April 1,062,763 1,056,427 1,038,031
future. To that end, J.D. Power Valuation Services expects used May 1,269,839 1,274,443 1,215,582
vehicle prices for units up to eight years in age to increase by 1% in June 1,309,554 1,343,623 1,319,513
2018 relative to 2017. July 1,286,594 1,293,240 1,271,296
Negatives associated with weaker credit conditions, modestly August 1,197,603 1,212,251 1,274,272
higher incentives and yet another increase in used vehicle supply September 1,053,285 1,054,800 1,320,530
(+3% vs. 2017 for vehicles up to 5 years old) are expected to be October 836,649 824,044 926,019
offset by stronger employment, home prices, driving demand, and November 831,375 862,575 921,130
continued increases in vehicle quality. Gasoline prices are expected December 846,755 859,443 943,919
to have a relatively neutral impact. Annual 11,476,307 11,694,366 12,168,616
SUV prices are expected to soften as more units return to the used
market (especially compact SUVs). Mainstream passenger car prices USED VEHICLE RETAIL SALES BY YEAR TOTALS
should continue to firm up as supply falls, while luxury car prices
will soften due to the increased competitive pressure associated 2015 2016 2017
with SUVs and mainstream cars whose prices are lower, yet whose
design and optional equipment continue to push into luxury New Car Dealers 14,647,535 14,968,206 15,107,834
territory. Overall, 2018 should see used vehicle prices rebound back Used Car Dealers 13,319,015 13,892,922 14,106,537
to levels recorded two years ago, placing them 5% below the record Private Party Sales 11,476,307 11,694,366 12,168,616
high observed in 2014. TOTAL 39,442,856 40,555,494 41,382,987
SOURCE: NATIONAL AUTOMOBILE DEALERS ASSOCIATION
22 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 23
AUTO BUYING PATTERNS
BY BODY STYLES
2018 DATA REVEALS
SHOPPER HABITS &
PRICE TRENDS
Section 05
Dealers already know that a truck buyer and an SUV buyer want different things — but at CarGurus, we like to get
at the data behind auto shopping patterns and pricing trends. Here’s a look at how pickup, SUV, and sedan buyers
differ, according to data from CarGurus user activity and a survey of auto buyers of all types.
SUV buyers talk to dealers, pickup buyers do direct research
When we look at research habits of these types of That theme carries through to their activities on
buyers compared to the general population, we see that CarGurus, too. Truck buyers are more likely to read
SUV buyers are more likely to contact and engage with customer reviews of specific cars (34.9% increase vs.
dealerships, while pickup truck buyers are more likely baseline) — and much less likely to read expert reviews
to gather unbiased information themselves, through (58.8% decrease).
videos, talking to friends and family, and going directly
to the manufacturers’ sites.
Increase in shopping activities compared to average used car buyers
Pickup buyers SUV buyers
Top buyer concerns: pricing, choosing the right car
Overall, buyers are about evenly split on the most difficult factors, with 38% saying pricing and deal factors were the
most challenging, and 36% saying it was choosing the right car. Digging into the concerns of SUV and truck buyers
reveals some variation:
Most difficult parts of the buying process
Pickup buyers SUV buyers
1. Negotiating price 1. Finding right fit/deciding on car
2. Finding the right fit/deciding on car 2. Finding car in price range
3. Finding car in my price range 3. Negotiating price
4. Dishonest salespeople/false 4. Loan/financing process
advertising/inaccurate info 5. Dishonest salespeople/false
5. Finding a good, quality car advertising/inaccurate info
24 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TSection 05
What do they know when they start shopping?
Truck buyers SUV buyers Sedan buyers
38.9% 58.8% 47.1%
more likely to know the more likely to know the more likely to know the
exact model they want color they want color they want
36% 47.8% 21.7%
more likely to know what they’ll do more likely to know the more likely to know the
with the vehicle they’re replacing specific dealership specific dealership
27% 28.6% 8.5%
more likely to be certain more likely to know specific less likely to know the price
about type of vehicle awards or ratings they want they’re willing to pay
25.7% 26.3% 5.4%
less likely to know specific more likely to know the less likely to know whether
awards or ratings they want features they want they’d buy new or used
Body styles highlight urban/rural divide
In addition to varying buying habits, we can also see differences in the most popular body style by region.
This map shows the most popular of pickups, sedans, and SUVs by metropolitan area.
Pickups tend to dominate in
more sparsely populated or rural
regions. That’s not a huge surprise
— pickups make sense for farming,
ranching, and other rural uses, and
smaller cars make sense to many
city dwellers. It is interesting to see
how granular the city/rural divide
is. Yes, Texas loves pickups — but
in Houston, Austin, San Antonio,
El Paso, Dallas, and Ft. Worth, and
some surrounding areas, sedans are
more frequently the first choice.
In more urban or suburban areas,
SUVs dominate in northern
climates, sedans win in the south.
Again, not shocking: for AWD and
general performance in snow, it makes sense that SUVs are more commonly searched in the colder parts of the
country. The coasts aren’t quite as into SUVs as the interior portions of the country, even as you move north into
Seattle, or up the east coast as far as Boston.
W W W. N I A DA .CO M 25Section 05
Pricing trends swing away from pickups, towards sedans
Used car prices by body style, July 2017 - June 2018
pickup
suv
sedan
Over the 13 months from July 2017 to July 2018, the overall trend isn’t
dramatically volatile. However there are notable fluctuations in each Pickup owners keep vehicles longer
group, particularly from the first half of the year to the second:
One possible reason for different
research habits? On average, pickup
Jul ’17-Jan ’18 Jan ’18-Jul ’18 buyers tend to hang onto their
vehicles longer — 6 months longer
than SUV buyers, and a year longer
2.6% 0.3% than sedan buyers.
Pickup
Average years of ownership
5.2% 1.2%
SUV 5.25
Pickup
1.0% 2.5%
Sedans 4.75
SUV
In the second half of 2017, SUV (and to a lesser extent, pickup truck)
prices were climbing steadily, while sedan prices were falling. But from
the beginning of 2018, the picture changed: SUV price growth slowed 4.24
considerably, pickup prices flattened out entirely, and sedan pricing Sedans
rebounded to grow 2.5% in the first six months of the year.
The contrast in the two periods is interesting. The end of 2017 was
strong evidence of the continued ascendency of SUVs, with prices up All used 4.56
significantly while sedan prices fell. But perhaps the scales swung a
little too far, as the first half of 2018 saw sedan prices grow twice as fast
as SUVs.
Sources: Regional searches and pricing data from internal CarGurus data, July 2018.
All other data from GfK / CarGurus Automotive Study, 3/2018, n=3008.
26 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 27
TESLA: COMING IN HOT!
DISRUPTOR
OR JUST
ANOTHER EV?
Section 06
28 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TSection 06 30 2018 N I A DA U S E D C A R I N D U S T RY R E P O R T
W W W. N I A DA .CO M 31
2018 CAR BUYER
JOURNEY STUDY
FOR MORE INFORMATION, VISIT
WWW.COXAUTOINC.COM/LEARNING-CENTER
Section 07
SHOPPERS ARE SPENDING LESS TIME IN-MARKET
Used-vehicle shoppers are spending seven fewer days in market for a car than last year. And, 2 in 3 state that they
need, rather than want, a new vehicle.
TOTAL DAYS SPENT IN MARKET
2018 108 Used
Buyers 109 New
Buyers
2017 115 Used
Buyers 104 New
Buyers
SHOPPING DRIVEN BY NEED VS. WANT
NEED A NEW VEHICLE WANT A NEW VEHICLE
2018 64% Used
Buyers 54% New
Buyers 2018 36% Used
Buyers 46% New
Buyers
Used New Used New
2017 58% Buyers 47% Buyers 2017 42% Buyers 53% Buyers
BUYERS WANT TO KNOW THE TOTAL PRICE OF THE VEHICLE
While 53% of car buyers look for monthly payment information while researching
a vehicle, 47% of buyers said that the total price of the vehicle is more important
than the monthly payment. 47%
32 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TSection 07
CAR BUYERS SPEND 63% OF THEIR TIME ONLINE
(among those who shopped online)
USED BUYERS NEW BUYERS
TOTAL TIME
SPENT 15:20 HOURS TOTAL TIME
SPENT 12:31 HOURS Researching &
Shopping Online
13% 13% Talking with
Others
With the
Dealerships/ Seller
where Purchased
26%
20 % 55% Researching
& Shopping
with Print
63% Visiting Other
Dealerships/
1% Sellers
3 %
3% 3%
THIRD-PARTY SITES ARE THE MOST-USED SITES FOR ONLINE CAR SHOPPING
While car buyers use a variety of sites to shop, third-party sites are the most-used site of any online resource.
SOURCES USED TO SHOP*
78% Total
3rd Party Sites 67% New
82% Used
53%
Dealership 56%
52%
29%
OEM Sites 44%
23 %
*Respondents were asked, “Please select the names of the specific
website(s)/apps that you used.” Some selected more than one answer.
3%
12%
TIME SPENT ON VARIOUS SITES
69 %
5%
Buyers continue to spend most of their time shopping on third-party sites.
USED
3rd Party Sites Dealership Sites OEM Sites Search Other
11%
W W W. N I A DA .CO M 33Section 07
BUYERS MOST OFTEN START AT THIRD-PARTY WEBSITES
When researching online, Used buyers often start and end at third-party sites. Dealers should focus on unique ways
to deliver a consistent overall message across all sites. It is also critical that dealership websites are user-friendly,
compelling, easy to search, consistent across devices and accurately reflect the pricing, incentives, services and
amenities that are offered when the consumer visits the brick-and-mortar dealership.
FIRST AND LAST WEBSITE VISITED
USED // FIRST USED // LAST
3rd Party Sites
61% 3rd Party Sites
51%
Search
18% Search
6%
OEM Sites
6% OEM Sites
5%
Dealership Sites
15% Dealership Sites
38%
BUYERS ARE LEAST SATISFIED WITH LONG PURCHASE PROCESS
SATISFACTION WITH DEALERSHIP PROCESS
USED
69% 76% 72% 60% 57% 45%
00:00
Your overall The test-driving Interactions The selection Interactions How long the
experience with process with dealership of inventory with financing process took
the dealership sales people available department
64 %
WHAT PART OF THE PROCESS TOOK LONGER THAN YOU EXPECTED?*
FINANCING/PAPERWORK
Buyers spend nearly 40 minutes idle at the dealership. Leaving customers idle has the potential
to lead to headaches in finalizing the sale, as some start to rethink the deal during that time.
*Among buyers who were dissatisfied with how long the process took
34 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 35
AUTOMOTIVE FINANCE
MARKET
EXPERIAN’S 4TH Q 2017
STATE OF THE AUTOMOTIVE
FINANCE MARKET
Section 08
The following is taken from Experian’s 4th Quarter 2017 Additionally, Experian published a summary of their
State of the Automotive Finance Market Report. For the entire 4th quarter 2016 report below:
purposes of this section, we highlight the reliance upon • Outstanding loan balances continue to set record highs
financing and automotive loans by risk segment and by • Delinquency rates beginning to improve
lender type. Average credit scores by vehicle type are also • Leasing remains strong with over 28% of all new
noted. The second page of this section details average consumer vehicle sales
amounts financed, average used monthly payments, • Credit scores improve as lending continues to shift into
average used loan term, and average used loan rates. This more prime segments
section also highlights all four major areas broken down • Deep subprime reaches record lows in used lending
by loan type. The sidebar to the very right details leasing • Loan amounts and payments reach record highs for
data. both new and used vehicle financing
• While longer term loan remain the norm, there’s a
decrease in 72-84 month loans in both new and used
financing; while new sees slight growth in 85+
Used Automotive Finance Average Credit Scores by Vehicle Type New & Used Automotive Loans
by Lender Type by Risk Distribution
Q4 2017 Q4 2017
15.8% 39.31%
740 -
715
712 711 711 713 20.39%
34.8% 720 -
700 -
673 673 677 681
680 - 672
660 -
640 -
28.4%
620 - 607 614 617
603 18.82%
12.4% 600 18.22%
600 -
8.6% 3.27%
580 -
Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017
NEW
FRANCHISED USED
INDEPENDENT USED
Percentage of Consumers by Used Risk Distribution Reliance Upon Financing
Risk Tier Choosing Used Loans PERCENTAGE OF VEHICLES WITH FINANCING
Deep Subprime
• Q4 2016
• Q4 2017 Subprime
Nonprime
80
85.1%
Prime
70
2%
7%
Super Prime
.9
.2
91
91
60
%
0%
5
53.8%
.7
.7
79
79
11.90% 11.97%
%
50
7%
.17
.2
68
2%
67
5%
.5
.2
35.86% 36.55% 40
58
57
5%
3%
.8
30
.2
22.09% 22.02%
41
40
20
24.79% 24.37%
10
5.36% 4.92%
Deep Subprime Nonprime Prime Super 0
Subprime Prime Q4 2016 Q4 2017
NEW USED
36 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TW W W. N I A DA .CO M 37
Section 08
• • • •
LEASING
Average Used Loan Term Q4 2016 Q4 2017 Average Used Loan Term Q4 2016 Q4 2017
48 60 72
.73
.11
65 2
65 1
.4
.06
DATA
.9
6266
61 78
65
.71
64
58 3
.25
.
Q4 2016 65
.
63.00
61
.3
61
58
Q4 2017 64.12 45
DEEP SUBPRIME NON PRIME SUPER
Used SUBPRIME PRIME PRIME Leasing remains very prime
Independent
Q4 2016 59.00 2017 EXPERIAN INFORMATION SOLUTIONS, INC. ALL RIGHTS RESERVED. despite a drop in prime level
Used EXPERIAN PUBLIC
consumers choosing to lease.
Independent 60.20
Q4 2017
2017 EXPERIAN INFORMATION SOLUTIONS, INC.
ALL RIGHTS RESERVED. EXPERIAN PUBLIC
% of New Borrowers
Choosing to Lease
Prime +
33.8%
34.8%
Average Used Loan Rate • Q4 2016
• Q4 2017 Average Used Loan Rate
BY LOAN TYPE
• Q4 2016
• Q4 2017
SOURCE: EXPERIAN AUTOMOTIVE 30.0%
Nonprime
31.6%
2 4 6 8 10+
%
19 3%
.32
%
.0
23.4%
16 %
Deep
19
.27
20%
.70 & Sub
24.2%
15
Q4 2016 8.5%
• •
15%
%
Q4 2017 Q4 2016
.01
10 %
9
Q4 2017 8.84% 10% 9.4
8%
6%
4%
9%
5.4
Used
4.0
%
0%
5.0
3.8 %
11.23%
3.9
Independent 5% 3%
9
3.3
Q4 2016
Used 0% 2%
Independent 11.48%
Q4 2017 DEEP SUBPRIME NON PRIME SUPER 1%
SUBPRIME PRIME PRIME
YOY CHANGE / SOURCE: EXPERIAN AUTOMOTIVE 0%
Q4 Q4
2017 EXPERIAN INFORMATION SOLUTIONS, INC. ALL 2016 2017
RIGHTS RESERVED. EXPERIAN PUBLIC
USED % OF LEASE MARKET
Average Amount Financed • Q4 2016
• Q4 2017 Average Used Amount Financed by Loan Type SOURCE: EXPERIAN AUTOMOTIVE
• Q4 2016
• Q4 2017
62
Q4 2016 $30,621
55
NEW 48
21
47
1,1
03
0,6
0,7
0,2
9,3
(+$478)
$2
9,1
30
57
$2
21K
$2
$2
$1
Q4 2017
$1
$31,099
6,4
6,5
63
33
18K
$1
$1
4,8
4,6
$1
$1
Q4 2016 USED 15K
$19,329
(+$260) 12K
Q4 2017
$19,589 8K
5K
Used
Independent $16,765
Q4 2016 0
Used DEEP SUBPRIME NON PRIME SUPER
Independent SUBPRIME PRIME PRIME
Q4 2017
$17,002
2017 EXPERIAN INFORMATION SOLUTIONS, INC. ALL RIGHTS
RESERVED. EXPERIAN PUBLIC
Average Used Monthly Payment Average Used Monthly Payment by Loan Type SOURCE: EXPERIAN AUTOMOTIVE
• Q4 2016
• Q4 2017
• Q4 2016
• Q4 2017
90
$3
85
Q4 2016 $390
80
$3
$364
78
$3
71
$380
$3
$3
65
64
64
Q4 2017 $371 $370
60
$3
$3
$3
57
$3
$3
$360
Used
Independent $353 $350
Q4 2016
$340
Used
Independent $360 $330
Q4 2017
$320
2017 EXPERIAN INFORMATION SOLUTIONS, INC. ALL RIGHTS
RESERVED. EXPERIAN PUBLIC $310
DEEP SUBPRIME NON PRIME SUPER
SUBPRIME PRIME PRIME
38 2018 N I A DA U S E D C A R I N D U S T RY R E P O R TYou can also read
