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UCIR_2011.indd 1

2011

NIADA

USED

CAR

INDUSTRY

REPORT

1

5/25/11 3:24 PM


Full-spectrum auto financing

Operating in 48 states

Over 10,000 active dealers

Over 300 dealers joining our family every month

24/7 Approvals with the Westlake Buy ProgramTM

Portfolio Services (ALPS)

(888) 8-YES-YES

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I AM A SECRET AGENT GATHERING INTELLIGENCE ONLINE TO WORK THE LANES, I QUICKLY SECURE THE PACKAGE I NEED. THEN I VANISH WITH MY PROFITS. I AM A BUYER, WINNING IN THE GREATEST MARKETPLACE THERE IS.

I AM AN EMPEROR I AM MAGNIFICENT. HUNDREDS ARE AT MY CALL, READYING MY CARS.

©2011 Manheim, Inc. All rights reserved.

WHEN I’M HAPPY, I GRANT THE MASSES THE INVENTORY THEY DESIRE.

I AM A SELLER, WINNING IN THE GREATEST MARKETPLACE THERE IS.

I AM A COWBOY

Manheim is the NIADA Dealer’s Edge Manheim.com/Yo u r Ad va n t a g e

6317 8_375x10_875 UCD_SecGrk_v1.indd 1 UCIR_2011.indd 4

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5 AM

INTRODUCTION

Table of Contents

5 INTRODUCTION

By Michael R. Linn, President, NIADA Services

6 SECTION ONE

NIADA Membership Data

16 SECTION TWO

Used Vehicle Industry Data from CNW Research

26 SECTION THREE

Buy Here–Pay Here Industry Benchmarks

30 SECTION FOUR

The Role of the Internet in the New and Used Vehicle Purchase Process (furnished by AutoTrader.com and R.L. Polk)

34 SECTION FIVE

AutoZone/NIADA Parts and Service Analysis

38 SECTION SIX

Independent Dealers and Vehicle History (furnished by CARFAX)

40 SECTION SEVEN

Auto Transport Analysis (furnished by uShip)

42 SECTION EIGHT

Auction/Remarketing Commentary by Tom Webb of Manheim and Tom Kontos of ADESA

44 SECTION NINE

The Effective Use of GPS in the Industry

48 SECTION TEN

NIADA Membership Survey

A PUBLICATION OF THE NATIONAL INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION AND USED CAR DEALER MAGAZINE Used Car Dealer (ISSN 0279425X) is published monthly with one additional special issue, Used Car Industry Report, that is published in May 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 Periodicals postage paid at Arlington, TX, and at additional offices. 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© 2011 by NIADA Services, Inc. All rights reserved.

Download and view the 2011 Used Car Industry Report at www.niada.com/ publications

www.niada.com

UCIR_2011.indd 5

The used motor vehicle industry is alive and well, and news of independent dealer sales eclipsing franchise dealer sales of used cars over the last few months is even more encouraging.

This 13th edition of NIADA’s Used Car Industry Report brings you a snapshot of all of this activity and provides valuable insight in all aspects of dealer operations. We are very proud of this annual report, and are amazed at how many calls and emails we get referencing the data in this publication. We at NIADA find it to be one of our most frequently used tools as we interact with those businesses and individuals who are involved in the automotive industry. We hope that you will find the statistics and narrative just as valuable for your own needs. In this edition, you will find familiar categories of statistics from previous years in addition to several new studies and analysis provided to us this year by NIADA’s National Corporate Partners. The Used Car Industry Report is divided into a record ten sections of data this year and is our largest and most comprehensive report we have ever published for our dealer members. Section One is traditionally a survey of NIADA members. We cannot stress enough the importance for our dealer members to take a brief five minutes out of the year to complete and return these surveys to us. They can be found in your new and renewing member packets, in certain issues of Used Car Dealer Magazine, at various NIADA events, and by an email survey coming your way later in the year. Your answers allow us to accumulate the very valuable data for this section, which also allows you to compare your dealership operations to those dealer member averages. This survey also allows us to develop new programs, services and benefits – and it ensures we’re providing the right kind of services to our members. Another familiar standard in Section Two is the work of Art Spinella of CNW Marketing Research in Oregon. His name is synonymous with comprehensive, in-depth statistical data about the used motor vehicle industry. Somehow, he understands one of the most sophisticated industries with its complex operations which survived within an environment of economic chaos. Having his materials in our report each year is a little like working alongside the guru of statistical research. Not only are we impressed with his analysis, we are also honored. Art’s work appeared in the very first Used Car Industry Report and has been included in every edition since. Section Three features Buy Here–Pay Here benchmarks provided by Ken Shilson of SubPrime Analytics and the National Alliance of Buy Here–Pay Here dealers along with NCM Associates. Although this segment of the used car industry has been growing for some time, Buy Here–Pay Here took on special interest this past year as dealers started re-examining their operations and reviewing opportunities after the recession in 2009. Prospective and current BHPH business owners can use these Benchmarks to determine where they should be in comparison to others and how they can more successfully build their operations. Sections Four through Seven are new this year from our generous partners, Autotrader. com, AutoZone, CARFAX and uShip.

2011

NIADA

USED

Section Four of the report is a special study recently completed by AutoTrader.com and R.L. Polk entitled “The Role of the Internet in the New & Used Vehicle Purchase Process.” The data analyzes how much time consumers spend online during the vehicle purchase process, why shoppers use the internet, and what types of information consumers are looking for that could lead to a sale. Interestingly enough, the report indicates that despite heavy internet usage, initial contact with the dealer still occurs most often “offline and at the actual dealership.” Section Five is a valuable new section for those that profit from parts, service work, reconditioning and aftermarket products. One of our newest corporate partners, AutoZone, captures perhaps some of the best partner data we have ever seen on what NIADA members spend online ordering, and even details information on what products dealers are purchasing most. For those dealers with service bays, this is one section you should especially study. And for those looking to start up a service bay(s) and profit from parts and service, this section is a great tool for you to use in getting started. For the second straight year, CARFAX has provided some very interesting data for our report. This year, Section Six focuses on a very hot topic: “Rising wholesale prices and competition in the wholesale market.” This section focuses on impact of different tactics independent dealers can use in the wholesale market to acquire the best inventory at the most competitive prices and looks at how these tactics impact a dealers gross and turn. This section also formulates a wholesale strategy to assist our dealers. Section Seven, a new section this year, brings you transportation data, courtesy of our industry partner uShip. The two charts included in this section show the most popular origins & destinations with their respective mileage bands, and the mileage breakdown nationwide with the respective average shipping price for that mileage range. Section Eight is familiar and highly valuable as a high-level picture of our industry. It includes overviews provided by highly-respected automotive economists Tom Kontos of ADESA and Tom Webb of Manheim. As economists, they both understand the synergy between independent dealers and the auction industry they represent. They analyze past activities which impacted the used motor vehicle marketplace. Then they draw in economic factors, try to peer into the future, and share their economic insight with us. Their commentary is the tie that brings all of these sections into a coherent pattern. The final portion of the Used Car Industry Report is the NIADA member survey for next year. It is a keystone in our communications with dealers. NIADA is an organization dedicated to improving the used motor vehicle industry. Please take a few moments to start the crucial communication process designed to help us fulfill your needs.

BY MICHAEL R. LINN, PRESIDENT, NIADA SERVICES, INC.

CAR

INDUSTRY

REPORT

5

5/25/11 3:26 PM


SECTION ONE NIADA MEMBERSHIP DATA NIADA

MEMBERSHIP

DATA

NIADA MEMBERSHIP DATA

NIADA MEMBERSHIP DATA

UCIR_2011.indd 6

NIADA

USED

NIADA

MEMBERSHIP

DATA

NIADA

MEMBERSHIP

2009

2010

80% 79.3 79.0

Our survey is included in Section Ten of this report. Surveys are also included in your new and renewing member packets as well as in a few issues of Used Car Dealer Magazine shortly. Please take a moment to complete and mail back your updated surveys so that we may continue to provide you with this very valuable report and reference source.

DATA

(percentage of respondents)

This year’s NIADA Member Data section also includes a third reference for each question from the surveys collected of our NIADA Certified Master Dealers (CMD). In many instances, there is a vast difference in the analysis from a regular NIADA Dealer Member compared to our members who have completed and passed the NIADA Certified Master Dealer course. This added reference for each question proves without a doubt the true value in the Certified Master Dealer course. For a list of upcoming CMD classes, go to www.niada.com/certifiedmaster-dealer.php

2011

MEMBERSHIP

TYPES OF BUSINESSES YOU OPERATE

One of the best ways to gauge the success of your dealership and it’s operations is to compare your situation and your dealer data to those of other NIADA members around the country. Each year NIADA surveys a variety of topics which cover demographic and business data. This section provides a two year history of every question on our member survey.

6

NIADA

60%

40%

30.8 31.0

39.8 39.0 23.8 25.0

20%

9.3

8.0

5.9

3.7 3.0

5.0

5.0

4.0

7.5

7.0

0

CMD

RETAIL

BHPH

WHOLESALE

RENTAL

LEASING

SERVICE DEPT.

PARTS DEPT.

BODY SHOP

OTHER

78

54

38

6

6

36

8

2

12

NUMBER OF YEARS IN BUSINESS

2009

2010

(percentage of respondents)

37.9

40% 30%

26.9

20%

17.0

17.6

17.2

37.9

26.7

17.2

10% 0

1.0

0.6

LESS THAN 1 YEAR IN BUSINESS

1-5 YEARS IN BUSINESS

6-10 YEARS IN BUSINESS

11-20 YEARS IN BUSINESS

21+ YEARS IN BUSINESS

0

4.8

22.6

38.7

33.9

CMD

NUMBER OF EMPLOYEES

2009

2010

(percentage of respondents) 60%

50.0

50%

50.2

40% 30%

21.9

21.7

20% 10%

19.1

18.9

9.2

9.0

0

CMD

CAR

INDUSTRY

1 EMPLOYEE

2-5 EMPLOYEES

6-10 EMPLOYEES

10+ EMPLOYEES

1.6

25.8

35.5

37.1

REPORT

www.niada.com

5/25/11 3:26 PM

DAT


SHIP

DATA

NIADA

MEMBERSHIP

WHERE YOU (percentage of respondents)

DATA

NIADA

BUY YOUR CARS

81.0

MEMBERSHIP

2009

2010

DATA

NIADA

WHERE YOU

(percentage of respondents)

MEMBERSHIP

DATA

SELL YOUR CARS

2009

2010

80%

81.7

80%

70.9

71.4

68.1

67.3

74.2

58.8

60% 60%

48.6

46.6 46.7

49.1 40%

40%

20%

20%

0

WHOLESALE AUCTIONS

OTHER DEALERS

ONLINE/ OTHER

91.5

61.7

44.7

CMD

DEALERSHIP LOT SIZE

0

WHOLESALE AUCTIONS

OTHER DEALERS

ONLINE

73.5

59.2

26.6

CMD

2009

2010

(percentage of respondents)

SPECIALIZE IN

50%

2010

2009

(percentage of respondents)

84.4 84.9

80%

40%

60%

31.3

30.1

30%

30.7

30.5 40%

22.6

21.8

20%

26.9 16.5

16.4

20%

0

CMD

UNDER 10,000 SQ. FT.

10,00125,000 SQ. FT.

25,00150,000 SQ. FT.

OVER 50,001 SQ. FT.

33.3

21.1

31.6

14

NUMBER OF LOCATIONS 74.2

9.6

4.5

4.2

0

CMD

2009

2010

(percentage of respondents) 80%

9.7

26.5

CARS ONLY

TRUCKS ONLY

OFFER BOTH

6.4

0

89.4

HEAVY DUTY

POWER SPORTS

RV’S

23.4

AUCTIONS ATTENDED PER MONTH

2009

2010

(percentage of respondents)

30.2 31.3

30%

73.7

25.9 25.7 22.5 22.3

60% 20%

16.5

15.7

40%

21.1

20%

10%

21.5 3.1

0

CMD

1

46

2-3

48.6

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UCIR_2011.indd 7

3.5 4-6

5.4

5.0

4.9 1.3

1.3 0

7+

0

0

CMD

2011

1-2

3-4

5-8

9+

1.7 5.1 30.5 33.9 28.8

NIADA

USED

CAR

INDUSTRY

REPORT

7

5/25/11 3:26 PM


SECTION ONE NIADA MEMBERSHIP DATA AVERAGE RETAIL PRICE

2009

2010

(percentage of respondents)

AGE OF VEHICLES SOLD

2009

2010

(percentage of respondents)

49.3 49.8

50%

80%

61.0

40%

60.0

60% 30%

17.2

20%

21.9 21.7

40%

7.0

10%

20%

6.8

4.6

CMD

11.4

4.6

0

0-5,000

5,00110,000

10,00115,000

15,00120,000

20,001+

4.3

45.7

41.3

8.7

0

11.0

0

1-2 YEARS

3-5 YEARS

8.3

68.8

CMD

22.9

HOW YOU FINANCE FLOORPLAN INVENTORY (percentage of respondents) AVERAGE MONTHLY INVENTORY

2009

(percentage of respondents)

2010

2009

2010

54.0

52.8 50%

43.3

22.9 23.3

36.7

34.8

17.1

43.0

40%

20%

13.6 13.7 14.8 14.8 10%

13.8 13.8

30%

11.7 11.2 10.6 10.6

7.0 7.2 5.6 5.4

20%

16.6

15.9

3.4

CMD

11-20

21-30

31-50

51-75

76-100

3.4

5.2

25.9

22.4 15.5

101-200

201+

19

5.2

11.7

10.5

10%

0

0

CMD

BANKS

AUCTION FLOORPLAN

CASH

OTHER

44.7

27.7

57.4

12.8

NOTE: Numbers won’t necessarily add to 100% because dealers finance multiple ways

HOW YOU FINANCE CUSTOMERS

2009

NUMBER OF SERVICE BAYS

2009

2010

(percentage of respondents) 40%

40.8

39.8

42.6

NIADA MEMBERSHIP DATA

30%

45.5

43.5

40%

36.6

47.0

37.8

30%

25.3

25.0

20%

20.3

20.0 20%

14.6

15.8

14.2

10%

15.7

10%

0

0

CMD

2010

(percentage of respondents)

0

1-2

3-5

6+

40

10.9

29.1

20

CMD

BHPH

FINANCE COMPANY

BANKS

OTHER

62.5

45.8

45.8

14.6

NOTE: Numbers won’t necessarily add to 100% because dealers finance multiple ways

8

2011

UCIR_2011.indd 8

NIADA

USED

CAR

INDUSTRY

REPORT

www.niada.com

5/25/11 3:26 PM


PAVED LOT

2009

CMD

(percentage of respondents)

2010

INDOOR SHOWROOM

NO 14.4%

2009

CMD

(percentage of respondents)

YES 20.6%

YES 20.3%

NO 14.7% YES 85.6%

2010

NO 79.4%

NO 79.7%

YES 85.3% NO 2.2% YES 97.8%

OUTSIDE LIGHTING

2009

CMD

(percentage of respondents)

NO 6.6%

NO 76.1%

YES 23.9%

2010

SELL AFTERMARKET PRODUCTS (percentage of respondents)

2009

CMD

2010

NO 6.4% YES 35.7%

YES 36.6%

NO 64.3%

NO 63.4%

YES 93.4%

YES 93.6%

YES 100%

FENCING ON PROPERTY (percentage of respondents)

NO 50%

YES 50%

CMD

2009

2010

DO RECONDITIONING OR DETAILWORK

CMD

2009

2010

(percentage of respondents)

YES 52.4%

NO 48.0%

NO 47.6%

YES 52.0%

NO 29.4%

NO 30.0%

YES 70.6%

YES 70.0%

NO YES 45.7% 54.3%

NO 26.1% YES 73.9%

www.niada.com

UCIR_2011.indd 9

2011

NIADA

USED

CAR

INDUSTRY

REPORT

9

5/25/11 3:26 PM


SECTION ONE NIADA MEMBERSHIP DATA HAVE WORKERS COMP

CMD

(percentage of respondents)

2009

2010

SEPARATE F&I DEPARTMENT

CMD

2009

2010

(percentage of respondents)

YES 21.2%

NO 32.3%

NO 32.3%

YES 21.1%

YES 67.7%

YES 67.7%

NO 78.8%

NO 78.9% NO 19.6% YES 80.8%

FULLY INSURED INVENTORY

NO 58.7%

YES 41.3% YES 80.4%

2009

CMD

2010

(percentage of respondents)

USE PAYMENT PROTECTION DEVICE

CMD

2009

2010

(percentage of respondents)

NO 16.0%

YES 21.9%

YES 20.1%

NO 17.0% YES 84.0% YES 83.0%

NO 15.2%

YES 84.8%

HAVE COMMERCIAL INSURANCE

CMD

NO 78.1%

NO 79.9%

2009

NO 58.7%

YES 41.3%

2010

DEALERSHIP WEBSITE (percentage of respondents)

CMD

2009

2010

(percentage of respondents)

NO 8.6% NO 8.8%

NIADA MEMBERSHIP DATA

NO 19.0%

NO 18.8% YES 91.4%

YES 81.0%

YES 81.2%

YES 91.2%

YES 97.8%

10

2011

UCIR_2011.indd 10

NIADA

USED

CAR

YES 91.4%

NO 2.2%

INDUSTRY

REPORT

NO 8.6%

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5/25/11 3:26 PM


UCIR_2011.indd 11

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SECTION ONE NIADA MEMBERSHIP DATA SELL WARRANTIES OR SERVICE CONTRACTS (percentage of respondents)

2009

2010

WARRANTY/SERVICE CONTRACTS SOLD PER MONTH (percentage of respondents) 50%

2010

58.4

40%

YES 61.6%

NO 38.2%

YES 61.8%

NO 38.4%

30%

21.1

20%

13.6

10%

4.6

2.3

0

NO 21.7%

CMD

YES 78.3%

RENTAL CAR

2009

(percentage of respondents)

2010

1-5

6-10

11-20

21-30

31+

40.7

22.2

26

3.7

7.4

TYPE OF RENTAL CAR OPERATION

2010

90%

YES 12.4%

80%

YES 12.6%

81.5

60% 40%

NO 87.6%

20%

NO 87.4%

18.5

0

YES 15.2%

CMD

FRANCHISE

71.4

28.6

NIADA MEMBERSHIP DATA

NO 84.8%

INDEPENDENT

12

2011

UCIR_2011.indd 12

NIADA

USED

CAR

INDUSTRY

REPORT

www.niada.com

5/25/11 3:26 PM


nADA

AppraisalPro

®

auction transactions retail, trade-in & loan values + auction values

retail transactions used vehicle days supply

vehicle history reports

asking prices

When you’re In The LAneS, you’Ve GoT

30 SECONDS TO DECIDE. www.nada.com/appraisal 866-974-6232

SM

UCIR_2011.indd 13

5/25/11 3:26 PM


SECTION ONE NIADA MEMBERSHIP DATA ANNUAL RETAIL SALES (percentage of respondents)

40%

2009

2010

Dealers chose a wide variety of advertising mediums in 2010. Surprisingly, a large number of respondents dropped TV and radio from their advertising mix in favor of the more traditional newspaper ads as well as a continued strong online presence.

39 38.4

30%

20.1 19.8

20%

10.8

12.1

12.9 12.6

10%

2.3

2.2

5.5

6.2 6.0

5.3 3.3 3.1

ADVERTISING MEDIA USED

0

0-100 vehicles

101-250 vehicles

251-400 vehicles

401-550 vehicles

551-700 vehicles

701-850 vehicles

851-1,000 vehicles

1,001+ vehicles

6.7

23.3

21.7

15.0

11.7

11.7

3.3

6.7

CMD

(percentage of respondents)

2009

2010

70%

68.6

60%

ANNUAL WHOLESALE SALES (percentage of respondents) 80%

2009

2010

53.2

54.9

52.6

50%

45.1

74.9 76.1 40%

37.3 60%

31.4 30%

27.5

28.5

40%

19.6 17.6 16.7

20%

16

11.9 20%

10%

12.8 12.0 5.6

5.5

1.6

1.5

1.0

1.1

1.3

1.0

.7

.5

2.1

2.1 0

0

0-100 vehicles

101-250 vehicles

251-400 vehicles

401-550 vehicles

551-700 vehicles

701-850 vehicles

851-1,000 vehicles

1,001+ vehicles

61.4

27.3

4.5

0

4.5

0

0

2.3

CMD

PERCENTAGE OF SALES TO WOMEN BUYERS*

2010

38.0

40%

30%

NIADA MEMBERSHIP DATA

HOW DO YOU USE THE INTERNET AT YOUR BUSINESS

21-40%

41-60%

61-80%

UCIR_2011.indd 14

USED

CAR

INDUSTRY

MAGAZINE

68.9 17.8

REPORT

17.8

2009

2010

78.1 79.5 63 65.5 54.352.0 51.1 52.5 50.0 49.8 29.3 28.7 18.6 19.0

DEALERSHIP WEBSITE

81-100%

* Annual comparative data not available

NIADA

OTHER

0

0

ONLINE

20%

8.8

10%

2011

SPECIALTY PUBLICATIONS

40%

20%

14

RADIO

NOTE: Numbers won’t necessarily add to 100% because dealers advertise multiple ways

60%

20.9

NEWSPAPERS

CMD 48.9 44.4 37.8 35.6

80%

32.3

0-20%

TV

E-MAIL

INDUSTRY RESEARCH

ONLINE BUYING AND

ONLINE AUCTIONS

ONLINE FINANCING

OTHER

64.3

42.9

33.3

SELLING

CMD

88.1

88.1

83.3

59.5

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5/25/11 3:26 PM


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866.655.8825 ©2011 ProconGPS, Inc.

UCIR_2011.indd 15

5/25/11 3:26 PM


SECTION TWO USED VEHICLE INDUSTRY DATA from cnw marketing research USED

CAR

INDUSTRY

DATA

FROM

USED VEHICLE INDUSTRY DATA FROM CNW MARKETING RESEARCH

MARKETING

2011

UCIR_2011.indd 16

NIADA

USED

USED

CAR

INDUSTRY

2008

DATA

FROM

CNW

MARK

2010

2009

40%

35.3

36.1

36.1 34.7

33.0

32.1

31.8

30.9

30.0

30%

20%

10%

0

INDEPENDENT DEALERS

CAR

FRANCHISE DEALERS

CASUAL SALES

NUMBER OF VEHICLES SOLD PER INDEPENDENT DEALER (Average per year per independent dealer)

This profile includes all active dealerships with an actual place of business and multiple sales of the same vehicle (post repossession, etc.)

INDUSTRY

Source: CNW Research, Inc.

400

300

351.0 302.4

308.8 283.2

200

100

0

2007

SALES VOLUME BY INDEPENDENT DEALERS (in millions)

2008

2009

2010

NUMBER OF INDEPENDENT DEALERS IN THE U.S.

14

13.0 12

11.7

60K

11.7

10

42,791 40K

38,662

8

36,418

37,717

6 20K

4

2

0

0

2008

16

RESEARCH

TOTAL USED VEHICLES SOLD

The following 2010 used vehicle market data presented in this section by CNW Research shows great promise and an upward positive swing in many important independent dealer data categories for 2010, with forecasts for even greater improvements in 2011. For the first time in over five years, the number of independent dealers in the U.S. finally increased from a prior year. In 2010, CNW Research indicates there are 37,717 used dealers successfully operating, up over 1,299 dealers from 2009. Of even greater significance is the huge increase in the average number of units sold by independent dealers in 2010, up to 351 units sold yearly per dealer. This represents the highest average units sold per dealer in 10-plus years. Also, for the first time in many years, independent dealer market share surpassed franchise market shares. The high demand for used vehicles and the dwindling supply of quality inventory continue to be problematic for dealers. However, this issue has been a positive for dealers in a few areas. Quality used vehicles are selling fast, leading to a large decrease in “Inventory Days Supply.” The high demand and short supply has also justified higher asking prices for the better quality and certified inventory. The average asking price per vehicle and the average prices of vehicles actually sold were both the highest they have been in over five years. As noted on page 18, the average asking price rose to an average of $9,428, and the average selling price per unit was $8,875 in 2010. The Internet continues to play a significant role in sales. 44 percent of all units are now offered on the internet, and over 11 percent of all units are now sold directly over the internet, the highest percentage seen in recent years. Finally, for the first time in this report, CNW Research presents on page 24 a most valuable chart of BHPH dealer counts by state. The chart astonishingly indicates that 31,384 independent dealers participate in some form of BHPH in their daily operations. Consumer credit issues surely play a factor in many of these dealers taking the risk in financing certain customers.

USED CAR INDUSTRY DATA FROM CNW MARKETING RESEARCH

CNW

REPORT

2009

2010

2007

2008

2009

2010

www.niada.com

5/25/11 3:26 PM


W

MARKETING

RESEARCH

USED

CAR

INDUSTRY

DATA

FROM

CNW

MARKETING

RESEARCH

TOTAL USED VEHICLE SALES PER MONTH

2010

2009

(In millions, independent and franchise dealers) TOTAL SALES 2009: 35.5 TOTAL SALES 2010: 36.9

35.5

5

3.96

4

4.50

4.19

4.62 3.85

3.96

3.86 3.94 3.27

3.22 3.29 3

3.09 2.59

2.26 2.39 2

1.79

1.89

36.9

2.47 2.50

2.70

2.80

1.97

1.61 1.62

1

0

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

USED VEHICLE SALES PER MONTH, PER OUTLET - INDEPENDENT DEALERS (in millions) For example, in January 2010, independent dealers sold 668,030 vehicles from 36,125 locations. That results in 18.5 units per outlet. 42.1

42

2009

2010

46.0 41.5

40.2

36.4

38.1

35

28.9

TOTAL

DEC

33.0

32.9

30.7

29.1 30.1

28

23.6

22.8 21

18.9

18.5

20.7

21.1

21.8 22.4

15.2

14.1

14

18.0

13.6

7

0

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

INTERNET USED VEHICLE SALES

USED VEHICLE INVENTORY DAYS’ SUPPLY (in days)

DEC

2009

2010

(in millions) 50

100

42.5

86.36 NOV

80

70.5 60

40

78.63 JAN

SEPT

56.84 FEB

40

61.73 50.8

30

APRIL

49.56 40.21

SEPT

JUNE

OCT

20

LOW

HIGH

20

44.01

11.0

10

7.5

0

2007

2008

2009

2010

2007

2008

2009

2010

0

UNITS OFFERED ON INTERNET

www.niada.com

UCIR_2011.indd 17

2011

NIADA

USED

UNITS SOLD THROUGH INTERNET

CAR

INDUSTRY

REPORT

17

5/25/11 3:26 PM


SECTION TWO USED CAR INDUSTRY DATA from cnw marketing research

CNW MARKETING RESEARCH

NEW AND USED VEHICLE SALES (in millions)

USED VEHICLE ADVERTISING DISTRIBUTION – INDEPENDENT DEALERS WHO ADVERTISE (Listed by percentage of money used for particular type of advertising; note that many dealers advertised more than one way, so percentages won’t necessarily add to 100)

CATEGORY Classified Ads Radio Television Internet

2007 89.6 1.2 0.8 22.1

2008 89.1 1.1 0.6 23.4

2009 88.4 1.1 0.1 24.8

2010 84.7 1.7 0.3 26.2

AVERAGE PRICE OF USED VEHICLES SOLD BY INDEPENDENT DEALERS

NEW VEHICLES

2006 2007 2008 2009 2010

USED VEHICLES TOTAL SALES

16.54 16.22 13.33 10.63 11.58

42.56 41.75 36.50 35.49 36.90

59.11 57.80 49.80 45.93 48.48

PURCHASE OF EXTENDED WARRANTIES FOR USED CARS (percentage of respondents)

2009

2010

15

10

6.8 6.4 $10K

$8,650

$8,875

$8,459

$8,358

5

4.1

$7.5K $5K

0.0

0

0.0

NEW

$2.5K 0

2007

2008

2009

2010

3.5

2-4 YEAR OLD

5-7 YEAR OLD

1.1 0.9

1.0

8-10 YEAR OLD

OVER 10 YEARS

PURCHASE OF EXTENDED WARRANTIES FOR NEW CARS (percentage of respondents)

2009

USED CAR INDUSTRY DATA FROM CNW MARKETING RESEARCH

0.6

2010

15

AVERAGE INDEPENDENT DEALERS ASKING PRICE VS. TRANSACTION PRICE

12.7

11.6

10

ASKING PRICE

8.9

TRANSACTION PRICE $9,428

9.5K

10.7

5

4.2 4.1

$8,937

9K

2.2 2.0

1.9

8-10 YEAR OLD

OVER 10 YEARS

1.3

0 8.5K

$8,622

NEW

2-4 YEAR OLD

5-7 YEAR OLD

$8,314

8K

PAYMENT PROTECTION DEVICES - REDUCING LATE PAYMENT AND REPOSSESSIONS

7.5K

(Dealers with devices)

7K

2009

80 6.5K

66.42

2010

68.82

60 6K

41.34

40 5.5K

2009

38.15

20

2010

0

REDUCTION OF LATE PAYMENT

18

2011

UCIR_2011.indd 18

NIADA

USED

CAR

INDUSTRY

REPORT

REDUCTION OF REPOSSESSIONS

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5/25/11 3:26 PM


UCIR_2011.indd 19

5/25/11 3:26 PM


SECTION TWO USED CAR INDUSTRY DATA from cnw marketing research

INDEPENDENT USED VEHICLE INCOME USED VEHICLE SALES

SERVICE AND PARTS

(As percent of total sales)

(As percent of total sales)

$2.5M $1.3M

$1,894,458 41.92%

$2M

$1.2M

$1,476,694 37.17%

$1.5M

$1,281,200 28.35%

$1,428,838 37.17%

$1M

$1,197,209 34.28%

0

$1,169,993 29.45%

$1,132,076 29.45%

2008

2009

$228,834 5.76%

$221,418 5.76%

$1.1M

0

2007

2008

2009

2010

2007

F&I INCOME

OTHER INCOME

$1.25M

$250K

(As percent of total sales)

2010

(As percent of total sales)

$1,216,123 26.91%

$1.2M

$200K

$171,828 4.92%

$1.15M

$1,097,291 27.62%

$1.1M $1.05M

USED CAR INDUSTRY DATA FROM CNW MARKETING RESEARCH

$1,088,944 31.18%

$150K

$1,061,730 27.62%

$1M

2007

2008

2009

$1,034,462 29.62% 2010

$100K

$127,442 2.82%

$50K

2007

2008

2009

2010

TOTAL SALES (Averages all departments) $5M

$4,519,223 $3,972,812

$4M

$3,844,062

$3,492,443

$3M

$2M

$1M

2007

20

2011

UCIR_2011.indd 20

NIADA

USED

CAR

INDUSTRY

2008

REPORT

2009

2010

www.niada.com

5/25/11 3:26 PM


DEALER PROFILE EXPENSES ADVERTISING EXPENSES ($ per vehicle) $80K $60K

$82,459 $76,507 $253 per vehicle

$66,269 $234 per vehicle

$267 per vehicle

$75,859 $216 per vehicle

$40K $20K 0

2007

2008

2009

While dealers were selling many more units in 2010 compared to the previous 10-plus years (an average of 351 units per dealer), ADVERTISING

2010

RENT AND EQUIVALENT ($ per vehicle) $125K $100K

$115,214 $381 per vehicle

$75K

$122,569 $94,589 $334 per vehicle

$106,856 $346 per vehicle

$349 per vehicle

EXPENSES PER VEHICLE ACTUALLY DECREASED

$50K

to its lowest levels since 2003. One could say this decrease in advertising per vehicle was due to HIGH

$25K 0

2007

2008

2009

2010

DEMAND OF QUALITY USED INVENTORY,

FLOOR PLAN INTEREST ($ per vehicle) $45K

$40K

$35,986 $35K

$119 per vehicle

$37,382 $132 per vehicle

$39,222 $127 per vehicle

resulting in much shorter inventory turns for most vehicles, equating to less time having to advertise each unit.

$42,495 $121 per vehicle

$30K

$25K

2007

2008

www.niada.com

UCIR_2011.indd 21

2009

2010

2011

•

NIADA

USED

CAR

INDUSTRY

REPORT

21

5/25/11 3:26 PM


SECTION TWO USED CAR INDUSTRY DATA from cnw marketing research

INDEPENDENT USED VEHICLE DEALER PROFILE TOTALS NET PROFIT BEFORE TAXES

TOTAL GROSS

(As percent of total sales per independent dealer)

(As percent of total sales per independent dealer) $1,000K

$1.5K

$750K

$1K

$1,227 $645,797 14.29%

$500K

$501,369 12.62%

$1,044

$0.5K

$462,825 12.04%

$389,757 11.16%

$250K

0

2009

0

2007

2008

2009

2010

2010

This profile includes all active dealerships with an actual place of business and multiple sales of the same vehicle (post repossession, etc.)

RETAIL GROSS PROFIT (Percent of retail selling price) $450

TOTAL EXPENSES

$400

$433.10 5.23%

(As percent of total sales per independent dealer) $350 $125K

$300

$100K

$86,409 18.67%

$75K

$325.93

4.07%

3.92%

$71,481 18.34%

$277.99 3.37%

$250

$50K

USED CAR INDUSTRY DATA FROM CNW MARKETING RESEARCH

$321.25

$200

2007

2008

2009

2010

$25K 0

2009

(Independent dealers)

(Franchised dealers)

12,819,759 55.9%

12

(Financed)

12,816,471 56.62%

(Financed)

14 12

10

10

8

8

6

6

13,010,150 11,721,216 44.4%

(Cash)

4

(Cash)

(Cash)

4

0

2009

UCIR_2011.indd 22

56.3%

2

0

2011

(Cash)

43.38%

2

22

43.7%

(Financed)

(Financed)

55.6% 44.1%

TEN-YEAR HIGH,

USED VEHICLE SALES FINANCED VS. CASH

USED VEHICLE SALES FINANCED VS. CASH

14

As units sold per year reached a

2010

•

NIADA

2010

USED

CAR

2009

INDUSTRY

REPORT

2010

retail gross profits per vehicle unfortunately continued to decline, due to a large decrease in overall total sales volume from every income department, as referenced on page 20.

www.niada.com

5/25/11 3:26 PM


UCIR_2011.indd 23

5/25/11 3:27 PM


SECTION TWO USED CAR INDUSTRY DATA from cnw marketing research

BUY HERE–PAY HERE CHART BY STATE The following information includes dealerships that sell more than 50 percent Buy Here, Pay Here. Franchised Dealers’ BHPH lots are those located off site. That is, these BHPH lots are NOT on the same property as the franchised new-car dealership or the new-car dealership’s used car lot. How to read: In 2010, there were a total of 31,384 Buy Here–Pay Here used-vehicle stores in the U.S. that had at least half of their finance contracts as BHPH notes. Among franchised new-vehicle dealers, there were another 2,446 BHPH lots located away from the dealership’s property. Not shown are franchised new-car dealerships with BHPH operations at their dealership site. CNW MR believes there are few such BHPH locations performing at least half of their business on a new-vehicle dealership site even though many dealers might offer BHPH notes at that location.

State

CY ‘09 Franchised Off Site BHPH

CY ‘09 Licensed Independent BHPH

Total Dealers Selling BHPH

CY ‘10 Franchised Off Site BHPH

CY ‘10 Licensed Independent BHPH

Total Dealers Selling BHPH

39 24 56 38 407 42 46 19 77 63 11 37 42 36 29 32 25 36 11 18 44 56 38 64 16 11 46 62 13 193 13 194 16 11 73 24 20 113 7 14 18 14 102 10 12 9 18 11 19 9 17

226 84 371 267 1,124 324 207 69 2,191 703 26 109 1,321 947 298 361 522 347 86 222 417 462 339 421 672 102 325 268 211 1,648 169 1,858 412 126 2,623 474 288 2,198 86 679 204 1,003 3,082 125 267 815 668 32 293 747 93

265 108 427 305 1,531 366 253 88 2,268 766 37 146 1,363 983 327 393 547 383 97 240 461 518 377 485 688 113 371 330 224 1,841 182 2,052 428 137 2,696 498 308 2,311 93 693 222 1,017 3,184 135 279 824 686 43 312 756 110

42 31 59 36 419 43 48 23 78 61 14 38 44 40 32 35 26 38 13 17 42 58 39 45 16 12 48 65 12 198 14 201 18 13 75 28 22 119 7 17 19 13 108 13 15 11 19 10 21 11 20

228 86 378 261 1169 331 212 72 2262 709 29 113 1325 951 289 366 541 357 89 230 422 458 337 423 679 110 328 271 219 1682 174 1874 421 133 2659 485 281 2209 89 683 210 1046 3098 133 276 824 677 35 298 756 96

270 117 437 297 1,588 374 260 95 2,340 770 43 151 1,369 991 321 401 567 395 102 247 464 516 376 468 695 122 376 336 231 1,880 188 2,075 439 146 2,734 513 303 2,328 96 700 229 1,059 3,206 146 291 835 696 45 319 767 116

2,355

30,912

33,267

2,446

31,384

33,830

USED CAR INDUSTRY DATA FROM CNW MARKETING RESEARCH

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hamp New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington Washington D.C. West Virginia Wisconsin Wyoming

Totals

24

2011

UCIR_2011.indd 24

NIADA

USED

CAR

INDUSTRY

REPORT

www.niada.com

5/25/11 3:27 PM


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UCIR_2011.indd 25

5/25/11 3:27 PM


SECTION THREE BUY HERE-PAY HERE Industry Benchmarks BUY

HERE-PAY

HERE

INDUSTRY

BENCHMARKS

BUY HEREPAY HERE INDUSTRY BENCHMARKS

BUY

HERE-PAY

HERE

INDUSTRY

BENCHMARKS

BUY

HERE-PAY

BUY HERE-PAY HERE INDUSTRY BENCHMARKS / TRENDS 2010 The table below compares the resultant changes in gross profit from 2008 – 2010 (The numbers below are compiled from our best performing dealers and are not industry averages.): Note: All percentages are expressed as a percentage of sales. • Unit sales in 2010 were generally lower versus the year ended 2009 although some operators offset these lower unit sales volumes with sales price increases. Only where operations expanded their operations and added additional lots did unit sales increase significantly. The inventory shortages explained above constrained growth, particularly for those who had capital limitations and who were unable to compete in the rising vehicle acquisition cost environment. • Many operators controlled vehicle acquisition costs by purchasing higher mileage vehicles. They increased their reconditioning costs in order to make ready these higher mileage vehicles for resale. Average reconditioning costs increased almost $250 per unit in 2010! • Even the most profitable operators could not “cover” bad debt losses with finance income (where income equals or exceeds bad debt expense). This was largely because interest income was reduced as the average age of receivable portfolios increased due to a lower number of originations. (Interest revenue declines when the average age of the portfolio matures.) Bad debt defaults remained relatively constant with 2009 levels. Collections were strong where consumers had enough income to continue making payments in lieu of purchasing another vehicle.

Annually, NABD, with the help of Shilson, Goldberg & Cheung CPAs, compiles Buy Here-Pay Here financial benchmarks from a database of more than 500 operations nationwide NABD benchmarks also include operating information on sales, collections and recoveries, and inventory management which were developed

GROSS PROFIT COMPARISON: 2008 – 2010 2010

and supplied by NCM Twenty Groups, based upon a composite of all of their BHPH 20 Group members. The attached NABD benchmarks also include portfolio performance metrics which were compiled electronically by

2009

2008

SALES COST OF VEHICLE SALES SUBTOTAL

100%

100%

100%

(59%)

(59%)

(60%)

41%

41%

40%

FINANCING INCOME BAD DEBT GROSS PROFIT

15%

16%

18%

(18%)

(20%)

(21%)

38%

37%

37%

BUY HERE-PAY HERE INDUSTRY BENCHMARKS

Subprime Analytics, who performed computerized portfolio analysis of

AVERAGE CUSTOMER DOWNPAYMENT: 2006 – 2010

approximately 910,000 subprime

$1,040

loans aggregating approximately

$1,089

$1,000

$8 billion to identify loss rates and patterns. These statistics provide a comprehensive look at the financial

$900

$1,059

$1,018

$800

$600

and operating performance of the BHPH industry for the last three

$400

years and some interesting trend $200

information for earlier periods.

0

2006

26

2011

UCIR_2011.indd 26

NIADA

USED

CAR

INDUSTRY

REPORT

2007

2008

2009

2010

www.niada.com

5/25/11 3:27 PM


RE-PAY

HERE

INDUSTRY

BENCHMARKS

BUY

HERE-PAY

HERE

INDUSTRY

BENCHMARKS

BHPH FINANCIAL TRENDS 2004-2010 BAD DEBTS

COST OF GOODS SOLD AND OPERATING EXPENSE DETAIL NABD BY SHILSON, GOLDBERG, CHEUNG AND ASSOCIATES, LLP According to the research, Buy Here-Pay Here dealers spent more money in 2010 on reconditioning vehicles and spent more for the vehicles themselves than they did in 2009.

20%

20%

19%

% OF SALES 21% 19%

20%

18%

17% 15%

COST OF VEHICLE SALES COST OF VEHICLES RECONDITIONING COSTS OTHER

2010 % OF VEHICLE SALES

2009 % OF VEHICLE SALES

2008 % OF VEHICLE SALES

48.13%

49.03%

51.03%

7.17%

6.68%

4.12%

3.21%

2.85%

4.52%

10%

5%

0

TOTAL COST OF VEHICLE SALES

58.51%

58.56%

59.67%

ADVERTISING

2.50%

2.20%

1.55%

BANK CHARGES

0.27%

0.21%

0.24%

CONTRIBUTIONS

0.03%

0.01%

0.01%

DEPRECIATION

0.45%

0.40%

0.54%

DUES AND SUBSCRIPTIONS

0.10%

0.08%

0.02%

INSURANCE

0.27%

0.45%

0.99%

LEGAL AND ACCOUNTING

0.35%

0.51%

0.50%

OUTSIDE SERVICES

0.50%

0.13%

0.30%

OFFICE EXPENSE

0.65%

0.58%

1.31%

RENT

2.33%

2.18%

1.62%

REPAIRS AND MAINTENANCE

0.41%

0.22%

0.27%

10.26%

10.59%

10.81%

TAXES - GENERAL

0.11%

0.26%

0.30%

OTHER OPERATING EXPENSE

0.30%

0.94%

0.60%

TAXES - PAYROLL

0.49%

0.77%

1.11%

UTILITIES AND TELEPHONE

0.50%

0.70%

0.79%

TRAVEL / TRAINING

0.26%

0.27%

0.38%

19.78%

20.50%

21.35%

SALARIES (NON-OWNERS)

TOTAL OPERATING EXPENSE

2004

2005

2006

2007

2008

2009

2010

Source: NABD

BHPH FINANCIAL TRENDS AVERAGE WEEKLY PAYMENT AMOUNT 2007-2010 $86

$85

$84

$85 $84

$84

2008

2009

$82

$80

2007

2010

Source: NABD (for 2003-2005) NCM (for 2006)

LOSS STATISTICS - 2010

2009 SUBPRIME ANALYTICS BENCHMARKS

(Statistics supplied by Subprime Analytics)

2010 SUBPRIME ANALYTICS BENCHMARKS

AVERAGE GROSS DOLLAR LOSS (BEFORE RECOVERIES)

$7,049

AVERAGE NET DOLLAR LOSS (AFTER RECOVERIES)

$5,090

$4,526

AVERAGE DEFAULT RATE (% OF LOANS WRITTEN OFF)

30.11%

30.39%

AVERAGE GROSS DOLLAR LOSS RATE (% OF PRINCIPAL)

37.51%

39.18%

AVERAGE NET DOLLAR LOSS RATE (% OF PRINCIPAL)

26.06%

26.52%

AVERAGE RECOVERY (% OF PRINCIPAL CHARGED OFF)

29.80%

35.50%

HIGHEST CUMULATIVE DEFAULT MONTH AFTER ORIGINATION

21ST MONTH

25TH MONTH

HIGHEST FREQUENCY OF DEFAULT (MONTH AFTER ORIGINATION)

4TH MONTH

4TH MONTH

FEBRUARY

FEBRUARY

WORST PERIODIC LOSS MONTH AFTER ORIGINATION

$7,072

THE ABOVE REFERENCED LOSS DATA WAS DETERMINED BY ELECTRONICALLY ANALYZING APPROXIMATELY 613,000 LOANS, AGGREGATING APPROXIMATELY $5.3 BILLION TO IDENTIFY LOSS RATES AND TO UNDERSTAND WHY THEY OCCURRED.

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UCIR_2011.indd 27

2011

NIADA

USED

CAR

INDUSTRY

REPORT

27

5/25/11 3:27 PM


SECTION THREE BUY HERE-PAY HERE Industry Benchmarks While BHPH dealers sold many less units in 2010 than previous year, the 543 average yearly units sold per BHPH dealer are still much higher than the overall independent dealer average of 351 yearly units sold, noted in Section Two of this report. Also of note in this dealer operating chart is the large spike in reconditioning cost per vehicle in 2010 compared to 2009.

2010 DEALER OPERATING INFORMATION Statistics supplied by NCM Associates, Inc.

SALES AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE

COLLECTIONS / RECOVERIES AVERAGE WEEKLY PAYMENT AMOUNT AVERAGE # OF ACCOUNTS PAST DUE AVERAGE # OF PAST DUE ACCOUNTS PER COLLECTOR AVERAGE LOSS PER CHARGE OFF AVERAGE PORTFOLIO DELINQUENCY CURRENT 0-10 DAYS 11-29 DAYS 30-59 DAYS 60-89 DAYS 90+ DAYS

INVENTORY MANAGEMENT AVERAGE NUMBER OF UNITS IN STOCK AVERAGE INVENTORY AGING 0-30 DAYS 31-60 DAYS 61-90 DAYS 91+ DAYS

BUY HERE-PAY HERE INDUSTRY BENCHMARKS

BHPH FINANCIAL TRENDS AVERAGE “CASH IN DEAL” 2007-2010

BHPH FINANCIAL TRENDS 2004-2010 COSTS/EXPENSES

Average cash in deal per unit sold $5,000

$4,645

$4,696

UNITS SOLD PER DEALER (BHPH DEALS ONLY) CASH IN DEAL PER VEHICLE SOLD ACV PER VEHICLE SOLD (INCLUDES RECON) RECONDITIONING COST PER VEHICLE SOLD GROSS PER VEHICLE SOLD CASH DOWN PAYMENT AMOUNT FINANCED TERM OF LOAN (IN WEEKS)

COST OF VEHICLES $4,865

$4,850

728 $4,865 $5,534 $556 $4,149 $1,272 $9,274 132

543 $4,850 $5,458 $798 $4,314 $1,152 $9,380 134

$84 366 86 $4,360

$85 228 95 $4,273

74.40% 10.30% 7.80% 3.60% 1.70% 2.20% 100.00%

76.50% 10.30% 7.30% 2.90% 1.30% 1.70% 100.00%

145

128

40.80% 19.30% 12.80% 27.10% 100.00%

36.00% 21.10% 15.40% 27.50% 100.00%

AVERAGE TOTAL ACTUAL COST PER VEHICLE SOLD 2007-2010 Average total avg per vehicle sold (including recon)

OPERATING EXPENSES

62%

64%

64%

63%

60%

$3,500

2010 NCM BENCHMARKS

70%

$4,500 $4,000

2009 NCM BENCHMARKS

60%

$6,000

59%

59% $5,000

50%

$5,111

$5,284

$5,534

$5,458

$3,000 40%

$2,500

$4,000

30%

$2,000

22%

$1,500

20%

18%

18%

19%

21%

21%

$3,000

20%

$1,000

$2,000 10%

$500

0%

$0

2007

2008

2009

Source: NABD/NCM

28

2011

UCIR_2011.indd 28

$0

2004

2010

2005

2006

2007

Source: Shilson, Goldberg, Cheung & Associates, LLP

NIADA

USED

CAR

INDUSTRY

REPORT

2008

2009

2010

2007

2008

2009

2010

Source: NABD/NCM

www.niada.com

5/25/11 3:27 PM


RATIO COMPARISONS. BUY HERE–PAY HERE INDUSTRY BENCHMARKS PREPARED FOR NABD BY SHILSON, GOLDBERG, CHEUNG AND ASSOCIATES, LLP

RATIO COMPARISONS, COMBINED BUY HERE–PAY HERE COMBINED BUY HERE-PAY HERE

BALANCE SHEET

2010 AVG.

2009 AVG.

2008 AVG.

(INVENTORY X DAYS) / COST OF VEHICLE SALES COST OF VEHICLE SALES /AVERAGE INVENTORY DOLLARS VEHICLE SALES / AVERAGE INVENTORY DOLLARS VEHICLE SALES / TOTAL ASSETS TOTAL ASSETS / TOTAL LIABILITIES ALLOWANCE FOR BAD DEBTS / FINANCE RECEIVABLES* FINANCE RECEIVABLES* / TOTAL ASSETS TOTAL DEBT / TOTAL ASSETS * FINANCE RECEIVABLES ARE NET OF UNEARNED FINANCE CHARGES

63.40 DAYS 6.40 X 11.92 X .97 X 1.93 X 22% 96% 52%

64.11 DAYS 5.98 X 11.16 X 0.95 X 1.82 X 21% 93% 55%

68.57 DAYS 5.96 X 9.98 X 0.96 X 1.61 X 18% 89% 62%

18% 59% 38% 20% 17% 18% 15% 10% 7%

20% 59% 37% 21% 18% 16% 16% 11% 7%

21% 60% 37% 21% 23% 16% 18% 11% 4%

INCOME STATEMENT The NABD results - combined dealer and finance affiliate numbers - break down balance sheets and income statements into 16 categories. It also compares 2010 to the past two years so dealers can examine industry trends.

BAD DEBTS / VEHICLE SALES COST OF VEHICLE SALES / VEHICLE SALES GROSS PROFIT*** / VEHICLE SALES OPERATING EXPENSE / VEHICLE SALES INTEREST EXPENSE / FINANCING INCOME OPERATING INCOME / VEHICLE SALES FINANCING INCOME / VEHICLE SALES COMPENSATION** / VEHICLE SALES RECONDITIONING COST / VEHICLE SALES NOTES TO RATIO COMPARISONS: **Compensation excludes those of the owners

Sell Inventory FAST & REV UP YOUR PROFITS with NIADA Certified!

©

Administered by TM

www.NIADAcertified.com www.niada.com

UCIR_2011.indd 29

***Gross Profit is net of bad debts and financing income x = times

Get the best of all attributes – solid, reputable administration from NAC, a warranty that incorporates a comprehensive inspection, online training, and the nationally recognized NIADA brand – and the high performance tools, expert support and speed you need to leave your competitors in the dust with NIADA Certified!

Get the GREEN LIGHT to start selling top quality NIADA Certified vehicles today!

INNOVATIVE ONLINE TOOLS MAKE IT FAST & EASY TO: CERTIFY VEHICLES GENERATE COMPLIANT BUYER GUIDES EXPORT CERTIFIED INVENTORY TO THIRD PARTY PORTALS INCLUDING EBAY� MOTORS® GET AUTOCHECK® VEHICLE HISTORY REPORTS AND, INSTANTLY PROCESS WARRANTIES!

800-840-2567 2011

NIADA

USED

CAR

INDUSTRY

REPORT

29

5/25/11 3:27 PM


SECTION FOUR ROLE OF THE INTERNET in the New and Used Vehicle Purchase Process

ROLE OF THE INTERNET IN THE NEW AND USED VEHICLE PURCHASE PROCESS • ROLE OF THE INTERNET IN THE NEW AND USED V

ROLE OF THE INTERNET IN THE NEW AND USED VEHICLE PURCHASE PROCESS

The Internet is the preferred information source among vehicle buyers. In fact, 71 percent of both New & Used Vehicle Buyers said they used the Internet during the car shopping process. Furthermore, the chart below indicates 58 percent of Used Vehicle Buyers said that the Internet was the predominant source that led them to the dealers they bought from – more than twice that of any other source cited in the study. As a result, effective online automotive advertising not only influences what makes and models consumers buy, but also influences which dealers they buy from.

The Internet has become an increasingly important component of the vehicle purchase process. Consumers

MOST USED SOURCE DURING SHOPPING PROCESS NEW BUYERS

USED BUYERS

80%

71%

71%

60%

40%

20%

0

Internet

shopping for new and used vehicles can find a wealth of information and

MOST INFLUENTIAL SOURCES LEADING TO THE DEALER

tools on auto manufacturer, dealer and third-party websites.

USED BUYERS

65%

How much time do consumers

ROLE OF THE INTERNET IN THE NEW AND USED VEHICLE PURCHASE PROCESS

NEW BUYERS

58%

spend online during the vehicle

55%

purchase process? How does the

50%

45%

Internet compare to other channels in 35%

terms of influencing purchase? Why do shoppers use the Internet?

25%

To answer these and related

16%

19%

15%

questions, Polk and AutoTrader.com

7%

recently teamed up to conduct

5%

a study of recent car buyers:

0%

INTERNET

4,005 U.S. consumers who had purchased a new or used vehicle

5%

REFERRAL NEWSPAPER FROM FRIEND/FAMILY

4%

2%

DIRECT MAIL

2% 2%

OUTDOOR ADS

4%

2%

2% 1%

1% 1%

TELEVISION MAGAZINE

RADIO

from a dealership within the prior six months. The findings provide insights into the role, usage and perceived

NEW & USED VEHICLE BUYERS SPEND 60% OF THE SHOPPING PROCESS ONLINE For the first time ever, we now know the total amount of time that consumers spend on the car shopping process. According to the study, New Vehicle Buyers who use the Internet to shop for cars spend an average of 19 total hours shopping, while Used Vehicle Buyers spend an average of 18 total hours. Of that time, New and Used Vehicle Buyers spend the majority of their time online – 11.5 and 11 hours, respectively, actively choosing to engage with the medium. Throughout the process, they are seeking content and being exposed to multiple brand impressions – a big opportunity for automotive marketers to influence shoppers. Effectively engaging consumers at each point in their shopping process can dramatically improve the chances of turning a shopper into an actual buyer.

helpfulness of the Internet in the vehicle purchase process.

NEW VEHICLE BUYERS

7.5 HOURS OFFLINE 11.5 HOURS ONLINE

30

2011

UCIR_2011.indd 30

NIADA

USED

CAR

INDUSTRY

REPORT

19 TOTAL HOURS SHOPPING TIME

USED VEHICLE BUYERS

7 HOURS OFFLINE 11 HOURS ONLINE

18 TOTAL HOURS SHOPPING TIME

www.niada.com

5/25/11 3:27 PM


D USED VEHICLE PURCHASE PROCESS • ROLE OF THE INTERNET IN THE NEW AND USED VEHICLE PURCHASE PROCESS

HOW DO VEHICLE BUYERS INITIALLY CONTACT THE DEALERSHIP?

7 out of 10 of all vehicle buyers walk into the dealership without establishing contact with the dealer prior to their initial visit. Therefore, it has become increasingly important for automotive marketers to put methods into place to track advertising effectiveness (e.g., dealership walk-in traffic). Understanding the influence that online advertising has on car shoppers can help automotive marketers determine the true value of their advertising spend, as well as how and where they can more effectively invest their marketing dollars.

NEW & USED VEHICLE BUYERS SPEND MORE TIME ON THIRD-PARTY SITES While both New & Used Buyers shop online in a variety of places, they spend the most time on third-party sites. This information is important because it reveals that vehicle buyers find value shopping on manufacturer sites, dealer sites, and third-party sites alike. These sites serve as complements to each other during the shopping process. Knowing where car shoppers spend their time online also demonstrates the need for automotive marketers to have a broad Internet strategy. To effectively reach and influence vehicle buyers online, a defined marketing message must be in front of as many in-market shoppers as possible, as often as possible.

NEW VEHICLE BUYERS

USED VEHICLE BUYERS

3.25 HR

THIRD PARTY SITES

6.5 HR

2.25 HR

DEALER SITES

2.25 HR

2.75 HR

OEM SITES

1 HR

2 HR

SEARCH

1.5 HR

MOST INFLUENTIAL SOURCES LEADING TO VEHICLE PURCHASE New & Used Vehicle Buyers both use the Internet to research car prices, compare makes & models, look at photos, and locate a vehicle. While Special Offers, Dealer Rebates and Incentives are important to Used Vehicle Buyers, they are significantly more important to New Vehicle Buyers, who rank it the third most important reason to shop online. In order to effectively target their marketing messages as well as ad spend, it is important that automotive marketers understand how and why consumers use the Internet during the vehicle shopping process. These insights can help ensure that dealers and manufacturers deliver the right marketing message and content to the right shoppers at the right time.

58% 55%

50%

45% 35%

27% 25%

16%

19%

18%

15%

7% 5%

NEW BUYERS

www.niada.com

UCIR_2011.indd 31

USED BUYERS

5%

0%

INTERNET

2011

NIADA

REFERRAL FROM FRIEND/FAMILY

USED

CAR

NEWSPAPER (Printed or online)

ALL OTHER MEDIA SOURCES

INDUSTRY

REPORT

31

5/25/11 3:27 PM


SECTION FOUR ROLE OF THE INTERNET in the New and Used Vehicle Purchase Process

DO SEARCH AND SOCIAL NETWORKING SITES INFLUENCE VEHICLE BUYERS? According to the research, New & Used Vehicle Buyers are often using search engines like Google as a “Yellow Pages” type service – a convenient way of getting to sites and businesses they are already aware of. For example, of the Used Vehicle Buyers who used search, the most common reasons they used it were to access a dealer’s website, find a dealer’s phone number and/or address, access a manufacturer’s website, and to access third-party sites.

USED VEHICLE BUYER SEARCH ENGINE USE ACCESS OEM SITE

41%

ACCESS A DEALER WEBSITE

63%

FIND DEALER PHONE NUMBER AND/OR ADDRESS

51%

ACCESS THIRD PARTY SITES

45%

OTHER/NONE

16%

SOCIAL NETWORKING SITE INFLUENCE ONLY 3% OF VEHICLE BUYERS SAID A SOCIAL NETWORKING SITE INFLUENCED THEIR PURCHASE.

Regarding social media, an overwhelming 97% of New & Used Vehicle Buyers stated that their most recent vehicle purchases were not influenced by social networking sites. Vehicle buyers typically do not go to Facebook to search inventory, for example. However, social networking can still be an important relationship and customer retention tool. It can provide an opportunity for automotive marketers to stay engaged with their customer base and even generate post-purchase revenue.

ROLE OF THE INTERNET IN THE NEW AND USED VEHICLE PURCHASE PROCESS

97%

32

2011

UCIR_2011.indd 32

NIADA

USED

CAR

INDUSTRY

REPORT

www.niada.com

5/25/11 3:27 PM


Help get the right loan for each customer with Custom Finance* Chase offers full-spectrum financing to meet the needs of a diverse customer base. Our Custom Finance program places an emphasis on deal structure, enabling us to better match the right loan to the right customer. •

Flexible financing options to help you meet the needs of deserving borrowers with less-than-perfect credit

Knowledgeable sales and credit team dedicated to your dealership

Fast decisions and efficient funding

Local presence with more than 42 business centers nationwide

Plus, you can begin building customer loyalty and improving your bottom line when you help good customers establish better credit with Custom Finance.

Call 1-800-485-8455 or visit chasedealer.com/custom to sign up with Custom Finance today.

*Subject to credit approval by JPMorgan Chase Bank, N.A. Additional terms and conditions apply. © 2011 JPMorgan Chase Bank, N.A. Member FDIC. All rights reserved. (10-1105) 02/11

UCIR_2011.indd 33

5/25/11 3:27 PM


SECTION FIVE AUTOZONE/NIADA Parts and Service Analysis

AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS • AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS • AUTOZ

AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS

AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS

For the first time in our 16-year history of the Used Car Industry Report, NIADA has teamed up with AutoZone to provide detailed auto parts and service data. Over the past year, many of our dealer members have successfully taken advantage of the great parts discounts and quick and free delivery that AutoZone offers through its National Corporate Partnership with NIADA. The following charts and data provide valuable insight into the auto parts business. In addition to parts discounts and free delivery through the AutoZone HotShot Delivery program, dealers have also recently found the ease of ordering AutoZone parts online. The chart at the bottom of this page shows a tremendous spike in online ordering over the first quarter of 2011. The data on page 35 detailing the demographics of NIADA’s TOP 10 Auto Parts buyer proves that these dealers are profiting heavily from auto parts and service, and they all have two common factors: they all have multiple service bays and have their own service technicians. Finally, the pie chart on page 36 details the most common categories of parts ordered by NIADA members, and shows the corresponding auto parts sales volume generated by NIADA members in each category. This parts breakdown gives the typical dealer a clear indication of the types of parts that can be easily purchased and delivered free of charge to maximize your service and aftermarket business.

PARTS SALES VOLUME The following chart represents the sales volume NIADA members have spent with AutoZone in 2009 & 2010. In 2010, TOTAL SALES VOLUME WAS AT $17,111,506, AN INCREASE OF 33.84% OVER 2009. The data reinforces the success that AutoZone has had with their NIADA Partnership and suggests that more and more dealers are using parts, service and accessories as an additional profit center. 1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

JAN 2009 920,128 2010 1,148,188 2011 1,468,839 vs Last Year

UCIR_2011.indd 34

NIADA

USED

CAR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

36.4% 967,799 1,358,253 -

40.3% 1,109,842 1,470,216 -

32.5% 1,136,057 1,513,832 -

33.3% 1,098,603 1,568,093 -

42.7% 1,121,965 1,504,880 -

34.1% 1,185,443 1,488,533 -

25.6% 1,019,853 1,418,924 -

39.1% 1,074,852 1,462,948 -

AVERAGE WEEKLY SALES PER DEALER MEMBER CUSTOMER The following chart indicates that dealer member customers of AutoZone have been gradually increasing their weekly spend on AutoZone parts and accessories each month. As of the date of this analysis in February 2011, NIADA dealer members spent an average of $258 per week on parts. 300

250

200

150

100

50

0

2009 2010 2011

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

198 223 245

217 235 258

224 258 -

217 233 -

200 214 -

218 234 -

226 237 -

214 247 -

220 251 -

227 247 -

205 238 -

212 249 -

ELECTRONIC ORDERING SALES BY MONTH

Electronic Ordering of parts through the AutoZone portal has really taken off over the first three months of 2011. Dealer Members are encouraged to order online for an even quicker free delivery of their part via AutoZone’s Hot Shot Delivery Program, provided exclusively for NIADA Members. 120,000

100,000

80,000

20,000

0

2009 2010 2011 vs Last Year

APR

36.6% 1,052,972 1,436,655 -

40,000

www.autozonepro.com

2011

MAR

22.7% 1,079,697 1,474,899 -

60,000

“33.84 percent yearly increase in AutoZone/NIADA parts sales volume in 2010.”

34

FEB

27.9% 1,016,083 1,264,075 1,551,164

INDUSTRY

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

0 23,419 90,742

287.5% 539 30,074 79,357

163.9% 19 45,848 102,316

123.2% 907 35,949 -

3863.6% 4,441 42,853 -

865.0% 7,456 53,446 -

616.9% 9,202 60,870 -

561.5% 10,878 64,031 -

488.6% 14,904 69,332 -

365.2% 21,196 71,445 -

237.1% 16,299 73,193 -

349.1% 17,665 77,548 -

REPORT

www.niada.com

5/25/11 3:27 PM


• AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS • AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS

TOP 10 DEALER MEMBER PARTS VOLUME SALES

160,000

140,000

The chart to the right details combined monthly sales volume from the TOP 10 NIADA Dealer Members who purchased parts with AutoZone in 2010. Total parts purchases made by the TOP 10 dealers eclipsed $1,490,207. One can assume these Top 10 dealers have multiple service bays and do a majority of their parts, service and accessories work directly at the dealership. Below are the common demographic characteristics of these TOP 10 dealers to give you a comparison of their dealership operation to your own.

120,000

100,000

80,000

60,000

40,000

20,000

0

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

2010 Top Ten Dealer Member Parts Sales Volume: $1,490,207

DEMOGRAPHICS OF A TOP 10 AUTOZONE/NIADA PARTS BUYER Service Technicians

Service Bays

Service Hours

All Top 10 AutoZone Parts Dealers have service technicians on staff, and 50% have at least 3 or more service technicians.

All Top 10 AutoZone Parts Dealers have service bays, and 60% have at least three or more service bays.

70% of the Top 10 AutoZone Parts Dealers have their service departments open for business on Saturdays.

30% 100%

100% 70%

Online Orders

Average Weekly Parts Sales

Purchase Frequency (Weekly Basis)

50% of the Top 10 AutoZone Parts Dealers order their parts online.

The Top 10 AutoZone Parts Dealers purchase an average of $2,883 worth of parts weekly. (percentage breakdown is a percentage of the Top 10 Dealers above)

The Top 10 AutoZone Parts Dealers place an average of 84 orders weekly. (percentage breakdown is a percentage of the Top 10 Dealers above)

40%

40%

30%

30%

50%

60%

60%

45%

50% 20%

10%

30%

10%

10%

20%

10%

15%

0

10%

10%

0

$0- $1,001$1,000 $2,000

$2,001$3,000

$3,001$4,000

$4,001$5,000

0-50 orders

51-100 orders

101-150 151-200 orders orders

PARTS SALES BY STATE Below are the states with the highest overall sales volume in 2010: 1. 2. 3. 4. 5.

TEXAS GEORGIA OHIO NORTH CAROLINA ARIZONA

$2,343,160 $1,815,316 $1,434,356 $1,409,288 $871,011

6. PENNSYLVANIA 7. FLORIDA 8. OKLAHOMA 9. ALABAMA 10. VIRGINIA

www.niada.com

UCIR_2011.indd 35

Below are the states with the highest sales volume percentage increase from 2009 to 2010: $734,824 $689,891 $689,187 $670,577 $669,840

1. 2. 3. 4. 5.

NEW YORK MARYLAND NEBRASKA NEW JERSEY WASHINGTON

2011

NIADA

+693% +321.% +153% +114% +109%

USED

CAR

6. WEST VIRGINIA 7. IDAHO 8. ILLINOIS 9. KANSAS 10. MASSACHUSETTS

INDUSTRY

+101% +74% +71% +67% +65%

REPORT

35

5/25/11 3:27 PM


SECTION FIVE AUTOZONE/NIADA Parts and Service Analysis

PARTS BY CATEGORY BREAKDOWN The pie chart below indicates the top “Categories” of parts purchased by NIADA Members in 2010. The bar chart to the right indicates total dealer member expenditures by Category in 2010. Below are the category descriptions for a more detailed description of each part included in that category.

4% MINOR REPAIR

3% OUTSIDE BUYS

5% CHEMICALS 10% UNDERCAR 12% COMMODITY & SEASONAL 16% BRAKE SYSTEMS

2% P&P $5,000,000 $4,196,473

$4,000,000

25% STARTING & CHARGING

$3,918,076

$3,000,000 $2,862,786 $2,093,097

$2,000,000

$1,757,654

$1,000,000

23% TUNE UP & FUEL

$887,221

$771,421

$555,260

$413,942

0 BRAKE SYSTEMS

CHEMICALS

COMMODITY & SEASONAL

MINOR REPAIR

P&P

STARTING & CHARGING

TUNE UP & FUEL

UNDERCAR

OUTSIDE BUYS

Almost half of all auto

CATEGORY DESCRIPTIONS BRAKES: Rotors, pads, calipers, bearings and seals

parts purchased by NIADA were classified

COMMODITY & SEASONAL: Antifreeze, A/C chemicals, filters

in the “Starting & Charging” and

CHEMICALS: Performance chemicals, wipers, wash and wax

“Tune-Up & Fuel” categories. Batteries

MINOR REPAIR: Electrical, lighting, tire and wheel

were the number one

AUTOZONE/NIADA PARTS AND SERVICE ANALYSIS

seller overall, with P&P: Accessories, truck and towing, covers and mats

over $1,288,156 in NIADA member

STARTING & CHARGING: Alternators, starters, batteries, cooling system

parts sales volume. Brake system parts,

TUNE-UP & FUEL: A/C and heating, belts and hoses, fuel systems, engine management

engine oil, and engine management and

UNDERCAR: Chassis, drive train, exhaust, shocks and struts, steering

ignition parts were among the other

OUTSIDE BUYS: Parts, accessories, chemicals, etc., which AutoZone does

highest volume sales items purchased by

not regularly stock

NIADA Members.

36

2011

UCIR_2011.indd 36

NIADA

USED

CAR

INDUSTRY

REPORT

www.niada.com

5/25/11 3:27 PM


UCIR_2011.indd 37

5/25/11 3:27 PM


SECTION SIX CARFAX/NIADA Independent Dealers and Vehicle History

C A R F A X / NI A DA I N D EPEN D EN T D EA LERS A N D V EH ICLE HIS TOR Y • CAR F AX/NIADA INDE PE NDE NT DE ALE R S AND VE HICL E H IST OR Y

CARFAX/NIADA INDEPENDENT DEALERS AND VEHICLE HISTORY

CARFAX/NIADA INDEPENDENT DEALERS AND VEHICLE HISTORY

Build Consumer Confidence. Confident Consumers Buy Cars. Independent Dealers Sell More Cars. Here’s a look at the average independent dealer’s inventory.* This snapshot, based on joint research by NIADA and CARFAX®, shows how vehicle history helps impact key areas of your used car business—from acquisition to retail.

ACQUISITION

ADVERTISING

RETAIL

Know before you buy

Build consumer confidence online

Build confidence at the deal table

19%

15

1

31

of your vehicles listed online last month had a vehicle history report run prior to you buying them.

fewer days online for your vehicles listed with a CARFAX® Report.

shoppers wanted the history of cars in your inventory, but it wasn’t available to them.

vehicle you listed online had a branded title.

8

vehicles you listed online have an accident.

2011

UCIR_2011.indd 38

NIADA

USED

CAR

vehicles listed online as of the 1st of the month had open recalls.

40%

of your inventory is CARFAX 1-Owner®.

136

times shoppers viewed CARFAX Reports for vehicles on your website and other sites such as cars.com and AutoTrader.com.

* Analysis of online inventory, November 2010 – April 2011 Data April 2011 Data

38

3

INDUSTRY

REPORT

OPN_MN | Independent Dealers ©2011 CARFAX, Inc. All rights reserved.

www.niada.com

5/25/11 3:28 PM


www.niada.com

UCIR_2011.indd 39

2011

NIADA

USED

CAR

INDUSTRY

REPORT

39

5/25/11 3:28 PM


SECTION SEVEN AUTO TRANSPORT Analysis

USHIP AUTO TRANSPORT ANALYSIS • USHIP AUTO TRANSPORT ANALYSIS • USHIP AUTO TRANSPORT ANALYSIS

AUTO TRANSPORT ANALYSIS

SHIPPING DEMAND BREAKDOWN BASED UPON DESTINATION

For the first time this year, NIADA brings you vehicle transport data, courtesy of our National Member Benefit Partner uShip. The following charts provide valuable insight into the transport logistics business, and will provide dealers a great reference to compare your current shipping distances and costs to these national averages. The charts included in this section were devised from combining all of the all auto shipment listings on uShip in calendar year 2010.  

AUTO TRANSPORT ANALYSIS

The destination chart at the top indicates that shipped vehicles traveling to California, Washington and Oregon have by far the longest shipping distances to travel (of course other than the obvious in Hawaii and Alaska). Coinciding with the far West states, the far Northeast section of the country also had long destination shipping distances. The mileage and shipping costs chart indicates that 56 percent of all vehicles shipped have destination mileages of 1,000 or less miles. This chart also indicated that 22 percent of all auto shipment listings on UShip travel from 1,000-1,500 miles. Surprisingly 16 percent of all auto shipment listings on uShip had mileage interval requests of 2,500 or more miles, but only 7 percent of actual shipments in this same mileage category. This would suggest that either dealers weren’t wanting to pay the large costs associated with shipments of such a long distance, or that there aren’t enough transport carriers in the marketplace that cater to these very high shipping distances. The last chart indicates a breakdown of auto shipments by the model year. It is no surprise that just over 70 percent of all autos shipped through uShip are less than ten years old. For more information on auto transport through uShip, visit www.uship.com/niada.

40

2011

UCIR_2011.indd 40

NIADA

USED

CAR

US REGION DESTINATION

# OF AVG. LISTING LISTINGS AVG. SHIPMENT SHIPMENTS STATES DISTANCE % DISTANCE %

ME, MA, RI, NH, VT

5

1,648

3%

1,245

3%

VA, WV, PA, MD, DE, NY, CT, DC, NJ

9

1,273

18%

845

20%

NC, SC, GA, TN, AL, MS

6

1,147

11%

834

13%

FLORIDA

1

1,414

9%

1,132

9%

MN, MI, IN, IL, KY, OH, WI

7

1,148

14%

896

16%

NE, KS, MO, IA

4

1,066

4%

938

4%

TX, OK, AR, LA

4

1,249

11%

1,018

12%

NM, AZ

2

1,595

3%

1,309

3%

ID, WY, MT, ND, SD

5

1,470

2%

1,272

2%

WA, OR

2

1,993

5%

1,669

4%

CALIFORNIA

1

1,940

12%

1,500

12%

NV, UT, CO

3

1,495

4%

1,240

4%

HI, AK

2

3,319

2%

3,618

0%

SHIPPING MILEAGE AND AVERAGE SHIPPING COST BREAKDOWN MILEAGE INTERVAL

AVG. MATCH PRICE LISTINGS % USD$

SHIPMENTS %

0-250 MILES

$245.30

6%

11%

251-500 MILES

$384.00

10%

18%

501-750 MILES

$525.16

10%

14%

751-1,000 MILES

$622.81

10%

13%

1,001-1,500 MILES

$727.80

22%

21%

1,501-2,000 MILES

$893.56

12%

9%

2,001-2,500 MILES

$1,023.37

13%

7%

2,501+ MILES

$1,178.54

16%

7%

LOCAL

$575.25

1%

0%

SHIPPING BREAKDOWN BASED UPON MODEL YEAR YEAR

% OF LISTINGS

% OF SHIPMENTS

2010-2011

4.47%

4.34%

2000-2010

68.29%

66.03%

1990-1999

22.61%

23.56%

1980-1989

4.63%

6.07%

INDUSTRY

REPORT

www.niada.com

5/25/11 3:28 PM


DEALER EDUCATION

24/7

ONLY ON NIADA.TV

Watch where you want... ...when you want

Sales • Operations • F&I • Remarketing • Compliance • Legal/Regulatory • Special Features • Industry Events

PLUS: Automotive Industry News & Special Monthly Programs

www.niada.tv UCIR_2011.indd 41

5/25/11 3:28 PM


SECTION EIGHT AUCTION PERSPECTIVES By Tom Webb of Manheim and Tom Kontos of Adesa

AUCTION PERSPECTIVES • AUCTION PERSPECTIVES • AUCTION PERSPECTIVES • AUCTION PERSPECTIVES

MANHEIM AUCTION PERSPECTIVE by Tom Webb

ADESA AUCTION PERSPECTIVE by Tom Kontos

NUMEROUS ECONOMIC INDICATORS ARE POINTING

INDEPENDENT DEALERS ENJOYING

TOWARD A POSITIVE 2011 & 2012

ENCOURAGING GROWTH IN THEIR RETAIL USED VEHICLE SALES!

We began forecasting that the economic recovery would be an “upward-slanted W” more than 18 months ago, and that description remains valid. Recent events such as the Japanese earthquake and tsunami, Middle East unrest, European sovereign debt issues and domestic gas price spikes are clearly drags on the economy. However, numerous other economic indicators (most notably employment and new and used vehicle sales) are pointing positive for 2011 and 2012. We remain optimistic about economic progress this year and next, but recognize that there will be steps backwards along the way.

AUCTION PERSPECTIVES BY TOM WEBB OF MANHEIM AND TOM KONTOS OF ADESA

The total number of vehicles remarketed via NAAA-member auctions declined for the third consecutive year in 2010 as a result of fewer repossessions, program vehicles and off-lease units (the last of which will lose close to 300,000 units in both 2011 and 2012). Dealer consignment increased to 45 percent of auction volume in 2010, up from 39 percent in 2009 and 42 percent in 2008. Looking ahead, we anticipate auction volumes will increase as new and used vehicle sales rise and auctions employ operational efficiencies to provide new processes that support the changing needs of dealers It is hard to imagine how dealers would have coped with rising used vehicle demand and restricted used vehicle supplies without the services of the auction industry. The ability to search and buy both in live auction and Buy Now formats expanded used vehicle showrooms and helped make a “just in time” inventory model possible for dealers struggling to find used inventory. Tight supply has driven used prices up, and many dealers who in the past may have bought from auctions by the truckload are turning to online channels to buy only what they need right away. More than 20 percent of all Manheim volume was sold online in 2010. Manheim features more than 100,000 vehicles available for preview (more than 25,000 of which are available for sale) at any time via its online channels. Mobile is the next frontier for dealers and auctions, with apps becoming the norm and buying, selling and other auction services becoming more common via mobile devices. In recent years, we have seen improved inspection reliability enhance buyer confidence (particularly online) and operational efficiencies decrease days to sale. Auction process investments are paying off for both buyers and sellers. As a result, the auction industry is in a strong position to take advantage of the economic rebound. Although the economic recovery has been and will continue to be uneven, the “upward-slanted W” suggests more positive than negative. We encourage a job market focus on the “doughnut” (employment) rather than the “hole” (unemployment), as it is the employed who purchase new and used vehicles. Even modest job growth boosts customer confidence, which in turn drives more retail sales. The availability of retail financing improved consistently throughout 2010 and the first part of 2011. So too, has wholesale inventory financing for used vehicle dealers. We don’t expect either trend to reverse over the next year. Gas prices and international affairs will remain key variables impacting retail spending, but most data and forecasting suggest that the economic rebound should continue throughout 2011 and into 2012 – although not as steadily or as quickly as many would like. Tom Webb is chief economist for Manheim Consulting. For more in-depth and ongoing industry updates, visit the Manheim Consulting blog at www. manheimconsulting.typepad.com or follow Tom on Twitter at www.twitter.com/ TomWebb_Manheim.

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Throughout much of 2010, the choppy nature of the economic recovery appeared to be generating more uncertainty than confidence. As a result, fears of a double-dip recession were prevalent. At this juncture, however, most of the economic indicators we track are tilted towards the positive and a return to recessionary conditions appears to have been averted. GDP growth rates accelerated from the second through the fourth quarter. The unemployment rate dropped considerably in 2010 through the addition of nearly one million jobs. Manufacturing continued to expand and has resulted in increased exports. Consumer and business spending grew at a solid clip. To be sure, the housing market remains depressed and fuel prices are on the rise, but the former is to be expected to correct for past excesses and the latter is a reflection of an improving global economy. New vehicle sales began a rebound that can be expected to continue in 2011. Independent dealers enjoyed encouraging growth in their retail used vehicle sales after several years of declines. A more right-sized automotive industry has encouraged inventory and incentive discipline that benefits new vehicle resale values and sales. In addition to the growth in trade-in volume fostered by rising new vehicle sales, the past year also saw more lease originations and rental and commercial fleet sales, all of which could eventually help relieve the current tight vehicle supplies. Wholesale used vehicle prices reached record levels in April and rose by almost four percent for the year. Although year-over-year price growth appears to be diminishing, prices are expected to follow typical seasonal patterns. The Canadian economy saw a bit of a slowdown in its recovery as 2010 progressed, but to some degree this was expected as a result of a cooling housing market. Nevertheless, Canada appears to have avoided the need for the degree of correction in its housing market that was required in the U.S. and should enjoy faster growth rates as its exports improve, including those to the U.S. Wholesale used vehicle prices in Canada have risen as supplies have tightened, creating market conditions similar to those in the U.S. Class 8 truck sales were up during all of 2010. Most classes of medium-duty truck sales were also up for the year. Growth in truck sales and truck tonnage are good “coincident” indicators, reflecting the improving economy. The percentage of insurance claims that are declared total losses remains high. Miles driven will likely increase as the economic recovery continues. Salvage recovery values are benefiting from the strong wholesale used vehicle market.

www.niada.com

5/25/11 3:28 PM


WE SPEAK “DEALER” FLUENTLY Whether you’re a buyer or a seller, we speak your language. We know that it’s all about service—before, during and after the sale. And our dedicated, experienced staff is ready to assist in every way.

© 2011 ADESA, INC.

Contact the Dealer Sales and Services team at your local ADESA auction, or visit us online at ADESA.com/sell.

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SECTION NINE THE EFFECTIVE USE OF GPS in the Industry

THE EFFECTIVE USE OF GPS IN THE INDUSTRY • THE EFFECTIVE USE OF GPS IN THE INDUSTRY

THE EFFECTIVE USE OF GPS IN THE INDUSTRY

DEALER FACTS/OPINIONS TOWARD GPS DEVICES 90% 88% 87%

THE EFFECTIVE USE OF GPS IN THE INDUSTRY

The following data regarding dealer use and opinions of GPS and their effects on reduction of delinquency are detailed in this section. This brand new data is the result of a survey collected by Ken Shilson of The National Alliance of Buy Here, Pay Here Dealers (NABD) and was just released at the 2011 NABD Conference in May 2011. The data was collected from a survey of dealers in 30 states, and these dealers collectively have over 150,000 GPS/Starter Interrupt units deployed nationwide. The dealers surveyed had very high regard and very positive and strong opinions about the effective use of GPS devices, as showcased in the very first chart. The second set of charts show the number of devices in use per dealer, and the length of time that dealers have been using GPS. It is assumed that those dealers who have been using GPS for 7+ years were mostly using starter interrupt devices prior to using the newer GPS technology. The final set of pie charts and graphs at the bottom show the dealer’s cost savings with the use of GPS devices. It is clear from the survey that the decrease in the amount of delinquencies using GPS proves the high effectiveness of such devices. “GPS devices more significantly reduce default rates, according to our study, but don’t seem to affect customer repayment behavior like CBS systems. GPS devices reduce bad debt losses by improving recoveries and reducing recovery costs. GPS devices also deter customers from ‘walking away from the deal’,” Shilson indicated. “However, GPS technology is newer in usage to the industry so more data is needed to fully measure its impact on collections and recoveries. NABD also found that operators activate these devices differently in their application which impacts results. In summary, GPS devices seem to increase recoveries more than they impact delinquencies,” Shilson explained. Special thanks to STARS GPS, NIADA’s exclusive National Corporate Partner of GPS Devices, for gathering and summarizing this data for our report. For more information about STARS GPS, and to get started using GPS devices in your dealership, visit www.statgps.com/contactus.asp.

85%

80%

80%

78%

77%

75%

70% CUSTOMER RESPONSE TO PAYMENT REMINDER

DISABLE FEATURE AS A PROACTIVE TOOL

REDUCES THE NUMBER OF COLLECTORS NEEDED

DEALERS WITH DEVICES IN USE 60%

I WOULD DECIDE AGAIN TO INSTALL THEM ON ALL VEHICLES I SELL

DEALERS LENGTH OF TIME USING GPS/STARTER INTERRUPT

59%

30% 28%

50%

25%

40%

20% 29%

30%

I WOULD RECOMMEND THESE DEVICES TO OTHER OPERATORS

29% 27%

18%

15%

20%

10%

10%

6%

5%

2,0005,000

5,000+

0%

5% 0%

0-500

5002,000

COST SAVINGS WITH THE USE OF GPS

0-2 YEARS

2-4 YEARS

5-7 YEARS

7+ YEARS

GPS REDUCTION IN AVERAGE DELINQUENCIES 50% 41%

40%

CAN’T MEASURE

< $300

30% 22%

20% 13%

OVER $750

$301$500

10%

0% < 5%

5-10%

> 10%

$501$750

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www.niada.com

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www.niada.com

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NEW NIADA MOBILE SERVICE

FOR SMART PHONES PUTS KE Y APPR AISAL DATA , MEMBER NE WS AT YOUR FINGERTIPS BY SCOTT LILJA, VICE PRESIDENT, NIADA MEMBER SERVICES

This spring, NIADA members will have access to a new mobile application tool from NIADA that will enhance their productivity and profitability and stay up to date on the latest developments impacting their dealership.

This new tool, NIADA Mobile Service, is accessible by Apple iPhones, Android-type phones and other select models. It puts at members’ fingertips a wealth of critical data to help them make better vehicle appraisal, purchase and retail sales decisions. Now, members can access their subscriptions to appraisal services from NADA Guidebook, Kelley Blue Book, Black Book, and Galves Auto Price List. They also will access run lists from participating auctions. Furthermore, NIADA Mobile Service links them by smart phone to select content on NIADA.com. Here’s how NIADA Mobile Service will streamline your operations: On the lot or on line: More quickly appraise a vehicle, for customers at your lot or those selling online through sites such as Craigslist. Access your guide book vehicle appraisal service or a market report – or your subscription vehicle history report service – on the specific unit. Have at your fingertips the right current facts to pencil your best deal. Buying from auction: You can access the auction’s pre-sale run list while at the auction or sitting in your office. You may view the inventory then, once you land on a unit you like, press on the appropriate smart phone icons to pop up auction-supplied information about the unit, its appraisal data, and a vehicle history report. Continual and timely updates ensure you have the freshest available data. During a moment of downtime: Activity suddenly slows its hectic pace for a few minutes, so you use the time to access the NIADA website. There you check some key association information or watch a NIADA.TV video you’d put off. The service also alerts you to urgent messages that might require immediate action. Designed for NIADA

NIADA Mobile Service was developed by leading automotive mobile applications developer and NIADA technology partner and advisor GigglePop.com Inc. The company is importing NIADA web content and coupling it with existing GigglePop software mobile applications. GigglePop’s technology is known 46

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for speed, accuracy and, of course, mobility. Its fat-finger icon or button designs are a special value when searching for key information when working in distracting environments like auctions. These large icon designs help users easily find and stroke with their fingers the right icons or buttons they want, reducing keystroking errors. As NIADA’s technical partner, GigglePop will continue to support Mobile Service and be an industry liaison for NIADA Mobile. Accessible subscription guidebook data and features through Mobile Service include: s s s s s s s s s s

s s

Customizable software settings All guidebook regions or states include VIN look-up decoder Stores booked vehicles, recall in an instant Enter personal notes on booked vehicles Lists and sorts appraised vehicles Re-values saved vehicles with each new update Automatically updates wirelessly Barcode scanning capability Seamless integration with all GigglePop valuation tools, including vehicle history report subscription services and auction run lists SmartBid Market Report Large easy-to-read fonts

NIADA Mobile Service also makes your day at the auction simple, easy and productive. Accessible auction run list data from participating auctions includes: s

s s

s s s

s s

Search by lane or run number to view auction vehicle data Barcode scanning capability Continual auction run list updates even while auction is in progress View those late arrivals Save target vehicle data for future reference Enter personal notes and bid pricing on specific vehicle records Lists and sorts saved target vehicles Seamless integration with all GigglePop valuation tools, including Guide Books, Vehicle History and participating Market Reports

In addition to providing mobile access to these key services, NIADA Mobile Service also connects members to select NIADA content on the NIADA site. Wherever you are, you can stay on top of moving legislative decisions, regulatory compliance issues, new NIADA member services and educational programs.

INDUSTRY

REPORT

Especially in today’s market, still recovering from the recession, this mobile service will help members operate more profitably. It puts at hand the insight needed to buy and sell more profitably and keep abreast of industry news and events influencing the used vehicle retail market. The more competitive dealers today are clearly adapting to our changing industry by using mobile technologies and solutions to help them better manage their used vehicle operations, inventories, vehicle sourcing and retail sales processes.

DELIVERS TANGIBLE MEMBER BENEFITS Members’ use of the NIADA Mobile Service tool will help them:

I dentify quality, retail-ready inventory: Mobile accessibility to auction inventory as well as vehicle valuation guides can help dealers meet challenges presented by the economic fallout from the last three years’ depressed vehicle sales, drop in leasing activity and reduced stream of fleet rentals into the remarketing stream. s Source the right-priced vehicle for the customer: Reduced levels of wholesale units flowing into remarketing channels have made it more difficult to source and match the right vehicle to customers’ ability to pay. NIADA Mobile Service helps dealers locate those vehicles at an acquisition price the customer can afford and finance, while providing enhanced profit for the dealer. s

Often spread thin by needing to be in the office, on the lot and at the auction seemingly simultaneously, the independent used auto dealer must use time and resources wisely. By adding this new Mobile Service tool to the NIADA portfolio of member services, the association helps its members access critical association information and related vehicle valuation, history reports and auction run list services right from their smart phone. As market needs continue to change and dealers seek new ways to remain competitive, like purchasing inventory outside their local market areas and using web-based competitive vehicle analysis and pricing tools, GigglePop and NIADA will continue to enhance Mobile Service to help dealers make the most informed and profitable business decisions.

www.niada.com

5/25/11 3:28 PM


the NEXT generation of NIADA

try NIADA’S new MOBILE APP ACCESS GUIDEBOOK VEHICLE APPRAISAL SERVICES • GET INSTANT VEHICLE HISTORY REPORTS • ACCESS AUCTION PRE SALE RUN LISTS NATIONWIDE • STAY INFORMED WITH NIADA EVENTS & PROGRAMS

Get Started with NIADA’s Mobile App Today! For Details & Instructions Visit: http://niada.gigglepop.com or Call 1-855-MY-NIADA (855.696.4232)

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SECTION TEN NIADA MEMBERSHIP SURVEY NIADA NEEDS YOUR DATA!!! SO HELP US HELP YOU!!! YOU’VE NOW REACHED THE BACK OF THIS REPORT, MEANING YOU JUST CAN’T GET ENOUGH DATA. If you are like most of our dealer members, this data is extremely important in comparing your dealership to nationwide industry standards. Please assist us in providing the most comprehensive and accurate dealership statistics by taking just five minutes to complete and fax back this NIADA Membership Survey to 817-649-5866

FREE NADA GUIDEBOOK SUBSCRIPTION OR NIADA ACCOUNTING MANUALS The NIADA membership data is based on results from this survey. Your dealership demographic is important to us. We use the results from this survey to gather statistics for the NIADA Used Car IndustryReport. The results will allow us to show trends in the industry over the past few years.

YOUR EFFORTS WILL NOT GO UNNOTICED. BY COMPLETING THIS SURVEY, YOUR NAME WILL BE ENTERED INTO A DRAWING TO

RECEIVE ONE OF THESE ITEMS FOR FREE • NADA GUIDEBOOK SUBSCRIPTION (1 year, $90 value) OR • NIADA STANDARDIZED ACCOUNTING MANUALS on CD ($125 value) Please assist us in providing the most comprehensive and accurate dealership statistics by taking just five minutes to complete and fax back this NIADA Membership Survey to 817-649-5866. All surveys must be completed and mailed or faxed back to us by December 31, 2011 to be eligible for the drawing. The survey can also be filled out online at www.niada.com.

BY COMPLETING THIS SURVEY, YOU ALSO AUTOMATICALLY QUALIFY FOR A DRAWING FOR

NIADA MEMBERSHIP SURVEY

TWO COMPLIMENTARY REGISTRATIONS TO THE

2012 NIADA CONVENTION & EXPO, TO BE HELD AT THE CAESARS PALACE IN

LAS VEGAS, NEVADA ON JUNE 17-21, 2012.

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www.niada.com

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DEALER MEMBER QUESTIONNAIRE 2012 This survey is being used to gather statistical information from NIADA dealers for our 2012 Annual Used Car Industry Report. Please take a moment to complete the information in this questionnaire and fax to us at 817-649-5866. This information is proprietary and will not be seen by anyone outside of NIADA. Thank You. Dealer name

Company name

E-mail address*

City & state

* Certain NIADA Member Benefits are delivered via email and by providing your email address, you are consenting to and giving NIADA, it's subsidiaries and affiliates, your permission to contact you at this address.

1. What is the nature of your business? (check all that apply) � Retail

� BHPH

� Service Dept

� Rental

�Wholesale

�Leasing

� Parts Dept � Body Shop

� None

2. How long has your business been in operation?

4. What is the monthly average total number of vehicles in your inventory?

� Trucks

sell? 7. How many employees do you have (including yourself)? 8. Which of the following mediums, do you spend your advertising dollars? (check all that apply) � TV � Newspaper � Specialty pubs

� Online

9. What percentage of your retail sales are to women buyers? 10. Do you have a website for your dealership? � Yes

� No

11. How do you use internet access at your dealership? (check all that apply) � Dealership Website � E-mail/Communication � Online Auctions

� NIADA.TV

� Online Buying/Selling

� Online Financing

� Other

12. How do you finance/floorplan your inventory? � Banks � Auction floorplanning

� Cash

� Other

13. How do you finance vehicles for your customers? � Finance companies

� Banks

many service bays do you operate?

� 10,001 – 25,000

� Other

� Other

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� 25,001 – 50,000

� 50,001+ � No

23. Do you have outside lighting?

� Yes

� No

24. Do you have outside fencing?

� Yes

� No

25. Do you have a paved lot?

� Yes

� No

26. Is 100% of your inventory insured?

� Yes

� No

27. Do you have an indoor showroom?

� Yes

� No

28. Do you use payment protection devices? � Yes

� No

29. Do you have a separate F&I department? � Yes

� No

30. Do you sell aftermarket products to customers? � Yes

� No

31. Do you do your own reconditioning and detailing work? � Yes � No 32. Do you carry workers compensation?

� Yes

� No

33. Do you carry commercial insurance on your building? � Yes

THANK YOU!

� No ucd

Your efforts will not go unnoticed… By filling out this survey and returning it to us by February 29, 2012, your name will be entered into a drawing to receive one of these items, FREE! NADA Guidebook Subscription 1Yr ($90.00 value)

15. Where do you buy your vehicles? (check all that apply) � Other dealers

� No

If yes, how many on average do you sell per month?

� More than 6yrs old

� Wholesale auctions

� Yes

� Franchise or � Independent

22. Do you sell warranties and/or service contracts? � Yes

� BH-PH

14. How old are most of the vehicles you sell? � 1-2 yrs old � 3-5 yrs old

� No

21. What is the square footage of your dealership? � Up to 10,000

� RV’s

6. What is the average retail price of most of the vehicles you

� Industry Research

� Yes

� 8 or more times

19. If you have a body shop, parts and/or service dept. on site, how

If yes, please check:

� Heavy-duty vehicles

� Magazines

� 5-7 times

20. Do you have a rental car operation?

5. What type of vehicles do you sell? (check all that apply) � Power Sports vehicles

� 1-4 times per

If yes, how many locations?

Wholesale:

Retail:

� Other

� Online

18. Do you have multiple locations?

3. How many vehicles do you sell per year?

� Radio � Other

� Other dealers

17. How often does your dealership attend auctions per month?

� Other

� Cars

16. How do you wholesale your vehicles? � Wholesale auctions

� Online

NIADA’s Standardized Accounting Manuals on CD ($125.00 value)

Mail to: NIADA, 2521 Brown Blvd., Arlington, TX 76006 Fax to: 817-649-5866

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B:9.25” T:9” S:8.5”

“THERE’S NO WAY I COULD REACH THE CUSTOMERS I DO WITHOUT AUTOTRADER.COM. THEY PUT US ON THE MAP.” Joe Mallette Owner–American Auto Brokers San Antonio, TX

Jeff Ravlin Advertising Consultant AutoTrader.com

“When it comes to shoppers, our net casts far and wide,

recently, video, we have seen a tremendous spike in business.

and there is no way I could reach those customers without

Bottom line is without AutoTrader.com, we would struggle.”

AutoTrader.com. With their Premium listings, and most

To hear Joe’s inspiring story, visit WeWorkForYou.com/Joe.

©2011 AutoTrader.com, Inc. All Rights Reserved. “AutoTrader.com” is a registered trademark of TPI Holdings, Inc. used under exclusive license.

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2011 NIADA Used Car Industry Report