Auto dealerships are experiencing longer vehicle turnover times, with an average of 50.2 days spent on car lots over the last twelve months, marking a 23% increase from the previous year. June and July 2021 saw the shortest turnaround, averaging only 32 days. This prolonged time on the lot drives up costs, with dealerships spending an estimated $40 per day for new vehicles and $85 for used ones. Consequently, there's a pressing need for dealerships to expedite vehicle sales to reduce inventory holding costs. #InvestmentBanking #MiddleMarket #Finance #MergersAndAcquisitions #PrivateEquity #CapitalRaising #Auto #AutoDealership #CarSales #Fraud #IdentityFraud … [Read more...]

84% of auto dealerships have experienced identity theft since COVID-19, costing the industry $700 mm annually. The remote nature of car retailing online, which accounts for 30% of sales, makes identity theft easier. Despite these risks, only 29% of dealerships employ proper identity document verification methods, with 64% relying on photocopies and only 33% using document authentication. Sources:  Wards Auto; “Auto Lending Fraud Trends Report”, Point Predictive, 2023; eLend Solutions; Consumers Embrace Online Car Buying, Progressive … [Read more...]

New and used vehicle loan-to-value (LTV) ratios fell 6.6% and 5.0%, respectively, in Q4 2023, according to Experian’s Q4 State of the Auto Finance Market. The average new vehicle MSRP rose to $41,703 in Q4 2023, up 3.6% year-over-year, while the average clean retail (ACR) value of used vehicles declined 2.0% year-over-year to $25,995. For new cars, the drop in LTV was largest for superprime borrowers, down 6.9% year-over-year, followed by prime at -4.6% and near prime at -3.1%. Superprime also saw the largest yearly decrease for used vehicles, down 5.6%, followed by deep subprime at -5.0%, then prime at -3.7%. As vehicle prices rose during the pandemic, many borrowers took on larger loans. … [Read more...]

There has been a significant spike in construction inventory during the month of January, indicating a potential uptick in construction activity. According to a report from Equipment Finance News, this surge in inventory suggests a growing demand for construction materials and equipment, reflecting optimism within the industry. The increase in inventory levels may be attributed to various factors such as infrastructure projects, residential construction, and commercial developments. Analysts believe that this rise in inventory could lead to increased construction spending and economic growth in the sector. Moreover, the data highlights the resilience of the construction industry amid ongoing … [Read more...]

Banks are adapting to the rapidly evolving landscape of the banking industry in 2024. There is heightened importance on agility and innovation in responding to emerging trends such as digitalization, changing customer preferences, and the rise of fintech competitors. Successful banks are investing in technology and digital infrastructure to enhance customer experiences, streamline operations, and remain competitive in the market. Banks are leveraging data analytics and artificial intelligence to personalize services, anticipate customer needs, and drive growth. By embracing a forward-thinking approach and prioritizing customer-centric strategies, banks are positioning themselves to thrive in … [Read more...]

New SEC disclosure rules are designed to bolster transparency and mandate private equity firms to divulge comprehensive details about their investments, fees, and potential conflicts of interest. This heightened transparency aims to enhance investor trust and attract more capital, yet it also poses challenges, such as increased compliance costs and potential industry consolidation as smaller firms adapt or merge with larger entities. Against the backdrop of financial sector volatility, the SEC's disclosure regulations will redefine how private equity firms operate. By requiring more extensive reporting, these rules seek to provide investors with deeper insights into fund activities and … [Read more...]

Respondents to a recent Dave Cantin Group and Kaiser Associates survey anticipate interest rate decreases in mid-to-late 2024 to release pent-up demand, leading to higher auto sales, particularly for those financing through both traditional and alternative methods. 68% expect to purchase a vehicle in the next year, while 27% reported putting off purchasing one over the last two years due high interest rates. A further 16% bought a cheaper vehicle due to higher financing costs. For their next purchase, 35% of consumers expect to use traditional financing, 12% expect to use alternative financing (such as peer-to-peer loans, manufacturer financing, etc.), while 42% will pay in full. The … [Read more...]

Our very own CEO, Gina Cocking, had the pleasure of being interviewed by Corey Kupfer on the DealQuest podcast. During their conversation, they delved into three key areas: (1) the significance of thorough preparation in deal-making, (2) the mindset required for effective deal-making and (3) the influence of freedom on both business and deal-making. … [Read more...]

Although 21% of lenders expect the leveraged credit market to ease in 2024, a plurality believe conditions will remain similar to 2023, according to a recent FTI Consulting survey of nearly 250 leveraged loan professionals. Furthermore, only 12% predict more relaxed underwriting standards, with most expecting them to remain largely unchanged over the next year. There was cautious optimism in the leveraged M&A market, with 38% of respondents expecting a “modest improvement” in deal activity. Non-bank lenders expected higher leveraged M&A activity than their bank lending counterparts.  … [Read more...]

Disciplined production, the ascendancy of electric vehicles (EVs), and the growing influence of online retailing are the major dealership trends identified by Cox Automotive. The industry will continue to be challenged by burgeoning vehicle inventories, escalating fleet volumes, and the proliferation of incentives. Despite record-breaking EV sales in 2023, Tesla has had to rely on substantial discounts and some legacy automotive companies are reassessing their EV strategies. Online players too are having challenges - for example, Vroom is reportedly winding down operations. … [Read more...]

The FCC recently adopted new laws requiring telemarketers to obtain consent to receive robocalls and robotexts one brand/seller at a time, rather than allowing a single instance of consent to apply to multiple brands. These regulations come after complaints by consumers who thought that they were only consenting to telecommunications from one single company, but then received messages and calls from multiple industry competitors. A bipartisan coalition of 29 Attorneys General filed a letter with the FCC in June 2023 urging for the rule to be enacted, and it was passed with a 4-1 vote on December 13. According to Michigan AG Dana Nessel, “This one-to-one consent rule will allow consumers to … [Read more...]

The FTC has finalized the Combating Auto Retail Scams (CARS) Rule, which aims to protect consumers during the car purchase process by preventing common scams, including bait-and-switch tactics and hidden junk fees. According to FTC estimates, the rule is expected to save customers more than 72 million hours and $3.4 billion annually. It also includes language protecting members of the military, who are frequent targets of predatory practices. The CARS Rule passed with a 3-0 vote and will take effect on July 30, 2024. NADA President and CEO Mike Stanton came out against the rule, arguing that it will “lengthen the car sales process by forcing new layers of disclosures and complexity into the … [Read more...]

AI is transforming the call center industry at lightning speed, redefining customer service as we know it and opening new frontiers for tech-driven investment opportunities. Studies from McKinsey Global Institute project that generative AI, capable of analyzing and anticipating customer needs, could drastically reduce the demand for traditional call center roles within a year. AI’s efficiency in addressing customer issues through predictive analysis and conversational bots points to a future where inbound calls may become rare, as most concerns are resolved proactively by AI before customer interaction is even needed. This shift underscores a major transformation in customer service delivery … [Read more...]

Nissan is significantly expanding their manufacturing capacity for electric vehicles through a $2.4 billion investment to add a gigafactory in the UK. The Japanese manufacturer plans to produce two additional EVs in their Sunderland facility to expand their offerings further, and their objective is to have an all-electric lineup in Europe by 2030. Nissan is focusing on a vision of carbon neutrality, and the new manufacturing facility will use renewable electricity from wind and solar farms. … [Read more...]

As the end of 2023 approaches, final estimates for production schedules indicate that global automakers will have cut nearly 2.5 million throughout 2023 from their forecasts. However, this represents a 43% reduction in vehicles cut from production schedules compared to the 4.3 million cut in 2022. Estimates for the remainder of the year call for a reduction of 8,100 vehicles in production lines, with 35% of those from North American facilities. … [Read more...]

A recent survey from Kaltura (NASDAQ: KLTR) found that 25% of marketers using AI tools reported a positive impact on lead generation. A further 41% noted an increase in leads generated that could be attributed to AI. At a broader level, 84% of marketing teams are seeing value from AI, with 69% having at least one paid AI service. These findings come during a time of wide-ranging adoption of AI across sectors. According to Lisa Bennett, Kaltura’s EVP of Marketing, “The fact that frequent users of AI tools are reporting measurable impact on key metrics such as content creation and lead gen this early in the era of AI shows that the true scale of change has yet to be realized. However, it’s … [Read more...]

Cox Automotive reported that auto credit became more accessible in October across all channels and most lender types. Cox stated that October was the third month in a row of improvement, though credit remains less accessible than it was in October 2022 and tighter than before the pandemic. The consumer credit scene is experiencing mixed patterns as the number of subprime equity shares of auto loans rose and the average loan terms lengthened, all of which increased consumer access.  However, the approval rate decreased and down payments grew, limiting consumer credit access. In October, Cox highlighted that the average loan rate increased by 16 basis points month-over-month and … [Read more...]

Whillet, a finance startup company, announced that it is rolling out an instant payment plan platform in the U.S. in collaboration with Visa. Whillet’s Instant Payment Platform uses VisaDirect’s real-time payment capabilities to make used car purchases secure and flexible. Through the collaboration, Whillet plans to offer solutions to improve payment processes in the used-car market. The Instant Payment Platform will be integrated into car dealership’s DMS systems offering payment support services. This service offering is aimed at reshaping the money movement game in car dealerships. … [Read more...]

Cox Automotive reported that U.S. electric vehicle sales grew to over 300,000 in September, a monthly record.  Cox also forecasts that the total number of electric vehicles sold this year will pass one million before the year ends, another record. Electric vehicle sales have increased for 13 consecutive quarters, and third quarter sales in 2023 were up 50% year-over-year. Cox attributes the growth to be driven by the launch of 14 electric vehicle models in Q3 along with price cuts from market leaders, such as Tesla. Tesla lowered prices in order to increase volume, which resulted in its third-quarter sales growing 20% year-over-year but lowered its market share to 50%. The … [Read more...]

According to Fitch Ratings, the percentage of subprime auto borrowers who were at least 60 days past due on their auto loans rose to 6.11% in September, the highest since 1994. Millions of subprime car owners are struggling to afford their car payments as interest rates continue to make loans more expensive. These rising delinquency rates may be indicating economic distress, specifically regarding the health of consumer spending. Margaret Rowe, senior director with the asset-backed securities group at Fitch said, “The subprime borrower is getting squeezed. They can often be a first line of where we start to see the negative effects of macroeconomic headwinds.” As delinquencies continue … [Read more...]

The percentage of auto loans financed at zero percent fell to just 1.1% in Q3 2023, down significantly from a high of 24.2% during that pandemic. According to Edmunds, for the three years before the pandemic, the average quarterly share of 0% loans was 7.1%. Driven by the surge in demand for vehicles, combined with higher interest rates, it has become less appealing for lenders to offer lower rates, with captive lenders regaining market share in the total financing market. Of the remaining 0% deals available, stringent eligibility requirements and shorter terms have excluded many potential borrowers. During the first three quarters of 2023, the average term for zero percent loans was 42.8 … [Read more...]

The response times by auto dealerships to website inquiries improved ~6% year-over-year, according to the 2023 Pied Piper PSI Internet Lead Effectiveness study. Pied Piper submitted customer inquiries, along with a name, email address, and local telephone number, to the websites of over 1,600 dealerships from 17 groups. Responses across channels were monitored over the next 24 hours. The majority of dealerships recorded faster response times compared to last year, with some top performers replying over 20% faster. The study’s findings highlight the importance that dealers place on the customer service aspect of the lead closing process. Per Pied Piper’s CEO, Fran O’Hagan, “What everyone has … [Read more...]

Following years of supply chain challenges and production schedule reductions, artificial intelligence poses potential productivity upsides for parts purchasing processes. One AI company, Arkestro, created predictive procurement software that helps companies eliminate two steps in the purchasing process. By allowing the AI to generate and analyze the quotes, purchasing departments can allocate time and resources to higher-level objectives, saving time and money while reducing ordering errors. … [Read more...]

According to Carfax, we have begun the most dangerous season for driving. 72% of U.S. drivers live in states where Fall is the peak season for accidents.  Several factors contribute to the increase including fewer daylight hours, slick roads caused by leaves, and nearly half of all deer crashes occurring during their mating season between October and December.  The week following Daylight Savings Time is especially dangerous as deer collisions increase 16%, leading to approximately $1.2 billion in damage annually. … [Read more...]

In recent weeks, auto manufacturers cut production estimates by 63,400 vehicles for 2023. Nearly 90% of the latest production schedule cuts were from North American auto manufacturers, with the remainder spread across Asia, South America, the Middle East, and Africa. While the microchip shortage has posed smaller headwinds for manufacturers in recent months, it is expected to remain an ongoing challenge into 2024. … [Read more...]

As of July 2023, the Mitsubishi Mirage is the last car model in the United States that can be purchased new for under $20,000. One year prior, nearly a dozen models in the market were available for under $20,000, but now all those models sell for higher prices. Including the Mitsubishi Mirage, there are only five vehicles priced under $25,000 and on average, U.S. vehicle buyers paid around $48,000 for new vehicles, according to Cox Automotive. … [Read more...]

U.S. housing starts hit a three-year low in August 2023 as high mortgage rates and U.S. treasury yields have hindered demand in recent months. Furthermore, builders are experiencing more difficulty accessing affordable financing, with lenders remaining cautious and continuing to tighten credit standards. The Commerce Department also reported that homebuilders’ confidence hit a five-month low in September 2023. According to economist Daniel Vielhaber, "August's home construction data appear to be showing some cracks in the armor of what has been one of the few strong indicators in the housing market recently… Still, it's important to note that there could be a noise component here as much of … [Read more...]

Following the Federal Reserve’s statement that higher rates are not going away soon, fintech share prices took tumbles in the market. The reason higher rates pose such a challenge for fintech’s is that in the wake of elevated rate environment, their own costs to borrow funds are higher leaving them little room to offer more attractive terms for consumers than normal banking institutions. As rates remain at higher levels, consumer discretionary spending decreases. Over the last few years fintech’s have generated generous returns on the buy-now-pay-later programs; however, these programs are expected to see less adoption as consumers slow down purchasing. Often times these programs are … [Read more...]

M2 money supply declined by roughly $1 trillion from July 2022 to April 2023. M2 has recovered from April lows, with M2 money supply up 0.9% (roughly $200 billion) from April 2023 to July 2023.  This recent recovery has been slow and steady, as M2 grew month over month in May, June, and July of 2023. … [Read more...]

The average new car buyer in America paid $48,334 in July 2023. Average new car transaction prices are $1,335 (2.7%) lower than they were at the start of the year, representing the largest January to July decline in average new car transaction price in a decade. … [Read more...]

On September 15, the Bank of Montreal announced it will be exiting the retail auto finance business as it looks to reposition its resources in areas where the bank’s “competitive positioning is the strongest”.  The announcement stated that the bank will stop making consumer vehicle loans but will continue to offer financing for automotive dealerships. A spokesperson at the bank said, “By winding down the indirect retail auto finance business, we have the ability to focus our resources on areas where we believe our competitive positioning is the strongest.” BMO also stated that this decision will result in results, but the company did not quantify the amount. … [Read more...]

According to Cox Automotive’s latest credit barometer reading, August auto loan available improved.  All loan channels except for new-vehicle loans saw loosened availability but were tighter year-over-year.  Cox’s All-Loans index rose to 99.1, the highest level since November 2022. Cox said that the negative-equity and subprime shares of auto loans grew, combined with narrowing yield spreads that increased consumer credit access.  However, average terms grew while down payments and approval rates fell. Credit access remains flat compared to February 2020 levels, but access remains harder than before the pandemic. … [Read more...]

Apple recently applied for a patent to develop a windshield with augmented reality capabilities. The company’s filings indicated that Apple has been working on this technology since 2015. Augmented reality overlays digital images over the real world using a variety of display technologies. Augmented reality can recognize physical reality and create graphics to interact with it. Apple’s system would use various sensors to gather information on the external environment to create a three-dimensional image of the vehicle’s surroundings. Data from a variety of cameras, including infrared, ultrasonic, visible light, and light-based scanning devices would also assist in the image … [Read more...]

Several days after Lithia announced plans to acquire the dealership and fleet business of U.K. dealership group Pendragon, Penske Automotive Group submitted a significant counteroffer. Lithia is expected to re-submit their offer to win the business to continue acquisition initiatives to reach $50 billion in annual revenue by 2025. … [Read more...]

The delinquency rate for car loans and credit cards has increased to the highest level in over a decade, a sign of financial stress among consumers as inflation and rising interest rates eat into household budgets. Lower-income earners are disproportionally feeling the pain of inflation, as they have already exhausted the savings they accumulated during the pandemic. Lower-income borrowers are resorting to credit cards to hold their finances together.  There are more credit card accounts open today than there were in 2019.  For the first time in history, Americans’ total credit card debt topped $1 trillion, according to the New York Fed. Source: Washington Post … [Read more...]

According to a recent survey by CDK, despite a significant interest from most automotive dealers, few have implemented AI solutions.  The most commonly used solutions, Parts Inventory Predictors and Consumer Credit Predictors, were used by only 10% and 7% of dealers respectively.  Dealerships would be most interested in implementing a Propensity to Buy Solutions, which predicts a buyer’s likelihood to purchase a vehicle based on their CRM profile.  Despite over 90% of dealerships interested in the solution, only 4% have implemented it so far. Moreover, 76% of all respondents have already implemented one or more AI-based applications in their dealership or plan to do so … [Read more...]

While AI has penetrated various aspects of the automotive industry, many dealers have yet to embrace it in the sales process. According to the J.D. Power 2023 U.S. Dealer Financing Satisfaction Study, 77% of dealership F&I teams see in-person interactions with sales reps as critical to increasing business with lenders. As noted by J.D. Power’s Patrick Roosenberg, one-on-one interaction with lending sales reps is still overwhelmingly preferred by finance teams. The caveat is that sales personnel “need to be prepared and the meetings need to be highly effective. When sales reps can clearly communicate current and upcoming programs and speak to the specifics of the dealership customer base, … [Read more...]

Illinois Gov. J.B. Pritzker recently signed Senate Bill 1896, which clarifies language regarding automotive retailing in the state. Licensed dealers are now explicitly permitted to “conduct sales activities, including the collection of electronic signatures, via the internet and deliver vehicles to a customer at the customer's residence or other suitable location, if the sale, lease, or delivery is requested by the customer.” Previous legislation, which was over 50 years old, did not formally address recent industry developments, such as home delivery and e-signing. Used vehicle retailer Carvana, which relies heavily on online sales and home delivery, was a major proponent of the bill, … [Read more...]

The Equipment Leasing and Finance Foundation’s Monthly Confidence Index for the Equipment Finance Industry reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives in the equipment finance sector. Industry confidence declined sharply in Q2, registering an index value of 40.6 in May 2023, the lowest index value reported since May of 2020. Recently, industry confidence has rebounded, with the August 2023 confidence index for the equipment finance industry standing at 50.4. … [Read more...]

The average age of cars and light trucks in the US continued to increase in 2023 to 12.5 years, up over 3 months from 2022. This marks the sixth consecutive year that the average vehicle age of the US fleet has increased. The vehicle service industry stands to benefit from the recent growth in average light vehicle age, as an older fleet will continue to require repair work and maintenance. … [Read more...]

Domestic automotive brands have rebuilt strong inventories ahead of a potential UAW strike. Stellantis, in particular, currently holds 136 days of supply at Dodge, 125 at Chrysler, 115 at Ram, and 95 at Jeep.  Historically, 60 days of inventory has been considered ideal.  UAW’s current contract is set to expire on September 14 as the two parties appear to remain far apart on terms.  The UAW most significant demands include a 46% raise over the four-year life of the contract, a return to traditional pension payment plans and a limits on the use of temporary workers and forced overtime. Source: Cox Automotive … [Read more...]

In June 2023, the average price of a new car rose to $46,265, 5.8% over Jun-22 and 8.5% above MSRP.  The strong demand for new vehicles and inflation has driven manufacturers to increase average MSRP by over 10% in the last year.  Despite the seemingly strong new vehicle market, UBS expects car production to exceed sales by 5 million vehicles, leading to price cuts near the end of the year. Sources: UBS, iseecars.com … [Read more...]

In June, new home listings declined 30.6% year over year to its lowest level on record excluding April 2020.  Homeowners remain hesitant to sell as the majority would incur a significantly higher interest rate on a new mortgage.  Approximately 9 in 10 homeowners have an interest rate on their mortgage below 6%, compared to an average 30-year-fixed mortgage rate in June of 6.71%.  … [Read more...]

According to the Federal Reserve Bank of New York, Americans’ credit card debt levels have surpassed $1 trillion, a new record high.  During the second quarter of 2023, credit card debt grew $45 billion to $1.03 trillion.  Overall household debt has grown to $2.9 trillion since the end of 2019, largely driven by credit card debt and auto loan balances Credit card debt balances have grown for five straight quarters, with the increases being at some of the largest rates in the past 20 years.  The average credit card charges a 20.53% interest rate, a near-record according to Bankrate. As a result of the growing levels of debt, Bank of America reported approximately 16,000 individuals … [Read more...]

S&P Mobility recently reported that the average U.S. vehicle age hit an all-time high as consumers have been buying more used vehicles due to supply chain constraints and rising new vehicle prices.  As a result of the increasing number of used vehicle purchases, the number of vehicles aged between 6 and 11 years old has grown significantly since the beginning of COVID.  Vehicles aged between 12 and 13 years old have also been growing. S&P predicts that the share of 7 year old vehicles should drop through 2028 while those over 8 years old will grow by more than 25 million during that time period.  This shift will cause vehicles in the “after-market sweet spot” … [Read more...]

J.D. Power’s 2023 U.S. Initial Quality StudySM (IQS) found that industry-wide “problems per 100 vehicles” rose by 12 to an average of 192 in 2023, up from 180 in 2022 and 162 in 2021. The survey is based on responses from over 93,000 purchasers and lessees of new 2023 vehicles who were surveyed on issues experienced across nine categories: infotainment; features, controls, and displays; exterior; driving assistance; interior; powertrain; seats; driving experience; and climate. The features, controls, and displays category reported the greatest increase in problems, followed by infotainment. J.D. Power attributed the rise in issues, in part, to the increasing complexity of vehicles. The … [Read more...]

Dealership software provider Impel has announced Chat AI, an automated conversation agent driven by generative AI. According to the Company’s press release, Chat AI enables dealerships and OEMs to “engage shoppers with a fully automated conversational chat experience that delivers hyper-personalized, human-like responses to consumer questions.” The tool is now in beta testing in 50 U.S. dealerships, with a wider rollout planned in the coming months. It is designed to integrate with existing dealership management systems and can be woven directly into a dealership’s website. Impel’s announcement follows both Edmunds and CarGurus introducing ChatGPT plugins aimed at helping car shoppers search … [Read more...]

Similar to deals reached with General Motors and Ford Motor Company, Rivian is the latest car brand to make a deal with Tesla. Under this arrangement, Rivian owners will have access to over 12,000 Tesla EV stations throughout the United States starting in early 2024. Current Rivian models will require a supplementary adapter allowing the vehicles to share charging station access. However, beginning with 2025 models, Rivian will incorporate the Tesla-style charging ports directly into their vehicles. … [Read more...]

After several years of reduced passenger travel due to COVID-19 and fewer aircraft orders from major airlines, manufacturers are seeing a steep increase in order volume in 2023. According to the CEO of Airbus, Guillaume Faury, the airlines are not seeing any booking reductions in the wake of a global economic slowdown. As a result, airlines are focusing on growth, requiring orders of new aircraft. In one of the largest deals in history, Indian budget airline IndiGo purchased 500 A320 aircraft from Airbus this past June. The growth is being realized across all manufacturers, with Boeing commenting that many of their expected fulfillment dates for new orders are well into the 2030s. New orders … [Read more...]

Assurant has launched a comprehensive EV sales training course called EV Sales Professional’s Blueprint from the Automotive Training Academy.  The course’s training provides information on the differences between traditional vehicles and EVs while also providing sales professionals tools to grow their knowledge of the space.  Certain course topics include: EV Basics, Range and Batteries, Affordability, and EV Charging Levels. Sean Browning, a national vice president with Assurant Dealer Services Development & Training says, “While there are many similarities between selling EVs and ICE (internal combustion engine) vehicles, the most pronounced difference is communication … [Read more...]

According to a recent report by Experian, used vehicle sales of vehicles 0 to 3 years old remain significantly below 2019 levels.  The decreased number of sales in the age range is likely due to fewer new vehicles being leased during the pandemic.  Between 2015 and 2019, nearly 30% of all retail sales were leases.  The new vehicle shortage, which began in early 2021 and continued through most of 2022, caused lease penetration to fall to 19%.  Lower levels of sales in the 0 to 3 age range will likely continue into the near future as Cox Automotive is forecasting that lease penetration will only rise to 21% in 2023. … [Read more...]

Cox Automotive reported that the May U.S. new vehicle inventory ended at a two-year high of 1.96 million, up 73% year-over-year, as consumer demand dipped.  Days’ supply ticked up to 55, 46% higher than it was in May 2022. Cox Senior Economist Charlie Chesbrough said, “The month of May ended on a slightly less positive note than when it started, suggesting some weakening of demand.  Sales for new vehicles began to decline near the end of the month, after rising throughout the month as supply continued to increase.” By historical standards, inventory remains low.  In May 2020, it stood at 2.99 million and 92 days’ supply.  May’s new-vehicle sales grew 23% year-over-year … [Read more...]

From May 2nd, 2022 to May 1st, 2023, M2 money supply contracted 4.6% from $21.6 trillion to $20.6 trillion. Over this same period, the US Federal Reserve hiked the federal funds rates by 450 basis points. Additionally, the Fed implemented a 25 basis point rate hike on May 3rd, 2023. … [Read more...]

Automakers have been exploring alternative revenue streams to generate significant profits, with in-vehicle subscription-based services ranking among the most promising avenues. Ford Motor Co. offers subscription services to commercial customers through Ford Pro, mainly related to vehicle health and driver performance reports. Year-over-year, Ford experienced a 60% increase in customer subscriptions, with forecasts to triple total subscribers by 2026. As a result, the company expects subscription-based software services to have the highest margins by 2026. Customer adoption has been the most significant in the commercial segment. Still, automakers remain optimistic that retail customers will … [Read more...]

Credit growth has slowed in recent months to some of its lowest levels in the past ten years, with banks reporting tighter credit standards and weaker loan demand from both businesses and consumers, according to the Federal Reserve’s Senior Loan Officer Opinion Survey. Securities, such as bonds held on banks’ balance sheets, experienced the largest decline, while loans and leases remained closer to their historical average. Nearly 51% of banks tightened terms of credit for commercial and industrial loans to medium and large businesses, with 49% tightening on loans to smaller businesses. Although standards remain below the 70%+ levels seen at the height of the pandemic, JP Morgan economist … [Read more...]

Automotive retailer AutoNation (NYSE: AN) recently announced a new “micro” leasing program offering terms of six or 12 months, allowing 800, 1,000, or 1,200 miles of driving per month. Traditional leases typically start at 24 months, with 36 months being the standard. Consumers can select their desired vehicle and get prequalified through a soft credit pull via the AutoNation Mobility online portal, with vehicle pickup taking place at one of AutoNation’s 300 stores. The leases also include routine maintenance, such as oil changes and tire rotations, vehicle registration, a limited warranty and maintenance plan, and roadside assistance offered by the manufacturer. Consumers must provide their … [Read more...]

June 2023 US new vehicle sales reached 1,385,862 units, up 20.8% from June 2022 levels when supply chains restricted production. Notably, June 2023 light truck sales (Pickup Trucks and SUVs) were up 22.2% over June 2022 levels, whereas June 2023 passenger car sales were up 15.7% as compared to June 2022. … [Read more...]

In Q2 2023, 17.1% of consumers financed a vehicle with a monthly payment of $1,000 or more. This figure is up from 12.2% one year prior. In Q2 2019, only 4.3% of consumers financed a vehicle with a monthly payment of $1,000 or more. … [Read more...]

Shift recently announced that it would be reducing its headcount by roughly 34% as part of a plan from the company’s newly named CEO’s plan to review Shift’s strategic alternatives.  This is the second round of layoffs Shift has announced this year as it previously announced headcount reductions of 30% in March.  Shift anticipates these layoffs will save the company $14 million in annual SG&A expenses as well as nearly $1 million in non-recurring expenses. As part of the strategic review, Shift also eliminated investment into the dealer marketplace. Shift acquired Fair’s dealer listing marketplace technology in 2022 with the plan to use it to build a dealership listings … [Read more...]

Cox Automotive recently reported that U.S. auto retailers sold a record number of full battery electric vehicles in Q2 2023. In the second quarter, 300,000 new electric vehicles were sold, which was a 48.4% year-over-year increase and a record high for any quarter.  Based on these numbers, Cox estimates that the U.S. will have more than one million new electric vehicles sold in 2023. Cox also reported that the average price paid for an electric vehicle shrunk 20% year-over-year in June and that Tesla remained the largest electric vehicle seller in the U.S., with Chevrolet coming in second.  While experts continue to see electric vehicle sales growth, many believe that the 50%+ … [Read more...]

FordDirect recently announced a partnership with CarNow, a dealer retailing system, that will empower Lincoln and Ford dealerships to create more personalized and connected messaging for customers. CarNow’s services allow dealerships to engage with customers using a variety of devices and channels. Some of CarNow’s services include its Real-Time Retail platform and its Real-Time Messaging solutions which allow dealerships to drive business growth by enhancing the customer experience.  FordDirect has previously been utilizing CarNow in the past and expects this partnership to continue to build on stronger customer connections. … [Read more...]

In May, Cox Automotive reported that automotive credit availability was at its tightest in more than two years.  Cox’s All-Loans index fell to 96.4, the lowest result since February 2021 as credit access fell 8% year-over-year and 2.8% lower than February 2020 results. Cox also noted that down payments fell and the average loan terms grew longer.  Additionally, consumer credit access was limited as the subprime and negative-equity shares declined.  Cox reported that most loan channels’ credit availability fell in May, especially credit availability for certified preowned loans.  May’s approval rate was flat month-over-month but fell 2.4 percentage points … [Read more...]

May US New vehicle sales increased 22.8% from 1,119,384 units in May 2022 to 1,374,910 units in May 2023. While there was one additional selling day in May 2023, the magnitude of this increase is particularly significant when considering the vastly different interest rate environments of the two periods. … [Read more...]

In 2022, total unsecured personal loan balances grew by more than 33% to $177 billion.  The $44 billion increase came as the Fed began its rate hike, increasing the federal funds rate by 400 bps in 2022.  The rising rates caused many borrowers to consolidate their loans into personal loans, rather than variable-rate credit card balances which continued to increase every few months. … [Read more...]

According to Winterberry Group, business-to-business (B2B) marketing has nearly returned to 2019 levels, growing by 16.9% in 2022 to $49.9 billion.  The responses to Covid appear to have caused a permanent shift in B2B budgets, increasing the amount of online spending.  In 2019, online spending made up 14.1% of B2B spending compared to 31.7% in 2022. … [Read more...]

While Global microchip production has slightly improved over recent months, output volume continues to pose challenges for global automotive manufacturing facilities. As a result, automotive manufacturing facilities are continuously revising year-end forecasts. However, in the most recent forecast updates, North American, Chinese, and South American facilities made no downward production estimates. Meanwhile, European and Middle East assembly plants pulled over 40,000 and 11,000 vehicles from production in the last few weeks, respectively. … [Read more...]

Cox Automotive reported that access to automotive credit waned in April for all auto loan types.  Cox’s All-Loans Index fell 1.5% in April to its lowest level since February 2021.  Availability was reported 8.5% tighter year-over-year and 2.4% tighter than two years earlier. Cox also reported that average credit terms lengthened in April and that down payments decreased.  Approval rate, subprime, and negative equity shares decreases hurt consumer credit access. The share of loans with terms greater than 72 months increased 0.8 percentage points, but it fell 0.4 percentage points year-over-year. … [Read more...]

Beginning in early 2024, Tesla will allow Ford EV owners access to a large share of their network, including over 12,000 supercharges across the United States. As a result, Ford will begin to incorporate new technology adapters into their next generation of EVs. Ford will be the first brand to which Tesla has opened their network, marking a further divide into what will become the industry standard in EV charging. Currently, Ford, GM, and other companies use a Combined Charging System, which is different from Tesla’s North American Charging Standard. With Ford shifting to the NACS, the industry-standard charging station and adapter gap will widen. … [Read more...]

CarMax has been a longtime leader in the Automotive News’ top 100 U.S. dealership group rankings but has secured a spot as the number one used-vehicle retailer on Automotive News’ new used-vehicle-only sales report. CarMax competes directly with several used-only dealership groups, including Carvana, Vroom, and DriveTime Automotive, but in 2022 sold nearly double the number of vehicles as number 2, Carvana. The new report by Automotive News strives to isolate the top used-only dealerships from their franchise competitors who offer new and used vehicles. The top five used-only dealerships make up over 85% of used vehicle sales amongst their direct peer group. … [Read more...]

Total US credit card debt increased 15.2% over the last year to an all-time high of $986 billion.  Covid lockdowns and related stimulus caused credit card debt to fall 16.9% between 2019 Q4 and 2021 Q1.  Credit card debt levels returned to pre-Covid levels in late 2022 as average credit card utilization increased from 25.5% to 28.0%.  Despite the increase, credit card delinquency remains below pre-covid levels. Sources: Experian; Federal Reserve Bank of New York Household Debt and Credit Report … [Read more...]

UVeye, the developer of AI-based vehicle inspection systems, raised more than $100 million in Series D funding at a valuation of nearly $800 million. The round was led by Hanaco VC, with participation from General Motors, CarMax, W.R. Berkley Corporation, F.I.T. Ventures L.P., and more. UVeye’s proprietary technology works to detect external or mechanical flaws, anomalies, modifications, or foreign objects under and around a vehicle within seconds. This can include oil leaks, exterior damage like scratches and dents, tire sidewall and tread issues, various forms of underbody damage, and more. Founded in 2016, UVeye already has agreements with major automakers, dealers, and fleet operators in … [Read more...]

According to the National Automotive Dealers Association and Wards Intelligence Data, dealerships sold five times as many electric vehicles in 2022 as in 2020. This same report projected that EV sales will continue to increase in 2023. NADA reported that franchised dealerships sold nearly 260,000 battery-electric vehicles last year, up from 135,000 in 2021 and 53,000 in 2020.  NADA also cited Consumer Reports data that shows EV demand increased 350% from 2020 to 2022. Dealers have been the primary consumer educators of EVs and they are leading the way in EV investments such as power lines, chargers, and other infrastructure. … [Read more...]

According to Point Predictive’s 2023 Auto Lending Survey, lenders are growing increasingly concerned about loan fraud amid the worsening economic conditions.  The survey reported that 70% of auto lenders are expecting an economic recession this year.  Lenders also reported concerns about fraudulent practices such as income misinterpretation, synthetic identity risk, dealer fraud, and pay stub forgery. Other key concerns found in the report include that 25% of lenders reported they are not tracking fraud as soon as it occurs, 35% of lenders said their front-line employees were not trained to investigate or identify fraud, and that only 30% of lenders reported using the U.S. … [Read more...]

Capital One has announced that it will terminate its auto dealer services business, including floorplan lending, later this year. Floorplan lenders extend a line of credit or short-term loans to dealers to buy inventory. The loan is collateralized by the purchased vehicle (and, in some cases, other physical assets like the building or property). It is repaid when the inventory is sold. According to a Capital One spokesperson, floorplan lending was “not core to the long-term priorities of our commercial bank” and only represented around 1% of its commercial business. It was also stated there will be “no impact on the Capital One Auto Finance business.” Despite this decision, Stephens Inc. … [Read more...]

New equipment finance business was estimated to be $9.7 billion in April 2023, a decline of 8% from April 2022, according to the Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25). Receivables were also down 2.1%, while charge-offs increased 28 bps over last year. According to ELFA’s President and CEO, Ralph Petta, “It is not clear whether increased borrowing rates are constraining liquidity or if this decrease in originations is merely a blip in an otherwise healthy marketplace.” Financial Partners Group’s Jeffrey LaLima remains optimistic, stating that equipment finance seems to be well positioned as “companies and consumers remain resilient and … [Read more...]

Frontdoor, the largest provider of home service plans (HSP) in the United States, recently announced their retention rates rose to an all-time high of 75.7%. Renewals are a critical part of the Company’s HSP business model, accounting for 75% of Frontdoor’s HSP revenue in 2022.  A 1% improvement in retention rates increases the Company’s annualized revenue by ~$20 million.  The consistently high renewal rates show the value customers continue to find in home service plans even as providers continue to raise prices to account for inflation. … [Read more...]

Stellantis announced offering buyout packages to employees to reduce operational expenses to help fund EV growth plans. The company plans to reduce nearly 3,500 employees by offering packages worth up to $50,000 depending on seniority. With plans to invest $35 billion into the EV space over the coming years, Stellantis is seeking ways to reduce operational expenses to avoid adding costs to consumers. With tight market competition in the EV space, Stellantis is one of several other groups to take this cost-cutting measure. For example, GM recently announced offering similar buyout packages to 5,000 employees, reducing costs by around $2 billion by 2024. These packages come ahead of … [Read more...]

Across the globe, manufacturing plants continue to cut production on vehicles due to continued microchip shortages. Year-to-date, over 1 million vehicles have been eliminated from production plans, just over one-third of the 2.8 million vehicles forecasted to be cut during 2023. While still a significant figure, the 2023 forecast represents a 36% reduction in production cuts compared to 2022, where nearly 4.4 million production cuts occurred. Consistent with 2022, North America and Europe continue to lead the count for most production cuts. … [Read more...]

The Vehicle Service Contract industry reached an estimated $40.2 billion in 2022, with the DTC segment representing approximately 9.5% of the industry ($3.8 billion). Increases in average VSC price, product penetration, and the continued expansion of the “F&I sweet spot” over recent years have driven market expansion. Source: Colonnade Estimates … [Read more...]

The Equipment Leasing & Finance Foundation measures confidence among industry leaders, generating a monthly index that provides a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key executives. Following a 28.1% decline over the course of 2022, sector confidence has increased in the first quarter of 2023. … [Read more...]

EpicVIN, the first vehicle-history provider based on its own blockchain technology, introduced a predictive tool that offers a unique forecast to empower dealers to make decisions on pricing and time spent on the lot.  EpicVIN is currently offering the product to dealers for free as they seek feedback, and the company is focused on helping dealers operate more effectively and efficiently.  The company is hoping to create more valuable tools that will assist dealers address their problems and deficiencies. Additionally, EpicVIN recently announced the launch of its redesigned reports that are designed to provide dealers with more detailed information on the vehicles they are … [Read more...]

Commercial banks are shedding deposits, with total US commercial bank deposits down 3.1% from $17.8 trillion to $17.3 trillion year to date*. This trend of declining deposits accelerated in March, concurrent with the failures of US regionals Silicon Valley Bank and Signature Bank. While total commercial deposits have exhibited a bounce in the most recent data release, the observed year-to-date reduction in deposits remains substantial. Source: St. Louis FRED … [Read more...]

A March 2023 survey of over 2,500 auto finance executives revealed that 95% have started using artificial intelligence in some aspect of their business. Loan processing and funding was the area in which AI was most commonly utilized, followed by credit application and decisioning, and the securitization or collateralization processes. Despite this widespread adoption of AI tools, lenders still described certain obstacles when implementing these tools. 37% of companies reported resistance to change as their biggest challenge, while 27% encountered difficulty integrating with legacy systems. Nevertheless, only 8% of respondents said they would not invest further in automation, with the vast … [Read more...]

According to Automotive News’ annual dealership census, the number of U.S. dealerships increased 0.4% last year.   The number of exclusive dealerships rose 1.6%, and the number of import-badged exclusive dealerships grew by 2%.  Hyundai added 80 stores, Mazda added 21, and Kia and Mitsubishi each added more than 10. In terms of throughput, Toyota ranked number 1 with 1,494 vehicles sold per franchise.  Cadillac dealers sold 240 new vehicles per franchise, up 45% year-over-year for the industry’s largest percentage gain. The census also reported that new-vehicle sales per franchise fell 8.8% as a result of inventory challenges and other factors. … [Read more...]

Rising interest rates are exacerbating the vehicle affordability problem despite lenders concessions. Vehicle prices increased significantly in 2020 and 2021, driven by new vehicle shortages during the pandemic.  While used vehicle prices have begun to normalize, they remain 55% higher than December 2019 levels. The increase in used vehicle prices and rising interest rates caused many borrowers to be priced out of the market.  Lenders have responded by increasing average loan terms and decreased interest spreads.  Average loan term increased from 65.7 months in Q4 2020 to 68.0 months in Q4 2022.  Interest spreads decreased across the credit spectrum, with subprime having … [Read more...]

Cox Automotive’s analysis of Auto Available Inventory data showed that new-vehicle inventories reached its highest level in two years in March.  The U.S. supply of unsold vehicles ended the month at 1.89 million, the highest number since April 2021.  This value is up 70% year-over-year.  Additionally, sales of new models in March rose 9% year-over-year to a seasonally adjusted annual rate of 14.8 million, up from 13.6 million a year earlier. March was the first month where sales surpassed the 1-million mark for a 30-day period since September 2021. Inventory still remains well below prepandemic levels.  In March 2019, inventory stood at 3.9 million vehicles compared to … [Read more...]

Average negative equity on vehicle trade-ins has nearly returned to pre-covid levels.  Rising used vehicle prices in 2020 and 2021 caused average negative equity to fall by a third to a low of $4,000 in late 2021.  As used vehicle prices stabilized in 2022, average negative equity rose to $5,500 according to Edmunds.  The trend will likely continue into the near future as increasing average loan term slow owner’s ability to accrue equity. Negative equity has a significant impact on what vehicles people are be able to afford since the outstanding balance must be rolled into a new loan or paid when the borrower trades-in their vehicle. Sources: Bloomberg, Edmunds … [Read more...]

On March 30, the CFPB finalized a new rule for data collection on small business credit applications. Banks, credit unions, savings associations, and other non-bank lenders will be required to collect and report demographic and geographic data along with lending decisions and the price of credit for each application. The rule classifies small businesses as ones with gross revenue under $5 million in its most recent fiscal year, and covers closed-end loans, lines of credit, online credit products, business credit cards, and merchant cash advances by banks, credit unions, and other lenders. It will be implemented in different phases depending on the size of the financial institution. The … [Read more...]

A recent survey of over 650 senior marketing leaders found that more than half plan to increase digital marketing spending over the next year. An additional 58% of respondents reported increased utilization of marketing technology throughout the past year, with software spending representing the largest proportion of marketing budgets. The focus on increased martech spending was seen across various company sizes, although larger firms expressed a greater likelihood to invest more. 59% of respondents with marketing budgets over $5 million intend to allocate a greater portion of marketing spending to software this year, while only 10% plan to reduce technology spending. Two of the most popular … [Read more...]

In 2022, Florida companies received the third-highest private equity investments within the United States at over $74 billion, behind Texas and California. Investments in the healthcare and manufacturing sectors led deal activity, with Kinderhook Industries making the largest single investment in Florida in 2022 through their $500 million investment into Tampa-based Physician Partners. Florida continues to be a hub for investments because of recent increases in companies and businesses relocating to the state. … [Read more...]

Private equity deal volume declined 17% from $218.7 billion in Q4 2022 to $181.8 billion in Q1 2023. This recent decline in private equity deal volume coincides with a broader slowdown in global M&A transaction activity. Q1 2023 saw global deal volume drop to $559 billion, marking the third lowest global quarterly M&A deal volume in the last decade. The only two quarters during the aforementioned time period with lower quarterly deal volumes were Q1 2013 ($502 billion) and Q2 2020 ($442 billion). … [Read more...]

Renewed efforts to shut down car warranty robocalls by the FCC, state attorney generals, and carriers have nearly ended the practice.  Nearly 1 billion car warranty robocalls per month were made in the first half of 2022.  However, in July 2022, the FCC enacted new regulation authorizing and requiring carriers to cut off traffic from robocallers. The new regulation and several lawsuits by state attorney generals caused over a 99% decline in car warranty robocalls by September 2022. The FCC continues to aggressively pursue robocallers, blocking Global UC from the US phone network in November after failing to comply with the new regulation. … [Read more...]

Beginning June 2023, Massachusetts will begin enforcing the automotive right-to-repair law following a long ongoing legal challenge. This law requires that automakers provide independent autobody shops and individuals with the same information easily accessible to large dealership groups and collision centers. Under the enforcement of the law, if consumers and independent repair centers don't receive the necessary data when needed, automakers may need to compensate the required party for three times the repair cost, up to $10,000. … [Read more...]

In honor of Willard Bunn’s 10 years of dedicated and formidable service as Director from 2010 to 2020, the current Board of CIB Marine, which our CEO, Gina Cocking, is currently a part of, has created a new award in his name. To be given annually, the recipient of the Willard Bunn Award for Business Ethics will be a CIBM employee who demonstrates outstanding character, honesty, integrity, and generosity. Willard Bunn currently serves as Senior Advisor of Colonnade. We are proud of you! … [Read more...]

According to the Cox Automotive/Moody’s Analytics Affordability Index, the average monthly new-vehicle payment fell about 2% to $765 in February 2023.  While this is the lowest index level since October 2022, affordability remains worse than a year earlier and is still well above what the average U.S household can afford.  Cox Chief Economist Jonathan Smoke said that the average household can afford just $400 of vehicle loan payment per month. Cox reported that the increased affordability resulted from growing consumer incomes and a lowered average loan rate.  Median income increased by 0.3% and the average new-vehicle loan interest rate fell to 9.2%. … [Read more...]

Bank of America recently announced that it would offer financing for electric-vehicle charges along with vehicle loans for its customers. It plans to offer the financing add-on through carmakers and dealers as charger prices in the US range between $200 to $2,000. Bank of America currently works with more than 10,000 EV makers and auto dealers. The bank cited the growing US demand for home chargers and consumer demands for options that make owning an electric-vehicle simpler as its main reasons for adding the offering. Statista-McKinsey showed that demand for home chargers will increase to nearly 27.5 million by 2030. … [Read more...]

Battling importunate inflationary effects, the US Federal Reserve is shedding assets, reducing the size of its balance sheet by 7.0% from peak levels observed in April of 2022 to current levels. This reduction is consistent with Jerome Powell’s statements during his March 8th Semiannual Monetary Policy Report to the Congress, in which he stated: “With inflation well above our longer-run goal of 2 percent and with the labor market remaining extremely tight, the FOMC has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will … [Read more...]

Profits per location for dealerships owned by public auto retailers reached an estimated $6.5 million, more than triple pre-pandemic levels, according to the Q4 2022 Haig Report. Experts believe that profits may have peaked as vehicle prices for new and used vehicles are coming down and operating expenses are going up due to more recalls and higher labor rates. In 2022, 566 dealerships were acquired, making 2022 the second most active year in the buy-sell market behind 2021. However, private dealers acquired 526 dealerships, a 7% increase from 2021. Public companies continue to be looking for acquisitions this year as their share prices have recovered and because auto dealers continue to … [Read more...]

On March 10, 2023, in the second largest bank failure in US history, Silicon Valley Bank collapsed. The Federal Deposit Insurance Corp. stated that it has taken control of the bank via a newly created entity called the Deposit Insurance National Bank of Santa Clara. A historical examination of the number of U.S. bank and thrift failures compared to the Federal Funds effective rate yields surprising results. Interestingly, elevated US bank and thrift failures tend to correspond to periods in which rates are tapered down to lower levels, not during the rate hike segment of the interest rate cycle that is often associated with duress in the equity markets. … [Read more...]