Will the automotive retail industry ever really go ‘back to normal?’
As soon as it all gets ‘back to normal’ is a phrase that we have heard time and time again throughout the COVID-19 pandemic. However, on the latest edition of Straight to the Point, host Frank J. Lopes asks, will it ever go back? What is even considered normal today? When looking back at 2021, we can all agree on one thing, it was nothing close to normal. Between the pandemic, inventory challenges, and record-breaking gross and net profit, the year in automotive retail can definitely be considered outside of the status quo. Watch the complete segment here.
During fiscal Q3, which ended November 30, CarMax increased both its online sales and used inventory volume, thanks to its relatively new online appraisal tool. In fact, CarMax just about doubled its purchase of consumer vehicles in Q3, and nearly half of those transactions used the online appraisal feature. Additionally, sales came in at 227,424 vehicles, of which 9% were online-only transactions.
While car dealers on average are experiencing record-breaking gross profit, auto sales for 2021 are expected to slump industry-wide. Bloomberg analysts recently compiled the estimated seasonally adjusted annual rates from seven of the industry’s top players and averaged a 2021 SAAR of 12.5 million. While December is usually a strong month for dealers, that was not the case in 2021. “It’s not a demand problem. It’s a supply problem,” said Cox Automotive analyst Michelle Krebs. “We’re at least 1.5 million units of inventory behind 2020 and 2.5 million units behind 2019.”
Last November, reservation holders with EV maker Rivian were told that their R1T electric pickups may have to wait until 2023. Now, according to a new email from CEO RJ Scaringe, Rivian will prioritize batteries for its electric SUV and R1T electric pickup preorders, but only for more expensive trim packages. After the email was initially posted to Reddit, CNET reports that the prioritization represents the large majority of reservations and that the less expensive trim packages for R1T models are on track for 2023.
According to a new report from The Verge, New York City has announced its order for 184 electric Ford Mustang Mach-Es to be used by law enforcement and emergency response workers. With an expected delivery date of June 2022, the city’s $11.5 million contract will be set in place for five years. Additionally, the city plans to purchase over 1,000 EVs this year in preparation for a full transition to electric by 2035.
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Managing risk in data collection and compliance
Instances of auto fraud are on the rise, and some are for incredibly costly transactions. A Texas man has been recently convicted of wire fraud and money laundering that included a $233,000 purchase of a 2019 Lamborghini Urus as well as a Ford F-350 pickup truck, and sentenced to nine years in prison. In June this year, Volkswagen had more than 3 million customers’ data compromised in a data breach. And instances of identity theft have been on the increase across the country. Read more
Why Effective Labor Rate is the KPI car dealers should keep an eye on
Recently we discussed the top KPIs you should monitor to ensure maximum profit in the New Year. One of the most important to consider is the Effective Labor Rate. Maybe you don’t know what the Effective Labor Rate is or perhaps you are simply perplexed about how to improve it. Either way, we have the tips you need to grow by leaps and bounds in 2022. Implement these ways to work on Effective Labor Rate and you will skyrocket profits in no time. Read more
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