Friday, 29 May 2015

New President is Named for Audi Canada

AJAX, Ontario - 
Audi Canada announced today it has a new president.
Chosen for the position is Daniel Weissland, who will start in his new role on Aug. 1.
The company explained Weisslan will be succeeding Wolfgang Hoffman as president, who has completed his three-year foreign assignment.
Weissland is currently the sales director for Southern Europe and is based in Ingolstadt, Germany. He has been in this position since 2011.
Daniel Weissland, Audi Canada
Weissland first joined the automaker in 1999 and has held increasingly progressive roles within the company since joining.
These include the areas of sales, marketing, network development and product management.
 Previous experience includes being part of the team that founded the National Sales Co. in Dubai.

New President is Named for Audi Canada...........................................................

Friday, 22 May 2015

84-Month Loans Focus of New Black Book Analysis

by Auto Remarketing:
Black Book Lender Solutions wanted to give the industry analysis and information so dealerships and finance companies can handle the latest origination challenge.
A potential buyer has a family budget cap for a monthly payment of roughly $400, but those stipulations demand that the vehicle installment contract term stretch to 84 months to get the unit delivered.
On Friday, Black Book made its latest white paper available that's appropriately titled, Collateral Insight Critical to 84-Month Auto Loans. Barrett Teague, Black Book's vice president of lender solutions, told SubPrime Auto Finance News that 10 years ago, a term of "84 months was really not a topic of conversation."
What Teague described as "specialty shops" handled the longest term loans that usually peaked at 75 months and were reserved for "pristine" customers.
Now with terms stretching to 84 months moving from talk at industry conference networking sessions to contracts connected to metal on the street, Teague insisted Black Book "addressed something we don't feel is being addressed very often in the marketplace today when it comes to those longer-term vehicles."
Of course, it doesn't take a seasoned finance company executive to realize the risk increases the longer the term is. Black Book outlined in the white paper four considerations when determining risk levels, including
? LTV ratio
? Rate of vehicle depreciation
? Credit profile
? Risk adjusted return on capital
"This kind of analysis will help the lender review the loan deals from a whole-lifetime-analysis perspective so they can optimize their risk and return for that portfolio while at the same time meeting their customer needs," said Anil Goyal, Black Book's vice president of automotive valuation and analytics.
Goyal and his team gathered the data and found not only a variety of vehicle depreciation trends from Black Book's own resources, but also referenced material from government outlets as well as Experian Automotive.
As elaborate as all of the data points can possibly be, Black Book boiled down one crucial component that might be one of the most important triggers of the rise of 84-month contracts. According to the U.S. Census Bureau, from 2007 through 2012, household incomes rose just 1.6 percent from an average of $48,729 to $49,486.
However, during that same time, the average price of a 2- to 6-year-old vehicle rose 24.9 percent from an average of $11,160 to $13,949, according to Black Book vehicle valuation data.
"It becomes very apparent there's not a lot more household income to spend on vehicles, yet the consumer is spending more each month on that. That's really the driving the consumer need on the longer-term loans," Teague said.
In light of consumer demand, Goyal explained that captives, banks, credit unions and even buy-here, pay-here dealerships with related finance companies might ask themselves as series of questions when deciding how far they want to stretch terms to meet consumer demand.
"How much longer are you going to keep that vehicle in a negative equity situation, which is going to increase that severity of risk?" he said. "What is the value today? How much loan do you want to lend? When is that loan going to turn around into a more positive situation? How is that collateral going to perform? What are the depreciation trends?
"Analysis of collateral values becomes very important," Goyal continued in Friday's conversation with SubPrime Auto Finance News.
Teague pointed out that some finance companies are looking to leverage the possibilities of longer terms to increase potential profitability. Because interest rates are low for consumers with strong credit background, Teague noted shorter terms aren't allowing for an extended window for the portfolio to blossom.
"Instead of just increasing the risk based on credit score alone, that there is an opportunity based on the term that's out there," Teague said.
But as Black Book also mentions in the white paper, longer terms create a potential sour consumer situation down the road depending on how long the buyers wants to keep that vehicle.
"There is always a place for longer-term loans. There is a customer out there who would really benefit," Goyal said. "If that customer is intending to keep that vehicle for seven to eight years and not looking to come back to the dealership in three to four years, this is an ideal loan for them. But if that customer is looking to come back in three years, they're going to find that they don't have much value for that trade-in, and it's going to be a difficult conversation when they come back.
"I think it's important for the industry to recognize that there is a place but it depends on how you target them ? making sure you're addressing the right segment for that customer and getting them into the right vehicle that makes sense for this longer-term loan.

84 Month Loans Focus of New Black Book Analysis.................................

Friday, 15 May 2015

Regulatory Concerns For Ontario Dealers

Ontario's all-in pricing regulation is still causing trouble for dealers, and the issue is top-of-mind for Ontario Motor Vehicle Industry Council management.
In fact, the organization put out another bulletin on the issue just this spring, reminding dealers "there can be no hidden fees; no surprises."
And to get a handle on the top regulatory issues facing dealers today, Auto Remarketing Canada caught up with Michael Rothe, director of legal services at OMVIC, at the recent Auto Remarketing Canada Conference in Toronto.
Not surprisingly, perhaps, Rothe said all-in pricing should be No. 1 in dealers' minds when it comes to regulations, and issues with negative equity and subprime financing are a close second.
"All-in pricing continues to be an issue, and it really requires the industry to work with the regulator because we don't want to race toward the lowest common denominator," said Rothe.
With the exception of the harmonized sales tax (HST) and licensing cost - which can be excluded is the advertisement indicates as such - the price advertised should be the price a customer can expect to pay, without any surprises.
Examples of fees or charges that must be included in an advertised price include:
  • Freight
  • PDI-PDE (pre-delivery inspection/expense)
  • Administration (Admin) fee(s)
  • Government levies (air tax, etc.)
  • OMVIC fee
  • Safety and e-test (unless the ad contains a mandated "Unfit Vehicle" or "As-Is Vehicle" statement)
Dealers must also include fees they intend to charge for products or services they have pre-installed on a vehicle, including warranties, tire protection packages and more.
"If everyone is secure with the rule, it creates a more level playing field, and I think is better for the industry overall, not just consumers," Rothe said.
If dealers already have all-in pricing down, Rothe cited a few financing concerns that may cause some trouble in the future.
"The second most important issue is financing," said Rothe, "and by that I mean subprime financing, negative equity and loan duration."
Since the recession and the leasing fall-off, loan terms have been getting consistently longer. And Rothe explained the issue is not in a vacuum - and the auto industry isn't the only business on this trajectory.
"Again, it is very difficult issue and some ways a more difficult one, because it's not just an automotive sector. You also have the banks, insurance companies, and other sectors impacting it, so it's not just OMVIC coming up with a solution to that end," Rothe said.
OMVIC has reached out to various banking regulators on a provincial and national level to try and craft a "holistic" solution to the financing issue.
"But again, these things take time, and this is a fast developing issue," said Rothe, and one that the industry, and country, have to work together to solve.
In the automotive business the long duration of vehicle loans have the potential of cannibalizing future sales.
"With extremely lengthy loan terms, dealers are padding their bottom line today at the expense of their bottom line down the road," Rothe concluded.

Regulatory Concerns for Ontario Dealers........................................................

Saturday, 9 May 2015

Auction Prices Spike As Spring Selling Season Begins

Wholesale prices were on the way up last month as the market got over the winter hump and the spring selling season began.
The Manheim Canada Used Vehicle Index was up by 2.5 points from March, rising to 113.4. This also is 10.5 points higher than levels seen in April 2014.
Every vehicle segment showed a spike in prices this past month, except for the vans, which fell by 2.6 points, and pickups, which were down by two.
As weather warms, the sports car segment saw the biggest price spike last month, rising by 11 points on the Manheim index.
Full-size vehicles also saw a large jump, spiking by 6.1 points.
Compact cars rose by 4.5 points in April, while midsize cars were up 3.9 points.
SUVs gained 2.4 points on the index, while luxury cars were up 1 point.
Though many in the industry are expecting used supply to expand a bit this year, and hopefully push wholesale prices down to more normal levels, a true trend change may not be in the cards quite yet.
Josh Bailey, editorial director at Canadian Black Book, pointed out in an interview with Auto Remarketing Canada this year will most likely present a "theoretical increase in supply," meaning many auction attendees won't get a chance at the extra vehicles coming through the wholesale pipeline.
Looking at where prices stand today is key, Bailey said, since residuals have fared much better than originally expected, especially for 4-year lease vehicles, "the bulk of the used market."
"The forecasts were originally much lower than what the market price is today. So, the reason I think it is a theoretical increase in supply is that the dealers and the lessees are likely going to buy these cars before they hit the auction," Bailey said. "If there is equity in the vehicles, then someone is likely to take it before it makes it to auction."

Auction Prices Spike as Spring Selling Season Begins........................

Friday, 1 May 2015

3 Myths About Future Car Buyers

You can buy just about anything these days with a thumb-swipe on a mobile device or a click of a mouse, and when it comes to buying cars, more and more of that is moving online, too - but not the whole process; and it appears most consumers want to keep it that way, as they see value in what a dealership salesperson brings to the table.
The Autotrader Car Buyer of the Future study, released Monday night, found that 84 percent of respondents want to purchase a car in person.
"You don't build value in a distributive price negotiation; you build value by talking about feature benefits," he added. "What we found is that 43 percent of all consumers want to go to the dealership. They want to learn more about those feature benefits. Now, they may want to learn about it in a slightly different way ... but ultimately, this is something that they value tremendously."
Consumers view the dealership experience as a chance to validate what they learned online, while also getting more information on specials, offers, warranty and service, the study says.
This notion that salespeople will be less important in the future is just one of three that Autotrader says its study dispels.
"Some commonly held beliefs about the future of car buying are that salespeople will be less important in the future; consumers don't want to negotiate; and that lowest price will always win. In fact, the study shows the opposite," the company said in the study's news release.
The second commonly held belief on Autotrader's list is negotiation - more specifically, that consumers just don't want any part of it.
However, the study found that more than half (56 percent) actually would rather negotiate. What's more, millennials and women, in particular, will take negotiation over flat rate pricing.
"This is a result of the fact that consumers do not yet trust flat rate pricing, and they feel that they have to negotiate to get a fair price," Autotrader said.
Third on the list deals with price - in that lowest is always best. But, again, more than half (54 percent) of respondents said they would choose to purchase from the store that offered a better experience than one that offered the best price. This helps show that even though price is vital, "the dealership experience can trump lowest price," the company said.
And consider this: more consumers were willing to drive farther to work with a salesperson they liked (73 percent) than to get the lowest price (65 percent).

3 Myths About Future Car Buyers...........................................................................