David Robins, Principal Automotive Analyst and Head of Canadian Vehicle Valuations at Canadian Black Book, explores the findings of a new study on the effects on car-buying trends amid the pandemic, along with the concept of “driving less means buying less” — and what that means for car dealers in Canada.
Author: Admin
“This week’s performance was much better than seasonal norms (2017-2019) for the overall market, with truck/SUV segments again leading the strong market performance,” said CBB in its update, adding that cars picked up momentum with a strong up-tick in prices that was “much stronger than historical performance (2017-2019)”
The truck/SUV segment outperformed historical weekly price changes (2017-2019) that are now resulting in “a strong up-swing in prices almost identical to last fall’s strongest weekly performances,” said CBB.
Listing prices continued an upward trend from the previous week (14-day moving average, approaching $24,850). Prior to last week, average listing prices seemed to be softening, but the 28-day moving average is catching up to the daily and 14-day trends, and CBB said they are now seeing increases. The analysis is based on around 130,000 vehicles listed for sale on Canadian dealer lots.
“We continue to remain optimistic on our expectations for retail prices, as seasonal trends would point to a continued increase in prices as we head into the Spring market,” said CBB. “There is still uncertainty around the impact of current stay-at-home orders and social distance measures, and the degree to which these measures may cool off the Spring selling season.”
Once the stay-at-home orders in Ontario are lifted, CBB expects retail demand to increase, with a positive impact on prices. And the potential impact from the chip shortage on new vehicle inventory is likely to push used vehicle demand up — leading to stronger retail prices in the short-term.
Closing large sales is critical for your business’s growth, but it can be a challenge when customers are concerned about how a big purchase will affect their budget. Your company can increase sales by promoting its financing program to show customers how financing can help make an expensive purchase work with their budget constraints. To build a successful financing program, it’s important that you promote it widely, so customers are aware of their financing options.
Here are some of the most effective ways that your business can market its financing program to customers and grow your revenue:
- Include financing on price tags
Prominently advertise financing costs on your price tags in store and online, to show customers how the cost of an item can work with their budget. Price is the number one factor affecting purchase decisions. By displaying the lowest monthly payment option alongside the full price of a product or service, your customer can understand at a glance how financing can help them afford exactly what they want.
For example, paying an amount of $10,000 for the car they want to purchase might seem out of reach to many customers. But by breaking down the cost into monthly payments of $103, that big-ticket purchase suddenly becomes much more affordable.
- Highlight financing at the point of sale
It’s important to promote financing options throughout your store, including at the point of sale. Most customers won’t ask about a store’s financing options, simply because they don’t know how to do so. By displaying marketing materials that promote your financing program at the point of sale, customers will understand their loan options and how they can benefit from financing. Simple materials like pamphlets, tent cards or stickers displayed at the point of sale can help raise awareness for your financing program.
- Develop marketing programs
Offering customers attractive financing incentives can help your business increase sales and drive up the average transaction amount. Some common marketing programs include:
- Open loans
- Loans for good credit, bad credit, new credit
- Low interest
- Train your sales staff
Your sales team is crucial to the success of your financing program, because they’re the front-line staff interacting with customers everyday. It’s important that all members of your sales team receive in-depth training on your financing program so they’re able to:
- Explain how your financing program works
- Properly position financing to customers
- Outline the requirements to qualify for loans
- Address common questions and concerns from customers
Your sales staff can’t expect customers to ask about financing, so they should be able to identify opportunities within their sales conversations to present financing options. For example, when a customer asks about the price of a product or service, they’re providing an opening to discuss financing solutions. The sales team should be able to quickly and accurately provide a financing quote to customers. That way, consumers get a clear picture of what they’re loan payments would be, and how the cost fits within their budget.
- Simplify the sign-up process
Make it as easy as possible for customers to apply for financing, to minimize customer frustration and application abandonment. Streamline the data collection process as much as possible, while still collecting all the crucial customer information you need to complete a loan application. It’s a good practice for businesses to offer customers as many sign-up options as possible. In addition to letting your customers apply for a loan in store, you should also allow them to apply for financing safely online, so they can complete the loan application on their own time and don’t need to worry about their privacy.
If you take the time to promote your financing program in store, online and through direct conversations with customers, your business can increase its revenue by closing more sales and driving larger transaction sizes.
CBB data shows decline in wholesale prices slowing
Canadian Black Book (CBB) released data for the first week of February, which showed that while average wholesale prices of used vehicles across Canada continued to soften, the decline in prices has slowed. Although continuing to decline, the prices were better than 2017-2019 seasonal norms for the overall market and car and truck segments.
CBB notes that there was improvement compared to the same week last year, and believes this could be a sign that dealerships are beginning to stock up on spring inventory.
According to CBB, the sub-compact and luxury vehicle car segments saw the largest declines (-0.50% and -0.46% respectively), while sports cars led the increases with an increase of +0.28%. Within the truck segment, full-size luxury crossover/SUVs saw the largest increase (+0.29%), while the most significant decline came from full-size pickups (-0.49%).
CBB reports that listing prices dropped slightly, ending the week just below $25,000. Although there is still uncertainty in the market due to COVID-19 restrictions, seasonal trends point to prices continuing to rise.
While these restrictions could pose challenges and uncertainty for the spring selling season, CBB predicted that the chip shortage on new vehicle inventory will likely push used vehicle demand up, which could translate to stronger short-term retail prices — especially considering that there remains a general shortage of used inventory across the market.
And although active listing volumes have risen since the dip last fall and are now above 130,000 units, “The CBB Listing Volume Index continues to show that the market is at a higher level compared to this time in 2020, yet far below the stock levels available in 2019,” said CBB in its February 9 report.
CBB data shows decline in wholesale prices slowing – Canadian auto dealer
Canadian Black Book (CBB) released data for the first week of February, which showed that while average wholesale prices of used vehicles across Canada continued to soften, the decline in prices has slowed. Although continuing to decline, the prices were better than 2017-2019 seasonal norms for the overall market and …
canadianautodealer.ca
The latest automotive market update from Canadian Black Book reveals that average wholesale used vehicle prices in Canada are on the rise.
According to the report, prices climbed slightly this past week and are far better than the seasonal norms of 2017-2019 for the overall market. Both the car segment (+0.04) and the truck/SUV segment (+0.07%) were up this week, while the market was up 0.06% compared to the previous week.
“Last week’s price increase is also much improved compared to the same week last year, which is further evidence that dealers are beginning to stock up on products for spring,” said CBB in its report.
In the car segment, sports cars (+0.32%) and near-luxury cars (+0.31%) offered the largest increases, followed by the full-size car category (+0.25%). Compact cars managed an increase of 0.07%, and luxury cars were up 0.11%. However, the mid-size car segment led in declines for the week with -0.35%, followed by the prestige luxury car category with -0.21%. Subcompact cars were down 0.15%, and premium sporty cars declined 0.13%.
In the truck/SUV segment gains were seen in the sub-compact crossover category, which posted the largest increase for the week at 0.48%, followed by small pickups with +0.36%. Only two truck categories experienced “measurable declines” — the mid-size luxury crossover/SUV segment with -0.14%, and the compact van segment at -0.08%. Full-size pickups remained flat for the week.
As for retail prices and listing volumes, listing prices dipped last week — a continuation of the decline in average retail listing prices that started after peaking during the third week of January, according to CBB.
The seasonal trend heading into the spring season points to prices on the rise, although there is still uncertainty around the impact of pandemic restrictions, such as stay-at-home orders and social distance measures, and how these things may impact the spring selling season.
“Canadian Black Book continues to monitor the potential impact from the chip shortage on new vehicle inventory, which will most likely continue to push used vehicle demand up, and therefore bringing stronger retail prices in the short term,” said CBB, adding that a shortage of used product in the market remains, but that they see a steady increase in the number of vehicles listed for sale.
