How GM Taking Softer Hit on Recalls than Toyota, Art Spinella on August Used Sales September 3, 2014

NADA Issues Special Report on Impact of Vehicle Recalls

Jonathan Banks
Executive Automotive Analyst
NADA Used Car Guide

NHTSA didn’t see much in the way of recalls in its first 20 years of history, but that started to change in the mid-1990s. From 1994 to 2013, the number of recalls jumped dramatically – an average of 177 per year – 86% from the prior period average. The flow of information from consumers and dealers made possible by the internet is the most likely reason for it; and vehicles have become highly complex machines.

Click here to read “The Impact of Vehicle Recalls on the Automotive Market”

Safety Concern and Number of Vehicles Affected Can Affect Market Performance:
Extent of damage largely determined by 2 factors: media coverage and brand reputation prior to recall.

There’s Only Mild Evidence to Suggest GM Prices Are Being Affected by Recalls:
Toyota recall took higher risk, which may have come from higher quality expectations for Toyota vehicles.

Evidence from Recalls Suggests Model Age also Influences Recall Impact:
It could be because older models are less associated with a brand’s current product image.
Spinella_Art_ head shot

August Used Car Sales Volume Down More than Seasonal Trend

Art Spinella
CNW Research

Retail sales were down 6.52% from year ago and more than 15% from July. While that month-over-month decline typically happens, it was somewhat distressing because usual pre-Labor Day sales tend to be for students going back to school and likely needing more reliable transportation. Sales may go up in September – there was slight surge in Sept. 1 used-floor traffic, which may result in September sales offsetting much of decline.

Here’s the CNW Research report on August 2014 used vehicle sales

Franchised and Independent Dealers Down 5.6% and 13.7% in Sales from Year Ago:
Private Party (Casual) took some share away from Independent.

Total Value of Used Car Sales Rose 7.3% in August Vs. Year Ago:
Came from higher asking prices, and ability to get customers to pay closer to asking price.

Total Number of Used Car Shoppers Down, Explaining Lower Sales:
There were 8.5 million used car shoppers in August 2014 vs. 10.8 million a year ago.
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Summer Ends, Continuing Trends

Trucks saw the small­est used vehi­cle seg­ment price decline, but it was more of a buyer’s mar­ket overall.

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A Better Website Means a Better Conversion Rate

The more intu­itive deal­ers can make their web­site tech­nol­ogy, the bet­ter their sales con­ver­sion rates will be.

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