INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

[Pages:23]INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

INSIGHTFUL GUIDE

An Independent dealer's guide to insightful data on inventory, financing, marketing and technology utilization during periods of heightened competition

POWERFUL DATA

Powered by Independent specific data from 2,150 dealerships, survey results from 4,000 dealers, Experian (via NIADA's 2015 Used Car Industry Report), NIADA proprietary industry analysis and J.D. Power's Power Information Network (PIN)

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

CONTENTS

Independent Landscape at a Glance

Who is the Independent Dealer?

8

Independent Dealership Outlook

Independent Dealership Pain Points, Initiatives & Goals in 2015

12

Growing Competition with Franchise

Competition for Cars

The Competitive Landscape

16

Find out why the used car market has become

How to Compete

17

more enticing for Franchise dealers and learn

how to be more resourceful to acquire new

inventory and capital

Page 16

Leveraging Technology

Independent Inventory & Capital Outlook

Identify cost-effective technology to sell

Independent Inventory Outlook

20

more cars and remain competitive within

an ever-changing market and discover the

Sourcing Inventory & Capital

23

steps top performing dealerships are taking

to succeed

Financing Options

25

Page 30

PAGE 2

ROI / Revenue Growth

Used Car Sales Leverage Technology Trends by Lead Source

The Digital Landscape

The Online Shopper Digital Marketing versus Traditional Marketing

Summary

Summary

30 30 32

36 36

42

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Independent Landscape

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

PAGE 4

AT A GLANCE

Data Sources

DealerSocket Independent Survey

DealerSocket Data

J.D. Power Power Information Network [PIN]

Experian via NIADA's 2015 Used Car Industry Report

NIADA proprietary industry analysis

WHAT IS THE INDEPENDENT DEALERSHIP ACTION REPORT?

POWERFUL, ACTIONABLE INSIGHT AND STRATEGIES TO ACQUIRE INVENTORY AND GROW REVENUE AS COMPETITION WITH FRANCHISE DEALERS INCREASES

The North American used car market is a powerful stimulus in today's economy. An estimated 40 million used cars were sold last year alone, compared to 16 million new cars. There are approximately 45,000 Independent used car dealerships compared to nearly 18,000 Franchise dealerships. Yet, with the obvious demand from the marketplace and Independent dealers outnumbering Franchise almost 3 to 1, the average Independent or BHPH dealer still remains at a severe disadvantage from the average Franchise dealer when progressing their business. Lack of technology, staff, inventory and legal resources are the tip of the iceberg when discussing hurdles these dealers face. Independent dealers do not have the same access to financial backing and cash flow as their Franchise counterparts. Moreover, with Franchise dealers seeing the revenue potential on used cars, it is anticipated that these dealers will shift their focus to pre-owned inventory and sales.

In an effort to help Independent dealers level the playing field, DealerSocket put together its first Independent Dealership Action Report (iDAR) specifically for the Independent and BHPH community. Comprised of key performance data (represented by our 2,150 Independent/ BHPH dealers), survey results, data from J.D. Power's Power Information Network (PIN), information from Experian via NIADA's 2015 Used Car Industry Report and NIADA proprietary industry analysis, this report analyzes industry trends, performance benchmarks and metrics, and consumer online shopping behaviors. It is a resource designed for Independent and BHPH dealership professionals to identify areas of opportunity that will result in inventory acquisition and revenue growth.

For more information about DealerSocket, visit ID.

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Independent Landscape at a Glance

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

INDEPENDENT LANDSCAPE AT A GLANCE

The Independent Dealer Breakdown

87% of Independent dealers sell 50 or fewer cars per month

DealerSocket Independent Survey

54.3% of Independent dealers sell vehicles priced less than or equal to $10K

NIADA Industry Analysis

PAGE 6

36.8% of Independent dealers boast $1M - $2.5M in annual sales

NIADA Industry Analysis

40% of Independent dealers offer BHPH financing

NIADA Industry Analysis

1 Who is the Independent Dealer? Statistics at a glance

2 Annual Growth Year-over-year dealership trends

3 Nature of Business Breakdown of services offered

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Who is the Independent Dealer?

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

AT A GLANCE: WHO IS THE INDEPENDENT DEALER?

< 50

87% of Independent dealers sell 50 or fewer cars per month

37%

Almost 37% of Independent dealers have an annual sales volume of $1M - $2.5M

< $10K

54.3% of Independent dealers sell cars less than or equal to $10K

6-10

The vast majority of used vehicles sold are 6-10 years old, which accounts for 58.6% in 2014

VEHICLE SALES

DEALERSOCKET INDEPENDENT SURVEY: VEHICLES SOLD PER MONTH

Q: HOW MANY VEHICLES DO YOU SELL PER MONTH?

87% of Independent dealers sell 50 or fewer cars per month

1

11 - 50 Vehicles Sold per month

55%

2

0 - 10 Vehicles Sold per month

32%

3

51 - 100 Vehicles Sold per month

9%

4

101 - 200 Vehicles Sold per month

3%

5

200+ Vehicles Sold per month

1%

NIADA INDUSTRY ANALYSIS: ANNUAL SALES VOLUME

Almost 37% have an annual sales volume of $1M - $2.5 M

1

$1M - $2.5M

36.8%

2

Less than $1M

24.7%

3

$2.5M - $5M

17.8%

4

More than $10M

10.8%

5

$5M - $10M

9.9%

PAGE 8

VEHICLE SALES

NIADA INDUSTRY ANALYSIS: AVERAGE RETAIL PRICE

54.3% of Independent dealers sell cars less than or equal to $10K

1

$5,001 - $10K

42.1%

2

$10,001 - $15K

32.3%

3

$0 - $5K

12.2%

4

$15,001 - $20K

7.4%

5

$20,001+

5.9%

NIADA INDUSTRY ANALYSIS: AGE OF VEHICLES SOLD

The vast majority of used vehicles sold are 6-10 years old, which accounts for 58.6% in 2014

1

6 - 10 Years Old

58.6%

2

3 - 5 Years Old

27.5%

3

11+ Years Old

9.4%

4

1 - 2 Years Old

4.5%

NIADA INDUSTRY ANALYSIS: ABOUT THE DEALERSHIP

96%

Single Location Dealerships

1

Multiple Locations

4%

2

Single Location

96%

20+

Nearly 1 in 4 Independent dealerships have been in business 20+ years

63%

Over 63% of Independent dealerships have four or fewer employees

33.9%

33.9% of Independent dealerships are BHPH

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Independent Dealership Outlook

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

INDEPENDENT DEALERSHIP OUTLOOK

Dealership Pain Points, Initiatives & Goals in 2015

52% of Independent dealers cited Inventory Acquisition and Capital to Finance Inventory as the top problems facing their business

DealerSocket Independent Survey

ROI / Revenue Growth is the top initiative for Independent dealers

DealerSocket Independent Survey

PAGE 10

3.5% increase in NIADA members who feel competition from Franchise dealers is a top pain point

NIADA Industry Analysis

10% of Independent dealers rank improving efficiencies/software consolidation as a top priority

NIADA Industry Analysis

1

Dealership Pain Points Inventory acquisition, capital to finance inventory & growing competition with Franchise dealers

2 Dealership Initiatives ROI / Revenue Growth

3 Shift in Perception Heightened perceived threats from Franchise dealers

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Dealership Pain Points, Initiatives & Goals

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

NIADA INDUSTRY ANALYSIS: PAIN POINTS

3.5%

In Q2, 15% of NIADA members polled cited heightened competition from Franchise dealers as their top pain point, a 3.5% increase from Q1

PAIN POINT: HEIGHTENED COMPETITION FROM FRANCHISE DEALERS

20%

10%

1

2

1 Q1 - 11.5% 2 Q2 - 15%

DEALERSOCKET INDEPENDENT SURVEY RESULTS: INDEPENDENT DEALERSHIP PAIN POINTS, INITIATIVES & GOALS

We asked. You spoke. We listened.

Of the available choices, Independent dealers ranked Inventory Acquisition and Capital to Finance Inventory as top pain points. ROI / Revenue Growth was their top initiative for 2015. For the purpose of this report, these topics will be examined along with how growing competition with Franchise dealers impacts the Independent landscape.

Q: WHAT IS THE MOST IMPORTANT PROBLEM FACING YOUR DEALERSHIP TODAY?

A combined 52% of responding Independent dealers cited Inventory Acquisition & Capital to Finance Inventory as the top problems facing their business in 2015

52%

1

Inventory Acquisition

31%

2

Capital to Finance Inventory

21%

3

Lack of Customer Prospect Traffic/Leads

20%

4

Government Regulations / Compliance

16%

5

Competition from Franchise Dealers

12%

Q: WHAT ARE YOUR DEALERSHIP'S TOP 2 INITIATIVES/GOALS FOR 2015?

25% stated that ROI / Revenue Growth was their #1 initiative for 2015

25%

1

ROI / Revenue Growth

25%

2

Customer Retention

18%

3

Increase Visibility/ Digital Presence

14%

4

Improve Efficiencies/ Software Consolidation

10%

5

Increase Inventory

10%

6

Acquire Capital

8%

7

Become More Competitive with Franchise Dealers

8%

8

Compliance

7%

PAGE 12

There is a direct correlation between Independent dealers' top challenge-- Inventory Acquisition and their number one initiative--ROI / Revenue Growth. In a circular fashion, acquiring more inventory will increase revenue and cash capital to finance more cars.

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Growing Competition with Franchise Dealers

INDEPENDENT DEALERSHIP ACTION REPORT FALL 2015

GROWING COMPETITION WITH FRANCHISE

The Uphill Climb of Competing with the Big Boys

Franchise dealers saw a 617% higher yield in gross profits selling used cars

J.D. Power - Power Information Network (PIN)

800K lease maturities will be coming back to market in 2016

J.D. Power - Power Information Network (PIN)

PAGE 14

Independent dealers saw an average profit increase of $261 per vehicle when using CRM

DealerSocket Data

Independent dealers turn used cars 27 days faster than Franchise dealers

DealerSocket Data

1

The Uphill Climb Increased competition with Franchise dealers

2

The Competitive Landscape How Independent dealers stack up against Franchise dealers

3

Checklist: How To Compete Quick tips on how to optimize opportunities

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The Uphill Climb

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