This November brings national and local elections to us. One of the greatest gifts we have as Americans is the ability to get out and vote. Sadly, for a myriad of reasons, many Americans (about half of eligible voters) choose not to vote in mid-term elections. A lot of people only think about voting every four-years when the presidency is on the ballot. Fact is, there is a tremendous amount being done at the state, county, and local level. State representatives, judges, city council, etc. are most likely on ballots in your area. Please get out and vote this November.
Several automotive industry trends are impacting its future in 2023 and beyond. These trends involve how vehicles are powered, driven, shopped for, and acquired. Plus, there are statistics you must know about if you plan to buy a vehicle in 2023. Here are the top 10 trends shaping the future of the rapidly changing auto industry and some critical motor vehicle-related statistics.
Trends Shaping The Auto Industry In 2023
1. Increased Production Of Electric Cars With Digital Technology
Automakers continue to integrate more digital technology into their vehicles. Technology companies like Google and Tesla are also working on electric and self-driving vehicles. As a result, it’s clear that vehicles produced in 2023 and beyond with be full of technology to address digital touchpoints. There’s fierce competition to develop software and digital and electronic operating systems to power and control the new, innovative zero-emission electric vehicles. These new vehicles will be filled with digital technology.
2. A Rise In Digital Automobile Sales
Automakers in North America and Europe have started giving consumers the option to skip the visit to the car dealership and pick and purchase the vehicles they want online. With a computer or smartphone, buyers can shop at their convenience, explore and select the features they want on a vehicle and get the financing they need. In addition, dealerships now offer online sales, let an online buyer use virtual walk-around technology, facilitate at-home test drives and do home delivery of vehicles they sell. More dealerships will do so in 2023.
3. Increased Sales Of Pre-Owned Vehicles
There is a boom in used car sales going on. Car industry experts anticipate a 9% growth rate in used car sales between 2019 and 2025. The demand for used automobiles is rising, particularly for vehicles four years old or newer. These vehicles have many of the latest automotive technologies but are not as expensive as new ones. This includes pre-owned electric and hybrid automobiles. Dealerships now have inventories full of certified pre-owned autos that look, feel, and function like new cars but cost much less. Low APR financing also helps make pre-owned vehicles very attractive
4. More Connected Cars
Connected cars are vehicles connected to the Internet of Things using wireless means. These vehicles provide a safe, comfortable, convenient multimedia experience by using on-demand features that allow you to do anything you want on the web while in your vehicle. Connected cars can communicate bidirectionally with various other systems outside their local network. The vehicles can share internet access and data with devices inside and outside the car. Connected cars now send digital data and remote diagnostics, vehicle health reports, data-only telematics, access 4G LTE Wi-Fi Hotspots, get turn-by-turn directions, warn of car health issues and directly intervene to prevent breakdowns. Over a billion customer requests were processed by 2015, and connected car technology will explode on the scene in diverse ways in 2023 using predictive intelligence and maintenance technology
5. More Innovative Online Marketing Strategies
In China, automobile dealers use third-party e-commerce platforms to market cars, schedule visits, and book test drives. Social media influencers will significantly engage consumers and generate interest in the new vehicles hitting the market in 2023. Technology enablers like Roadster, G Forces, Digital Motors, Sophus3, and CitNow power the automotive ecosystem and engage customers digitally with compelling images, captivating presentations, and potent pitches. And car buyers can expect much more of it in 2023.
6. The Emergence Of Fuel Cell Electric Vehicles
In 2023, the worldwide emergence of fuel cell electric vehicles is poised. More and more people embrace fuel cell electric vehicles because they recharge faster, have up to 5 times the range of other electric vehicles, and only emit water out of their tailpipes. Many cars, truck, and SUV manufacturers are investing in fuel cell electric vehicle development. China, Germany, Japan, South Korea, and the United States are backing fuel cell electric auto technology. So, 2023 could be the year they break through.
7. Shared Mobility
Shared mobility is a new business model growing in popularity that’s an alternative to vehicle ownership in the traditional sense. With shared mobility, two or more people use the exact vehicle with short-term access. It’s mobility-as-a-service like Uber or using a personal rental. This demand-driven vehicle-sharing arrangement has become a lot more popular in recent years. New companies offering shared mobility options are popping up daily, creating a creative, affordable, convenient alternative to vehicle ownership’s high costs and many responsibilities. Shared mobility is expected to grow dramatically in 2023.
8. Autonomous Self-Driving Vehicles
Autonomous self-driving vehicles are here and will be more prevalent in 2023 and beyond. Research has shown autonomous vehicles are safer, reduce downtime, expand the last-mile delivery scope, reduce driver fatigue and negligence-related accidents, improve fuel efficiency by 10%, and reduce CO2 emissions by 42 million metric tons annually. Several trucking companies have installed self-driving technology and have tested it at locations nationwide. Beginning in 2023, it will become commonplace to see a fleet of autonomous self-driving commercial trucks or a self-driving Tesla in the lane next to you.
9. Truck Platooning
Another automotive industry trend you will see more in 2023 is truck platooning. This is when multiple trucks use vehicle-to-vehicle connectivity to drive close behind each other while traveling at high speeds. Truck platooning will become more common in 2023 and beyond because research has shown that trucks driving in this type of formation increase their fuel efficiency exponentially. Truck platooning is particularly effective when used in combination with autonomous freight transport. As autonomous self-driving trucks become more commonplace on the road, so will the use of truck platooning.
10. Automakers And Technology Company Partnerships
With the rapid rate at which new technological advancements are being added to cars and other vehicles, it’s not surprising to see automakers and technology companies forming partnerships. Electric, connected, and autonomous vehicles require specialized software and advanced technology to function safely and correctly. Car, truck and SUV manufacturers must either make massive investments in their technology divisions or partner with tech companies that can design and produce the new operating systems the next generation of technologically advanced automobiles will need. In 2023 you will see many more automobile manufacturers and tech company partnerships.
10 Must-Know Statistics
The emerging automotive trends are caused by and are creating several significant changes in the habits of consumers. Here are ten must-know statistics that can help you see those trends’ impact.
- In the United States, automobile dealerships and auto parts stores make up 20% of the country’s retail sales. That is the largest sector of the total U.S retail sales.
- In 2020, the automotive industry in the United States employed 4.1 million people and contributed $562.2 billion to the country’s gross domestic product. That’s 2.5% of the GDP.
- Electric vehicles release 54% fewer CO2 emissions into the atmosphere than even the newest gas-powered vehicles.
- There are 1.2 million electric vehicles in use in the United States today. There are expected to be 18.7 million by 2030.
- Under the new NAFTA, 75% or more of the components of American cars must be manufactured in the United States, Canada, or Mexico.
- Currently, vehicles assembled in the U.S. are made with about 40% to 50% of imported parts.
- Of the auto workers building those cars, 30% or more must earn $16 an hour. The number will increase to 40% in 2023.
- Automobile industry experts predict in 2023 and beyond, car subscriptions will become the most popular alternative to private ownership of autos. They see the car subscription programs having a 23.9% share, with car-sharing and ride-hailing making up only 1% each.
- The self-driving truck market globally is anticipated to be over $1,699 billion by 2025.
- About 50% of small businesses say that truck fleets will be completely self-driving in 20 years. More than 35% of them say it could happen in 10 years.
Originally posted by Linchpin https://linchpinseo.com/automotive-industry-trends/.
Financial markets had a roller coaster ride last week, ending the week lower due to stronger-than-expected inflation data and consumer sentiment data indicating rising inflation expectations. Both suggest the Fed will raise rates as much as planned in November and December and possibly more.
The September Consumer Price Index (CPI) inflation report indicated headline inflation did not come down in September, and core inflation rose to a new 40-year high.
Retail sales in September were flat with August and were weaker than expected. Adjusted for inflation, spending declined in September from August but was unchanged year over year.
Consumer credit growth grew in August with heavier credit card usage. Auto loan performance has deteriorated further as both severe delinquency rates and default rates increased in September. While delinquency rates are very high, default rates remain relatively low. Auto loan credit loosened in September across all channels and lender types.
Sentiment increased slightly in the first half of October, according to the University of Michigan. However, inflation expectations are increasing, and the measure of future expectations declined.
September CPI Report Indicates Higher-Than-Expected Inflation, Core at 40-Year High
Inflation increased in September more than expected, according to the CPI. Headline year-over-year inflation was unchanged but remained lower than the peak in June.
The headline aggregate measure increased by 0.4% when a 0.2% increase was expected on a seasonally adjusted basis. The increase was an acceleration from the 0.1% increase in August.
The core CPI, which excludes Food and Energy, increased by 0.6% just as it did in August. A slowing to 0.4% had been expected. Energy declined again in September but at a smaller pace. Food and all other items saw similar aggregate gains.
Drilling down further, medical care and transportation saw the largest gains. Fuel oil, motor fuel, apparel, and used cars saw large declines. Rents saw another 0.8% increase, likely misleading and not reflecting current trends as the CPI methodology produces a severely lagged measure relative to real market activity.
Vehicle prices again moved in different directions in the CPI, finally reflecting what we have been seeing in the auto market, as new vehicles saw a 0.7% increase in September. Still, used vehicles saw a 1.1% decline.
The core CPI accelerated to a 6.7% increase on a year-over-year basis, a new 40-year high. The overall CPI year over year was unchanged at 8.2% but down from a peak of 9.0% in June.
The categories with the largest year-over-year increases in September were airline fares (43%), fuel oil (40%), piped gas utility (33%), butter (32%), and eggs (31%).
September Retail Sales Were Flat and Weaker than Expected
Retail sales in September were unchanged and weaker than expected, but August’s sales were revised higher. The initial estimate for September showed spending unchanged when an increase of 0.2% was expected.
The auto sector underperformed as sales excluding motor vehicles and parts increased by 0.1%, while sales of motor vehicles and parts declined by 0.4%. As gas prices declined for most of the month, spending at gas stations declined by 1.4%.
Categories saw mixed performance in September. Miscellaneous stores (-2.5%), furniture, home furnishing, electronics, and appliance stores (-0.7%), sporting goods, hobby, book, and music stores (-0.7%), and building material stores (- 0.4%) were also down. Clothing and accessories, non-store (e-commerce) retailers, and food services and drinking places were the largest gainers, each with growth of 0.5%.
Retail sales were up 8.2% year over year on a nominal basis. Only furniture, home furnishing, and electronics (-2.9%) were down compared to last year. The biggest year-over-year gainers were gas stations (+21%), non-store (+12%), and food services and drinking places (+11%).
Adjusted for inflation using the CPI, retail sales declined 0.4% for the month and were unchanged from a year ago.
Consumer Credit Card Growth Increases
The Federal Reserve reported that Consumer Credit, excluding housing-related debt, increased by $32.24 billion in August, accelerating from July’s $26.10 billion. Credit cards drove the acceleration in growth.
Auto loan performance in September deteriorated. Delinquencies of 60-plus days increased by 2.6% and were up 30.8% from a year ago. In September, 1.72% of auto loans were severely delinquent, rising from 1.65% in August and the highest rate since January 2010. Compared to a year ago, the severe delinquency rate was 44 basis points higher.
In September, 6.66% of subprime loans were severely delinquent, increasing from 6.38% in August. The subprime severe delinquency rate was 184 basis points higher than a year ago, and the September rate was the highest in the data series back to 2006.
Even though severe delinquencies are high and defaults increased in September, delinquencies are still not leading to pre-pandemic levels of defaults. Loan defaults increased 19.6% in September from August and were up 22.1% from a year ago. The annualized auto loan default rate in September was 2.24%, which remains below the 2.87% rate in September 2019. Auto credit access loosened in September.
Our Dealertrack Auto Credit Total Loan Index increased by 1.1%. Credit loosened across all loan channels and lender types in September, with new-vehicle loans loosening the most. Credit unions loosened the most across lenders.
Initial Consumer Sentiment Reading Mixed for October
The initial October reading on Consumer Sentiment from the University of Michigan increased by 2% to 59.8 from improving views of current conditions. However, inflation expectations are increasing, and the measure of future expectations declined. Consumers’ views of buying conditions for vehicles improved and were tied with March for the second-best reading this year. June was the all-time low in the reading.
Originally posted by Cox Automotive https://www.coxautoinc.com/market-insights/auto-market-weekly-summary-october-17/.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.
Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024. Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.
This article was originally published by International Monetary Fund https://www.imf.org/en/Publications/WEO/Issues/2022/10/11/world-economic-outlook-october-2022.
Slowing sales helped inventory levels recover further to 1.32 million vehicles in September, a significant jump over where they were a year earlier but still historically low, according to Cox Automotive and the Automotive News Research & Data Center.
Cox said the figure — the highest since June 2021 — represented a 42-day supply, based on its practice of using the selling rate from the last 30 days.
It was nearly a half million vehicles higher than where inventory stood at the same point last year and about 90,000 higher than where it stood a month earlier.
But inventory remained more than 2 million vehicles down from the same month in 2019, before the pandemic.
Mass-market and luxury brand inventories collectively rose from the previous month, Cox said. Within individual segments, stocks of compact and midsize cars remained tight, along with minivans and electrified vehicles, while selections were best among full-size pickups and high-end luxury cars.
Among automakers still reporting monthly sales and inventory figures, five saw their days’ supply increase, with Ford Motor Co.’s climbing the most. Volvo’s figure stayed flat, and Toyota Motor North America declined slightly, according to the Automotive News Research & Data Center.
This article was originally published by Automotive News. https://www.autonews.com/manufacturing/us-vehicle-inventories-highest-point-june-2021
CEO Akio Toyoda last week simply stated what he would like his legacy to be: “I love cars.”
Just how the 66-year-old racer, car enthusiast and company scion will be remembered regarding his approach to all-electric vehicles compared to gas-powered performance cars, like the Supra, or hybrids, like the once-groundbreaking Prius, will play out in the years to come.
Toyota, the world’s largest automaker, plans to invest $70 billion in electrified vehicles over the next nine years. Half of that will be for all-electric battery ones. While it’s a substantial investment in EVs, it’s smaller than some competitors’ plans, and not as much as some would like given Toyota’s global footprint.
Despite criticism from some investors and environmental groups, Toyoda this past week doubled down on his strategy to continue investing in a range of electrified vehicles as opposed to competitors such as Volkswagen and General Motors, which have said they are going all-in on all-electric vehicles.
The plans could arguably cement Toyoda’s “I love cars” legacy or tarnish it, depending on how quickly drivers adopt electric vehicles.
“For me, playing to win also means doing things differently. Doing things that others may question, but that we believe will put us in the winner’s circle the longest,” he said Wednesday during Toyota’s annual dealer meeting in Las Vegas, which, by the way, was called “Playing to Win.”
Toyoda, who described Toyota as a large department store, said the company’s goal “remains the same, pleasing the widest possible range of customers with the widest possible range of powertrains.” Those powertrains will include hybrids and plug-in hybrids like the Prius, hydrogen fuel cell vehicles like the Mirai and 15 all-electric battery models by 2025.
Aside from the EV plans, Toyoda discussed several other aspects of the company’s business last week during the dealer meeting and a small roundtable with U.S. media.
Toyoda reiterated that he does not believe all-electric vehicles will be adopted as quickly as policy regulators and competitors think, due to a variety of reasons. He cited lack of infrastructure, pricing and how customers’ choices vary region to region as examples of possible roadblocks.
He believes it will be “difficult” to fulfill recent regulations that call for banning traditional vehicles with internal combustion engines by 2035, like California and New York have said they will adopt.
“Just like the fully autonomous cars that we are all supposed to be driving by now, EVs are just going to take longer to become mainstream than media would like us to believe,” Toyoda said in a recording of the remarks to dealers shown to reporters. “In the meantime, you have many options for customers.”
Toyoda also believes there will be “tremendous shortages” of lithium and battery grade nickel in the next five to 10 years, leading to production and supply chain problems.
Toyota’s goal is carbon neutrality by 2050, and not just through all-electric vehicles. Some have questioned the environmental impact of EVs when factoring in raw material mining and overall vehicle production.
Since the Prius launched in 1997, Toyota says it has sold more than 20 million electrified vehicles worldwide. The company says those sales have avoided 160 million tons of CO2 emissions, which is the equivalent to the impact of 5.5 million all-electric battery vehicles.
“Toyota can produce eight 40-mile plug-in hybrids for every one 320-mile battery electric vehicle and save up to eight times the carbon emitted into the atmosphere,” according to prepared remarks for Toyoda provided to media.
Toyota’s hesitancy to launch all-electric vehicles has been criticized by environmental groups such as the Sierra Club and Greenpeace, which ranked the Japanese automaker at the bottom of its auto-industry decarbonization rankings the past two years.
Toyota has no plans to overhaul its franchised dealership network as it invests in electrified vehicles, like some competitors have announced.
“I know you are anxious about the future. I know you are worried about how this business will change. While I can’t predict the future, I can promise you this: You, me, us, this business, this franchised model is not going anywhere. It’s staying just as it is,” he told dealers to resounding applause.
The franchised dealer model has been under pressure after Tesla and newer EV startups began selling directly to consumers than rather through traditional dealers.
GM has offered buyouts to Buick and Cadillac dealers that don’t want to invest in EVs, while Ford last month announced dealers that want to sell EVs must become certified under one of two programs — with investments of $500,000 or $1.2 million.
As part of lighthearted and comedic comments to dealers, Toyoda said he danced when the automaker outsold GM last year for the first time ever in the U.S.
Despite Toyota executives saying the accomplishment wasn’t sustainable — GM led through the first half of this year — Toyoda still felt it was cause for celebration.
“At Toyota, we like to keep our head down and not talk about our success,” Toyoda said before reenacting the dance on stage. “But when I heard you became No. 1 in the U.S. last year, I actually did a little happy dance in my office.”
Article originally posted to CNBC https://www.cnbc.com/2022/10/02/toyota-ceo-akio-toyoda-electric-vehicles-happy-dance.html.
Fall has arrived and October typically brings us ghouls, goblins, and ghosts. This year our industry is dealing with more tricks and treats than normal…
A few of the “Tricks” dealers are facing:
- Inventory continues to be a challenge for most manufacturers. Although this has somewhat steadied, dealers are still wanting more inventory for their lots.
- The potential of new FTC rules going into effect will change the way vehicles are presented and sold. Much is happening with this and we recommend you stay tuned to the National and State associations for further guidance.
- Manufacturers are announcing price increases for their EV lineups as well as dealer-mandated expenses to add superchargers, etc.
- Federal and State governments continue to push EV adoption while certain states are requesting not charging EV’s during parts of the day.
There are still a few “Treats” to be found:
- Dealers for the most part are still experiencing record, or near-record profits on the vehicles they are selling.
- The American consumer is proving resilient despite key metrics signaling reason for concern.
- Fixed Ops continue to be a bright spot in most dealerships, with many stores and dealer groups posting record results.
- The NADA Mid-Year analysis shows a healthy and vibrant dealer body that continues to feed a significant portion of our overall economy.
Additionally, ADS has a few “Treats” for our dealers to take advantage of:
- We are hosting an AFIP Certification Course October 4th and 5th in Strongsville, OH. Be sure to check out the information below and register early to secure your seat.
- This year, ADS is a proud sponsor of Live2Lead in conjunction with one of our favorite charities, Changing Lives Foundation. This is a tremendous opportunity to take leadership lessons from some of the most recognizable names in leadership, coaching, and mentoring. Be sure to check out the information below and reach out to your ADS representative to secure either heavily discounted, or free admission.
Here’s to another great month for everyone!
View the full newsletter https://mailchi.mp/advdealer.com/october-newsletter.