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More Consumers Find Themselves 'Upside Down' On Trade-Ins
William Maley posted an article in Automotive Industry
A record number of consumers are finding themselves 'underwater' when it comes time to trade-in their vehicle - the vehicle is worth less than what they owe on their loan. The Detroit Free Press cites a study done by Edmunds revealing that in the second quarter of this year, 32 percent or nearly one-third of vehicles being traded in fall into the 'underwater' category. This isn't good news for consumers since the difference is tacked on to the new vehicle they had their eye on. To put this in perspective, the previous high was 29.2% in 2006, around the time where the housing market was reaching its cresting point. “There’s been a lot of water building behind this dam for some time because of higher transaction prices, lower down payments and long-term loans," said Greg McBride, chief analyst with Bankrate.com. "It’s problematic for the consumer because there’s no foolproof way to eliminate his financial exposure. If the car gets stolen, is totaled or you get new car envy while you’re upside down then it’s a big problem." In October, the average transaction price of a new car was $34,663 according to Kelly Blue Book. The average length of a new car loan hovers around 68 months according to Experian Automotive. This rises to 72 months if it's a subprime buyer - someone whose credit score is below the low 600s. Not helping matters is the amount of vehicles being returned from leases, flooding the used car marketplace. This increase is causing dealers not willing to spend a lot of money at auction. Source: Detroit Free Press -
A record number of consumers are finding themselves 'underwater' when it comes time to trade-in their vehicle - the vehicle is worth less than what they owe on their loan. The Detroit Free Press cites a study done by Edmunds revealing that in the second quarter of this year, 32 percent or nearly one-third of vehicles being traded in fall into the 'underwater' category. This isn't good news for consumers since the difference is tacked on to the new vehicle they had their eye on. To put this in perspective, the previous high was 29.2% in 2006, around the time where the housing market was reaching its cresting point. “There’s been a lot of water building behind this dam for some time because of higher transaction prices, lower down payments and long-term loans," said Greg McBride, chief analyst with Bankrate.com. "It’s problematic for the consumer because there’s no foolproof way to eliminate his financial exposure. If the car gets stolen, is totaled or you get new car envy while you’re upside down then it’s a big problem." In October, the average transaction price of a new car was $34,663 according to Kelly Blue Book. The average length of a new car loan hovers around 68 months according to Experian Automotive. This rises to 72 months if it's a subprime buyer - someone whose credit score is below the low 600s. Not helping matters is the amount of vehicles being returned from leases, flooding the used car marketplace. This increase is causing dealers not willing to spend a lot of money at auction. Source: Detroit Free Press View full article
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What is the big problem with new cars? According to a new survey, it happens to be the infotainment systems. A study done by automotive consultants SBD and polling firm Nielsen asked some 14,000 owners about features in their cars and asked which ones were the best and the worst. The ten that scored the lowest in the survey were all related in some form to the infotainment system. These included smart phone integration, built-in apps, customizable instrument panels, and voice recognition. “It’s sort of an arms race -- who can have the most technology in the vehicle -- and consumers are confused,” said Nielsen Vice President Mike Chadsey at a connected-car symposium yesterday. The study also showed that 43 percent of participants said automakers are adding too much infotainment tech. So why are automakers adding all of this tech? Andrew Hart, director of SBD explained that automakers add all sorts of tech to draw in customers and to help boost revenue. But this might backfire as owners might go to another brand because of how bad the infotainment system was. If you to improve the chances of owner sticking with your brand, just get the infotainment right, getting the right set of features that people actually want to use and making them easy to use,” said Hart. Source: Automotive News (Subscription Required) View full article
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What is the big problem with new cars? According to a new survey, it happens to be the infotainment systems. A study done by automotive consultants SBD and polling firm Nielsen asked some 14,000 owners about features in their cars and asked which ones were the best and the worst. The ten that scored the lowest in the survey were all related in some form to the infotainment system. These included smart phone integration, built-in apps, customizable instrument panels, and voice recognition. “It’s sort of an arms race -- who can have the most technology in the vehicle -- and consumers are confused,” said Nielsen Vice President Mike Chadsey at a connected-car symposium yesterday. The study also showed that 43 percent of participants said automakers are adding too much infotainment tech. So why are automakers adding all of this tech? Andrew Hart, director of SBD explained that automakers add all sorts of tech to draw in customers and to help boost revenue. But this might backfire as owners might go to another brand because of how bad the infotainment system was. If you to improve the chances of owner sticking with your brand, just get the infotainment right, getting the right set of features that people actually want to use and making them easy to use,” said Hart. Source: Automotive News (Subscription Required) -
While Americans are keeping their cars longer (Experian Automotive says the average ownership length is now 7.75 years), there are some models that owners can't wait to get rid off within a year of buying. iSeeCars.com recently compared new car sales against used-car purchases in 2014 to figure out which vehicles were traded-in the fastest. Their analysis showed that on average, around 2.7 percent of all new vehicles are traded in after only a year’s ownership. More surprising was the vehicles that had the highest amount of trade-ins. The expectation would be that the vehicles with the highest amount of trade-ins would be cheap. Not so fast. iSeeCars.com in their analysis the vehicles with highest trade-ins range from $18,000 to $45,000. “iSeeCars.com analysts think the fact that consumers are giving more of these cars up than the average is directly linked to quality or perceived quality of the cars,” says Phong Ly, CEO of iSeeCars.com. “Because purchasing a new car is expensive and something most people tend to spend a lot of time on, it stands to reason they would make a change shortly afterward if they felt the quality was lacking.” Here's the list of the vehicles with the highest trade-in amounts, Buick Regal - 10.7 Percent Traded-In Chevrolet Sonic - 8.9 Percent Traded-In BMW X1 - 7.8 Percent Traded-In Dodge Charger - 7.7 Percent Traded-In Mercedes-Benz C-Class - 7.4 Percent Traded-In Chevrolet Cruze - 7.2 Percent Traded-In Nissan Frontier - 6.9 Percent Traded-In Source: Forbes -
While Americans are keeping their cars longer (Experian Automotive says the average ownership length is now 7.75 years), there are some models that owners can't wait to get rid off within a year of buying. iSeeCars.com recently compared new car sales against used-car purchases in 2014 to figure out which vehicles were traded-in the fastest. Their analysis showed that on average, around 2.7 percent of all new vehicles are traded in after only a year’s ownership. More surprising was the vehicles that had the highest amount of trade-ins. The expectation would be that the vehicles with the highest amount of trade-ins would be cheap. Not so fast. iSeeCars.com in their analysis the vehicles with highest trade-ins range from $18,000 to $45,000. “iSeeCars.com analysts think the fact that consumers are giving more of these cars up than the average is directly linked to quality or perceived quality of the cars,” says Phong Ly, CEO of iSeeCars.com. “Because purchasing a new car is expensive and something most people tend to spend a lot of time on, it stands to reason they would make a change shortly afterward if they felt the quality was lacking.” Here's the list of the vehicles with the highest trade-in amounts, Buick Regal - 10.7 Percent Traded-In Chevrolet Sonic - 8.9 Percent Traded-In BMW X1 - 7.8 Percent Traded-In Dodge Charger - 7.7 Percent Traded-In Mercedes-Benz C-Class - 7.4 Percent Traded-In Chevrolet Cruze - 7.2 Percent Traded-In Nissan Frontier - 6.9 Percent Traded-In Source: Forbes View full article
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In light of the GM Ignition Switch and Takata airbag recalls, you would think owners would be aware whether or not their vehicle has a notice and take it in to be repaired. Unfortunately, you would be wrong. Bloomberg reports that only two-thirds of vehicles get repaired. Even more worrying is a third of vehicles under a recall notice aren't repaired within 18 months. “Recalls are only successful, and they only save lives, if they end up getting the cars fixed,” U.S. Transportation Secretary Anthony Foxx said. So how do you get owners to repair vehicles? Well that's what NHTSA and automakers will be talking about today at meeting in Washington D.C. with the focus on improving the getting the word to get vehicles fixed. General Motors has a fair bit of experience on notifying owners in the wake of ignition switch recall. The company tried redesigned mailings, did outreach on a number of online platforms such as YouTube and Twitter; and even offered loaner cars. Yet, there are still a fair number of vehicles needing to be fixed. “Awareness doesn’t mean action,” said Julie Heisel, GM’s director of customer relationship management. Source: Bloomberg -
In light of the GM Ignition Switch and Takata airbag recalls, you would think owners would be aware whether or not their vehicle has a notice and take it in to be repaired. Unfortunately, you would be wrong. Bloomberg reports that only two-thirds of vehicles get repaired. Even more worrying is a third of vehicles under a recall notice aren't repaired within 18 months. “Recalls are only successful, and they only save lives, if they end up getting the cars fixed,” U.S. Transportation Secretary Anthony Foxx said. So how do you get owners to repair vehicles? Well that's what NHTSA and automakers will be talking about today at meeting in Washington D.C. with the focus on improving the getting the word to get vehicles fixed. General Motors has a fair bit of experience on notifying owners in the wake of ignition switch recall. The company tried redesigned mailings, did outreach on a number of online platforms such as YouTube and Twitter; and even offered loaner cars. Yet, there are still a fair number of vehicles needing to be fixed. “Awareness doesn’t mean action,” said Julie Heisel, GM’s director of customer relationship management. Source: Bloomberg View full article
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A Growing Number Of New Car Buyers Skip The Test Drive
William Maley posted an article in Automotive Industry
William Maley Staff Writer - CheersandGears.com August 14, 2012 A new study conducted by Maritz Research finds that 11.4% of new car buyers are skipping the test drive. The implication for skipping the test drive are due to more consumers doing their research on the internet (8 out of 10 consumers the study found) and the universal dislike of the car sales practice. "I just find it quite fascinating and a little baffling. As cliché as perhaps it sounds, there's that new-car smell that needs to be experienced firsthand and cannot be experienced over the Internet," said Chris Travell, vice president of strategic consulting for Maritz Research. Dealers aren't happy with this news. The test drive is one tactic used to get people excited enough to part with their hard earned cash. "My manager said, 'The feel of the wheel will seal the deal,' " said Philip Reed, a former dealership representative who now serves as senior consumer advice editor for Edmunds.com. The test drive can also tell a potential buyer whether they're making the right decision or not. "Everything that you read isn't necessarily true. There's nothing online that tells you how that car feels. I enforce it with the salespeople that they have to at least offer a test-drive with every customer," said Ken Thomas, general manager of Telegraph Chrysler Dodge Jeep Ram in Taylor, MI. Source: Detroit Free Press William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. -
William Maley Staff Writer - CheersandGears.com August 14, 2012 A new study conducted by Maritz Research finds that 11.4% of new car buyers are skipping the test drive. The implication for skipping the test drive are due to more consumers doing their research on the internet (8 out of 10 consumers the study found) and the universal dislike of the car sales practice. "I just find it quite fascinating and a little baffling. As cliché as perhaps it sounds, there's that new-car smell that needs to be experienced firsthand and cannot be experienced over the Internet," said Chris Travell, vice president of strategic consulting for Maritz Research. Dealers aren't happy with this news. The test drive is one tactic used to get people excited enough to part with their hard earned cash. "My manager said, 'The feel of the wheel will seal the deal,' " said Philip Reed, a former dealership representative who now serves as senior consumer advice editor for Edmunds.com. The test drive can also tell a potential buyer whether they're making the right decision or not. "Everything that you read isn't necessarily true. There's nothing online that tells you how that car feels. I enforce it with the salespeople that they have to at least offer a test-drive with every customer," said Ken Thomas, general manager of Telegraph Chrysler Dodge Jeep Ram in Taylor, MI. Source: Detroit Free Press William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster. View full article
