Sales down for 6th month... WHY?

[TomLaPointe]

Sales are down for 6th straight month - even JEEP. Japanese brands up a tic, US & Korea drop...
Why do you think and what can be done?

Detroit Free Press article snip...

Fiat Chrysler Automobiles announced its sales fell 7% in June while sales also fell 5.1% for Ford and 4.7% for General Motors amid a broader decline for an industry that is now entering its sixth consecutive month.

Sales of Ford SUVS such as the Explorer, Edge and Flex were strong in June but not enough to overcome a 23% drop in car sales. The story was similar for GM, where a number of new or recently launched SUVs, such as the Chevrolet Equinox and Buick Envision, could not counteract falling sales of cars such as the Chevrolet Cruze, Malibu and Impala.

At Fiat Chrysler, sales rose 6% for Ram and soared for the Alfa Romeo brand but fell 11% for Jeep -- a surprising decline for a brand that sells nothing but SUVs in a market where SUVs are the best-selling vehicles... READ MORE

 

[Tallcool1]

I don't want to open up an all out political brawl here, but with that in mind I will give you my opinion.

In my opinion, I believe there is an extreme lack of consumer confidence. I am not saying that our new President lacks or possesses any of the qualities necessary to lead our country to a place in which the general consumer feels a sense of security. I am saying that the general population is not feeling it right now.

People don't know what is going on with Health Care, many of our immigrants are concerned either for themselves or a loved one, the whole situation with N Korea is a circus, the uncertainty that surrounds Russia and their involvement with our last election, and the list goes on and on. Again, I am not saying one way or another who is right or wrong, I am saying that these issues are causing unrest.

To me, there is no rhyme or reason to it. Brands that I would think would be down are up, models that look good are doing bad. It makes no sense.

How do we fix it? I am afraid that the only thing that can fix it is time.

 

[Rick Buffkin]

Ummm....

 

[AdamMurray]

I don't want to open up an all out political brawl here, but with that in mind I will give you my opinion.

In my opinion, I believe there is an extreme lack of consumer confidence. I am not saying that our new President lacks or possesses any of the qualities necessary to lead our country to a place in which the general consumer feels a sense of security. I am saying that the general population is not feeling it right now.

People don't know what is going on with Health Care, many of our immigrants are concerned either for themselves or a loved one, the whole situation with N Korea is a circus, the uncertainty that surrounds Russia and their involvement with our last election, and the list goes on and on. Again, I am not saying one way or another who is right or wrong, I am saying that these issues are causing unrest.

To me, there is no rhyme or reason to it. Brands that I would think would be down are up, models that look good are doing bad. It makes no sense.

How do we fix it? I am afraid that the only thing that can fix it is time.

Sorry, I just can't agree with this assumption. While those are all occurring events and seemingly spotlighted in our 24-hour news cycle, they have no reflection in consumer confidence. As a matter of fact, this was just released last week:

“Consumer confidence increased moderately in June following a small decline in May,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved to a nearly 16-year high (July 2001, 151.3). Expectations for the short-term have eased somewhat, but are still upbeat. Overall, consumers anticipate the economy will continue expanding in the months ahead, but they do not foresee the pace of growth accelerating.”

While I am no fan of using the Dow as the end-all, be-all indicator, it is hard to ignore its stamina as of late. That is a direct reflection of investors confidence.

I'm just a dumbass sales manager but it is my opinion that we are merely in a downward trending market from an overbought populace. We set an all-time record last year with almost 18 million vehicles in this country. 2015 was just a few thousand vehicles behind that number. How many more can we sell??? Every boom has to have a bust. These last few years were accelerated by a massive injection of incentives...that's a drug that cannot sustain prolonged use. *Incentives are used to treat sales dysfunction in the United States. Contact your doctor or seek emergency medical attention if your incentives last longer than 4 years. A prolonged incentive can damage your market.

 

[TomLaPointe]

Ummm....

funny as poop!!

 

[TomLaPointe]

adam - i tend to agree that we've saturated the market and the economy is due for a downswing. oh, and i doubt that you're a dumbass lol. according to forbes we're way overdue - it's the second longest economic period without a recession in US history

 

[craigh]

The cycle tends to cycle.
Theoretically, this is what we're fighting right now.

 

[AdamMurray]

adam - i tend to agree that we've saturated the market and the economy is due for a downswing. oh, and i doubt that you're a dumbass lol. according to forbes we're way overdue - it's the second longest economic period without a recession in US history

lol...thanks for the vote of confidence!

Please don't take my comments as pure doom and gloom, though. I still wake up every morning, go to work and think about new ways we can sell cars and make money. In the 20 years I've been in/around this business, I've seen the bottom of a few sales cycles and it's not pretty....however, the good dealerships tighten up their processes, get creative and survive. Sometimes they even flourish while others get clubbed like baby seals.

I think my point was really meant to be that we can't make excuses and blaming outside factors like politics, world affairs or whatever is trending on CNN won't get us anywhere and has little to do with our success or failure.

 

[Chris Cachor]

I think it's largely because we're reaching the end of the business cycle. For dealers, I think it's also the end of the automotive "super" cycle. Household debt is back up (https://www.nytimes.com/2017/05/17/business/dealbook/household-debt-united-states.html?mcubz=2)

Things are tapering off but I don't think this will be a repeat of '08. The transition to electric is going to happen a lot faster than most people think. That's going to help out sales and service departments IMO. All those new vehicles sold will also help service depts. If I was a dealer I'd be investing to capture more of the used car and service business.

 

[AdamMurray]

I think it's largely because we're reaching the end of the business cycle. For dealers, I think it's also the end of the automotive "super" cycle. Household debt is back up (https://www.nytimes.com/2017/05/17/business/dealbook/household-debt-united-states.html?mcubz=2)

Things are tapering off but I don't think this will be a repeat of '08. The transition to electric is going to happen a lot faster than most people think. That's going to help out sales and service departments IMO. All those new vehicles sold will also help service depts. If I was a dealer I'd be investing to capture more of the used car and service business.

I couldn't agree with you more on all of your points. Putting so many people in these 72+ month loans is bound to catch up with us eventually...combine that with pretty strong fleet sales that absolutely hammer resale values and you have a pile of customers that won't be able to trade for quite awhile.

You're spot on regarding service as well. On this site, and many others, I have repeatedly expressed my astonishment by the lack of parts/service marketing in today's dealerships. While variable operations scratch and claw for morsels of gross, fixed ops across the country continue to keep the lights on and boost dealership net to gross. Yet, 90% of our time and resources is spent on marketing the sales department. When service starts to see a dip we pretty much jack up the number of coupons going out and call it a day. Meanwhile, Auto Zone and Jiffy Lube are putting new stores up on every corner in America...