Web Closes 1 in 6 New Vehicle Sales for International Nameplate Auto Dealerships

AIADA-NCM iDealer Dashboard Finds Internet Increasingly Important Sales Tool

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Alexandria, VA (June 21) -- It’s no secret that the internet is a major source of information about new and used vehicles. But the internet is increasingly becoming a sales conduit for international nameplate dealerships. In just the first four months of 2005, the internet was responsible for 1 in 6 new international nameplate vehicles sold, according to the AIADA-NCM iDealer Dashboard.

Some dealers think that’s just the beginning of the web’s potential. "Right now it’s just going to continue to see a higher utilization," said Peter Lanzavecchia, General Manager of Burns Hyundai in Marlton, New Jersey. The iDealer Dashboard found that the average international auto dealership sold 66.6 new vehicles via the internet this year.

There’s room for internet sales to grow because car buyers have historically used the internet as an information gathering tool. Nowadays, the internet is progressing from a shopping tool to a sales discussion tool.

"People are emailing the internet sales team about their potential car and saying, ’add a sunroof,’ and later, ’take out the nav [navigation] system," explained Lanzavecchia. "People are doing legwork on their deal. For many of today’s active consumers, this advanced level of discussion saves time."

Ultimately, all car shoppers come to the store to buy their vehicle. But by then, many have already done everything but sign the paperwork.

Internet sales are generally defined as any sale that originated through the internet and the dealership’s internet sales team handled the sale.

The bulk of new vehicle internet leads come from third party lead generators such as cars.com or Kelley Blue Book’s online site. In the first four months of 2005, the average international auto dealership received 466 new vehicle leads from lead generators, compared to just 136 from manufacturer websites and 123 directly from the dealership’s website, according to the iDealer Dashboard.

"Our experience indicates that regular off-the-street people are informed by the internet," said Sabi Castro, Internet Sales Manager at Burns Hyundai. Most customers start at lead generator sites and then trickle down to the dealership’s website. "People are doing some homework and they have the impression that internet prices are cheaper."

One in 10 international nameplate used vehicles was sold via the web this year. Lead generators brought in over seven times the number of leads as the manufacturer’s website, and nearly four times the number of leads as the dealership’s website.

The average international auto dealership has 2 internet sales employees, or about 3 percent of a dealership’s workforce.

The average international auto dealership sold 99.6 vehicles in April, up slightly from March’s 98.0 vehicles per franchise according to the AIADA-NCM iDealer Dashboard. The biggest winner among new vehicles sales was the subcompact car segment, which rose 14.8 percent to 13.3 units in April. Models in the subcompact car category are: Honda Civic, Hyundai Accent, Kia Rio and Spectra, Mitsubishi Lancer and Mirage, and the Toyota Echo. Sales of these vehicles were up a similar 15.1 percent in the market in April, according to Autodata.

Sales of compact and specialty compact cars at the average international nameplate dealership were also up for the month, up 6.7 percent to 11 units. In the overall market, sales of iDealer Dashboard-participating linemakes’ compact and specialty compact vehicles grew 4.5 percent. Vehicles in this segment include the market’s popular hybrid vehicles -- the Honda Insight, the Honda Civic Hybrid, and the Toyota Prius -- as well as the Kia Optima, Mitsubishi Eclipse, and the Mazda3, among others.

Conversely, sales of more gas-intensive international nameplate vehicles were almost universally down for the month. The average international auto dealership saw sales of new light trucks (including SUVs) fall 4.4 percent in April to 32.3 units; sales of new SUVs fell 6.2 percent to 20.1 units. In the overall market, sales of iDealer Dashboard-participating linemakes’ light trucks fell a comparable 4.2 percent in April, while SUV sales were up a modest 1.1 percent.

As a percent of total new vehicle sales, trucks fell to 32.5 percent from 34.5 percent, and SUVs were down to 20.2 percent from 21.5 percent in March, according to the iDealer Dashboard.

Conventional pickups and SUVs took the hardest hit during the month. Sales were down 13 and 10.4 percent, respectively, at the average international auto dealership. According to Autodata, sales of Dashboard-participating vehicles in these segments fell 12.7 percent and 5.7 percent, respectively, in the marketplace during April.

"It looks like the price at the pump finally took its toll on larger car and truck sales," said Kevin Cunningham, Director of Business Development at NCM Associates. "I think if people do the math, they’d realize that over the course of the year the steeper gas prices don’t make a huge financial dent. But paying $50 or $60 each time you fill up is making a significant psychological impression."

Also of note, service and parts sales (line 35) at an average international nameplate dealership were down 5.4 percent in April to $488,126 even as dealerships are putting increasing focus on boosting sales in this area.

"However, at 11.2 percent of total sales, service and parts department sales are still in a healthy place," said Cunningham. Service and parts sales remain higher than their January and February levels, although department sales are showing a continual slide as a percent of total sales.

The AIADA-NCM iDealer Dashboard includes the following linemakes: Acura, Audi, Honda, Hyundai, Kia, Infiniti, Lexus, Mazda, Mercedes-Benz, Mitsubishi, Nissan, Toyota (including Scion franchises), and Volkswagen.

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