DEALERS PREPARED FOR DECLINING SALES Although US auto sales only decreased 2% during the first six months of 2017, compared to the same 2016 period, many industry analysts expect the second half of 2017 to start with an even larger decline. J.D. Power and LMC Automotive is forecasting a 5% decrease while Kelley Blue Book (KBB) and Edmunds are predicting a 6% decrease. KBB estimates that by year s end, 2017 will be the first year since 2014 with an annual total less than 17-million units. According to Edmunds, the Big Three will likely be leading the declines, with General Motors, -11%; Fiat Chrysler Automobiles (FCA), -7%; and Ford, -5%. In the positive category, Honda is forecast to increase sales during July by 4% and Subaru is likely to experience its 68th consecutive month of year-over-year US sales increase. The table on page 4 indicates these forecasts were generous, as total July sales declined 6.9%; GM decreased 15.4%; FCA, 10.5%; and Ford, 7.4. Even the predicted 4% increase for Honda wasn t even close, at -1.2%. Subaru delivered, however, with a 6.9% increase one of the few black numbers in the table. According to a July 2017 report on auto dealers advertising spending from RBC Capital Markets, however, many dealers had anticipated that 2017 sales would not equal 2015 s and 2016 s. As the page-2 story explains, this is not having much of a negative effect on auto dealers local ad spending outlook. Congress Slowly Accelerating on Autonomous Vehicles Thursday, July 27th was a green-letter day for Ford, Google, Uber and other companies with autonomous-vehicle initiatives, as the Energy and Commerce Committee in the US House of Representatives voted to present the Safely Ensuring Lives Further Deployment and Research in Vehicle Evolution Act, or SELF-DRIVE Act, to the entire House. Maybe, more importantly, the act was a bi-partisan effort of both Republican and Democratic representatives, a trend sorely lacking in our nation s capital. The act permits these companies to test as many as 100,000 self-driving vehicles in the US; however, they would be required to show that the new autonomous technologies make cars just as safe as current vehicles. If these companies can satisfy that requirement, then the act directs the Department of Transportation to relax some of its federal safety regulations. 1
MARKETING FORWARD Forecast for Stable Local Auto Dealers Ad Spending According to the July 2017 RBC Capital Markets report cited on page 1, the local advertising agencies with auto dealer clients that were contacted for the report expect ad spending to remain stable during 2017, and the coming years, and spot TV, specifically, although there may be some modest near-term cuts. These agencies support the concept that TV and digital are the best media mix for local auto dealers, although the combination varies depending on market size, average age and a dealer s size and advertising strategy. The digital share of auto dealers media mix has increased more than TV s share. The consensus among most of the agencies, however, is that TV is still the prime ad medium for building awareness and it is the stimulus that drives digital. Plus, digital s gain has come at the expense of other media, not TV. AUTO DEALERS AD MEDIA MIX, 2013 2016 Medium 2013 2014 2015 2016 TV 23% 23% 24% 24% Internet 26% 26% 28% 34% Radio 16% 16% Direct mail 11% 11% Newspapers 14% 8% Other 9% 9% 8% RBC Capital Markets (NADA), July 2017 It was more difficult for advertising agencies to provide a longterm forecast of ad spending, especially given RBC s estimates for future US auto sales are 17.1 million for 2017; 16.7 million, 2018; 16.2 million, 2019; and 15.7 million, 2020. Many agreed that digital is likely to continue to gain a larger share of local media ad dollars, but, again, from other media. The changing nature of TV viewing habits cord cutters, cordnevers, OTT, streaming media services, etc. is likely to affect TV s share. Conversely, auto dealers and their ad agencies that still value TV and benefit from a strong ROI will find more spot inventory available as more dollars from some dealers migrate to digital. A winning strategy for local TV stations and their sales teams is likely to be the development of comprehensive digital content and TV/digital advertising combinations/packages. Many agencies also said they TV sales reps long-term relationships with their auto dealer clients will be critical to maintaining TV s share of ad dollars. 2
ROAD SIGNS The Global Push for Electric Cars Although only approximately 3% of all cars sold across the globe are electric and there aren t many electric charging stations, France, Great Britain, China and India are all aggressively pushing for the end of the gasoline-powered vehicle era. Great Britain wants them off the country s roads by 2040 and India will only sell electric vehicles by 2030. Within those timeframes, many industry experts and analysts expect battery technology to become cheaper than using gasoline, and provide much longer driving ranges than current electric vehicles. The simpler mechanical systems in electric vehicles are likely to make them less expense to maintain an economic reality that will convince even the most reluctant owner of a vehicle with an internalcombustion engine that the electric era is here. The T-Pod Autonomous Truck Photo: EINRIDE Even Scandinavian Countries Are Revolutionizing Transportation Many transportation industry analysts have stated that the first autonomous vehicles on our roadways will not be cars, but long-haul trucks, 18-wheelers. There are far fewer obstacles and situations for autonomous technology to manage on the freeways outside cities. Einride, a Swedish company, has unveiled the T-pod, a fully electric, autonomous truck that is clearly an amazing vision of the future. At 23 feet in length and with a 20-ton capacity, it isn t as large as today s 18-wheelers, but a T-pod can drive itself or be remotely controlled and it has no windshield! Finland may not be your first thought as a center of transportation innovation, but a project called Sohjoa at Helsinki Metropolitan University of Applied Sciences is about to start a trial in downtown Helsinki of an autonomous robo-bus. There are seats for 12 passengers and the bus travels at just seven miles per hour, but within the few short blocks of a central city, they are likely to be safer, more fuel efficient and a pleasant ride, compared to conventional buses and taxis. The first 200 T-pods will be in use on the route between the Swedish cities of Gothenburg and Helsingborg by 2020, and clients have already reserved 60% of them. Photo: Sohjoa 3
MONTHLY AUTOMOBILE SALES CHART RANK AUTOMAKER JULY 2017 % CHANGE FROM JULY 2016 2017 YEAR TO DATE % CHANGE FROM 2016 YEAR TO DATE #1 Toyota 193,155 +3.6% 1,214,560-1.5% #2 Ford 190,443-7.6% 1,428,503-4.6% #3 Chevrolet 151,502-15.3% 1,120,384-5.5% #4 Honda 136,803-1.7% 854,818 +0.3% #5 Nissan 117,455-4.1% 858,000 +0.3% #6 Jeep 69,351-12.3% 475,642-12.6% #7 Kia 56,403-5.9% 352,139-9.3% #8 Subaru 55,703 +6.9% 360,513 +8.7% #9 Hyundai 52,419-30.1% 388,860-13.4% #10 GMC 47,412-7.3% 310,587 +1.6% #11 Ram 44,090 +0.1% 323,685 +6.5% #12 Dodge 31,264-11.9% 292,244-5.0% #13 Lexus 28,902 +3.6% 162,662-9.4% #14 Mercedes-Benz* 28,667-9.8% 206,427-1.9% #15 Volkswagen 27,091-5.8% 188,329 +5.9% #16 Mazda 27,089-3.0% 168,713-2.6% #17 BMW 21,965-14.8% 171,051-4.6% #18 Audi 18,824 +2.5% 121,795 +5.6% #19 Buick 15,966-30.5% 126,282-0.7% #20 Acura 14,177 +3.7% 88,048-5.0% #21 Chrysler 13,303-30.1% 115,398-22.5% #22 Cadillac 11,227-21.7% 83,300-4.9% #23 Infiniti 10,840 +9.0% 89,983 +20.1% #24 Lincoln 8,875-2.5% 65,212 +4.5% #25 Mitsubishi 8,025 +1.7% 62,601 +4.6% #26 Volvo 6,967-18.8% 41,072-9.2% #27 Land Rover 5,915-2.6% 41,754-2.3% #28 Mini 4,398-7.9% 26,603-11.1% #29 Porsche 3,901 +0.6% 31,469 +2.9% #30 Jaguar 3,166-6.8% 23,831 +65.6% 4
RANK AUTOMAKER JULY 2017 % CHANGE FROM JULY 2016 2017 YEAR TO DATE % CHANGE FROM 2016 YEAR TO DATE #31 Fiat 2,242-18.0% 16,926-13.0% #32 Genesis 1,644 --- 11,563 --- #33 Alfa Romeo 1,255 +2,749% 4,944 +1,354% #34 Maserati 1,063 +31.1% 7,841 +29.4% #35 Smart 182-63.1% 2,165-29.8% General Motors 226,107-15.4% 1,640,553-3.8% Toyota Motor Corporation 222,057 +3.6% 1,377,222-2.5% Ford Motor Company 199,318-7.4% 1,493,715-4.3% FCA/Chrysler Group 161,477-10.5% 1,228,839-7.2% American Honda Motor Company Nissan Motor Company/ Infiniti /Mitsubishi Hyundai-Kia Automotive Group 150,980-1.2% 942,866-0.2% 136,320-2.9% 1,010,584 +2.0% 110,466-18.2% 752,562-10.1% Volkswagen Group 50,189-2.6% 343,114 +5.6% Daimler AG 28,849-10.7% 208,592-2.3% BMW Group 26,363-13.7% 197,654-5.5% Jaguar/Land Rover 9,081-4.1% 65,585 +14.8% TOTAL 1,416,743-6.9% 9,873,579-2.9% Source: Automakers and The Truth About Cars * Includes Mercedes-Benz vans: decreased 15.7% to 2,758 for July; decreased 2.5% to 18,558 during YTD. Includes Audi, Bentley, Porsche and Volkswagen brands Industry total takes into account Automotive News figures/estimates for brands, such as Tesla (4,400 July units) and other low-volume, high-priced manufacturers. Sources: Recode Website: https://www.recode.net/2017/7/27/16050062/house-lawmakers-vote-energy-commerce-self-driving-cars-bill-ford-uber-apple RBC Capital Markets Website: https://research.rbccm.com/sellside/emaildocviewer?encrypt=ae506d66-90c0-43b6-9dca-0ada7641cb96&mime=pdf&co=rbcnew&id=jm@jackmyers.com&source=mail CNN Money Website: http://money.cnn.com/2017/07/26/autos/electrified-cars-challenges/index.html Mashable Website: http://mashable.com/2017/07/06/einride-self-driving-truck-t-pod-reveal/#ydhhe6uumgqs Fast Company Website: https://www.fastcompany.com/40444021/automated-buses-are-here-now-we-have-to-decide-how-they-will-reshape-our-cities?partner=rss&utm_ campaign=rss+fastcompany&utm_content=rss&utm_medium=feed&utm_source=rss The Truth About Cars Website: http://www.thetruthaboutcars.com/2017/07/forecasters-believe-july-2017-u-s-auto-industrys-seventh-consecutive-month-decline/ http://www.thetruthaboutcars.com/2017/08/usa-auto-sales-brand-results-july-2017-ytd/ 2017 Media Group Online, Inc. All rights reserved. 5