The End of Days for Driving Bob Lutz is no starry-eyed Millennial entrepreneur with aspirations to disrupt the auto industry. He is a highly respected veteran of the industry and a former vice chairman at General Motors. Mr. Lutz is unequivocal in his recent statement that driving, as we have known it for more than 100 years, will end within 20 years. He is convinced standardize modules will replace all ground transportation currently embodied in individually own vehicles. Those who want to enjoy the thrill of operating a high-performance vehicle will be regulated to specially designated tracks or an area similar to an equestrian park. Mr. Lutz says most dealerships will disappear, except for a few small businesses catering to the wealthy who can afford a high-performance vehicle and its transportation to and/or storage at a car park. The handwriting was clearly on the wall when AutoNation, the country s largest retail auto dealer chain, announced during late October an agreement with Waymo, Google s self-driving company, to provide maintenance for its selfdriving test fleet. Obviously, this is the first step towards a future when AutoNation will maintain the potentially millions of Waymo vehicles on American roads. Now is the time for local media advertising departments to prepare for this future without car dealerships. Those who start planning for this major change today will be in the best position to replace the traditional car dealership advertiser with the new advertisers of the self-driving vehicle age. THE OLD WAYS DIE HARD In stark contrast to Mr. Lutz s unambiguous view of the future of driving is the difficulty many car dealerships have of transitioning from paper to electronic contracts. If they can t take this obvious step into the future, which has already occurred in many industries, then they are certainly ill-prepared for what Mr. Lutz expects to happen. The forward-leaning dealers who have adopted this new method say they receive money faster, complete contracts with fewer errors and are able to reduce the time they spend with each customer, meaning they can close more deals. facilitator of e-contracting with lenders and aftermarket providers. It estimates that a dealership with 100 sales per month would save $27,600 just in the first year of e-contracting. The operational money saving is significant, according to Route One, a 1
MARKETING FORWARD Driving Deals with Digital Car dealers utilization of digital media as a major channel for their advertising efforts is welldocumented (at least among those who understand it is essential to survive and thrive into the future). In fact, according to data from e-marketer, automotive will account for the second-largest share of digital spending during 2017, at 12.8%, with retail first, at 21.9%. The automotive industry also will record the second-largest rate of increase of digital ad spending, at 17.6%, again trailing retail at 18.2%. Automotive will also be second to retail in its share of video advertising spending, a format particularly powerful for attracting Millennials. SHARE OF VIDEO AD SPENDING, BY INDUSTRY, 2017 Industry Share Retail 19.5% Automotive 14.5% CPG and consumer products 10.6% Telecom 10.5% Financial services 9.9% Travel 7.7% Entertainment 7.1% Media 6.8% Computing products* 6.6% Other 4.2% Healthcare and pharmaceutical 2.8% emarketer, October 2017 *includes consumer electronics Measuring the TV-Social Media Mix 4C Insights, a global leader in data science and media technology, publishes a monthly ranking of TV social lift, which is a measure of how much more likely a consumer is to engage with the brand on social media after seeing its TV ad. It s latest ranking, for October, shows two automakers, Nissan, #6, and Toyota,#8, appeared in the top 10, which may indicate the relatively soft pulling power of Nissan and Toyota s TV ads for social media engagement. Maybe, a more important point for you and your local car dealerships is to study and understand why Home Depot was able to generate the highest TV social lift impact, and then emulate its strategies. TOP-10 BRANDS, BY TV SOCIAL LIFT, OCTOBER 2017 Brand Impact TV Spots Social Engagements Home Depot 135.6% 138 82,758 Amazon.com 131.2% 120 863,573 Target 115.4% 667 671,081 T-Mobile 106.3% 419 272,731 Olive Garden 82.4% 389 74,693 Nissan 81.8% 703 242,039 McDonald s 80.8% 451 566,643 Toyota 76.7% 836 191,315 DirecTV 72.0% 174 56,153 Macy s 71.7% 606 234,066 4C Insights, November 2017 The emarketer report also revealed that the rate of increase for video ad spending in the automotive industry during 2017 will be 30.7% and TV will suffer more than any other traditional media. Despite this shift in spending, you still offer car dealers the best advertising combination: TV and digital, building brand awareness with TV and targeting specific audiences with highly efficient digital ads on your station s Website. 2
ROAD SIGNS Driverless Cars Will Change More Than Driving Many historians have stated, and rightly so, that the automobile may have been the primary factor in creating suburban America. The building of the nation s interstate freeways was also a major contributor. Now, at least one analyst, Ralph McLaughlin, the chief economist at Trulia, thinks driverless technology will cause further expansion of the suburban sprawl. This point-of-view clearly runs counter to many other analysts who have posited a future population concentration in urban centers because driverless technology will make vehicle ownership passé, eliminate congestion and make it easier to cross town. As Mr. McLaughlin sees it, however, more-affluent white-collar executives and managers will actually welcome a longer commute from the exurbs. They won t be spending their time operating a motor vehicle, but instead can use that time to be productive, benefiting from their higher opportunity cost of time. For this reason, Mr. McLaughlin, thinks the affluent will be the first adopters of driverless vehicles. Middle- and lower-income workers have a lower opportunity cost of time, so not only will they be less likely to afford the higher-priced homes in the exurbs, but also must live closer to city centers because they can t afford to spend too much time commuting. They are also less likely to own a driverless vehicle. Mr. McLaughlin is concerned this could create more of a gap between high and middle- and low-income households. One of his solutions is to tax those who personally own a driverless vehicle. This would generate the funding for the necessary urban infrastructure to accommodate the large numbers of low- and middle-income households commuting in public or private companies driverless vehicles. Owning a Car Like a Smartphone During the late-november 2017 LA Auto Show, Volvo announced a somewhat radical new car-ownership idea that it calls Care by Volvo. For $600, consumers can subscribe to drive Volvo s XC40 crossover SUV; and the price includes not just tax, title and delivery, but also insurance and eligibility for Volvo s new concierge service. Essentially, this is the same method/ system for owning a smartphone, as many major smartphone companies and phone services providers now offer a monthly payment plan for a new smartphone that also provides the consumer with a new phone every year. 3
MONTHLY AUTOMOBILE SALES CHART RANK AUTOMAKER NOVEMBER 2017 % CHANGE FROM NOVEMBER 2016 2017 YEAR TO DATE % CHANGE FROM 2016 YEAR TO DATE #1 Ford 201,296 +7.3% 2,233,750-1.4% #2 Chevrolet 167,777-1.1% 1,859,079-1.3% #3 Toyota 164,499-3.0% 2,211,530 +0.2% #4 Nissan 122,959 +19.3% 1,318,202 +2.1% #5 Honda 120,440 +8.2% 1,352,572 +1.4% #6 Jeep 66,001-2.0% 755,317-10.0% #7 Hyundai 55,435-9.4% 603,297-14.7% #8 Subaru 51,721 +0.8% 584,614 +5.9% #9 GMC 46,277-5.8% 496,541 +2.8% #10 Kia 44,302-15.6% 546,629-7.9% #11 Ram 40,390-5.0% 506,914 +3.0% #12 Mercedes-Benz* 34,112 +3.6% 332,990-1.7% #13 Volkswagen 29,207-1.6% 309,395 +8.3% #14 Dodge 28,845-15.0% 419,111-11.0% #15 BMW 28,049 +7.1% 271,432-3.2% #16 Lexus 27,118-6.7% 267,671-7.0% #17 Mazda 21,469-2.6% 262,577-2.4% #18 Audi 19,195 +12.1% 199,534 +6.7% #19 Buick 17,974-3.0% 196,946-5.5% #20 Chrysler 16,510 +14.0% 171,337-20.0% #21 Cadillac 13,359-12.8% 141,136-5.0% #22 Infiniti 13,026 +7.5% 137,036 +14.1% #23 Acura 12,716 +9.5% 139,540-3.2% #24 Lincoln 8,909-5.5% 100,540 +1.6% #25 Mitsubishi 8,609 +24.8% 95,185 +7.1% #26 Volvo 7,854 +1.7% 71,828-1.1% #27 Land Rover 6,801 +20.0% 66,759 +2.0% #28 Porsche 5,555 +0.8% 51,507 +2.5% #29 Tesla 5,100 +50.0% 49,820 +33.2% #30 Mini 4,038-10.4% 42,494-10.3% #31 Jaguar 3,061-9.0% 36,180 +34.0% 4
RANK AUTOMAKER NOVEMBER 2017 % CHANGE FROM NOVEMBER 2016 2017 YEAR TO DATE % CHANGE FROM 2016 YEAR TO DATE #32 Genesis 1,776 +36.0% 18,664 +257.9% #33 Fiat 1,733-28.0% 24,754-18.0% #34 Alfa Romeo 1,440 +6,161.0 9,997 +2,055.0% #35 Maserati 1,141-17.4% 12,271 +13.2% #36 Bentley 247-36.2% 2,107-3.1% #37 Smart 130-76.9% 2,905-42.2% General Motors 245,387-2.9% 2,693,702-1.1% Ford Motor Company 210,205 +6.7% 2,334,290-1.3% Toyota Motor Corporation 191,617-3.0% 2,211,530 +0.2% FCA/Chrysler Group 156,060-3.8% 1,899,701-7.9% American Honda Motor Company 133,156 +8.3% 1,492,112 +1.0% Nissan Motor Company/Infiniti / 131,000 +13.8% 1,450,253 +2.7% Mitsubishi Hyundai-Kia Automotive Group 101,513-11.7% 1,168,590-10.5% Volkswagen Group 54,292 +2.9% 563,511 +7.1% Daimler AG 34,242 +2.2% 335,895-2.3% BMW Group 32,087 +4.5% 313,926-4.2% Jaguar/Land Rover 9,862 +9.0% 102,939 +11.0% TOTAL 1,399,159 +2.1% 15,922,106 +10.0% Source: Automakers and The Truth About Cars * Includes Mercedes-Benz vans: decreased 10.2%% to 2,446 for October; decreased 0.7% to 27,673 for YTD. Includes Audi, Bentley, Porsche and Volkswagen brands Industry total takes into account Automotive News figures/ estimates for brands, such as Tesla and other low-volume, high-priced manufacturers. 2017 Media Group Online, Inc. All rights reserved. Sources: The Car Connection Website: https://www.thecarconnection.com/news/1113678_industry-vet-bob-lutz-driving-will-be-over-in-20-years https://www.thecarconnection.com/news/1113622_self-service-waymos-self-driving-cars-head-to-autonation-for-fleet-maintenance Automotive News Website: http://www.autonews.com/article/20171023/finance_and_ INSURANCE/171029934/digital-contracting?utm_source=feedburner&utm_medium=feed&utm_ campaign=feed%3a+autonews%2flatestissue+%28automotive+news+latest+issue+feed%29&ito=792 emarketer Website: https://www.emarketer.com/public_media/docs/emarketer_us_retail_industry_statpack_2017.pdf 4C Insights Website: http://www.4cinsights.com/resource/october-us-tv-social-lift-rankings/?utm_source=email&utm_ medium=newsletter&utm_campaign=4csinsights&utm_content=vol83 Fast Company Website: https://www.fastcompany.com/40490471/how-driverless-cars-could-drive-even-deeper-economic-inequality?utm_ source=postup&utm_medium=email&utm_campaign=fast%20company%20daily&position=9&partner=newsletter&campaign_ date=11072017 engadget Website: https://www.engadget.com/2017/11/29/volvo-wants-to-sell-cars-like-verizon-sells-phones/ Good Car Bad Car Website: http://www.goodcarbadcar.net/2017/12/u-s-auto-sales-brand-rankings-november-2017-ytd/ 5