2019 Ram 1500, General Chat, Industry Insights

Is the RAM Pickup Set to Dethrone the Chevrolet Silverado as the #2 Selling Vehicle in the United States? – The CarGurus Blog


Since 1980, the Chevrolet Silverado has consistently outsold the RAM Pickup. However, the story is changing. Calendar year to date (CYTD) through May 2019, RAM has outsold the Chevrolet Silverado by more than 21,000 units.

And on CarGurus in June, we saw increased shopper interest in RAM and a dip in interest in the Chevrolet Silverado.

With June OEM sales numbers set to be released tomorrow, we expect to see the trend continue. So, what’s driving the gap? One of the main factors is the launch of the legacy RAM Classic trim.

RAM Is Winning on Affordability and Technology

Affordability has been a major issue in the pickup truck
segment. For instance, the 2019 RAM 1500’s average MSRP is now above $50,000, and the Chevrolet Silverado 1500’s average MSRP is just below $50,000. The higher price comes with new technology, including a 5-inch Uconnect touchscreen standard for RAM and the option of a 12-inch screen, which rivals the tablet found in Tesla’s Model S.

RAM’s solution to the affordability problem is to keep its
previous-generation vehicle, now called the RAM Classic, and price it lower than other new trucks. The RAM Classic trim’s average MSRP sits just above $40,000. While the Classic lacks some of the new technology, engine offerings, and towing capabilities of the new RAM, its relative affordability appeals to price-sensitive
consumers who are willing to make those tradeoffs.

By making both the new RAM 1500 and the RAM Classic
available, RAM addresses two different segments: those buying for technology and safety, and those buying for value.

Who Will End the Year as the Second-Best-Selling Vehicle in the US?

Looking at the historic sales seasonality of both the RAM
and Silverado, both sell over 60% of their volume from June through December. However, with RAM’s 21,000-unit lead through the end of May, the Chevrolet Silverado may have a difficult time closing the gap by the end of the year. That means for the first time, the RAM 1500 will end the year as the second best-selling vehicle in the United States.

<!-- -->



Source link

bernie sanders, cpo car shopping, Industry Insights, new car shopping, student loans

Could Forgiveness of Student Loans Lead to a New Peak in New-Vehicle Sales?


Debt continues to increase while wages lag, and many Americans struggle to purchase a new car. In fact, affordability represents the most severe headwind causing the decline in vehicle sales, which are down 2.0% calendar year to date (CYTD) 2019.

A recent survey from Bankrate finds that 58% of Millennials and 56% of all Americans lose sleep over money troubles. Today, 40% of Millennials earn at least half their income from a side hustle. Millennials are the largest living adult generation as of 2019, and they represent a key demographic in the success of the new and certified pre-owned (CPO) vehicle market. However, an increasing number of Millennials indicate that cost pushes them away from purchasing a new vehicle. Knowing this, increasing Millennial disposable income would lead to a rise in the new-vehicle market.

For Millennials, student loans represent the primary reason for their low disposable income. An estimated 44.7 million people in the U.S. have student debt, which amounts to 1 in 4 Americans. With the estimated student debt at $1.49 trillion and the average monthly payment at $393, the increasing amount of student debt shapes affordability significantly more than wages, housing costs, and the rising price of vehicles.

During the Democratic debates for the 2020 election, many candidates emphasized their policies on student loans. The most recent proposal came from Senator Bernie Sanders, who introduced a bill to cancel all of the roughly $1.5 trillion of student debt. According to Senator Sanders’ fact sheet, the bill would save the average student loan borrower $3,000 a year in student loans, which would provide an economic boost of nearly $1 trillion over ten years.

Putting aside the other potential implications of student debt forgiveness, consider what this kind of stimulus could mean for the auto industry. Student debt remains one of the largest economic struggles for Millennials and other generations. Therefore, loan forgiveness could result in one of the greatest economic stimulus packages in the history of the United States. A stimulus program of this magnitude would create an economic windfall that would boost a number of sectors in the economy, including both automotive and housing.

The Impact on Automotive

The average MSRP of all vehicles continues to rise more quickly than wages. This heightens the struggles of affordability in the automotive industry. Over the past six years, the average MSRP of vehicles increased nearly $7,000, the average lease payment approached $500 per month, and the average finance payment fell above $550 per month. Student loan forgiveness would result in more than 44 million people receiving an additional $393 per month. This would decrease the affordability headwind and create a spark in new-vehicle and CPO sales.

In the short term, the impact would come from consumers entering the market either at the end of their lease or because they are in need of a new vehicle. With an additional $393 per month in their budget, consumers entering or reentering the market would have more vehicles to choose from with this added discretionary income.

Longer term, the market would see a potential increase in new entrants. Currently, there are consumers who stay out of the CPO and new-vehicle markets due to affordability. With student loan forgiveness, those 44 million consumers would be able to pay down debt and save for a down payment, and they could possibly enter the new-vehicle or CPO market for the first time.

Increases in Housing Help the Automotive Industry

If the result of student debt forgiveness increased home purchases, that would also help drive automotive sales. New-home construction and home remodeling have historically positively correlated to automotive sales, specifically in the truck market. As contractors take on more remodeling work and bid on construction projects, they could hire more workers and build their businesses, which would positively impact the truck market.

Conclusion

Student loan forgiveness would give consumers additional monthly income to purchase a vehicle, leaving the most immediate impact in the new vehicle and CPO market. An additional $393 per month would put many consumers into a new class of vehicle, potentially moving them from non-luxury to luxury. Even if consumers spent only a portion of that $393 on a vehicle, an additional $100 would allow consumers to combat the rising cost of new vehicles.

In the midterm, an increase in home ownership would trickle down to the vehicle market. The impact would not immediately affect new-vehicle sales in the first six months, but strengthening the home-construction industry would provide sustained growth in the automotive market over time, providing long-term stability. The result could be the greatest stimulus package in the history of the United States, and it would likely cause a new sales peak in the United States automotive industry.

<!-- -->



Source link

Industry Insights

Oil-Price Hike Accelerates Interest in Electric Vehicles


On Monday, West Texas Intermediate (WTI) oil prices closed up roughly 15%, from $54.85 per barrel to $62.90. This uptick has increased car-shopper interest in electric vehicles (EVs). According to data from CarGurus, the share of searches for new and used EVs spiked in response to the news about oil prices.

EV Interest Factors

Consumers have been
slow to adopt EVs. While several factors have slowed the EV adoption curve –
including product offerings, price, and total range – the EV market has historically
been driven by incentives and external benefits such as HOV-lane access.
Outside of incentives, the other major factor that drives consumer interest is
an increase in the price of gasoline. As EV search interest on CarGurus showed
on Monday, September 16, a rise in oil prices leads to an increase in EV searches.

In a week-over-week analysis of searches run the weeks ending Monday, September 9, and Monday, September 16, on CarGurus, the share involving new and used EVs increased 11% and 12%, respectively. When analyzing calendar-year-to-date (CYTD) EV and plug-in hybrid searches on CarGurus, we found that used EV searches and oil prices have a strong correlation with one another and new EV searches and oil prices have a moderately strong correlation. It’s likely that new and used EV search interest will increase if oil prices rise.

* CarGurus analyzed EV searches and the price of oil at the close of each day and averaged weekend oil-prices due to no daily reporting over those days. Saturday’s estimate is based on the previous two days, and Sunday’s is based on Friday and Monday.

EV Interest Varies by State

While interest in new EVs at a national level is clear, state-level interest varies. Florida, the third-largest state for vehicle registrations, saw a 23% increase in the EV and PHEV share of new vehicle searches. Compare that with California, which saw an approximately 4% decrease in new EV and PHEV interest.

Similar to new EV searches, the national interest in used EV
searches was apparent. However, when analyzing the results at a state level, we
saw some noticeable differences. New York and New Jersey both had Monday-over-Monday
gains in new EV search share. However, for used vehicle searches, both states
declined.

For New York, the decline in used and increase in new may be
supported by New York offering a state incentive on new EVs. As for New Jersey,
the state offers sales-tax exemption for both new and used EVs. However, this
may not be enough to entice used EV buyers in New Jersey.

California, the state with the highest number of registered vehicles and registered EVs, decreased in Monday-over-Monday new EV searches but increased in used searches. The increase in used EV search share in California is not a surprise, because the used EV market in California is supported by state-offered incentives. California offers two different incentives on used EVs:

The spike in oil prices on Monday, September 16, and the spike in EV searches suggests they are closely aligned. However, outside of the EV product offering, price and government incentives are the main drivers of EV sales. To help support both new and used EV sales, 38 states have implemented government incentives to assist EV sales. However, Americans may be slow to adopt EVs until the price of oil, and therefore gasoline, increases to a point at which Americans will do anything to avoid paying more at the pump.

<!-- -->



Source link

hyundai, hyundai crossover, hyundai suv used, Industry Insights, jose munoz

Hyundai Makes Progress on Goals with Help from SUVs


Hyundai recently announced its turnaround plan for the US with a goal of achieving 5.2% market share by the end of 2023. Its market share at the end of 2018 was 3.9%, and it has a three-pronged roadmap for gaining that extra share. 

The Background

Five-point-two percent market share is not unprecedented for Hyundai. The company’s previous market-share peak was 5.1%. This was likely due to improved product quality and the launch of its Hyundai Assurance marketing campaign. 

But a 1.3-percentage-point increase is more than an incremental boost. It could translate into as many as 214,000 more Hyundai vehicles on the road. For Hyundai to grow in market share, it must come at the expense of competitors like Nissan, Honda, and Toyota. 

New Leadership

Over the past year, Hyundai has made concerted efforts to bring in seasoned and proven industry executives. 

In April 2019, Hyundai hired industry titan José Muñoz from Nissan. Muñoz had previously worked as Nissan’s Chief Performance Officer, Chairman of Nissan China, EVP of Nissan North America, and President of Nissan Mexico. Under Muñoz’s leadership, Nissan’s US sales achieved a 9.2% market share, its highest ever. (Editorial Disclosure: I worked at Nissan from October 2013 to May 2015, overlapping with Muñoz. The analysis below is not impacted by my tenure at Nissan.)

Muñoz wasn’t the only former Nissan executive to join Hyundai. By May, Hyundai brought on Randy Parker, another seasoned executive from Nissan. Parker worked under Muñoz, overseeing Nissan’s West Region and later running Nissan’s luxury brand, Infiniti, in the Americas. And most recently, Hyundai hired Robert Grafton as Director of Dealer Development. Grafton previously worked at Infiniti.

With Muñoz, Parker, and Grafton back together at Hyundai, they may be able to replicate the strategy that led to the success they achieved at Nissan.

Strong Product

Over the past few years, Hyundai has debuted and refreshed several crossovers. The Kona debuted in 2017, while the Palisade, which debuted in 2018, and hydrogen fuel-cell Nexo both went on sale in 2019. The Tucson also underwent a mid-cycle refresh for 2019. The Venue, a midsize SUV, joins the lineup for 2020.

Hyundai announced a 9% YoY growth of total sales in SUVs, with the Kona and Palisade leading the way. Despite their success, these new additions may not be enough to get Hyundai to a 5.2% market share. However, Hyundai is taking advantage of another hot vehicle category: the midsize pickup truck segment. Hyundai will launch the Santa Cruz, a midsize pickup, by 2020. While this is the first Hyundai pickup in the United States, Hyundai has ventured into the pickup segment before; the Hyundai Pony Pickup was sold in Europe in the 1980s.

As of this writing, Hyundai hasn’t announced the exact release date or pricing strategy for the Santa Cruz. However, if Hyundai launches the Santa Cruz at a price below its competitors’, this truck could be a success in a pickup segment whose average MSRP has increased approximately 25% since 2014, more than any other segment in the industry over the past six years.

Pricing

Hyundai is a brand with a lower average MSRP than its competitors’. That makes its vehicles an ideal solution for price-sensitive shoppers. If wage growth continues at its current slow pace and affordability remains one of the biggest headwinds in the industry, Hyundai will continue to gain attention from the most price-sensitive consumers.

Pricing, Product, and Leadership—Hyundai’s Holy Trinity

Hyundai has brought in leaders who led Nissan to its best US sales year in history, it has shifted its product mix to favor SUVs, and it has maintained its affordability.

The initial results of these changes are promising. As of October 1, Hyundai has reported a 5% YoY increase in total sales and a 9% YoY increase in total sales of crossovers, laying the groundwork to reach its goals.

<!-- -->



Source link

PreviousNext

You Want To Have Your Favorite Car?

We have a big list of modern & classic cars in both used and new categories.