SALT LAKE CITY–Vehix, the multi-platform digital automotive network, today announced a convenient new way for consumers to list cars for free on one of the nation’s top automotive websites. This free classified ad service also provides access to one of the largest self-qualified car buying audiences online.
“We have thousands of people visiting Vehix.com daily to shop for and purchase cars,” said Meade Camp, COO of Vehix. “With our free auto classifieds, we’re not only providing consumers with a fast and economical way to sell their cars, but also access to thousands of users that are already interested in purchasing a car.”
Visitors can click the “Sell Your Car” button and post their ad on www.vehix.com in minutes to expose their vehicle to more than one million potential buyers each month. For users that need more help, a downloadable guide with listing tips and instructions called “Selling Your Car Online” is also available.
“My car sold in about 2 weeks,” said Vehix Customer Suzanne Kauss. “I can’t believe how easy it was to sell my car for free on Vehix and so fast. The buyers lived three hours away, and because it was on Vehix, a reputable site, we negotiated the price over the phone, met and handled the transaction. It was just that easy.”
The free classified ad service also benefits Vehix media partners and dealers. Prior to launching the service nationally, Vehix successfully tested the service in May and June 2008 in two markets — Chicago and Minneapolis. In Chicago, Vehix added more than 1,500 free listings and the Minneapolis market added more than 1,300 free listings. Overall, the average daily searches of vehicles in these two markets were up 67 percent, proving that consumers that list vehicles also search for vehicles on Vehix.com.
As automakers try to entice consumers with low- and no-interest financing on new vehicles amid a slow economy and rising fuel prices, some small banks appear to be backing away from the auto-loan market, while credit unions and some larger banks still participate in the fray, industry insiders say.
The general slowdown in the auto industry, rather than automaker incentives, has had the greatest impact on auto-loan volumes, at least at Spokane Teachers Credit Union, says Patrick Garrity, the credit union’s director of consumer lending.
“We’re not losing a lot of business because of those 3.9 percent or lower rates,” Garrity says. “The bigger impact is the overall auto-industry market has slowed.”
About 15 percent of STCU’s loan portfolio is in auto loans, he says, adding, “We want to do auto loans.”
Meanwhile, auto lending no longer is an emphasis at Inland Northwest Bank, says Randy Fewel, the Spokane-based bank’s president and CEO.
“Over the years, auto financing has become less and less of our business,” Fewel says. “My guess is that 15 to 20 years ago, car loans might have been 20 percent of our business. Today, it’s about 2 percent.”
Fewel says it’s difficult these days for many banks to compete with the rates offered by credit unions, automakers, and the national financing networks offered through dealerships.
“Their rates are incredible,” he says. “We can’t match them.”
Don Webster, business manager at Wendle Motors Inc., of Spokane, says that despite auto manufacturers’ incentives on some models, the majority of financing used to buy cars through Wendle is handled through the dealership’s online national lender networks, such as DealerTrack and Credit Union Direct Lending (CUDL). Such networks have become the dominant lending conduits in the last two years, he says.
“We’re handling 70 to 80 percent of the financing” through them, Webster says, referring to the dealership, which sells Ford, Nissan, Infinity, and Suzuki vehicles.
He says the lender networks offer financing that typically matches or beats loan rates that car buyers can find on their own through banks and credit unions. Through the online systems, borrowers with good credit can have loans approved electronically in seconds, Webster says.
Because the Rancho Cucamonga, Calif.-based CUDL network includes about 50 credit unions in its Northwest region, the dealership often can arrange loans at the same rate customers can get from their own credit unions, he says.
“If, for instance, you just moved here from Seattle, and you’re still with Boeing Credit Union, we can do it all right here for you,” Webster says.
If a customer isn’t already a member of a credit union in the network, but wants to finance a vehicle through the network, Wendle can help them sign up as a credit union member.
In such an arrangement, the dealership charges the lender a processing fee.
“Basically the lender pays us for doing the paperwork,” he says. “It doesn’t cost the customer anything extra.”
Meanwhile, though it’s nothing new for automakers to offer their own incentive financing as a way to attract more buyers to their dealer’s lots, in a soft auto-sales market those offers often intensify.
In recent newspaper ads, Saturn and GMC both were offering zero percent interest for 72 months, while Mazda was offering no-interest loans for up to 60 months. Downtown Toyota and Downtown Honda were advertising incentive rates on certified used vehicles.
Scott Brewer, general manager of George Gee Automotive Group, of Liberty Lake, which sells Buick, Pontiac, GMC, Hummer, and Porsche products, says banks and credit unions can’t compete with the zero percent, 72-month financing that manufacturers offer.
In the current down market, however, most manufacturers who offer such incentives have put them on large SUVs and full-sized pickups, which aren’t selling well because gas prices are so high, Brewer says.
Even with the incentives, market values for trade-ins have dropped so much that the incentives haven’t sparked sales as they did when such financing was offered in 2006, he says.
Buyers are more interested in higher-gas-mileage vehicles, which are selling comparatively well without interest-rate incentives, Brewer says.
He also says most people are financing through institutions in the CUDL and DealerTrack networks.
“Just about anybody who finances uses one of these two sources,” he says.
Brewer says credit unions generally offer lower interest rates than banks, although larger banks, including Bank of America and U.S. Bank, “can get aggressive and be reasonably competitive,” offering some loan rates below 6 percent.
Spokane-based Washington Trust Bank isn’t a member of the DealerTrack network, and the bank doesn’t specialize in auto loans, says James Mellott, spokesman for the bank.
“We advertise them on our Web site, but, other than that we don’t market them,” Mellott says. “Commercial lending is our primary focus.”
The bank, though, is marketing aggressively its line of home-equity loans, which he says often are tapped by customers to pay for automobiles, boats, and recreational vehicles.
Such loans typically have annual rates from 4 percent to 8 percent, he says.
“Payments are more flexible for home-equity loans, and the terms for them can be extended,” he adds.
Bank of Fairfield, a Rockford, Wash.-based community bank, doesn’t participate in dealer networks and doesn’t market auto loans, says Geoff Forshag, the bank’s president.
“We don’t as a practice have a large amount of auto loans,” Forshag says. “Customers who do have auto loans with us chose convenience as more important than the rates. They need to know they can get what they need in a short time.”
STCU’s Garrity says the credit union, which isn’t a member of the CUDL network, was experiencing steady growth in auto loans until last spring. “Then auto finance overall slowed down,” he says, adding that the slowdown continued through the first four months of this year.
“The last couple of months it has picked up,” Garrity says. “Consumer spending has been better than what most had expected.”
He’s noticed that some people are taking out loans so they can switch to more fuel-efficient vehicles.
“We’re definitely hearing our members asking us if we know of dealerships with more economy-type vehicles,” Garrity says.
STCU offers auto loans with financing as low as 5.74 percent for up to 84 months, he says.
The credit union also offers discounts to auto buyers who make their loan payments automatically through electronic means, and for those who have credit cards through STCU.
Lower-interest manufacturer financing might not be the best deal, depending on restrictions that can come with it, Garrity contends.
“In general, you give up rebates to get the best financing rates offered by the manufacturer,” he says.
Given a choice, rebates are sometimes worth more than the savings in interest on low-interest loans, he contends.
“That’s something we encourage them to compare,” he says. “The rebate could be enough that they come out ahead taking the rebate and a higher-interest loan.”
Auto financing isn’t just for new cars, Garrity says, adding, “We do more financing for used than new.”
STCU encourages its members to arrange preapproved financing before they visit car dealerships.
“If they choose financing at the dealerships, we’re OK with that,” Garrity says. “Maybe they will come to us before their next purchase.”
Not everybody is going to qualify for the manufacturers’ low-interest financing, he says. “Those who do qualify could get financing anywhere. That’s why we say compare.”
Ann Flannigan, vice president of public relations at Washington State Employees Credit Union, a member of CUDL for four or five years, says the credit union offers 72-month loans with rates as low as 4.99 percent.
Through CUDL, the credit union had a near-record month for car-loan volume in May, Flannigan says.
She says customers are choosing rebates and discounts over manufacturers’ low-interest financing incentives.
“Our customers are choosing cash savings up front instead of small savings over time,” Flannigan says. “They need a deeper discount—now.”
She says many members have joined the credit union through CUDL. “It’s a significant factor in our membership growth,” Flannigan says.
Contact Mike McLean at (509) 344-1266 or via e-mail at mikem@spokanejournal.com.
Auto Dealer Traffic, Inc., a leading automotive Search Engine Marketing (SEM) company, today announced it has been named a preferred vendor by the National Association of Minority Automobile Dealers (NAMAD). Auto Dealer Traffic will provide Search Engine Marketing (SEM) and Search Engine Optimization (SEO) services to NAMAD members at special rates, along with free Web and market analysis, to help minority business owners in the automotive sector increase their Web site traffic, Internet-generated leads and sales.
“Auto Dealer Traffic is one of the most knowledgeable SEM companies in the industry. Their cutting-edge technology will enable our members to increase their online presence, and generate more business and profits from their Internet marketing campaigns,” said Damon Lester, president of NAMAD.
Auto Dealer Traffic is one of the most knowledgeable SEM companies in the industry. Their cutting-edge technology will enable our members to increase their online presence, and generate more business and profits from their Internet marketing campaigns
In addition to providing Internet marketing services and support to members, Auto Dealer Traffic will also serve as a corporate sponsor for NAMAD events.
“Our NAMAD sponsorship is an endorsement of the association’s emphasis on public education, and the partnership and networking opportunities they offer members, which are of tremendous value to the industry,” said Tanesha Bennett, sales director for Auto Dealer Traffic.
NAMAD is a 501c (3) non-profit organization headquartered in Lanham, Maryland whose mission is to provide viable opportunities for ethnic minorities in the automobile industry. NAMAD is both an advocacy and political association towards achieving parity in the automobile industry. Currently ethnic minorities represent five percent (5%) of new automobile dealerships in the United States. NAMAD’s goal is to achieve fifteen percent (15%) representation of the entire dealer network.
“We are looking forward to being a resource for NAMAD members and providing them with whatever assistance is needed to develop effective online strategies,” said Todd Swickard, president of Auto Dealer Traffic.
Auto Dealer Traffic is a premier provider of comprehensive, technologically advanced and highly effective search engine marketing programs to help drive new and used car sales. The company’s proprietary software can be implemented at any size dealership and on any existing Web site platform to significantly increase qualified buyer traffic to a dealer’s site. ADT’s dealer customers are consistently top-ranked on the leading search engine sites, including Google, Yahoo! and MSN.
About Auto Dealer Traffic Inc: (www.autodealertraffic.com)
According to a new nationwide survey from Zag (www.zag.com), consumers may be tossing in the towel needlessly. Conducted for Zag by Chicago market researcher Synovate, the survey reveals that a hefty majority of consumers believe car dealerships are entitled to more profit than they’re now receiving.
When Zag asked 1,000 consumers what they thought a fair profit would be for the sale of a $40,000 car – with all marketing and overhead costs considered – 72 percent were willing to give dealers more money than the dealers were actually netting. According to industry data, dealerships average less than $1,000 in profit per new car sold.
The largest group of respondents – 21 percent – was willing to part with $2,000, while 18 percent upped that to $2,500 and 17 percent were prepared to go higher than $2,500. Another 17 percent put the figure at $1,000; 16 percent pegged it at $1,500. Just 11 percent of respondents said $500.
Zag operates a robust auto shopping, research, and pricing technology platform that connects consumers with a select nationwide network of pre-qualified dealers who have agreed to provide no-hassle, upfront pricing that is guaranteed in writing.
“The survey results make a stunning statement about consumer expectations, even given the informational advantage that the Internet provides to car shoppers today,” said Scott Painter, Zag founder and CEO. “Ironically, salespeople are haggling to maintain margins below what consumers would grant in the first place.
“This confirms that a transparent pricing system would actually give dealers more profit per sale than the current haggle approach – and consumers would be much happier for it,” Painter said. “Dealers could practically work on tips and make more money. Consumers fully appreciate the need for dealers to make a profit, as long as they know they’re getting a fair deal. A system based on upfront prices works to everyone’s advantage.”
Behind the Sticker Shock
A closer look at the data reveals some surprises:
- The less you make, the more you expect dealers to make. The largest percentage (20 percent) of the lowest income group – those who earn less than $25,000 – chose “more than $2,500,” although nearly the same amount (18 percent) chose “$500.”
- Singles vote for higher dealer profits. Non-married respondents were more willing to say dealers should make more money: 22 percent said they should earn $2,000 per sale, and 21 percent chose “more than $2,500.” Meanwhile, 21 percent of married respondents chose $1,000, and just 15 percent chose the highest category.
- Age before generosity? The oldest age group favored a lower amount as fair compensation – 21 percent of those 65+ said $1,000, while 19 percent said $2,000 and 18 percent said just $500. Respondents ages 25 to 34 are the most generous, where dealers are concerned. Twenty-four percent said fair compensation on the sale of a $40,000 car would be “more than $2,500.” Just 5 percent of that group chose the lowest category ($500).
- Hard dealing in Dixie. Respondents in the South favored less compensation – 24 percent said $1,000 would be fair. The next most popular answer among this group was $2,000, chosen by 19 percent of those in the South. Those in the West were most likely to say dealers should earn more than $2,500 – 21 percent chose this response. But slightly more respondents in the West (22 percent) chose $2,000 as fair compensation.
- No gender divide, but a racial split. Where pricing and dealer compensation is concerned, there were no major differences between genders, at any price level. Non-whites were nearly twice as likely as whites to say dealers should make more than $2,500 (29 percent versus 15 percent, respectively).
- Where education matters … On the upper end of the dealer compensation scale, education was something of a factor. The greater the respondent’s educational level, the less likely the dealer would walk away with $2,500 – or more (19 percent of high school grads, 17 percent of college grads and 13 percent of those with post-graduate schooling).
- … And where it does not. The sweet spot – that figure where opinions don’t differ significantly, regardless of education – is the $2,000 level. Post-grads were more likely to land at the $1,000 level (23 percent, against 17.5 percent for high school grads and 16.5 percent for college grads).
- The jobless offer more. Similarly, on the basis of employment status, the sweet spot is $2,000 – although some variation exists among the demographic groups: 23 percent of both those employed full-time and the self-employed, 27 percent of those employed part-time, and 20 percent retired. The lone exception is the unemployed; the largest number of that group – 23 percent – pegged dealer compensation at $2,500.
The Zag/Synovate survey has a margin of error of +/- 3 percent. For a full copy of the survey results and a graphic presentation of top-line data, email info@edgecommunicationsinc.com.
About Zag
Zag (www.zag.com) has created a better way to buy a car. Zag operates a robust auto shopping, research and pricing technology platform that saves buyers money by concentrating group buying power, while providing a better car buying experience by connecting buyers with select dealers that provide upfront discounted pricing and a no-hassle delivery process. Zag provides its platform on a private-label basis to affinity buying groups, such as USAA, 14 AAA clubs, Parenting.com, Overstock.com and Capital One Auto Finance, for – www.capitaloneautobuying.com. These groups give Zag a combined total audience of more than 60 million members/consumers. Zag is fully operational for 65 percent of U.S. households and serves more than 93 percent of in-market car buyers. Zag’s investors include Anthem Venture Partners, Capital One Auto Finance, GRP Partners, Arcturus Capital, Callaway Cars and the Skoll Fund. The company’s approach to car buying and selling is garnering awards – Entretech gave Zag its 2008 Entrepreneurship Award for emerging companies, InfoWorld designated Zag’s platform as one of the 100 most innovative corporate IT solutions for 2006, and Entrepreneur Magazine named Zag in its 2006 “Hot 100″ list of the fastest-growing companies. Zag is based in Santa Monica, Calif.
