Jumpstart Automotive Group

The retail holiday season officially kicked off with Black Friday and Cyber Monday following Thanksgiving.  As we approach the end of what has been a financially insecure year for Americans, retailers are prepared for a slower than average holiday season and are using more pricing incentives than ever before to combat it.  The National Retail Federation’s 2008 Holiday Consumer Intentions and Actions Survey shows consumer spending habits forecasted to increase by just over one percent vs. last year. The minor growth can be attributed to all the offers and rebates that are enticing consumers to continue spending. 

Similarly in the auto industry, offers and incentives to purchase vehicles have reached new levels.  Brands such as Ford and Chevrolet are offering “Employee Pricing” cash incentives of $5,000 – $10,000 on certain vehicles. In some cases, there are greater promotions on top of the cash.  Import brands such as Hyundai, Kia, Toyota, and Lexus, who are in a healthier position than the domestic manufacturers, are also offering incentives that range from zero percent financing to cash back offers. 

It’s no secret that the automotive industry is feeling some of the greatest effects of the credit crunch and the general state of the economy.  In October we saw positive trends in automotive shoppers researching vehicles online, however the industry sales data for November reported a low of less than 750,000 vehicles sold in the U.S., the lowest sales reported YTD.  Automotive News data shows November sales down nearly 37 percent from the same month in 2007. In December 2007, vehicle sales for the month were nearly 1.4 million units, where December 2008 projections are looking to be closer to a stunning 50 percent decrease from year-ago levels.

The following table depicts not only the trend of vehicle sales in the U.S., but also the shopping patterns of consumers viewing vehicle information across all automotive websites as well as Jumpstart Automotive Group websites specifically.

Most months in 2008 show similar movement in trends between automotive shopping online and vehicle sales, however the sales data starts to see a greater decline in the fourth quarter. Economic variables such as unemployment rates, the housing market and credit holds are contributing to consumers delaying their next vehicle purchase.  These factors, coupled with the amount of information and resources that consumers are utilizing in researching purchases from big to small, are increasing the length of the purchase process. 

Despite the enticing offers, consumer confidence isn’t high enough to make larger purchases in our current economic state.  So while consumers continue to browse and research online, it is likely that December sales will show no signs of improvement.  As a nation, we are anxiously awaiting 2009 with hopes of greater stability, both as retailers and consumers.