GNYADA March 2018 Newsletter Including Special Auto Show Edition

Top Ten Trends 16

Here are the 10 trends that Cox Automotive believes will have the greatest impact on automotive businesses in the near-term and long- term. Cox will continue to monitor these trends closely as they shape the future of the automotive industry. 1 Millennials: As Millennials age into the largest car-buying cohort – which they will be by 2020 – dealers need to understand the shopping and buying preferences of this generation to more effectively market and sell to them. 2 Affordability: While consumer expenses are finally seeing some relief, it does not necessarily mean more money for a car – especially as interest rates are expected to continue to rise. 3 Autonomous Vehicles: While we are definitely headed into a future that is different from today, it's one that offers more opportunity than threat. That being said, dealers need to be preparing now for a world where possibly fewer consumers buy and own vehicles but one where fleets take on a more dominant role in the auto ecosystem. 4 Used Car Prices: Strong retail demand for used cars is largely being driven by affordability. Dealers need to be aware of a consumer trend towards lower price points and used

compete by implementing conveniences like online scheduling and by offering and promoting competitive pricing and price-match guarantees while focusing on advertising messages about high- quality service (e.g., OEM parts and certified technicians). 8 Consumer Credit: The market would not have seen the growth of 2015 and 2016 without credit and its availability. We are currently at a very low default rate and we will likely see this healthy default-rate level continue. The trend of longer loan terms has been growing and there is a likelihood to continue to see longer terms on loans (e.g., longer than 60 months). 9 Dealership Staffing: As dealers face increasing margin compression and operating costs, profitability is being tied up in comprehensive operational inefficiencies. Employee recruitment, retention, and development (staffing), are the biggest sources of operational opportunities that dealers have today, but two out of three dealers have no staffing strategy in place. The Economy: Fundamentally, how the economy is performing directly correlates to sales, and next year’s growth is likely to be similar to this year’s if not slightly better! 10

cars and should consider using stocking tools to align their inventory mix accordingly. 5 Digital Retailing: According to the 2017 Cox Automotive Digital Retailing Study, nearly all consumers (98%) want the ability to do at least some piece of the car shopping/buying process online. Dealers need to deliver the kind of online experience that consumers have grown to expect from other industries. Digital Retailing meets consumer expectations while allowing dealers to maintain control of the deal. 6 Shifting Consumer Preferences: Consumer preferences are shifting and most of the growth has been in the truck, SUV, and crossover segments. The luxury segment is following in a similar pattern. Thanks to today's modern fuel efficiency standards, consumers are now able to get the conveniences of an SUV/CUV without necessarily seeing the trade-off of higher gas expenses. 7 Fixed Ops: Cox Automotive calculations indicate there is a $99 billion opportunity with fixed ops, and dealers are currently capturing only 30% of that market. Consumers say convenience, value, and trust affect where they choose to get their vehicle serviced. Dealerships can

Greater New York Automobile Dealers Association • www.gnyada.com

The Newsletter • March 2018 11

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