Introduction and Abbreviations Introduction Other relevant reports Definition Abbreviations & terms Abbreviations Terms Executive Summary Average U.S. household owns 2.2 vehicles More registered vehicles than licensed drivers Income Internet breeds empowered consumers Transparent marketplace gives buyers a perceived advantage Rise of the no-haggle sales strategy Auto industry spends big on advertising, shifts some spending toward non-traditional techniques Targeting Echo Boomers Employee pricing and other incentives drive sales, train buyers to be price-sensitive Extended warranties promote quality, drive sales Reasons for buying a vehicle Younger car owners more influenced by financing offers Shopping across multiple segments, makes and nameplates Foreign or domestic? Sources of information No-haggle sales experience preferred Good idea to shop around Market Background Introduction U.S. sales history and trendsFigure 1: Total U.S. value sales of automobiles, at current and constant prices, 1999-2004Figure 2: Graph: Total U.S. value sales of automobiles, at current and constant prices, 1999-2004 Figure 3: Total U.S. new and used unit sales, 1999-2004Figure 4: Graph: Total U.S. new and used unit sales, 1999-2004Figure 5: Graph: Total U.S. new and used unit sales and new lease originations, 1999-2004 Figure 6: Volume sales of all cars, by new and used, 2002 & 2004 Figure 7: Total U.S. new and used value sales, 1999-2004Figure 8: Value sales of all cars, by new and used, 2002 & 2004 Average price of new and used vehiclesFigure 9: Average price of new and used vehicles, 1999-2004Figure 10: Graph: Average price of new and used vehicles, 1999-2004 Manufacturer certified pre-owned vehiclesFigure 11: Total U.S. number of manufacturer certified used unit sales, 2001-2004 Used casual (private party) salesFigure 12: Total U.S. number of used casual sales, 1999-2004Figure 13: Total U.S. value of used casual sales, 1999-2004 Figure 14: Average price of used-casual vehicles, 1999-2004 Leasing trendsFigure 15: Total U.S. number of new retail leases written, 1999-2004 Number of nameplates on the rise Type and number of vehicles owned Figure 16: Type and number of vehicles owned/leased, January-September 2004 Type of car driven most often and how long owned Figure 17: Type of vehicle driven most often, June 2005 Duration of ownership Figure 18: How long type of vehicle driven most often has been owned, June 2005 Scrappage rates Market Drivers  Demographics AgeFigure 19: American population projections, by age, 2000-2010 Number of licensed driversFigure 20: Number of licensed drivers, by age and gender, 2000 Vehicle ownership by ageFigure 21: Type and number of vehicles owned/leased, by age, January-September 2004 Type of primary vehicle driven, by ageFigure 22: Type of vehicle driven most often, June 2005 Younger Americans see cars as a means of self-expression Figure 23: Attitudes about car’s appearance, by age, January-September 2004 Economic conditions Rise in energy costs slows sales of used vehicles IncomeFigure 24: Number of households per income group, 2000 and 2003 Median household incomeFigure 25: Median household income, 1990-2003Figure 26: Graph: Median household income, 1990-2003 Figure 27: Median household income, by age of householder, 2003 Figure 28: Type and number of vehicles owned/leased, by household income, January-September 2004 Figure 29: Type of vehicle driven most often, by household income, June 2005 Figure 30: How long type of vehicle driven most often has been owned, by income, June 2005 Figure 31: Type of vehicle driven most often, by household size, June 2005Figure 32: Graph: Type of vehicle driven most often, by household size, June 2005 Race/ethnicityFigure 33: U.S. population, by race and Hispanic origin, 2000-2010 Figure 34: Type and number of vehicles owned/leased, by race/ethnicity, January-September 2004 Figure 35: Ownership of loan products, spring 2004 The Internet breeds empowered consumers Broadband penetrationFigure 36: U.S. broadband household projections, 2000-2010 The role of the Internet in the car-buying process Customer segmentation informs site design The role of third party and branded sites Advertising and Promotion Introduction Traditional media Measured spendingFigure 37: Automakers’ measured U.S. new- and pre-owned- vehicle ad spend, 2003-2004 Trends Non-traditional advertising and promotion heat up Mobile marketing begins to grow Ford launches product placement blitz on TV shows and video games Targeting Echo Boomers and the need to be unique (Scion/Toyota) Other automakers targeting Echo Boomers More migration to face-to-face marketing VW: co-branding lifestyles Reaching out to Hispanic consumers Pay less now… …or pay less later Dealers need to differentiate themselves Incentives New-vehicle shoppers reject newly launched models due to lack of incentives Increased shopping across multiple segments, concern over gas mileage hurt SUV sales Extended warranties promote quality, drive sales Discounts spur short-term sales; quality drives long-term satisfactionFigure 38: American Customer Satisfaction Index, April 1-June 30, 2005 Customer Relationship Management OEMs and dealers lack coordinationFigure 39: Comparison of exclusive dealerships and multiple nameplate dealerships in the U.S., April 2005Figure 40: Graph: exclusive dealerships in the U.S., April 2005 Retailing Trends Introduction Trends The growing influence of the Internet: price transparency, consumer control Rise of the no-haggle sales strategy OEMs try to gain more control over dealers Dealer consolidation Dealer profilesFigure 41: Revenue for leading retailers of cars and light trucks, 2002-2004 Figure 42: Retail sales units for leading retailers of cars and light trucks, 2002-2004 AutoNation United AutoGroup Sonic Automotive VT Inc. Group 1 Automotive Asbury Automotive Hendrick Automotive Lithia Motors Staluppi Bill Heard Enterprises CarMax Online referral services and classifieds Autoshopper.com Autobytel.com CarsDirect.com Cars.com Autotrader.com The Automobile Consumer  Introduction Exploration of the “Purchase Funnel” Awareness of need Reason for getting a new or used vehicle Figure 43: Reason(s) for purchasing primary vehicle, June 2005 Figure 44: Reason(s) for purchasing primary vehicle, by type of primary vehicle, June 2005 Figure 45: Reason(s) for purchasing primary vehicle, by how long the vehicle has been owned, June 2005 Figure 46: Reason(s) for purchasing primary vehicle, by age, June 2005 Figure 47: Reason(s) for purchasing primary vehicle, by income, June 2005 Figure 48: Reason(s) for purchasing primary vehicle, by household size, June 2005 Factors and influences on purchase decision Figure 49: Factors and influences on vehicle purchase decision, June 2005 Figure 50: Factors and influences on vehicle purchase decision, by type of vehicle, June 2005 Figure 51: Factors and influences on vehicle purchase decision, by age, June 2005 Foreign vs domestic cars Figure 52: Preference for foreign or domestic brands, June 2005 Figure 53: Preference for foreign or domestic brands, by age, June 2005 Figure 54: Preference for foreign or domestic brands, by income, June 2005 Opinions about foreign vs. domestic Figure 55: Attitudes about foreign and domestic cars, by age, January-September 2004 Figure 56: Attitudes about foreign and domestic cars, by race/ethnicity, January-September 2004 Information Processing Amount of time spent researching vehicle purchase and sources of information Figure 57: Amount of time spent researching prior to purchase, June 2005 Figure 58: Amount of time spent researching prior to purchase, by age, June 2005 Figure 59: Amount of time spent researching prior to purchase, by income, June 2005 Sources of information Figure 60: Sources of information on vehicle purchase, June 2005 Figure 61: Sources of information on vehicle purchase, by type of primary vehicle, June 2005 Figure 62: Sources of information on vehicle purchase, by how long the vehicle has been owned, June 2005 Figure 63: Sources of information on vehicle purchase, by gender, June 2005 Figure 64: Sources of information on vehicle purchase, by age, June 2005 Figure 65: Sources of information on vehicle purchase, by income, June 2005 Information sources for new, used and leased car buyers Figure 66: Sources of information, new and used car buyers, January-September 2004 Purchase phase Opinions about dealerships and the retail experience Figure 67: Opinions about dealerships and sales staff, June 2005 Figure 68: Opinions about dealerships and sales staff, by type of primary vehicle, June 2005 Figure 69: Opinions about dealerships and sales staff, by how long the vehicle has been owned, June 2005 Figure 70: Opinions about dealerships and sales staff, by age, June 2005 Figure 71: Opinions about dealerships and sales staff, by region, June 2005 Who comes along to shop and buy? Figure 72: Companion for vehicle shopping and purchasing, by age, June 2005 Financing method Figure 73: Method of financing for most recently-acquired vehicle, by age, January-September 2004 Figure 74: Cash, dealer finance or bank loan method of financing for most recently-acquired vehicle, by household size and income, January-September 2004 Post-purchase evaluation Post-purchase communications from dealer and car maker Figure 75: Companion for vehicle shopping and purchasing, June 2005 Appendix: Trade Associations  Appendix: Research Methodology  Consumer Research Sampling & Weighting Technometrica TechnoExpresssm ICR Surveys EXCEL Simmons National Consumer Surveys Greenfield Online Presentation & Definition Further Analysis Trade Research Informal trade research Formal trade research Desk & Internet Research Sources Definitions Forecasts Appendix: What is Mintel? 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