2016 NADA Convention & Expo packed with news and exciting products
On the heels of a record year for car sales, and with what looks like another record year shaping up, dealers and vendors were all smiles at this year’s National Automobile Dealers Association (NADA) Convention & Expo that opened April 1 in Las Vegas, Nev.
It’s the 15th time that Vegas has hosted the annual pilgrimage of auto dealers from across North America — and from 30 countries around the world — who come to learn about best practices, meet old friends, and get exposed to products from the more than 600 exhibitors in the massive trade show floor.
It’s not just one trade show floor at this year’s event — the exhibitors are packed into two massive halls.
The general thrust is one of optimism and excitement, with digital and mobile being two big areas of focus.
As part of the opening general session, Bill Fox delivered his final address as 2015 chairman of the NADA.
Fox reflected on his role as chairman over the past year. “As the retail automotive industry has evolved, so have we,” said Fox to the thousands of new-car dealers, their managers and auto industry executives. “And the result is that we have not only survived, but we have prospered.”
To stay ahead, it’s important that dealers and their industry partners work together to find ways to adapt and respond to the needs of the consumers.
“The only difference between change today and change over the past 99 years is the speed at which it happens. And it affects all of us — dealers, manufacturers, and of course the driving public,” said Fox.
“When we pull in the same direction, we accomplish more together than when we try to do it alone.”
NADA predicts record sales year for 2016
Steven Szakaly, NADA’s Chief Economist, delivered an address on the state of the economy at a press conference on opening day.
Szakaly briefed journalists about his perspective on the macroeconomic market, taking them through the factors behind his strong sales forecast, including low interest rates, low gasoline prices and a good product mix for dealers to sell.
“The economy is still doing remarkably well,” said Szakaly. “It remains a great time for consumers to buy a car.”
Consumer appetite for trucks and SUVs continues to be strong, and the NADA expects light trucks to represent 57 per cent of the new car market for 2016, with cars making up only 43 per cent.
He said there was a hiccup in the equities market, but that doesn’t really impact vehicle purchase decisions. Housing values, however, do impact vehicle sales and consumer confidence, and the market is reasonably strong.
Although average car payments have gone up 12 per cent, he said they are still manageable for households. The average transaction price on a new vehicle was nearly $34,000 at the end of the first quarter, fueled by sales of higher priced trucks and consumers buying more options and upgrades on their vehicles.
Dealers can capitalize on lease growth
A press conference by Experian Automotive looked into vehicle leasing and other auto finance trends in the U.S.
More than 1.8 million vehicles will come off lease by the end of 2016 in the U.S. making it a good time for dealers to capitalize on the trend, according to Experian Automotive.
Melinda Zabritski, senior director of Automotive Finance and Erik Hjermstad, senior automotive market analyst for Experian, looked into some of the shifts happening in leasing in the U.S., including financing and other changes in consumer preferences.
“It’s been the year of the lease and we don’t see that going away any time soon,” said Zabritski.
In the U.S., leasing is at its highest rate in 10 years, up 50 per cent since 2010. More consumers are attracted to the lower monthly payments on leases, even though monthly lease payments have gone up slightly from last year, said Zabritski.
The Honda Civic, Accord and Toyota Camry are the top three vehicles leased in the U.S., though Hjermstad notes that the pickup and SUV segments have picked up due to low prices at the pump.
With 56 per cent more full-sized pickups in the leasing market today, Hjermstad anticipates real opportunity in that segment in two to three years.
Zabritski also sees the prime segment increasingly moving into leasing, as 33 per cent are choosing leasing over loans now, up 24 per cent from 2014. While there is not as much leasing in subprime, Zabritski is noticing a change. Leasing also drives loyalty more than anything else, as dealers know exactly when consumers will come back to get a new vehicle.
But with record car sales and a strong leasing market, dealers need to figure out how they can grow, said Hjermstad.
Experian identified areas of opportunities for dealers to capture new buyers in the leasing market, in particular those with graduate degrees, in management roles, and with household incomes greater than $200,000.
Recent Experian data revealed that graduate degree holders have the highest lease rate at 33 per cent — but the lowest loyalty. Managers who lease vehicles were found to be nine per cent less loyal, and “that’s a large number,” said Hjermstad.
Household income was the strongest trend, said Hjermstad. As income moves above $200,000, leasing rates drop 17 per cent compared to those making $100,000 or less.
Peyton Manning inspires dealers
Recently retired, and destined for the Pro Football Hall of Fame, NFL legend Peyton Manning entertained and inspired delegates on the last day of the NADA 2016 Convention and Expo in
Las Vegas, Nev.
During his speech to a jam-packed convention hall of dealers, the former Super Bowl winning quarterback for the Indianapolis Colts and Denver Broncos said he hadn’t yet determined his post-retirement plans. “I’ve only started plugging my coordinates into my GPS,” said Manning.
He said that when he told his five year-old daughter he was retiring, she asked if they would now be moving into a retirement home. “I am far from dead,” said Manning. “A person’s life is like a road – the driver really doesn’t know how or when it will end until they get to their final destination.”
Most of Manning’s talk was about leadership, as he recounted how he had developed his own personal leadership style over the course of his college and NFL career, and how he had to adapt to remain successful.
“Nobody starts out as a leader,” said Manning. “People have to earn the mantle of leadership.”
He described leadership as the ability to influence others. “If you cannot influence your team, you cannot lead your team,” he said.
Leaders must also grow continuously, whether through hardships and setbacks, and be prepared to “pivot” to be nimble at embracing new opportunities.
“The ability to pivot is to change strategy without changing your vision,” said Manning. “Frankly, I don’t pivot that easily.”
But dealers and business leaders must be ready to “mothball” their old ways of thinking and have the courage to adapt to their new realities.
One major adaptation he needed to make came late in his career, when his physical limitations, partly from a series of injuries and four neck surgeries, were preventing him from performing at the same level he had throughout his career.
For the first time in his pro career he found himself relegated to the role of backup quarterback. “As a leader you have to prepare for a wide range of inevitabilities,” he said.
“I was keenly aware of my strengths and my physical limitations,” said Manning.
He said just as dealers love the smell of a new car, he loves the smell of pigskin. He wasn’t ready to walk away from the game he loved. So he persevered and kept preparing for the opportunity to take the field again.
When given the opportunity, he adapted and managed to successfully lead his team to win the Super Bowl in 2016.
Manning asked the dealer crowd to imagine that they could turn back time, and consider what they would have done differently as leaders of their businesses, their communities and their families. “No one seems to be satisfied about where they are,” he said. “Let’s just imagine we go in reverse.”
He said those that work for public glory and seek only rewards could find themselves on the wrong path. “If the rewards are what drives you,” said Manning, “you risk running off the road.”