Cox Automotive Competitor Briefings

Part
01
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Part
01

Cox Automotive Briefing

Last week, the Cox Automotive company mentioned that it is in the process of furloughing over 12,500 of its personnel globally due to the impact of the COVID-19 pandemic. With regard to the statements on matters related to its business, the Cox Automotive industry insights team mentioned that they have been anticipating digital retailing to change the game in the automotive retail space. On innovating, an article mentioned that Cox Automotive has released "Thriving in the New Normal," a guide for dealers and OEMs in the U.S. to survive the pandemic.

Company Communication

  • On May 7, Cox Automotive announced that it is in the process of furloughing over 12,500 of its personnel globally as the COVID-19 pandemic starts to wreak havoc on its operations. The furloughed employees account for 38% of the company's manpower. Ten thousand of them are based in the U.S. The process will start on May 17 and is seen to last for 16 weeks. These employees will still keep their employment status in the company and can still avail of the company's healthcare benefits.
  • On May 7, the company also announced that it will slash the salaries of its senior executives. Vice Presidents and above will see their salaries cut by 15%, while for the executive leadership team, it will be 25%. On May 7, Cox Automotive President and Chief Executive Sandy Schwartz, CEO Alex Taylor, and other top executives have volunteered to give up their full base salaries while the COVID-19 pandemic is still ongoing.

Cox Automotive Statements on Matters Related to its Business

  • On May 6, the Cox Automotive industry insights team mentioned that for some time now, they have been anticipating digital retailing to change the game in the automotive retail space. With the onset of the COVID-19 pandemic, the automotive industry is now experiencing an accelerated transition of its retailing process to a more digital model. The insight team mentioned that the increasing adoption of digital and touchless processes will have a long-term impact on various automotive processes aside from vehicle sales workflows.
  • On May 7, a report from the company mentioned that the prices of wholesale used vehicles dropped by 11.41% month-over-month in April. This has pulled down the Manheim Used Vehicle Value Index (MUVVI) to 125.8, a reduction of 9.2% versus the previous year. The index is also the lowest value in three years.
  • Commenting on the low inventory volume in the automotive industry on May 6, Cox Automotive Senior Economist Charlie Chesbrough said that inventory levels rely on the vehicle sales trendline. He also said that inventory may be sufficient if purchase levels will stay low during the summer. However, he mentioned that stocks may be depleted once they start buying again in May and June.

Negative Economic Impact on the Company

  • On May 7, the company mentioned that plunging numbers in wholesale vehicle dealings have forced the closing of physical Manheim auctions. Manheim is one of the brands of Cox Automotive. According to Cox Automotive CEO and President Sandy Schwartz, he is expecting a sluggish recovery for the automotive industry which will also impact the company's revenue growth.
  • According to a May 7 report, the COVID-19 pandemic has put a big dent on the global automotive sales and production. Consumers are also spending much less on automotive-related products. Some states also declared that car dealerships should remain shuttered to prevent the spread of the virus. Given this situation, Mr. Schwartz mentioned that they don't know yet when and how they can get back 80% of the company's business again.

Cox Automotive Innovation

  • On May 8, an article mentioned that Cox Automotive has released "Thriving in the New Normal," a guide for dealers and OEMs in the U.S. Along with other practical recommendations on how automotive businesses can survive in the current pandemic environment, Cox Automotive gave some suggestions to dealerships on how to create touchless retail solutions. The touchless solutions involve enhancing all their online sites and ensuring that all the details of their operations, products, and services can be found easily on their virtual shopfronts. As part of the touchless campaign, dealerships are also urged to highlight their cars and the features on their online channels such as social media pages and other related websites. Other recommendations that are part of the touchless solution include increased usage of digital retailing tools, paperless contract signing, enhanced digital client communication, leveraging technology to manage fleets, and improved test drives and delivery processes.
  • On May 6, Cox Automotive mentioned that its new valuations and appraisals platform called eVA can be used in the part-exchange process. The platform can integrate vehicle valuations with an appraisal tool that links the online to the physical store customer touchpoint. Once deployed into a dealer’s website, a customer can look for their new car, have their existing car assessed, then integrate that into the new transaction as a part-exchange.
Part
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Part
02

Carfax Briefing

Carfax, inc. has not communicated about itself in the past seven days. Below is an explanation of the research strategy, as well as some useful information.
  • Carfax for Police is a program that furnishes law enforcement agencies with Carfax's data on old and new vehicles.
  • The program continues to host its training events virtually. On May 5, 2020, Carfax for Police hosted a webinar to teach Florida State Police how to use its investigative tools. Similar events targeting other states are scheduled for May 14, 2020.
  • In the past seven days, Carfax has only posted about its tools and products Facebook, Twitter, LinkedIn, and Instagram. It has not posted anything on YouTube in two months.
  • Carfax has not released any press statements since February 26, 2020, and it only posts content for car buyers on its blog. Carfax says that it uses PR Newswire to distribute its press releases; however, the latest press release from Carfax on PR Newswire is dated February 27, 2020.
  • Carfax updated its Car Care app on May 4, 2020, to fix a bug and add several features, but there is nothing indicative of the company's economic struggles (if any) or innovation.
  • Neither Carfax Canada nor IHS Markit (Carfax's owner) have provided any relevant or useful information on Carfax. A search for statements by the company or its employees through the public domain for any statements from media resources, third-party sites, and industry-focused resources such as MotorWeek, Car and Driver, and Motor Trend did not provide any relevant information.
Part
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Part
03

Carvana Briefing

Carvana is expanding its home delivery service to 100 additional cities. The company has also announced its financial results for the first quarter of 2020. The company is innovating by offering its customers touchless home delivery of vehicles and 90 days no-payment offer.

Statements

  • Carvana has published two formal press releases over the past 7 days.
  • On May 7, Carvana announced that it was expanding its home delivery service to "100 additional cities across 24 states to provide those who need to purchase a vehicle with an entirely online car buying experience".
  • On May 6, Carvana announced its financial results for the first quarter that ended on March 31, 2020. The company reported $1.098 billion in revenue and a total gross profit of $138.4 million.
  • On May 7, during the company's first-quarter earnings call, employees issued statements about the company's reaction to the coronavirus pandemic and future plans. Carvana's CEO, Ernie Garcia, briefly explained the measures the company had taken since the start of the pandemic such as employees working from home, reduction of travel budgets, and reduction of working hours.

Signs of Recent Negative Economic Impact

  • According to CNBC, Carvana reported a net loss of $183.6 million for the first quarter of 2020. This was more than double the company's 2019 first-quarter loss. The adjusted net loss was $1.18 per share.
  • On May 6, Carvana's shares "fell nearly 8% in the extended session" after the company reported a wide adjusted loss. The company's stock is "down 1% this year".
  • In a communication to shareholders, Carvana said that COVID-19 "brought unprecedented change at an unprecedented pace".

Company Innovation

  • Carvana is implementing touchless home delivery of vehicles to its customers. This is an innovative way for car buyers to receive their vehicles without the need to be in direct contact with Carvana's team members. The company is committed to offering its customers "the safest and easiest experience to buy a car".
  • Additionally, Carvana is offering its customers 90 days no-payment offer to support them during the coronavirus pandemic.
Part
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Part
04

Car Gurus Briefing

Information regarding news and press release statements, negative economic impacts, and current innovations by CarGurus has been provided below.

Press Releases

  • On 10 April 2020, CarGurus published a post on its Dealer Resource Center about the impact of COVID-19 on consumer sentiment. The company noted that many consumers feel that the economy is improving. However, CarGurus stated that it is still early to make strong predictions and that it will continue to conduct polls and share updates through its Consumer Insights and Industry Insights Team.
  • On 6 May 2020, CarGurus published a post on its Dealer Resource Center highlighting how the company is driving customer engagement using contactless services. The company mentions the adjustments it has made to its website such as adding an onsite banner that promotes contactless services and the marketing campaign it has launched on YouTube, Instagram, and Facebook.
  • On 7 May 2020, CarGurus released a statement on the company’s First Quarter 2020 results. The company reported that the revenue was $157.7 million, which was a 17% year-over-year increase. In addition, the article notes that CarGurus had strong financial results in the first two months of 2020 with January and February visitors reaching 40.1 and 40.3 million respectively.

Negative Economic Impact on the Company

  • COVID-19 has had a negative impact on CarGurus because several states have put in place stay-at-home orders that restrict the buying and selling of automobiles. In such cases, many of the dealerships are not considered essential services.
  • In addition, CarGurus’ revenue has decreased as a result of the COVID-19 pandemic as a result of dealer cancellations. The company has taken measures, such as reducing its workforce, reducing spending in consumer marketing, and decreasing salaries by up to 50% for the next three months.

Current Innovations

  • In response to COVID-19, CarGurus stopped its marketplace operations in Spain, Italy, and Germany. In addition, the company halted all its international expansion efforts to focus on human and financial resources in United Kingdom and Canada, which are established international markets.
  • CarGurus has introduced chat interactions and Whatsapp text in the UK as a social distancing measure in response to COVID-19. In addition, the company has been sharing information with dealers on current product developments by the company and how they can manage the global health crisis through its Dealer Resource Center.

Part
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Part
05

Car AutoNation Briefing

Between May 3rd and May 10th, Autonation announced that it would release its financial report for the first quarter of 2020 and that it would partner with the American Cancer Society to intensify its support to protect patients who are vulnerable in this global COVID-19 pandemic. These insights have been gathered from press releases, industry reports, and social media posts.

2020's First Quarter Earnings

The American Cancer Society Partnership

  • On Tuesday, May 5th, Autonation announced that it would partner with the American Cancer Society (ACS) to ensure that cancer patients still get the assistance they need through this COVID-19 crisis. This partnership aims at raising funds that will support cancer patients.
  • This announcement was made on social media sites with the hashtag, #GivingTuesdayNow. It gives users a chance to donate in-store or online.
  • This company has intensified its support for cancer patients who are increasingly vulnerable in this global pandemic. Autonation confirms that this partnership will extend beyond this pandemic, in support of the shared vision of a cancer-free world.
  • Beginning May 5th, customers of Autonation will be able to donate towards the ACS. They will be able to do so via credit card terminals available across all the 325 locations. 100% of all the donations will go directly to the fund.
  • On May 5th, Autonation tweeted this: "On #GivingTuesdayNow, and every day AutoNation proudly supports the AmericanCancer Covid-19 Response Fund. Donate in store or visit http://cancer.org/givingtuesdaynow. #DrivePink."
  • The cover photo for their Facebook page reads, "Drive Pink, Drive Safe, Drive Now."

Research Strategy

Our research team was able to identify two major press releases/announcements that the company made between May 3rd and May 10th. These announcements have been identified across various sources/platforms. A thorough search of the company's social media sources and industry reports was unable to find any other additional statements/press releases/presentations made within this time-frame.
Part
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of six
Part
06

Car Buyer Behavior Changes 5/3 - 5/10

Consumer behavior shifts associated with the automotive industry during the week of May 3-May 10, 2020, include consumer confidence negatively impacting expected car buying, the importance of safety features and financial incentives in consumer car decision-making, a decline in used car buying, and interest in a fully virtual car shopping experience. Top "car buying" queries relate to used and new car buying, online car buying and virtual auto marketplaces, and auto insurance.

Declining Consumer Confidence Negatively Impacting Expected Car Buying

  • According to an IPSOS poll of 1,000 US adults conducted May 5-6, 2020, 72% say they are less comfortable making a major purchase, such as a car, compared to 6 months ago.
  • The consumer confidence index dropped 2 points compared to last week, eliminating the gains observed during the second half of April.
  • In a separate IPSOS survey, published May 5, 2020, 16% of US consumers reported being less likely to buy or lease a car, compared to pre-COVID-19.
"Purchase Vehicle Intention Impact After COVID-19 Outbreak (n=2,891)"

Growing Emphasis on Safety Features in Auto Decision-Making

  • Results of an IPSOS global survey (including respondents from the United States) among 11,000 auto "intenders" (those planning to buy or lease a vehicle in the next 18 months), released May 6, 2020, highlights safety as the top reason for an increasing or constant likelihood of automobile purchase.
  • A trend toward social distancing is continuing to drive this shift toward safety and personal protection, and away from public transportation, among US consumers.
"Top Reasons to Maintain/Increase Purchase Interest (n=2,784), globally all countries combined"
  • In a report published on May 4, 2020, McKinsey notes that many people will switch to a transport mode that reduces their chance of infection.
  • In their weekly briefing, published May 5, 2020, Counterpoint research consultancy notes that features being requested by car buyers include those that "prevent the ingress of viral and bacterial contagions", such as anti-bacterial or self-cleaning surface treatments. These are especially important for those in vulnerable age groups and those that spend more time in their cars.

Continued Trend Toward Fully Online Car Shopping

  • According to a recent "Google Auto Pulse" survey (reported in May 2020), 18% of respondents planning to buy a vehicle in the next 12 months report that online car buying options would accelerate their purchase.
  • On May 6, 2020, IPSOS reported that 33% of global car buying "intenders" (including US consumers) would like a fully virtual car shopping and buying experience.
"Interest in Completing Entirely Online (n=11,000), globally all countries combined"
  • Top virtual features for those in the market for an automobile purchase, as ranked in the "Google Auto Pulse" survey, include video review, a digital showroom, an online configurator, a virtual test drive feature, and videoconferencing.
  • JD Power notes on May 6, 2020, that many car manufacturers (such as Fiat) are "dramatically accelerating" online buying programs and tools, as American consumers continue to self-isolate.

Declining Used Car Buying Despite Lower Used Car Prices

  • Sales of used cars in the US declined in April, due to increased unemployment, auto sales bans (associated with COVID-19 restrictions), and concerns about economic and health issues.
  • According to Auto Finance News (reported May 7, 2020), used car values declined 11.4% between March and April, a 9.2% year-over-year decrease, and the lowest level in three years, driven by an increase in inventory.
  • While all segments of used cars took longer to sell, it appears Tesla electric cars have been more impacted than most. In March, less than half of their used cars took 30 days to sell, compared to 71.5% of used Tesla cars selling in 30 days in February.
  • There was some indication of a small recovery in sales toward the end of April.

Aggressive Financing Options Drive Increased Intention To Purchase Automobiles

  • An Autolist poll of 1,436 US shoppers, published May 4, 2020, reported that zero-percent financing (48%), flexible payment plans (32%), and deferred loan or lease payment (27%), were the top incentives driving increased intent to buy or lease a car during the COVID-19 pandemic.

Top Search Queries and Topics

Top Five Car Buying Search Queries

Buying a Used Car

  • "Buying a used car" (or "buying used car") was the top search query related to car buying between May 3-May 10, 2020. This search is related to purchasing automobiles as it focuses on the process and 'watchouts' associated with used car buying, such as this May 7, 2020, Edmunds article, "How to Buy a Used Car in 10 Steps."

Buying a New Car

  • "Buying a New Car" was a top search query, just after "buying a used car", between May 3-May 10, 2020. This search is related to purchasing automobiles as it focuses on the process of buying a new car, but also showcases recent news articles associated with buying a new car, such as this Consumer Reports article discussing new car incentives for health care workers.

Cars

  • A general search for "cars" was a top query between May 3-May 10, 2020. This search is related to purchasing automobiles as it offers results relating to car marketplaces, such as cars. com. It also provides news results, such as this article from the Detroit Free Press, which discusses declining used car values.

Car Insurance

  • "Car insurance" was a top search query between May 3-May 10, 2020. This search is related to purchasing automobiles as it brings up alternative insurance provider websites for auto insurance quotes, such as this Allstate website.

Online Car Buying

  • "Online car buying" was a top search query between May 3-May 10, 2020. This search is related to automobile purchasing as it reports results related to online auto marketplaces, where cars can be researched and purchased online, such as Carvana.

Research Methodology

To identify ways in which consumer behavior is shifting within the auto industry between May 3-May 10, 2020, we leveraged recent surveys that focused on purchase intentions and priorities related to car buying, expert thought leadership and blogs, news articles and reported sales figures and trends. We used resources that were published between May 3-May 10, 2020 and related to recent car buying behavior shifts, as well as surveys that were conducted between May 3 and May 10, related to expected changes in consumer behavior and attitudes toward car buying. We leveraged global surveys only if United States respondents were included, and verified the insights with additional US-focused resources when possible. Some observed and indicated behavior shifts were seen in previous periods as well. To identify top search queries/topics during the past 7 days related to automobile purchasing, we leveraged past 7-day Google Trend topics and search queries related to "car buying."






Sources
Sources

From Part 06