Cox Automotive Competitor Briefings

Part
01
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Part
01

Cox Automotive Briefing

From May 10 – May 16, Cox Automotive reported that it's taking several measures to temporarily reduce its payroll costs, is implementing strict safety measures across all of its locations, and that its Manheim brand is recommencing auctions online.

Company Communication

  • On May 11, Cox reported that its Manheim brand is recommencing auctions, but strictly online now. The auction will feature various vehicles, which will be available for purchase "through ‘buy now’ events and ‘virtual auctions’ via Simulcast." The additional Simulcast fee will also be waived for buyers.
  • On May 15, Cox published a video about how the company is applying safety measures across all of its locations. These measures include daily body temperature checks when employees arrive to work, social distancing by maintaining two meters apart from colleagues, sanitizing work areas and equipment, providing PPE for team members when required, and posting large signage around the office about safety measures. While many of Cox's locations restrict access to customers, a few areas of the company are allowing customers to purchase online through Simulcast, as well as allowing them to collect vehicles in a "safe and secure environment.
  • On May 15, it was reported that Cox was taking some measures due to the pandemic negatively affecting its business. Some of these measures include reducing hours and pays for hourly workers, eliminating most consultants and contractors, "hiring only limited positions to support business demand," and canceling events and sponsorships.

Negative Economic Impact on the Company

  • On May 12, Cox Automotive's chief economist, Jonathan Smoke, reported that new vehicle sales were down by 37% year over year last week, while used vehicle sales were down 15% year over year last week. Smoke said a major concern is the number of unemployed people across the U.S. Smoke said, "It will be the key to see what the job numbers do over the next several weeks, as well as what happens to income and credit," since those are the key to determine whether people are confident to purchase vehicles. In the meantime, Cox said since it can't predict how long the pandemic will last and its impact on the company's operations, it's furloughing employees, including 260 in Clarksville and Indianapolis and 305 in Cranberry Township in Pennsylvania. Cox said the furloughs may be longer than 16 weeks because of the pandemic.
  • On May 15, it was reported that the COVID-19 pandemic forced many DMV offices to close, which has also disrupted "some Americans from taking possession of cars and trucks." This along with "sharp declines in wholesale transactions" has caused Cox to make several measures to "temporarily reduce its payroll costs."

Cox Automotive Innovation

  • On May 11, Cox Automotive's RideKleen mobility brand introduced "a vehicle hygiene product solution and service called PureProtect by RideKleen," which disinfects cars and offers "air cleanse protection for fleet owners and operators, riders and drivers."
  • On May 15, Cox's chief customer officer, James Leese, reported that online remarketing is now more crucial than ever before due to the COVID-19 pandemic and lock downs. Leese said the company's Dealer Auction is an example of an online remarketing platform that is providing dealers with accurate live market data. Leese said by offering "accurate temperature check of the market at any time," it allows dealers to "make smart stocking decisions during the crucial post-lockdown period."
Part
02
of six
Part
02

Carvana Briefing

Carvana's plan to develop an "automotive processing facility" in Ohio might no longer be viable due to the effects of the pandemic. There were no statements by the company or its employees regarding its business in the past seven days. Below is an overview of the findings, as well as an explanation of the methodology.

Statements/Press Releases

  • Carvana has neither published any articles nor released any statements in the past seven days. The last news release was on May 07, 2020.
  • There were no scheduled events or presentations in the past week, and Carvana has only posted about its tools and products on Facebook, Twitter, and Instagram in the past seven days. There were no sentiments from the company, or its officials, related to their business on media resources or third-party sites.

Signs of Negative Economic Impact

  • On May 13, 2020, the Cincinnati Business Courier reported that Carvana intended to construct a "200,000-square-foot automotive processing facility" in Butler County, Ohio. The development would cost up to $40 million and add 400 jobs to the local economy.
  • However, Butler County officials indicated that the project might not be a good fit after the pandemic since there is a possibility that locals may seek different opportunities. Carvana officials were not available for comment.
  • According to MarketWatch, Carvana's stock price closed at $92.26, which was a $0.40 drop from the previous close. This represented a -7.42% 5-day drop.

Innovation

  • On May 14, 2020, Carvana live-streamed a "behind-the-scenes tour" of the Carvana Vending Machine to explain to customers how it works.
  • The Instagram live stream was advertised on Facebook and Twitter. It also involved a question and answer session with the company's "vending machine specialist."

Research Strategy

To provide insights on what Carvana is currently communicating about itself, as well as signs of negative economic impact and current innovations, we searched through Carvana's news releases, blogs, website, resources page, and social media pages. However, we could not find any business-related statements, or any information on its innovation in the past seven days. We also searched through the public domain for media resources, third-party sites, and industry-focused resources containing any relevant data; however, there was only information on how the situation in the broader economy is impacting the company. Regarding innovation, we could only establish that the company live streamed an event in the past seven days. There were no statements from the company or sentiments from its officials regarding its business in the past seven days.
Part
03
of six
Part
03

Carfax Briefing

Recent statements by Carfax indicate that the company has recently seen an uptick in consumer activity related to its tools and products, and that the pandemic may create new incentives for consumers to use its services as used car buying rebounds.

Company Statements — Last 30 Days

  • Perhaps the most significant and comprehensive statements that Carfax has made in the last 30 dais about the company's business were included in an April 28, 2020 YouTube interview with MotorWeek.
  • Specifically, the automotive trade interviewed Carfax Public Relations Director Emilie Voss, who made several remarks related to how the coronavirus outbreak has impacted Carfax's business, including the following:
    • Initially, Ms. Voss discussed how Carfax's business as well as the larger auto industry has shifted from a "record year" of used car sales to a "significant drop in retail sales," resulting from nationwide shutdowns due to the pandemic.
    • However, Ms. Voss added that Carfax has seen "good signs" on the consumer side in the "last few days and week," adding that Carfax's used car listings on Facebook Marketplace have reached "pre-COVID-19 levels" in terms of customer/dealer traffic.
    • Additionally, Ms. Voss forecast that Carfax and the US auto marketplace will see a "big increase" in the supply of used cars in the "next four to six months," based on trends witnessed in the wake of the 2008 recession.
    • While Ms. Voss added that this supply glut will decrease prices for used cars in the interim, she also stated that used car prices will likely rebound in the next two to three years for used cars less than 3 years old given that auto manufacturers are currently curtailing production.
    • Ultimately, these used car price fluctuations may create additional incentives for used car buyers to leverage the Carfax History-Based Value Tool, given that it combines vehicle-specific pricing with information about current market conditions.
  • Approximately two weeks prior to the interview with Ms. Voss (in mid-April), Carfax also published a statement on LinkedIn related to COVID-19, including comments that Carfax is "still figuring things out" amid the "unprecedented" impacts of the coronavirus, but remains available to support customers.
  • Notably, the lack of any commentary within this statement related to how the consumer experience with Carfax may change during the pandemic implies that the company's existing consumer interfaces and business processes have not been significantly affected by the coronavirus outbreak.
  • More recently, on May 12, 2020, Carfax also published a press release, within which the company outlined suggestions for used car shoppers during COVID-19.
  • In this case, the extensive discussion of how and where Carfax's services may be useful to car buyers at this time implies that the company's product offerings remain relevant and accessible to customers, despite the "changing circumstances" resulting from the pandemic.

Company Innovation & Signs of Recent Negative Economic Impact — Last 7 Days

Part
04
of six
Part
04

Car Gurus Briefing

CarGurus recently conducted a COVID-19 Sentiment Study and released its findings on US car buyers' sentiments toward car purchasing during the pandemic. Despite some negative impacts the coronavirus has caused the company like clients' delay on planned purchases, it has currently deployed innovations and changes to its business operations. These include comprehensive car valuation analytics and online reputation management as its way to respond to the effects of COVID-19.

Press Releases

  • In an article posted by George Augustaitis, CarGurus' director of automotive industry analytics, its auto sales seasonality trends were broken due to COVID-19. However, since vehicles are necessities, these purchases were merely delayed but not canceled as about 68% of those who initially planned to buy vehicles stated that their purchases are still essential.
  • In a recent COVID-19 Sentiment Study conducted by CarGurus to its 722 customers, the company found that 61% of its clients/respondents believe that it is safer to purchase vehicles from dealerships than from a private party. This is because dealers can offer contactless services and virtual appointments.
  • Though the uncertainty caused by COVID-19 resulted in declining consumer confidence, CarGurus stated that since the last few weeks of April, the company's sales leads are starting to increase as its car shoppers' activities are starting to ramp up again.
  • In the UK, CarGurus has seen about 17.5% increase in searches for used cars on its marketplace on May 10-11. It is because the UK government announced on May 10 that workers can return to work as long as its safe but suggested them to avoid public transport.
  • As of May 14, 2020, almost 50% of CarGurus' car inventory falls under the $10,000 to $30,000 price range, as well as 45% of all its leads in the US at CarGurus website. Its US leads for mid-tier price bracket are now back to the same February level.

Recent Negative Impact on the Company

  • In the same CarGurus study, it was found that 79% of the respondents who were planning to buy a car are now expecting to make a purchase later than the original plan as a result of the pandemic. Those who can still buy during the pandemic are more likely to buy cars only due to their necessity. This has significantly affected the usual sales trend of the company.
  • According to a May 15 article posted by Augustaitis, low-priced vehicles will be the ones to have the slowest recovery. He noted that due to COVID-19, unemployment increased the most to those who generally have the lower median wages in which banks typically limit the amount they will lend. This lower income resulted in buyers looking for less expensive vehicles.
  • As of the above-mentioned article's date of posting, CarGuru's US lead submission for the vehicles with the two lowest price ranges (below $5,000 and $5,000-$10,000) is still below its February levels.

Innovations/Changes in Business Operations as a Response to COVID-19

  • CarGurus combined its comprehensive car valuation analytics to analyze dealer reviews and bring transparency and trust to its marketplace. It has introduced new features that help dealers highlight their purchase options like contactless purchases, socially distant appointments, and free drop off at home.
  • The company considers online reputation management as the "key area of opportunity" during the COVID-19 lockdown as 50% of its clients are found to choose a car dealer depending on online reviews. The need for "impressing" online customers during this time is considered by the company as an important factor among clients 18-34 years old who are most likely to be influenced by reviews online.
  • Car buyers are more likely to become cautious of their vehicle purchases due to the impact of COVID-19. At CarGurus, Augustaitis stated that the company makes sure it has the right mix of inventory as buyers also adjust their budgets as they feel less confident about the economy.
Part
05
of six
Part
05

Car AutoNation Briefing

AutoNation, the largest automotive retailer in the US, has made a few announcements within the last month including the release of its 2020 first-quarter financial results and new executive appointments. The company has also experienced the negative economic impacts of COVID-19 as it reported a net loss of $232 million after its first quarter, on top of crashing stocks and market value. The company, however, has responded to the pandemic by cutting costs and repurchasing shares.

Brand Messaging

  • A thorough analysis of AutoNation's blog, press releases, ads, social media posts, as well as other third-party media resources shows that the company has not substantially communicated about itself in the past seven days (May 10-16).
  • The above resources mostly provide pieces of information about its business/corporate activities, products, offers, and financial details.
  • Nonetheless, in its quarterly financial report published on May 11, it referred to itself as "the largest automotive retailer in the United States — operating 317 new vehicle franchises from 231 stores located in the United States and its stores include some of the most recognizable and well-known in its key markets by selling 32 different new vehicle brands."
  • In the press release where it announced similar results, it was referred to as "America's largest and most recognized automotive retailer."

Company Statements/Press Releases

#1: 2020 First Quarter Financial Reports

  • On May 11, 2020, AutoNation released its first-quarter financial results. The company "reported first-quarter 2020 GAAP net loss from continuing operations of $232 million or $2.58 per share, compared to net income from continuing operations of $92 million or $1.02 per share, in the prior-year period."
  • AutoNation reported that "the COVID-19 pandemic and related shelter in place orders enacted in the second half of March 2020 caused significant disruption to its first-quarter 2020 results."

#2: AutoNation Partners with the American Cancer Society to Raise Funds for COVID-19 Response Fund

  • On May 5, 2020, AutoNation reaffirmed its commitment to driving out cancer by partnering with the American Cancer Society through its DRV PNK Initiative.
  • The partnership will "help raise funds and awareness for its COVID-19 Response Fund by offering its customers the opportunity to donate to the American Cancer Society via the credit card terminals in all 325 AutoNation locations, with 100% of all donations going directly to the fund."
  • Through its DRV PNK Initiative, the company revealed that it had already donated about $24 million to cancer research and treatment, and it is increasing its effort to achieve more during the pandemic.

#3: AutoNation Announces New Chief Customer Experience Officer

  • On April 29, "AutoNation announced that Marc Cannon, its executive vice president and chief marketing officer, has been appointed the executive vice president and chief customer experience officer.
  • "Marc Cannon is known to be an innovative leader with over 30 years of experience in establishing brands, addressing digital disruption, driving corporate social responsibility, and crisis management."
  • As part of his responsibilities, he will continue to lead branding, advertising, marketing, ecommerce, customer relations, and communications, as well as technology.

#4: AutoNation Announces New President

  • On April 22, AutoNation named Jim Bender the new president and chief operating officer. "Jim Bender has held several key leadership positions within AutoNation for over 20 years and has implemented successful initiatives which have resulted in record-breaking results over the last year."
  • He will continue to manage and oversee the day-to-day business activities at its more than 325 locations across the US.


Signs of Recent Negative Economic Impact

#1: Poor Financial Performance First Quarter 2020

  • Following the release of its first-quarter financial results on May 11, AutoNation, as highlighted above, recorded $232 million in net losses from continuing operations, in large measures, from the impact of COVID-19.
  • Revenue for the company fell by 6.3% to $4.7 billion compared to the previous year.
  • It followed that "the states — Florida, Texas and California — from which it derives about 95% of its total revenue were under extensive 'shelter in place' or 'stay at home' orders from federal, state, and local governments" — a move that adversely affected or restricted its business operations.

#2: Falling Stocks and Market Capitalization


Current Response To COVID-19

#1: Share Repurchase Program

  • Due to the effect of the pandemic on its business activities, which led to reported losses in the first quarter of 2020 and falling stocks, AutoNation revealed on May 11 that it had halted its share repurchase program during the first quarter.
  • Before this, it repurchased 2.5 million shares of common stock for an aggregate purchase price of $80 million during the first quarter of 2020. And as of May 8, it had about $139 million remaining board authorization for share repurchase and 87 million shares outstanding.
  • Companies repurchase shares for various reasons such as reducing the number of shares to facilitate the growth of the earnings per share (EPS), revenue and cash flow.

#2: Cost Cutting

  • The CEO of AutoNation, Mike Jackson, revealed that in responding to the adverse impacts of the pandemic on its sales, they had to take actions to protect the company by ensuring that it remains afloat, as published by CNBC on the May 12.
  • These include the furloughing of 7,000 employees, the reduction of executive pay, and the postponement of more than $50 million of capital spending.
Part
06
of six
Part
06

Car Buyer Behavior Changes 5/10 - 5/16

Five automotive industry consumer behavior shifts were identified between May 10 and May 16, 2020. These include increased interest among car buying among millennials, growing interest and usage of "concierge" services, rising trips to dealer showrooms, more consumer engagement in digital industry events, and an increasing percentage of consumers trading in cars with negative equity. Current industry financing incentives, a growing comfort with online car shopping, and financial concerns, may be driving top queries related to car buying, which include researching and buying cars online and saving money on car insurance.

More Millennials Consider Car Purchases

  • An April 2020 Capgemini survey found that younger (under 35) consumers were demonstrating greater intent to purchase a vehicle compared to older consumers.
  • According to a Harris Poll weekly consumer tracker of over 2,000 US adults, millennials are showing a slight upward trend in car buying intent from April 20 to May 11. In the most recent survey (conducted between May 8-10), just under a quarter (23%) of younger millennials (18-34) and 24% of older millennials (35-49) intend to buy a car once "things return to normal and businesses reopen." In mid-April, 21% of those between 18-34 and 17% of those between 35-49 said they would likely buy a car when things return to normal.
  • The Capgemini survey found that, despite a growing interest among younger consumers to purchase a car, financing could be a barrier for some.
  • Millennials are considered a key group to engage as the auto industry works to recover from COVID-19. Key dealer recommendations including data mining to target this audience and offering a diverse array of inventory, with a focus on sustainability.

Increasing Usage of "Concierge" Services

  • In a May 16, 2020, article focused on COVID-19 car buying behavior changes, Forbes noted services that virtually coordinate test-drives, home delivery ("concierge services"), and other aspects of the virtual car shopping experience are continuing to grow.
  • Carvana reported a 16% increase in miles driven by their auto haulers from February to March.
  • Steve Kalafer, chairman of Flemington Car and Truck dealership, said about the trend toward concierge services: "We're delivering cars to people's homes so they can test drive. Many times, they will let consumers try about 10 different cars before they purchase."
  • Ernie Garcia, Carvana CEO, commented on the trend: "Consumers continue to shop for cars online and more are turning to home vehicle delivery versus pickup for their online car purchase."
  • Car manufacturers are responding to this behavior shift by launching their own concierge services.
  • On May 11, Gemini announced the launch of Gemini Concierge, positioned as a "complimentary personal shopping service" and the "easiest and newest way to shop for a vehicle"

Increasing Trips To Dealerships

  • Car dealerships are starting to re-open their showrooms as states begin to lift their lockdown restrictions.
  • According to Gravy Analytics, consumer foot traffic to dealerships declined 76% between February 2 and April 12, 2020, but increased over 35% from April 12 to May.
  • Some reasons for preference for an in-person auto buying experience include viewing vehicles, test-driving a car, and signing final paperwork.
  • Even with dealers adapting to virtual sales models, dealerships are modifying the in-store experience to entice consumers to showroom. Safety provisions, such as using Plexiglas barriers to separate customers and employees, providing sanitizer and masks, requiring social distancing, locking cars on display, and appointment-only showroom shopping, are increasingly being implemented to reassure consumers who want to shop for an automobile in-person.

Consumers Engaging In Digital Automotive Industry Events

  • With the cancellation of in-person events, such as trade shows, consumers are engaging in digital industry events to view new car launches.
  • Hyundai launched its 2021 Elantra with a series of live-stream events, which garnered 800,000 views.
  • Other companies who have turned to online events to preview their automobile innovations include BMW and Audi.
  • Lamborghini was planning a May virtual launch of a new model.
  • Volkswagen considers interactive virtual show visits, in which consumers can experience their new models, as a way to reach consumers in the future. Jochen Sengpiehl, chief marketing officer of the Volkswagen Passenger Cars brand, said about the virtual visit experience, "Our first digital booth is only the opening chapter in our new sustainable concept for future innovative online experiences."

More Consumers Trading In Cars With Negative Equity

  • According to recent research by Edmunds, consumers are increasingly trading in vehicles with negative equity when buying a car, representing 44% of new vehicles in April 2020, compared to 40% of new vehicles in March 2020 and 33% of new vehicles in April 2019.
  • Automotive industry experts attribute this spike in negative-equity trade-ins to the aggressive financing incentives currently being offered by car manufacturers.
  • In addition to the spike in negative equity trade-ins, the amount of negative equity also reached an all time high of $5,571, further reflecting consumers' interest in taking advantage of generous incentive offers.
  • Ivan Drury, Edmunds senior manager of insights reflects on this trend as an opportunity for consumers: "If you play your cards right, this could be an opportunity to essentially reset your loan and acquire a new vehicle for a similar or smaller monthly payment."

Top Car Buying Topics and Queries: May 10-May 16

  • Top car buying topics between May 10-May 16, 2020 include "Car-transportation mode", "Used car", "Car dealership", "Credit", and "Lease."
  • Top car buying queries between May 10-May 15, 2020 related to the purchase of used cars ("buying used car", "used car", "buying a used car") and new cars ("buying new car" and "buying a new car"). Additional top queries include "cars", "car insurance", and "online car buying."
  • Toward the end of the week of May 10-May 16, car buying searches trended up slightly. Top rising search topics related to Suburu, CarGurus, and Hyundai.

Used Car Purchase Queries ("buying used car")

  • This query is related to purchasing automobiles as it results in news highlighting why it currently a good time to purchase a used car.

New Car Purchase Queries ("buying new car")

  • This query is related to purchasing automobiles as it results in news that sheds light on some incentives that are drawing consumers to car buying, such as this May 13, NPR article, "7-year No-Interest Loans What It Takes To Sell Cars In A Pandemic."

Cars

  • This general search query highlights car marketplaces and research sites, such as Edmunds, for consumers to conduct online research, shopping and buying.

Car Insurance

  • In addition to providing alternative auto insurance provider websites, this query provides recent news resources intended to help consumers save money on car insurance, such as this article, published by Yahoo Finance on May 16, "How to Compare Car Insurance Quotes and Get Cheaper Rates."

Online Car Buying

  • This search focuses on browsing and buying new and used cars online, with a number of leading online automobile marketing places identified in the search.

Research Strategy

To identify consumer behavior shifts related to the automotive industry for the week of May 10, 2020, to May 16, 2020, we leveraged consumer surveys, polls, industry resources and thought leadership, industry news, expert publications, and observed behavior changes (such as foot traffic metrics, provided by Gravy Analytics). We also leveraged recent communication by some car dealerships or manufacturers, when relevant, to illustrate the behavior shift. Resources used to identify the behavior shifts were published between May 10, 2020, and May 16, 2020, though supporting information could be from slightly outside this time frame, if still relevant. Consumer surveys may have been fielded prior to May 10, 2020, but were considered relevant if highlighted in a resource published between May 10, 2020, and May 16, 2020, and fielded no earlier than April 2020. Behavior shifts identified did not duplicate previous research. Top and rising topics and queries were sourced from past 7-day Google Trends in the US, related to "car buying."



Sources
Sources

From Part 05
From Part 06
Quotes
  • ""Consumers continue to shop for cars online and more are turning to home vehicle delivery versus pickup for their online car purchase," says Ernie Garcia, Carvana's CEO."
  • "This type of virtual buying is often referred to as a "concierge" service. High-end car manufacturers have used it for a while. But now, says Kalafer, "it's the exclusive way to sell cars.""
  • " Carvana recorded a 16 percent increase in miles traveled by its haulers from February to March, suggesting a robust market for at-home deliveries. "
  • "According to Gravy Analytics, foot-traffic at dealerships for major car brands saw its steepest decline on April 12, with a 76% decrease in daily visitors since February 2. But there was also a rebound in traffic at dealerships as of May 1, with a 35% increase since April 12."
Quotes
  • "As circumstances have required postponing or canceling auto shows and large conferences, some original equipment manufacturers are delaying vehicle launches, while others are shifting to fully online launches for new vehicles. "
Quotes
  • "Thirty-five percent of all consumers are considering buying a car in 2020. However, the younger age groups are showing a stronger preference for ownership: as we see in Figure 7, 45% of people under 35 are considering buying a car."
  • "Two in five of the 18 to 24-year-olds in our research have used personal cars as their most used/most regular mode of transport. However, over the next six to nine months, 30% aim to use a car that they own as the most used/most regular mode of transportation. "