Hey, everyone. In case you missed it — we had a killer podcast drop last week with Michael Kelley, GM at Bourne’s Auto Center. Michael pulled back the curtain on what it really takes to build a used car empire. Give it a listen here.

—CDG

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Car Dealership Guy Week-in-Review

Each week, I curate the top 5 automotive industry headlines based on the topics CDG readers engaged with the most on social media. Let’s get started.

1. Major discounts on domestic brands ahead of Memorial Day

Top line: The share of 2023 model-year vehicles on dealer lots is 6.8%, almost mirroring the pre-pandemic (2019) share of 6.7%, leading to meaningful discounts for Memorial Day weekend. 

Domestic brands lead the charge for the most discounts.

Discount deep dive: 

• The $4,147 average discount on 2023 models is just $453 less than it was in 2019 when discounts on outgoing model year (2018) vehicles were $4,600.

• 52.6% of Dodge listings are 2023 models, and the average discount is $6,753.

• Chrysler also has a large share of 2023 listings at 38.4%, with an average discount of $6,252. 

• Buick is trying to offload their share of 2023 models (17.6%) by offering discounts of $4,256.

What our readers say: 

There’s also the return of low APR incentives, many at 0%. Why?

The industry keeps making more vehicles than are being sold.

2. New and used vehicle inventory rose at the start of May

At a glance: At the beginning of the month, vehicle inventory levels varied widely from brand to brand. Nearly a dozen automakers had over a 100 days' supply. These brands pulled the national average days’ supply up to 76 from 74 month-over-month. 

• The total U.S. supply of available unsold new vehicles was 2.84 million units as of May 2. 

• That is 961,000 units more or a 51% year-over-year.

Brand highlights:

• Stellantis brands at the start of May, continued to have days’ supply well above the national average. Days’ supply at Jeep rose 21% and Ram was up 14%. Both brands have more than double the industry average.

• Dodge had 151 days’ supply with Chrysler, which was marginally better at 143 days.

• Acura, Buick, BMW, Chevrolet, and GMC all hovered within 6 days of the industry average.

• Days’ supply at Toyota, Honda, and Lexus is under 50 days. At the lowest end of the spectrum, Toyota had an average of 30 days worth of supply.

Good news — boosted by the usual bump from Memorial Day sales and the return of more aggressive discounts, new car sales are expected to rise in May.

Here’s a question – how much would your business change if you had one more employee who works 24/7, answering questions, driving sales conversations, and setting up test drives–even when your dealership is closed?

Most AI solutions only act as a copilot–and a human still has to approve and use the content they create.

But now with Podium’s AI BDC – AI can take over tasks to respond instantly to every incoming lead without direct supervision.

The best part?

With a seamless handoff to staff on the sales floor, customers will never know they were interacting with an AI to begin with.

Click here to try Podium's AI BDC today.

3. Signs of optimism in May’s auto sales forecast

Driving the news:

• Sales: The seasonally adjusted annualized rate (SAAR), or annual sales pace for total new vehicle sales, is expected to be 16.1 million units, up 0.5 million units from May 2023.

• Volume: Analysts expect retail sales of new vehicles to reach 1,187,000 units, a 4.4% increase on a selling-day-adjusted basis.

• Inventory: Projected retail inventory will finish around 1.8 million units, a 0.6% increase from April 2024 and a 52.7% rise from May 2023.

What’s more: The uptick in inventory and return of incentives year-over-year has led to a drop in average new car transaction prices (ATP). Transaction prices are trending towards $45,033, down $1,045 or 2.3% from May 2023. This is great news for consumers. 

• But wait a minute, $45,000 is still a lot of money. Remember — it’s only an average. 

• Mainstream brands are still building less expensive new cars like the Hyundai Elantra (MSRP: $21,625), the Chevy Trailblazer (MSRP: $23,100), and the Ford Maverick (MSRP: $23,920).

EV outlook: “We’re seeing a ‘low tide moment’ for EVs right now, but it’s unclear how long it will last. EV market share peaked at 8.8% in April, with May expected to be down 0.4 percentage points,” said Elizabeth Krear, vice president, electric vehicle practice at J.D. Power.

Since 2021, J.D. Power has tracked consumer interest in EVs. For the first time, new car buyer interest dropped from the previous year.

4. Consumer attitudes toward EVs are cooling

Top line: Only 24% of car shoppers say they're "very likely" to consider an EV, down from 26% in 2023. Overall interest ("somewhat likely" or "very likely") also dropped to 58% from 61%.

Zooming in: 52% of non-EV buyers cite a lack of charging stations as a dealbreaker (up 3% from 2023).

What else is holding consumers back? Inflation is persistently high. Interest rates are elevated. And, there is limited growth in model availability.

Plus, there is still a meaningful knowledge gap when it comes to EV incentives. “approximately 40% of shoppers say they do not have a solid understanding of such incentives,” said Stewart Stropp, executive director of EV intelligence at J.D. Power. Yet, when consumers do have an understanding of the incentives available, they are more likely to consider an EV.

Are these results indicative of further declines in EV growth, or are these the natural ebbs and flows of adopting new tech? 

Well…real-world experiences of EV owners and dealers are at odds with many of the assumptions people make about the EV market.

5. Most EV owners ditch gas for life, dealers help drive sales

What’s happening: CDK’s EV Ownership Lifestyle study challenges many stereotypes, not only about what it’s like to drive an EV long-term but also about how dealers are driving the market forward.

Buy once, buy for life: Today's EV owners are more than tech enthusiasts testing out a new toy. 

• The vast majority (73%) of consumers who purchase an EV are so happy with their decision that they ditch gas-powered alternatives for life. That number holds steady for both Tesla and non-Tesla buyers.

The dealer perspective: Dealers may have reservations over EVs. But, they are one of the most influential forces driving electrification.

• Almost all EV owners surveyed completed their purchase on-site, both when shopping at franchised dealerships (95%) and at Tesla’s first-party storefronts (96%).

• More than half (54%) of non-Tesla EV owners bought an EV because dealership staff recommended one. This counters rumors that pro-ICE sales reps are discouraging shoppers from EV options.

Bottom line: There’s much more to the EV market than the raw sales numbers. Dealership business models and sales training are actively promoting EVs, countering the myth that auto retailing is ‘anti-EV.’

Always so much going on in the automotive industry – make sure you’re following along on X, LinkedIn and IG/FB for real-time updates.

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• More comfortable inside the dealership? Tom Whiteside Chrysler Dodge Jeep Ram has 5 open positions, including technicians, engineers, and sales associates.

• Interested in how EVs work at the wholesale level? Plug is looking to fill two business development roles.

• Are you an expert in dealership financials? HGreg is seeking a Senior Controller near Palmetto Bay, FL.

Looking to hire? Add your roles today—it’s 100% free.

Thanks for reading. Hit reply and let me know if you found this week-in-review valuable or have any feedback. I’ll see you next weekend.

—CDG

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