Trade News

Brand loyalty remains the magic ingredient for automakers as they fight for position in 2020.

But that's not enough, a panel of industry trackers told an audience at the annual Franchise Assessment Review here Friday at the J.D. Power Auto Summit.

Brand loyalty must be coupled with an automaker's ability to reel in new customers if the brand expects to grow, said Tyson Jominy, vice president for data and analytics at J.D. Power.

"Customer loyalty illustrates how well a brand is doing," Jominy said. "But if it's not also conquesting new customers, the business won't be sustainable in the long run."

Retaining customers lowers business costs by taking the pressure off of marketing and incentive spending, Jominy said outside the assessment review, which is an off-the-record discussion of brand specifics for a mostly dealer audience.

The factors driving loyalty in the market are product quality, residual value…

When a dealership lot has two identical vehicles — down to the trim level, color and even sticker price — they can still end up with a significant price difference that leaves customers perplexed.

Why is one vehicle $1,000 less than the one next to it? It may have been on the lot 100 days longer, for example, but such details aren't apparent to customers, said Brad Korner, general manager of Cox Automotive Rates & Incentives.

Some dealers and automakers are on a mission to eliminate this situation.

Automaker incentives can create a wall between the customer and the dealership. Incentives going directly to consumers can create confusion and mistrust, dealers say, and need to be dramatically simplified.

"Overly complex incentives, incentives that aren't available to every customer, every dealer or even every vehicle in the vehicle line — they destroy customer confidence in dealers and destroy our profitability," sai…

What do you consider the main focus of the auto finance industry in 2020?

Laurie Foster, founder, Foster Growth Strategies: "This length-of-the-loan thing is going to be something that they have to answer because everybody's underwater on their cars. And so that's going to slow down the pace of people buying their next car."

Shawn Allgood, head of Chrysler Capital and auto relationships, Santander Consumer USA Holdings: "This is the year where e-contracting will likely become more and more common for dealers. I think dealers are going to force lenders to get involved in that, and technology that includes early fraud detection."

Alex Yurchenko, vice president of data science and analytics, Black Book: "Managing risk. Their own risk. The amount of loans is increasing, the length of the loan is increasing. Lease rates are at a record height. So they have a lot of exposure."

Kyle Birch, president of North American operati…

Cars.com is unveiling a digital video marketing strategy to help dealerships more efficiently target would-be car buyers.

The Chicago dealership technology company unveiled Fuel In-Market Video this week and will introduce it to dealers during the NADA Show.

Cars.com envisions Fuel as a smarter marketing option than TV advertising, which it says casts too wide a net. Fuel will draw on Cars.com's audience data to target shoppers it senses are in the market.

"The dealer's ad will appear where we think is most appropriate," Dean Evans told Automotive News. The former Hyundai and Subaru marketing chief was hired last fall to lead Cars.com's digital marketing initiative. He added that the multichannel approach could include such modes as cellphone or the Hulu streaming service.

Dealerships will be able to access advertising that can be customized to fit their brand and offers, Cars.com said.

Fuel has been pilo…

Volkswagen dealers will learn Sunday what assistance the brand will offer to help convert their facilities to begin selling at least three new battery-electric vehicles starting this year.

Volkswagen of America CEO Scott Keogh and sales head Duncan Movassaghi will lay out the assistance plan at the VW make meeting.

Full details weren't available before press time, but John Luciano, chairman of the Volkswagen National Dealer Advisory Council, said plans he's seen should mean the vast majority of Volkswagen's 650 U.S. dealers will participate.

"It's got heavy, heavy support with co-op, so dealers will be able to use those funds for what they need to do," said Luciano, who is also general manager of Street Volkswagen of Amarillo in Texas.

Volkswagen Group, which is spending about $66 billion globally in an effort to become the world's largest manufacturer of BEVs across its brands, will bring a Tiguan-sized electric cros…

State and federal regulatory activity and concerns over what the results of the 2020 presidential election might mean for the auto industry were hot topics at the American Financial Services Association conference this week in Las Vegas.

Auto lender and dealer eyes are on Washington regarding topics such as stagnation on changes to the Military Lending Act, the rise of state-level consumer financial protection bureaus and who will occupy the White House next year.

Danielle Fagre Arlowe, senior vice president at AFSA, said concern about the Military Lending Act dominates dealer discussions, while state-level consumer protection bureaus could also cause trouble for auto retailers.

California's so-called "mini-CFPB" plans to partially fund its actions through enforcement activities, Arlowe said, which AFSA finds troubling.

"There's a built-in incentive to have enforcement actions regardless of what's going on in the ind…

Karma Automotive, the U.S. electric-vehicle maker owned by Chinese auto parts conglomerate Wanxiang Group, is cutting jobs for the second time in several months.

The company said the latest round of layoffs will affect 60 people at its U.S. headquarter in Irvine, Calif., and an unspecified number of workers at a manufacturing plant in Moreno Valley, Calif., where the Revero is assembled.

In November, the company said it would cut 200 workers in Irvine under a broad restructuring that would see the company license and market technology to outsiders.

Karma has been pitching excess manufacturing capacity as well as its product development and vehicle integration expertise to other automakers under a new business plan called 4+1.

The latest layoffs -- mostly supervisory and engineering posts -- were disclosed in a notice to the California Employment Development Department under the state's Worker Adjustment and Retraining Notification Act.

The …