Why conquest sales will be tough this year

Thomas King: "A sale is a sale, but Gen Y's are particularly sensitive to new technology in shopping." Photo credit: JOE WILSSENS

NEW ORLEANS -- Conquesting customers will be a little tougher this year even though industry sales will rise, a senior industry analyst for J.D. Power and Associates predicted.

The industry is on track for 13.3 million retail sales in 2014, 500,000 more retail sales than in 2013, forecast Thomas King, senior director of consulting and analytics at J.D. Power. But there are new challenges to winning those sales in 2014.

Many of the potential new customers in 2014 will be young 20- and 30-something Gen Y shoppers who expect to make buying decisions through sophisticated online methods.

"A sale is a sale, but Gen Y's are particularly sensitive to new technology in shopping," King told the J.D. Power International Automotive Roundtable on Friday.

In 2008, 18 percent of all vehicle buyers selected their dealership based on online shopping. Last year 30 percent of them did, King said. Six percent of shoppers selected their financial lender online in 2008, while 11 percent of them did so in 2013.

Another challenge is that a growing number of those additional buyers are in the subprime credit sphere, King said. Dealers delivered vehicles to 2 million subprime customers last year, an increase from 1.7 million in 2012. Power forecasts 2.1 million subprime sales in 2014.

The industry's ongoing improvements in quality and service will also complicate dealer sales this year, King said.

According to J.D. Power data, overall industry quality improvements from 2008 to 2013 boosted customer satisfaction with their vehicles by 20 index points on Powers' APEAL index. APEAL measures owners' impressions of vehicle quality and dependability, as well as their satisfaction with service at the dealership.

A 20-point improvement is good news for everyone, King said. "But if folks are happier, it's going to be harder to get them to change brands," he said.

"We're seeing growth," King said. "But there isn't enough sales opportunity for everybody to be confident to capture the new growth."

You can reach Lindsay Chappell at lchappell@crain.com

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