04.16 · 2020-04-20 · Trajectory: China started seeing reversal of cases 4 weeks post quarantine...

04.16.20

At times of crisis, all dealers and automotive partners need to be armed

with the data necessary to make the smartest decisions for their business.

This market overview analyzes current government, OEM, and consumer

responses to the COVID-19 outbreak, as well as predictions for the future

impact of the pandemic.

● Trajectory: China started seeing reversal of cases 4 weeks post quarantine and 8 weeks post initial panic, and its

believed that the U.S. will follow a similar trajectory.

● TV/Radio/Internet/Streaming will primarily be consumed at the home.

○ More in home: Video, desktop traffic, streaming music and TV.

○ Significantly less Out of Home: mobile.

● Market Presence: We are advising our dealers to consider carefully any adjustments to their marketplace

presence, and to maintain a strong bias toward preserving all low funnel traffic to SRP, VDP or service pages.

○ These types of marketing are the lowest funnel customers and typically the most likely to buy a vehicle or to

schedule a service campaign. We recommend dealers to reassess their current marketing efforts and

consider reducing spend on branding campaigns and third-party listing sites.

● Consumer behavior will change during these turbulent times, but they will still expect you to offer them insight

into your brand.

● Digital Retailing: Dealers offering Free Home Delivery, Online Checkout, Over the Phone Sales, Delivery in the

Parking Lot will garner more business over the next few months. We believe this will also speed up the Digital

Retailing portion of your business after the market recovers as explained in “Just Faster” by Brian Pasch.

1.Schedule a walk through

of recommendations

designed to maximize

your outcomes with a

dedicated LotLinx

inventory strategist

2.Evaluate the

opportunities, not just

problems, in your current

market

3.Find ways to leverage your

existing services that will

provide long-term support

for current and potential

customers

Marketing

➔ Assess your current marketing strategy

➔ Avoid removing all ads, especially

anything that is low funnel traffic to SRP,

VDP or service

➔ Analyze and re-prioritize marketing

channels during the outbreak

➔ Consider reducing marketing spend on

branding campaigns and third party

listing sites

Branding

➔ Adjust marketing message

➔ Communicate how your dealership is

being responsible and responding to the

pandemic

➔ Align your messaging with Tier I and Tier

II to have a consistent, strong brand

statement

Maintain an online presence:

Consumers are still shopping for

cars, and right now, they’re online

more than ever. Businesses that

stop advertising in times of crisis

are likely to lose share of mind and

market. Stay present, but

acknowledge the issue at hand.

Expand your current services:

Get your finger on the pulse of

what consumers need in these

turbulent times. Free at home

deliveries and online check-outs are

just some offerings that can go a

long way in a consumer’s mind.

Stay informed and inform your consumers:

Inform shoppers of in-stock

inventory and available services.

Transparently communicate how

your business is being responsible,

including statements about your

strict adherence to CDC guidelines

and your commitment to the

community.

Focusing on services they do offer to help customers stay home and employees stay busy:

➔ Over-the phone and online service appointments

➔ Complimentary vehicle pick-up and drop-off

services for service appointments

Adhering to social distancing guidelines:

➔ Fresh pair of gloves, protective seat covers and

disinfectant wipes

➔ Frequent sanitation and additional hand

sanitizing dispensers

➔ Six feet of distance between all customers and

1. ECONOMIC IMPACT

2. CONSUMER BEHAVIOR IMPACT

3. AUTOMOTIVE MARKET IMPACT

4. OEM IMPACT

5. INDUSTRIES BEHAVIOR IMPACT

6. COMMUNITY IMPACT

Self-Quarantine Event Cancellations

COVID-19 Testing

Non-Essential Business Closures School Closures

Resources (food, supplies) Economic Relief Healthcare Capacity

● Signed into law 3/27/20

● Highlights:

○ Direct payments: One-time direct deposit of up to $1,200 to taxpaying Americans. Restrictions apply.

○ Unemployment: $250 billion for an extended unemployment insurance program

○ Small business relief: $350 billion dedicated to preventing layoffs and business closures. Companies with

500 employees> that maintain payroll can receive up to 8 weeks of cash-flow assistance.

○ Large corporations: $500 billion will be allotted to provide loans, loan guarantees, and other investments.

○ Hospitals and health care: $140 billion+ in appropriations to support the U.S. health system, provide

personal and protective equipment for health care workers, testing supplies, increased workforce and

training, accelerated Medicare payments, etc.

○ Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.

○ States and local governments: $150 billion to state, local and tribal governments. $30 billion for states and

educational institutions, $45 billion for disaster relief, and $25 billion for transit programs.

○ Agriculture: Agriculture Department bailout program increased to $50 billion

Source: The CARES Act Has Passed: Here Are The Highlights

What it means for dealers:

▪ $349 billion dedicated to Small Business Administration (SBA) loans

▪ Available for companies with no more than 500 employees at the franchise level

▪ Be sure your OEM is registered with the SBA

▪ The maximum loans are 2.5 times the average monthly payroll for the preceding 12

months, or $10 million

▪ Loan proceeds may only be used for payroll, health benefits, mortgage interest, rent and

utilities

Source: CARES Act Contains SBA Loan Provisions Favorable to Most Dealerships

Source: World Health Organization

Current stages of the impact of COVID-19 around the world:

China started seeing reversal of cases as early as

4 weeks post quarantine &

8 weeks post initial panic.

Source: Mapping the spread of the Coronavirus in the U.S. and worldwide, The Washington Post

As of April 7th, the number of cases

has started to decline in most major

nations.

However, the U.S. still has the highest

number of confirmed cases in the

world.

The number of administered tests in the U.S. is slowly climbing to outpace the number of confirmed cases per day.

Source: McKinsey & Company COVID-19 Briefing Materials

China is showing several areas of recovery, with daily new cases, active

cases, and newly infected cases rapidly decreasing.

DAILY NEW CASES ACTIVE CASESNEWLY INFECTED VS.

NEWLY RECOVERED

Source: World O Meters

Optimistic that a potential global economic

downturn could be short-lived, mitigating negative

impacts on the worldwide ad market.

Most likely scenario: “V-Shape” A classic economic

shock, where growth eventually rebounds.

Source: What Coronavirus Could Mean for the Global Economy, HBR

Past epidemics have all been “V-Shaped”:

Source: What Coronavirus Could Mean for the Global Economy, Harvard Business Review

The Coronavirus outbreak has been the largest reported economic threat across the globe.

The threat of decreased consumer demand is smallest in North America.

Source: McKinsey & Company Implications for Business

As fears of recession increased, equity

markets plunged in March with

most exchanges losing

around ⅓ of their value.

Source: An instant economic crisis: How deep and how long? McKinsey & Company

In China, where the pandemic has subsided, equity markets have suffered less in recent weeks.

Volatility indexes have generally spiked,

hitting readings not seen since the 2008/2009 financial crisis.

Source: Assessing the near-term impact of COVID-19 on US workers

U.S. initial unemployment

claims reached an all-time

high of 6.6 million

between March 21-28.

Cash for Clunkers showed the power of incentives to drive sales

9.6 millionSales pace before Cash for Clunkers

10.7 millionSales pace following

Cash for Clunkers

Source: Did 'Cash-for-Clunkers' work as intended?

In 2020, we expect total media ad

spending worldwide will reach

$691.7 billion up by 7.0% from 2019.

Source: How COVID-19 Has—And Has Not—Affected Global Ad Spending, E-Marketer

Source: What do consumers expect from brands? Kantar

Say they panic about running

out of essentials, ending up

making panic purchases

Believe this is going to be worse

than an economic recession with

the risk of people losing jobs

Are worried about

falling sick

Feel the situation demands

them to be more proactive

about financial planning and

security for the future

30% 34%46%

72% of respondents believe people should shelter in place until further notice.

Source: Daily COVID-19 Update: Concern + Media Consumption, Nuvoodoo

49% of respondents report feeling extremely concerned and significantly impacted by the virus.

Source: Tracking Public Opinion on the Coronavirus, The Morning Consult

U.S. consumers have been drastically adjusting their leisure activities since the outbreak.

Consumers have greatly

increased their

spending on groceries

and have cut back in all other

areas.

Source: How the Virus Transformed the Way

Americans Spend Their Money

Various industries have seen extreme increases or decreases in consumption due to social distancing necessities.

Source: How the Virus Transformed the Way Americans Spend Their Money

Source: COVID-19: TRACKING THE IMPACT ON FMCG, RETAIL AND MEDIA, Nielsen

Online shopping trends continue to be on the rise, especially for

household cleaning essentials.

U.S. WEEKLY COVID-19 CATEGORY TRENDS % sales growth vs year ago

Reading more

news stories

Source: Coronavirus: how news consumption is changing across the U.S. and UK, Global Web Index

Watching more

live videos

Sharing more

photos/videosSharing more memes

↑ 48% 28%

18% 18%

↑ ↑

Sharing more news

Started following

more journalists

Source: McKinsey & Company Implications for Business

Consumption of news and media is

evolving toward television, online, & social,

while moving away from print.

Source, Media Consumption during the Coronavirus Pandemic, Comscore

Source: Media Economy: How Far Down is Down? The Myers Report

The Myers Report predicts an

increase in Broadcast Network TV, Social Media, PR, Video Game Advertising, & Content Marketing consumption.

87% of users report using at least one media source more since the outbreak.

Across all key dayparts, TV viewing levels are up:

Source: WNBC (New York)

The top 25 local markets saw, on average, an 11 percent increase in daily households viewing local news.

Source, Media Consumption during the Coronavirus Pandemic, Comscore

Radio listenership is trending up, as 30% of users report using it more since the outbreak,

and 31% are using it to keep informed about local cases.

During two previous crises that kept people housebound, consumers watched 61% more streaming video content. Predictions

show that Coronavirus will have consumers follow a similar trajectory, expecting streaming video content to rise by over 60%.

Source: Self-Isolating Because of Coronavirus? You’re Probably Watching TV, AdWeek

Source: Video on Demand Transactions Increase in Month of March, Comscore

Comscore has reported video on demand subscription increases in nearly every category.

Twitter has seen that COVID-19 related content is

shared every 45 milliseconds and #coronavirus is

now the second most used hashtag of 2020.

Source: Brand communications in times of crisis, Twitter

Education

Shift from offline to online

E-Commerce

Continued growth, attracting

older generations

Service Delivery

Transformation from

IRL to virtual

Traditional Businesses

Accelerated digital

transformation efforts

Source: What do consumers expect from brands? Kantar

Immediately we have seen a huge and expected drop in sales volume

& fluctuating shopper engagement rateseven with lower shopper volume. Shoppers are now sitting at home and spending more time looking at the cars they plan to buy in the future.

Across the board, sales volumes are down while

pickups are enjoying higher shopper volumes and engagement.

States issuing nonessential business closures:

AlaskaCaliforniaColoradoConnecticutDelawareHawaiiIdahoIllinoisIndianaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMissouri

States impacted by dealership sales bans

Montana Nevada New MexicoNorth CarolinaOhioOklahomaPennsylvania Rhode IslandTennesseeTexasVermontVirginiaWashingtonWest VirginiaWisconsin

Source: COVID-19 Updates for the U.S. Retail and Real Estate Industry Source: Automotive News COVID-19 Headlines

1 MILLION+people employed in automobile parts

and manufacturing in the U.S.

1.3 MILLIONpeople work for auto dealerships

in the U.S.

The United Auto Workers union has been pressuring major manufacturers to continue

to adhere to CDC guidelines.

Source: The New York Times

GENERAL MOTORS

U.S. Manufacturing Suspension:No official date for restart. Plants making face masks.

Consumer Aid: - Flexible payment extensions and

deferrals for current customers.- Providing 0% interest on 84-month

loans and 120-day deferred payments on new-vehicle purchases for select customers.

FORD MOTOR COMPANY

U.S. Manufacturing Suspension:No official date for restart. Michigan plant making respirators.

deferrals for current customers.- 90-day first payment deferral and

payment relief for first three payments.

General Aid:The Ford Fund is donating $500,000 to nonprofit groups and food delivery.

FIAT CHRYSLER AUTOMOTIVES

U.S. Manufacturing Suspension:Through 5/4.

Consumer AId: - Flexible payment extensions and

deferrals for current customers.- Interest-free financing for 84 months

and deferred payment for 90 days on select models.

U.S. Manufacturing Suspension:Resumes 5/4.

Consumer Aid: - Current customer payment extensions

and deferrals. - 90-Day Deferred Payment on new

vehicle sales financed by Honda Financial Services for qualified customers.

- $1,000 cash toward new models. - Low-APR financing for certifies

models.

NISSAN

U.S. Manufacturing Suspension:Resumes late April.

Consumer Aid:- Case-by-case payment rescheduling

for current customers. - 0% APR financing- 90 day payment deferral and two

months of payment relief

HYUNDAI

U.S. Manufacturing Suspension:Resumes 5/4.

Consumer Aid: - 90-day deferred payments for current

customers. Extended warranty protection through June.

- 0% financing for 84 months- 120-day payment deferrals on select

models. - Assurance Job Loss Protection will

make up 6 months of payments for customers who buy before 4/30 and lose their jobs.

TOYOTA

U.S. Manufacturing Suspension:Resumes 5/4. Plants making face shields, masks, and ventilators.

deferrals for current customers.- Deferred payments for 90 days on

select new vehicles.

VOLKSWAGEN

Consumer Aid:- 90-day payment deferrals and

6-month lease extension for current customers.

- 180-day payment deferrals- 0%, 72-month financing for new-car

buyers.

SUBARU

Consumer Aid:- 90-day payment extensions and

6-month lease extensions for current customers.

- 0 interest financing for 63 months on select models

- 90-day payment deferrals

Changes in Service:

- Suspending “pool” rides

- Free Uber Eats delivery from local businesses

Messaging:

Changes in Service:

- Suspending shared rides

- Offering compensation to sick drivers

Messaging:

AMERICAN AIRLINES

Changes in Service:

- Waiving flight change feed through 4/30

- Changing flight schedules to eliminate unnecessary travel

Messaging:

Changes in Service:

- Assisting with flight cancellations and waiving fees

- Addressing proper cleaning procedures

Messaging:

AMTRAK

Changes in Service:

- No change fees for cancellations- Updates on suspended services- Guides for cancelling reservations

Messaging:

GOOGLE

Changes in Service:

- Small and medium-sized businesses receiving $340 million in Google Ad credits.

- $250 million in ad grants for government organizations

DEALERSOCKET

Changes in Service:

- Giving test drive technology free for 100 days

- Consumers can request test drives at any location

Messaging:

DIGITAL AIR STRIKE

Changes in Service:

- Retailing platform can conduct sales and vehicle servicing through video and virtual messaging

- Free for 30 days

Messaging:

Social distancing in areas like China and Italy has resulted in

decreased traffic and industrial business pollution and reduced the amount of nitrogen dioxide emissions in the air.

Source: Earth Observatory

Dozens of research organizations across the globe are on

the hunt to uncover a vaccine for the virus, with U.S. researchers already administering a trial study in Washington state.

Source: PBS

Bill and Melinda Gates have started

backing seven of the most promising vaccines in production.

1.DIGITAL RETAILING

As trends continue to shift toward digital, it is more important than ever to be advertising online.

HOME DELIVERY & ONLINE ORDERS

Now is the time to expand services to appeal to online-focused consumers.

3.INVENTORY DRIVEN MARKETING

The sales approach is shifting toward targeting individual consumers. To do this, advertising must focus on your must-sell inventory as opposed to general messaging.

4.UTILIZING DATA

Dealers need to continue to stay informed of fluctuating market data to make informed marketing decisions.

Drawing attention to expanded consumer services can be as easy as adding badges to your digital advertisements.

- Tom Peters

04.16 · 2020-04-20 · Trajectory: China started seeing reversal of cases 4 weeks post quarantine...

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