Q&A: Edmunds.com CEO Jeremy Anwyl: A New Phase for Consumers
October 10, 2008
Edmunds.com data, released last Friday, shows a continued downward spiral in car sales in early October. AutoObserver caught up with Edmunds.com's CEO Jeremy Anwyl for his take on what's going on in the automotive market.
You note that the consumer is barraged with bad economic news. What role does the media play in this?
Something that's not been acknowledged is the fact that this is the first widespread economic downturn in the Internet era. Literally, millions of competing outlets -- fighting for attention -- have found that bad news draws audiences. The volume and breadth of 24/7 inflated negativity is assaulting the consumer from all sides is overwhelming and unprecedented.
How about the role of the presidential election?
Indeed, on top of the 24/7 news, we are in the midst of an election cycle and have a void of leadership with a lame duck president. Political leaders, instead of being a voice of calm and reason, use the crisis for to score political points. The opposite of what our leaders need to be providing. No wonder consumers are scared.
How scared are consumers?
Consumers have abandoned hoping for best and are now doing the opposite -- planning for the worst. That's ominous for car companies. Anything they offer, no matter how attractive, is a distraction to consumers because they are worried about an economic survival. Buying a car is not part of that plan.
September sales numbers showed even seemingly invincible Toyota got hit.
What this means for automakers is that even especially good offers will be seen as a distraction instead of an opportunity. Toyota zero percent financing on 11 models, including 2009 models, is a good case in point. It's a fundamental shift of people hoping things will get better to consumers thinking things are going to get worse. And that's hard to turn around.
What do you mean by distraction?
A zero percent promotion amidst the din of bad news from around the world flowing over the airwaves and Internet is barely noticed. It's like a fly in the ear.
So are consumers overreacting by hunkering down?
Clearly there's been an overreaction. A realistic look at the economy shows that the fundamentals are not that bad. Unemployment is climbing but still moderate by historical standards. Commodity prices are down. So are gas prices. Interest rates are all over the map. Credit is available but may be harder for some to get. But until consumers can be convinced otherwise, the situation will worsen and a sharp and lengthy recession looks inevitable.
What can be done about it?
Frankly I don't think much will happen until after the election. I don't envy whomever wins the election. I don't think the candidates' promises have a prayer of being made real, and the risk is the consumer will quickly enter a period of disillusionment that won't be good.
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