Web Site Traffic Predicts Sales, Incentives and Automaker Profitability, Explains Edmunds.com

SANTA MONICA, Calif.--Web site traffic serves as a leading indicator of automotive sales, incentives and automaker profitability, explained Jeremy Anwyl, CEO of Edmunds.com, an online source for automotive information, yesterday in a presentation to the Society of Automotive Analysts in suburban Detroit.

“Edmunds.com serves millions of car-shoppers each month, and we learn very interesting things as we watch their collective behavior,” remarked Anwyl. “Site analytics indicate demand and we’ve managed to correlate that data with imminent pricing and sales shifts. Perhaps most fascinating is that our research shows that automakers can influence site visitor behavior, increase demand for vehicles and delay pricing adjustments that reduce their profits.”

According to Anwyl, Edmunds.com True Market Value^Ž pricing also serves as a leading indicator. By tracking real-world price trends, analysts could better understand demand and therefore predict incentives, a leading indicator of profitability. Automakers, on the other hand, could use pricing trend data to better manage pricing and incentive decisions, stepping up offers just as a vehicle’s natural value curve starts to decline.

Anwyl’s presentation, which is explained and published on Edmunds’ AutoObserver.com at www.autoobserver.com, also gives specific examples of vehicles that will sell particularly well in coming months, and those for which incentives are imminent. Not surprisingly, the small car segment is expected to thrive, increasing 15% over current levels, while larger, more gas-guzzling vehicles are expected to suffer in this summer’s marketplace unless more generous incentives are announced.

The analysis was largely done by Edmunds’ six staff PhDs and their team of 65 data experts who applied extensive statistical modeling and interpretative experience to determine the correlations between Edmunds’ site traffic and sales data.

Anwyl emphasized that the company’s predictive abilities suggest results in a steady marketplace. Automakers can influence these results by changing their advertising, incentive programs and pricing. Other variables include supply, the emergence of new competitors and macroeconomic factors like gas prices and interest rates. Car dealers can also alter the results by making buyers aware of vehicles they may not have considered online.

“Edmunds.com was one of the true pioneers in using the Internet for gauging consumer tastes and buying decisions,” said Society of Automotive Analysts President Jeffrey Leestma. “So often, market data is obtained after the fact, the result of an actual vehicle purchase. But Edmunds.com is utilizing the Internet to gauge consumer buying decisions in real time, as they are happening, before the actual vehicle transaction occurs. This can give automotive analysts a head start in their planning decisions.”