CATA News

NADA and the Texas Automobile Dealers Association (TADA) filed a challenge to the FTC’s Final Vehicle Shopping Rule in the U.S. Court of Appeals for the 5th Circuit. The purpose of the legal challenge is to prevent the implementation and enforcement of the rule, which dealers must comply with by July 30, 2024. NADA is also supporting federal legislation to this effect. A simple one-page guide provides two key messages explaining the action. The CATA will provide any updates from the NADA.

It’s important to stress the need for NADA PAC support to assist with efforts such as this one that will negatively impact consumers, but also the consumer.

[From Automotive News] General Motors and Ford Motor Co. eked out small fourth-quarter gains while Toyota Motor Corp. and Honda Motor Co. finished 2023 with double-digit sales increases in December, capping the U.S. auto industry's best full-year total since 2019.

But there are signs of a slowing market as automakers head into 2024, as elevated borrowing costs and new-vehicle prices sideline some shoppers. Among major automakers, Stellantis was the only one to post a fourth quarter and annual decline.

SAAR outlook
The seasonally adjusted, annualized rate of sales is projected to tally 15.1 million to 15.4 million for December, forecasters say, up sharply from 13.77 million in December 2022. Still, the sales pace has cooled since its 2023 peak of 16.22 million in June.

Inventory
New-car and light-truck stockpiles totaled 2.56 million vehicles at the beginning of December, more than 900,000 above levels a year earlier, Cox Automotive said. J.D. Power and GlobalData estimated that retail inventory finished December around 1.7 million vehicles, a 7.6 percent increase from November and a 55 percent jump from December 2022. However, stockpiles remain 40 percent lower than before the COVID-19 pandemic, they said.

Incentives
Average new-vehicle discounts were expected to rise $145 from November and 91 percent from December 2022 to an estimated $2,458 last month, J.D. Power and GlobalData said. In November, incentives exceeded $1,000 per vehicle at every major automaker; in the case of the Detroit 3, incentives topped $2,400, according to Motor Intelligence.

Click here to get complete sales results for 2023 (subscription required).

The 2024 What Drives Her program returns to the Chicago Auto Show Media Preview held Feb. 8 at McCormick Place. This program, now in its seventh year, celebrates women in the industry who are deserving recognition.

At a local level, the Best Retailer award calls on CATA dealers to nominate an extraordinary female at your dealerships. 

Who Should Be Nominated for the Best Retailer Award? This person demonstrates a high level of commitment and drive to any task at hand, whether that’s in sales, service, finance or technical support. Nominees must be employed by a Chicago-area dealership.

Prior year award recipients include Megan Deters, sales manager at Brilliance Honda, and Soledad Romero, store manager at Romeoville Toyota.

Nomination submissions are due Monday, January 15.

Submit Your Nomination

The 2024 COX Automotive Sales Forecast for 2024 details five key insights that will likely steer future sales. Those include the following:

COX also detailed some interesting trends in 2023:

Click here to read the full forecast.

Beginning January 1, 2024, new Federal regulations go into effect that will require many corporations, limited liability companies, and other U.S. and foreign entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company—to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). 

These new reporting requirements were created in 2021 under the Federal Corporate Transparency Act to strengthen the integrity of the U.S. financial system by making it harder for illicit actors to use anonymous shell companies to launder their money or hide assets.   

Companies formed or registered before January 1, 2024, will have until January 1, 2025, to file their initial beneficial ownership information (BOI) reports. Reporting companies created on or after January 1, 2024, and before January 1, 2025, must report their BOI within 90 days of their formation.  After January 1, 2025, the BOI must be filed within 30 days.

Reporting companies must report beneficial ownership information electronically through FinCEN's website. Reporting via the FinCEN website is not yet operative, reports will be accepted starting on January 1, 2024.

 Under the rule, federal, state, and local law-enforcement agencies, foreign governments, and financial institutions would be able to obtain the information, but it would be housed in a secure registry, and many of those seeking it would have to make formal requests and face other restrictions. Some requesters would have to obtain court orders to get the information or work through intermediaries.

To learn more about this reporting requirement, please see the resources below.

If you received ERC funds without having the requisite reduction of revenue, read the article linked below for the escape plan.

Here’s a summary:

 Click here for more information.

[From CATA Approved Partner ACV Auctions] In the automotive retail industry, we can’t know what tomorrow will bring. But we can prepare for it the best we can. Not knowing what turns are ahead for our industry doesn’t put us behind the 8-ball. Instead, it allows us to learn and thrive. Currently, we are nearing the end of Q4 in 2023. Are we where we thought we would be a year ago? Maybe.

I’m sure some guesses have been long forgotten. Perhaps some strong voices made predictions that stuck. The truth is, however, that we are at a point where we have decisions to make about the future. Automotive retail is robust even in the face of disruptions. The question will remain as to how we can overcome struggles and move from surviving to thriving. To answer this, we need to uncover where value rests in the process for the modern consumer. Everything you do from sourcing, managing, and selling automobiles needs to be done in a proactive manner.

Start with how you acquire. For many dealerships, what you can’t see can hurt you. This applies to the appraisal process and how you source inventory. If you are operating with blinders on, deploying an inefficient trade-in process, or not breaking free from outdated practices, you are putting yourself at risk.

What does this mean?

Simply put, the survival of your lot and business depends on vehicles. Automobiles are the lifeblood of your operations. However, the used car market continues to ebb and flow. This means that the better your stock, the better your ability to provide options to your community. If you couple a strategic approach to consumer acquisition with a data-backed philosophy, you gain insights that tell you not only what and why to stock…but where to get it.

There are plenty of modern solutions available to help you remedy this situation. It’s up to you to pick one and move beyond a simple sandwich board out in front of your lot.

But, don’t stop there. Build value into how you manage your inventory with a next-generation system. Never before has there been such a glut of solutions for your dealership. With data as a component, you learn the best cadence for your daily, weekly, and monthly tasks. You’ll get the upper hand on merchandising and marketing, and discover new avenues to connect with consumers and improve the overall experience. This impacts customer satisfaction, retention, and brand loyalty.

Now, value will never go out of style. As it stands, there are different approaches and styles to how a dealership can sell vehicles to the public. But every shopper is different. Their story, their trade-in, their desire…it produces a unique method for how they want to engage with your dealership, find their automobile, and finally drive it home.

Never discount how much the brick-and-mortar or digital shopping experience can bring a smile to a consumer’s face. Your dealership needs to offer multiple touchpoints. And each of these touchpoints needs to provide value. Always be giving and thinking outside the box. What would you want if you were purchasing a vehicle for yourself?

While many consumers will view buying a car as simply a transaction, you need to build further value into the process in order to create repeat business, drive brand awareness, and manage your reputation. Specifically for the importance of your ratings, encourage customers to engage with you on multiple levels through social media or search engines. Google is your friend and brings many options to enhance your brand’s presence online.

However, not seeing the full picture can hurt you. Much like if you do not take the time to properly assess a vehicle or walk a customer through the appraisal process, ignoring the building or nurturing aspect of the transaction will leave a bad taste in the shopper’s mouth.

Value is valuable. It’s up to you to break down your operations into a series of spots where you can give more to the customer. Only then will you be able to integrate new technologies that streamline consumer acquisition, maximize inventory management, and bolster your ability to sell more vehicles at a higher gross. Modern consumers are looking for benefits. And modern dealerships are poised to deliver value more than ever before.

Just over a month after passing the Chicago Paid Leave and Paid Sick Leave Ordinance (the Ordinance), which brought sweeping new paid leave and paid sick leave requirements to employers with Chicago employees, the city has amended the Ordinance to delay its effective date and limit the number of covered employees.

The delay to July 1, 2024, impacts the following provisions of the Ordinance:

The December 13th amending ordinance also modified the Ordinance as follows:

Effective December 31, 2023, the amending ordinance also modified the general provisions of Chapter 6-100 of the Chicago Municipal Code as follows:

With the effective date of the Ordinance delayed until July 1, 2024, Chicago employers now have six more months to prepare for its new requirements. The City of Chicago Office of Labor Standards has published proposed rules on the new Ordinance and is expected to continue issuing informal guidance over the coming months.  In the meantime, the city’s current paid sick leave ordinance remains in effect, so for now that benefit is business as usual for Chicago employers.

Contact your HR and employment law partner if you have any questions. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com.

[From NADA] Following significant advocacy by NADA, on Dec. 20, the U.S. Department of the Treasury renewed the “safe harbor” for Section 45W clean vehicle tax credits for commercial vehicle sales in 2024. Leasing companies will be able to continuing leasing qualifying EVs in 2024 and pass on to consumers up to $7,500 from the tax credit they receive. In addition, other commercial buyers will be able to continue to claim tax credits on their EV purchases.

Section 45W commercial clean vehicle tax credits are much more flexible than 30D credits and are not subject to restrictive criteria such as where a vehicle’s battery components or minerals are sourced. Accordingly, for leases, the credit is available for virtually any consumer lease of an EV, regardless of adjusted gross income of the lessee. The leasing company simply passes the value of the tax credit to the customer as a savings. 45W is the reason EVs are leased at a much higher rate than other vehicles.
 
Section 45W also applies to commercial vehicles above 14,000 GVWR and provides a credit of 30% of the cost basis up to $40,000 (15% for larger plug-in hybrid vehicles). Luckily, nothing. For cars sold in 2023, the IRS created a safe harbor that allowed both (1) lessors of almost all EV leases and (2) most other light-duty commercial EV purchasers to qualify for a $7,500 tax. Fortunately, the government is extending the safe harbor to 2024.
 
The 30D tax credit for new vehicles will see changes in 2024 based on new criteria for eligible vehicles. NADA will continue to update its members on developments.