CATA News

The chip shortage is still impacting vehicle supply, experts say, but automakers are now having to reckon with the battery supply chains as an even bigger headwind. Challenges surrounding electric vehicle production and the battery supply chain are finally materializing for legacy automakers and impacting their bottom lines.

Ford, GM, and Porsche pointed to delays, constraints, and expenses related to EVs and their batteries in recent financial results. These issues are not only causing them to fall short of their ambitious electrification targets but also impacting their balance sheets.

Ford CEO Jim Farley said during the company's last earnings call that with regard to EVs, "pricing pressure has dramatically increased in the past 60 days." Much of that stems from an EV price war brought on by Tesla and Elon Musk. One of the biggest reasons it's more difficult for a company like Ford to lower its EVs prices is because it hasn't yet hit production scale in the same way Tesla has, especially when it comes to batteries, which would bring down overall costs.

Visit Business Insider for more.

What’s new: In an ongoing effort to curb abuse of the Employee Retention Tax Credit, the IRS recently released a Generic Legal Advice Memorandum (GLAM) to further stress the strict requirements for claiming the Employee Retention Tax Credit (ERTC) based on a full or partial suspension of business operations related to supply chain disruptions.

Background: The ERTC is a refundable credit against certain employment taxes paid by businesses impacted by the COVID-19 pandemic. To claim it, a dealership must have experienced either:

Why it matters: The GLAM addresses the first criterion (first bullet above) by describing several scenarios that do not satisfy the requirements for claiming the ERTC. Its analysis specifies that, to claim the ERTC based on a supplier’s inability to deliver critical goods and materials, a taxpayer must show that a qualifying governmental order caused the supplier and the taxpayer to suspend their business operations.

Certain promoters have pushed ineligible businesses to claim the ERTC based on supply chain disruptions that are tangentially related to the COVID-19 pandemic. The GLAM makes clear that the IRS takes a strict view on this type of ERTC claim and IRS Commissioner Danny Werfel reiterated this message recently, noting that the IRS is working aggressively to address a flood of fraudulent and erroneous ERTC claims. Several CPAs have also expressed concern to NADA about the exposure of dealers who claim the ERTC based on a full or partial suspension of their operations.

In an ongoing effort to curb abuse of the Employee Retention Tax Credit, the IRS recently released a Generic Legal Advice Memorandum (GLAM) to further stress the strict requirements for claiming the Employee Retention Tax Credit (ERTC) based on a full or partial suspension of business operations related to supply chain disruptions.

Background: The ERTC is a refundable credit against certain employment taxes paid by businesses impacted by the COVID-19 pandemic. To claim it, a dealership must have experienced either:

Why it matters: The GLAM addresses the first criterion (first bullet above) by describing several scenarios that do not satisfy the requirements for claiming the ERTC. Its analysis specifies that, to claim the ERTC based on a supplier’s inability to deliver critical goods and materials, a taxpayer must show that a qualifying governmental order caused the supplier and the taxpayer to suspend their business operations.

Certain promoters have pushed ineligible businesses to claim the ERTC based on supply chain disruptions that are tangentially related to the COVID-19 pandemic. The GLAM makes clear that the IRS takes a strict view on this type of ERTC claim and IRS Commissioner Danny Werfel reiterated this message recently, noting that the IRS is working aggressively to address a flood of fraudulent and erroneous ERTC claims. Several CPAs have also expressed concern to NADA about the exposure of dealers who claim the ERTC based on a full or partial suspension of their operations.

What’s next: NADA encourages dealers that have claimed the ERTC based on a supply chain disruption, or that are considering doing so, to share and discuss the GLAM with their tax advisor.

Go deeper: Read the IRS GLAM on ERTCs

The Chicago Automobile Trade Association is excited to introduce its brand-new logo. Approved by the CATA Board, the freshened CATA logo reflects a modernized look and is symbolic of the association in the following ways:

The design was executed by Chicago Auto Show graphics partner MADMAXMAR, a local strategic marketing company.

Moving forward, please update your files and any placements of the CATA logo to the new logo found here.  Included in this link are various approved versions of the logo along with the new CATA style guide for all applicable uses of the logo. If you have any questions, please reach out to CATA Marketing Director, Jim OBrill, at jobrill@drivechicago.com.

Link to Logo Files and Style Guide: https://www.mediafire.com/folder/lq7y3u4drllng/CATA_New_Logo.

The Alliance of Automotive Service Providers of Illinois (AASP-IL) exists to serve the Members and Public of the State of Illinois through informing, involving, and influencing the SAFETY and QUALITY of REPAIRS.  AASP-IL has been around since the 1960’s and is working to raise awareness of the Illinois Automotive Collision Repair Act.  AASP-IL’s President Emeritus and Consumer Liaison, Wade Ebert, helped worked with the Illinois Assistant Attorney General of the Consumer Fraud Bureau to help drive the enactment of this comprehensive law entitled the Automotive Collision Repair Act.   

The Alliance of Automotive Service Providers of Illinois (AASP-IL) recently reviewed a list of currently licensed collision repair facilities in Illinois and discovered a gap exists between licensed facilities and the universe of non-licensed automotive collision repair facilities.  AASP-IL did see some dealer owned collision repair facilities that do appear to have a current UDL business license, but more dealer owned collision repair facilities that do not have a current UDL business license.  Why might this gap exist and how do we remedy this issue?  We must first seek to understand the challenge and then work together to solve it. 

The law in Illinois for the collision repair industry is called the Automotive Collision Repair Act and it was founded to guide businesses and protect consumers when it comes to the Collision Repair industry. 

According to the Pre-Amble of the Illinois Automotive Collision Repair Act, (815 ILCS 308/5), Sec. 5, Purpose: “With the increased complexity and technology involved in the repair of collision-damaged motor vehicles, there is a need for improved communication and accounting between collision repair businesses and motor vehicle owners. This Act enables purchasers of these services to make informed decisions based on standard practices by Illinois automotive collision repair businesses.” (Source: P.A. 93-565, eff. 1-1-04.)

“The Automotive Collision Repair Act was passed to help clarify responsibilities of the complex relationships consumers face when seeking to have their damaged vehicles repaired.  The Automotive Collision Repair Act became law on January 1, 2004.  The Automotive Collision Repair Act was designed specifically  to level the playing field in Illinois.  It requires that the shop recognize its responsibility to the consumer and treat that contract as prime. It requires repairers to write estimates of repairs that are as nearly complete as is practicable. A pattern or practice of underestimating repairs violates the act”.  (Source:  Body Shop Business, Legislation and Intrigue in Illinois, May 1, 2005, Wade Ebert.  

For reference, click to view a complete copy of the: Illinois Automotive Collision Repair Act.

What is needed for this landscape of disconnection to change and for collision repair facilities in Illinois to become compliant with the law?  AASP-IL believes a commitment to do the right thing for consumers is paramount.  AASP-IL also believes compliance with this law is critical for businesses asset protection, growth and sustainability. 

Does your business: 

Is your business:

AASP-IL is currently hosting a 6-part legal webinar series featuring attorney, Patrick J. McGuire, who has worked with AASP-IL Members for 20+ years.  Collision repairers who understand their legal rights and responsibilities have a distinct advantage over those who don’t. This six-part seminar series is essential for anyone who needs a refresher or would like to learn about the laws that impact collision repairs in Illinois. It is designed to provide a cost-effective and convenient way to get an overview of current law with a focus on practical, day-to-day issues. Each seminar will include 50 minutes of instruction followed by 10 minutes of Q&A.  If you would like to participate in our future webinar series and view additional details, please visit:  AASP-IL Legal Webinar Series.  

“This information is critically important to all collision shop businesses, both in the state of Illinois and throughout the U.S., as the topics of his content will be relevant to all of these types of businesses, both in terms of safety and protection of the business, but also to help stand up and advocate for consumers taking care of the most important person in the equation of collision repair,” said AASP-IL Executive Director Julie Lombardo. (Source:  Repair Driven News, AASP-IL hosts 6-part legal webinar series featuring Pat McGuire, June 9, 2003).

How does a Collision Repair business initiate compliance?  Complete and submit an Illinois Secretary of State, Vehicle Services Department, Dealer Services business license application Instructions for UDL Business License and UDL Business License.  The UDL Business license expires annually on 12/31 and must be renewed.  Securing appropriate signage for posting in a prominent area, easily visible to consumers is another critical piece to compliance.  If you are interested to purchase signs from AASP-IL, please visit:  AASP-IL Member Resources.  

AASP-IL exists with the gracious support of its sponsors and members.  It is our privilege to serve the Automotive Collision and Mechanical repair industry.  Here is a recap of our Purposes of Organization:

The AASP-IL Board of Directors has made it a top priority commitment to work to educate and communicate within our industry.  AASP-IL’s current President, Bob Gottfred of Erie LaSalle Body Shop & Car Care Centers has a visionary leadership approach encompassing a culture of importance for shops to conduct safe and proper repairs and return vehicles to OEM standards.  Gottfred passionately chairs AASP-IL and works to share best practices amongst all shops.  Gottfred believes in providing shops current information and tools to grow their businesses as the technology and investment landscape continues to evolve in collision and mechanical repair.  AASP-IL hosted the Annual AASP-IL Convention and Trade Show on March 4th in Naperville.  This year’s conference brought together two notable changemakers, Mike Anderson of Collision Advice and former Chicago Bears NFL Hall of Famer, Mike Singletary.  The day also included several OEM’s:  General Motors, Ford Motor Company and Subaru of America as well as industry leading suppliers to provide a day packed with education and resources for the automotive repair industry. 

AASP-IL’s focus for this year is MOVING FORWARD and we welcome your commitment to join us and not be left behind.  We are stronger together!  AASP-IL Membership

Recently signed into law by Gov. Pritzker, SB1896 Amends the Illinois Vehicle Code to provide that an Illinois licensed new or used motor vehicle dealer is authorized to conduct sales activities, including the collection of electronic signatures, via the Internet and deliver vehicles to a customer at the customer's residence or other suitable location, if the sale, lease, or delivery is requested by the customer. It also provides that any documents that state or federal law require to be signed in person may be signed at the time of delivery without constituting an off-site sale that is subject to the permit requirements for off-site sales.

The legislation modernizes Illinois state law, as the current statute was written more than fifty years. The legislation would benefit all automotive dealers in the State of Illinois. Many other states have permitted home vehicle deliveries, as they continue to respond to consumer needs and recognize the immense time and cost savings provided to residents are an increasingly critical element of modern-day life.

Note that this law goes into effect Jan. 1, 2024. The CATA will provide more detailed information in the coming weeks.

This past Saturday, the Chicago Automobile Trade again partnered with the USO Illinois to host the 10th annual USO Barbecue for the Troops fundraisers. More than 80 local new-car dealerships rallied their communities to host fundraising events which featured everything from patriotic ceremonies, classic car shows, live music, games for kids of all ages and, of course, barbecues.

To date, this year’s fundraiser has brought in nearly $50,000 for the USO and online fundraising efforts will continue throughout the summer. Since the program’s inception, CATA dealers have rallied to raise more than $1 million to support USO programs and services with more than 600 fundraisers taking place.

“New-car dealers are pillars of their communities and so it makes a lot of sense for the dealers to rally their neighbors for this grassroots fundraiser, all in support of local troops and their families,” said Kelly Webb Roberts, Chicago Automobile Trade Association chairwoman. “Last summer we achieved a major fundraising milestone and we look forward to adding to that running total with this year’s barbecue.”

“The support of service members’ hometown communities and local new-car dealerships has allowed USO Illinois to positively impact more than 300,000 service members and their families annually through hundreds of programs and services as well as our 10 USO Centers across Illinois,” said Christopher Schmidt, USO Illinois Executive Director. “Neighbors helping neighbors through initiatives like Barbecue for the Troops makes communities even stronger and joining your local dealership for their BBQ in July is a great way to get involved! From the USO Illinois and all those who serve our nation, we thank all of the participating dealers and their communities for the generous support,” Schmidt continued.

For more information on the CATA, visit www.cata.info. For more information on the USO Illinois, please visit https://illinois.uso.org/.

As you’re likely aware, a benefit of your CATA membership is your dealership’s access to Employee Relations and Human Resources counsel to assist you with various types of labor related and employment issues.

The CATA has transitioned to a NEW employee relations consulting service, moving from Littler (David Radelet and Terry Creamer) to SESCO Management Consultants (Jamie Hasty and Team). Contact information and more information on SESCO is found below.

To ease with the transition period, CATA dealers will still have access to Littler through the end of July, ending at close of business on July 31, 2023. We want to acknowledge Littler’s team, especially Dave Radelet, Terry Creamer, Chris Johlie and Mary Dokianos, for their longtime service to our association and dealer members. We greatly appreciate their partnership.

As a reminder, SESCO’s employee relations and human resources counsel service is a member benefit in addition to your access to CATA’s General Counsel (Dennis O’Keefe). Just as it has been with Littler (and previous counsel in the past), your first call/email/text will be complimentary and part of your CATA member benefit. Should the issue escalate to a heightened level, SESCO will advise the dealer up front (disclosing additional costs) or advise them to work with their personal attorney as a next step. The dealer can also choose to hire a SESCO attorney if the issue reaches that next level.

CATA members will now receive the following services through SESCO’s Certified consulting and legal staff:

Click here to download the announcement flyer. Please feel free to contact the CATA at 630-495-2282 (Jennifer Morand, David Sloan or Chris Konecki) or Ryan Kelly, CATA Employee Relations Committee Chairman (rkelly@kellynissan.com), with questions

The Federal Trade Commission recently announced revisions to its “Guides Concerning Use of Endorsements and Testimonials in Advertising,” (“Endorsement Guides”). 

Why it matters?: The revisions include several changes that according to the FTC “merit your attention,” such as:

The FTC has brought a number of enforcement actions in recent years against a variety of companies related to alleged deception in the use of endorsements and customer reviews. This is a fast-moving area that is of increasing focus to the FTC.

Background: The Endorsement Guides provide detailed guidance regarding how an advertiser can (or cannot) use endorsements, testimonials and customer reviews in advertising – including on websites and elsewhere. 

What’s next?: Dealers should review these changes with legal counsel, website providers and advertising professionals to ensure compliance with the FTC guidance regarding the use of endorsements, testimonials or consumer reviews.

Further resources: In addition, the FTC has issued updated Staff Guidance on the Endorsement Guides, with “answer[s to] more than 40 more questions, as well as examples and other guidance.”

Read all about it and much, much more in the CATA's 2023 Q2 Auto Outlook.

Below is a list of 10 key trends and developments in the Chicago Area new vehicle market: