CATA News

Former CATA and Chicago Auto Show Chairman Mike McGrath, Sr. passed away on Monday. Nov. 28 at the age of 75. McGrath, Sr. was CATA Chairman in 2002-03 and Chicago Auto Show Chairman in 2004. Visitation was Tuesday, Dec. 6. In lieu of flowers, donations can be made to USO of Illinois, www.uso.org, 312-822-6699. More information can be found here. 

[NADA] The Federal Trade Commission on Nov. 15 announced it is extending by six months the deadline for companies to comply with some of the amendments to the FTC’s Safeguards Rule. Earlier this year, NADA submitted comments to the FTC seeking an extension of the deadline. The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.

The provisions of the updated rule specifically affected by the six-month extension include requirements that covered financial institutions:

• designate a qualified individual to oversee their information security program,
• develop a written risk assessment,
• limit and monitor who can access sensitive customer information,
• encrypt all sensitive information,
• train security personnel,
• develop an incident response plan,
• periodically assess the security practices of service providers, and
• implement multi-factor authentication or another method with equivalent protection for any individual accessing customer information.

Dealers are encouraged to continue in their efforts to expeditiously comply will all the new requirements of the Rule but should consult with their attorneys, service providers and IT professionals about the potential impact of this deadline extension. More information can be found here: https://www.nada.org/nada/issues/issues/ftc-safeguards-rule.

CATA will be sending 2023 dealer kits to dealer members shortly after the new year. These kits include:

• CATA window decal
• Annual Report & Membership directory
• DOC fee poster
• 2 CAS honored guest tickets
• 50 CAS Employee Appreciation Day tickets
• 200 CAS vouchers for half-priced tickets
• 2 CAS posters
• 2 CAS poster easels
• 1 FLFC poster
• 1 FLFC invite + response card
• 1 order form for complimentary tickets
• 1 order form to Adopt a School

While factory direct sales have been a shiny button in auto retail over the last decade, new research shows that when it comes to customer satisfaction, local new car and truck dealerships dramatically outperform their direct seller counterparts.

According to research by Pied Piper Management Company, luxury brands Cadillac, Infiniti and Mercedes-Benz held the top spots in customer satisfaction among 25 luxury brands. Direct sellers Tesla, Lucid and Rivian scored 21st, 23rd and 25^th, respectively.

Pied Piper’s process measured customers’ shopping experience, starting with responsiveness to website customer inquiries, and continuing when customers visited retailers in-person. Measurement of responsiveness to website customer inquiries was based upon 22 best-practice behaviors, while effectiveness of shopping in-person was based upon more than 50 best-practice behaviors, using 1,657 measurements of response to website customer inquiries, and 1,096 measurements of the in-person sales experience. The evaluation took place between July 2021 and July 2022.

“We have found that when their customers reach out for help or with questions, they are usually met with brand reps who answer only simple, scripted questions without being proactively helpful,” said Fran O’Hagan, CEO of Pied Piper, regarding direct sellers Tesla, Rivian and Lucid. “It’s a missed opportunity that does not currently compensate for the missing retail experience.”

O’Hagan continued: “Tesla compares poorly today for helping website customers too. … Tesla’s model today appears to be, ‘If you want what we sell, and require no assistance, it’s easy to order.’”

For more information on Pied Piper’s study, click here. 

[Automotive News] Auto dealerships have another six months to beef up their consumer information security following a Federal Trade Commission Safeguards Rule extension announced Tuesday, Nov. 15.

The last-minute reprieve moves the date for dealerships and other financial institutions to comply with the revamped Safeguards Rule, from Dec. 9, 2022, to June 9, 2023. The Safeguards Rule is part of the Gramm-Leach-Bliley Act regulating business customer information practices.

FTC commissioners voted 4-0 in favor of the extension. On Monday, Nov. 14, FTC Commissioner Christine Wilson issued a separate statement noting that she still opposes the FTC's 2021 decision to change the rule in the first place.

The agency cited reports — including from the Small Business Administration Office of Advocacy — of a lack of qualified personnel to oversee the changes and businesses having difficulty sourcing necessary technology.

"These difficulties were exacerbated by the COVID-19 pandemic," the FTC wrote in a news release Tuesday. "These issues may make it difficult for financial institutions, especially small ones, to come into compliance by the deadline."

The National Automobile Dealers Association, auto lender trade group American Financial Services Association, credit bureau organization Consumer Data Industry Association and collections association ACA International made a similar point in a July letter to the FTC. The associations had requested a year-long extension, to Dec. 9, 2023.

"Our members appreciate the FTC's work to protect customers' information," NADA and the others wrote. "At the same time, the residual effects of COVID-19 on the labor market and supply chain, as well as dueling regulatory demands and the technological changes required for proper compliance, make it difficult for covered entities to uplift their information security programs to meet the requirements in the Final Rule."

NADA did not respond to a request for comment. AFSA said it appreciates the FTC's action.

"AFSA member companies provide crucial services in our economy," AFSA Senior Vice President Celia Winslow said in a statement. "Extending the implementation date of the rule means that companies will be able to make appropriate enhancements to systems and staffing, ultimately benefiting consumers."

The Small Business Administration Office of Advocacy, an independent SBA entity tasked with advancing the views of small businesses, wrote to the FTC in August asking for an additional year, citing similar points as the trade groups.

The updated Safeguards Rule instituted in 2021 lists nine elements that must be found in a dealership's cybersecurity program by the compliance deadline.

A business must hire or outsource a "qualified individual" to oversee the program and report to company leadership; assess risks and act to minimize them; have an incident response plan should a breach occur; test or monitor its system; train staff; monitor vendors for information security; and adapt the system to changes at the business or other developments.

[Cox Automotive] New-vehicle inventory closed October at its highest level since May 2021, and prices stayed high, according to Cox Automotive’s analysis of vAuto Available Inventory data. Over the past three months, all but four major brands have seen an increase in inventory. The question is: Will demand keep up with supply?

“The supply situation in the new vehicle market has significantly improved over recent months,” said Charlie Chesbrough, Cox Automotive senior economist. “But with interest rates rising, and consumer optimism falling, the key question now is whether buyers will be willing and able to buy.”

The total U.S. supply of available unsold new vehicles stood at 1.56 million units at the end of October, compared with a revised 1.32 million vehicles at the end of September. Days’ supply climbed to 49, the highest since May 2021, and compared with a revised 43 days’ supply at the end of September.

Supply at month end was 78% higher, or 680,000 units, than at the end of October 2021. Days’ supply was 70% higher than at the same time a year ago.

While inventory showed a significant bump, it remains low by historical standards. At the end of October 2020, supply stood at 2.59 million vehicles for a 65 days’ supply. For pre-pandemic October 2019, supply hit 3.49 million vehicles for an 86 days’ supply.

Closing October, the industry had non-luxury vehicle inventory totaling 1.32 million vehicles for a 49 days’ supply. That was up from 1.12 million a month earlier for a 40 days’ supply. Luxury supply stood at 222,469 vehicles for a 51 days’ supply. That compares with a month earlier when it was just shy of 200,000 units for a 47 days’ supply.

The Cox Automotive days’ supply is based on the daily sales rate for the most recent 30-day period, in this case, ended October 31, when about 941,368 vehicles were sold. That was the highest for a 30-day period since May 2021. The official full-month sales rose 10% from a year ago for an October seasonally adjusted annual rate (SAAR) of 14.9 million, the highest since January.

Asian and European Brands Still Have Lowest Supply
Asian non-luxury brands and Japanese and European luxury brands continue to have the lowest inventories as measured by days’ supply, according to Cox Automotive’s analysis of vAuto Available Inventory data.

As measured by days of supply, non-luxury brands with the lowest inventories were Toyota, Kia, Honda and Subaru, respectively. Luxury brands with the lowest inventories were Lexus, Land Rover, Acura and BMW, in that order.

Aside from low-volume high-performance cars, minivans had the lowest supply followed by compact, subcompact and midsize cars, which are in high demand for their fuel efficiency in a market with elevated fuel prices. Hybrid supply remained at the low end as well.

At the high end of the supply range were large and luxury cars, luxury subcompact SUVs and full-size pickup trucks from domestic automakers.

“Typically, the final quarter of the year is a brisk selling season for big trucks, but this year may be different,” said Chesbrough. “A decline in housing starts, which correlates to truck sales, combined with high interest rates may stifle truck sales, which, in turn, could hurt profits, especially for domestic manufacturers. We may see incentives on those trucks as inventories return to pre-pandemic levels.”

Of the 30 highest-selling models in the 30 days ended October 31, most were Asian brands, mostly Kia, Toyota, Honda and Subaru. A couple of domestic models – the Chevrolet Trailblazer and the Ford Bronco – fell to the low end this month. Kia Sportage and Toyota RAV4 were at the very bottom with a scant 19 days’ supply. Of the 30 top-selling models, full-size domestic pickup trucks and SUVs had the most inventory with Ram 1500 having the very most.

As has been the case for months, the lower the price category the tighter the supply. Under $20,000, days’ supply was 24. Between $20,000 and $30,000, days’ supply was 32. All other price categories had 50 days’ supply and higher.

Rise in Asking Price Slows The average listing price – or the asking price – was $46,317 at the end of October, up slightly from a revised $46,212 at the end of September, according to Cox Automotive’s analysis of vAuto Available Inventory data. The listing price is running only 4% ahead of a year ago and remains elevated from years past.

The average transaction price (ATP) – or the price paid – increased to $48,281, but remained below the all-time high of $48,301 set in August, according to Kelley Blue Book, a Cox Automotive company.

Incentives remained stable in October 2022 at 2.1% of the average transaction price. One year ago in October 2021, incentives averaged 4.3% of ATP.

1.                   What is NADA PAC?

NADA PAC is the political action committee sponsored by NADA. NADA PAC raises funds from individuals at NADA/ATD member dealerships and contributes those funds to pro-dealer candidates for the U.S. House and Senate.

2.                   Who is the staff of NADA PAC that assists state teams?

NADA PAC is staffed by three full-time employees:

3.                   Where is NADA PAC located, and how can I contact it?

NADA PAC is located at NADA’s Capitol Hill Office
412 First St. SE, Washington, DC 20003

202.627.6755; f 202.627.6750; nadapac@nada.org; www.nada.org/nadapac

4.                   Who pays for the expenses of NADA PAC?

NADA PAC is a “connected PAC,” and all administrative and fundraising expenses incurred by NADA PAC are paid by NADA, not out of fundraising receipts. One hundred percent of every donation goes toward contributions to federal candidates.

5.                   Who is eligible to contribute to NADA PAC?

Dealers and managers, and their immediate families, of NADA member dealerships are eligible to contribute to NADA PAC. Additionally, the NADA member dealership must have a signed prior-approval form on file with NADA PAC for an individual to be eligible to contribute.

6.                   What types of contributions can NADA PAC accept?

NADA PAC can only accept contributions made by personal check or personal credit card. NADA PAC can manage auto renewal credit card payments or divide a contribution into equal increments to be paid over time. Corporate contributions to NADA PAC are prohibited by federal law.

7.                   What is the contribution limit to NADA PAC?

An individual may contribute up to $5,000 per year to NADA PAC.

8.                   Where should dealers send contributions to NADA PAC?
9.                   What is prior approval?

Because NADA’s members are corporations, federal election law requires that the dealership give “prior approval” to NADA PAC so that dealers and other eligible employees within the dealership can receive communications and invitations to participate in NADA PAC’s activities. The form can be signed only by the dealer principle or NADA authorized representative of the dealership, and may be granted for multiple years.

Each dealership can only grant prior approval to one federal trade association PAC each year. This does not prevent a dealer from contributing to a “non-connected PAC,” such as the Automotive Free International Trade PAC (AFIT-PAC). Contributions received from individuals whose dealerships do not have a prior-approval form on file will be returned to the contributor. A signed prior-approval form does not create an obligation to contribute to NADA PAC.

10.               Where do I find prior-approval forms, and where do I send completed ones?

Prior-approval forms are located on the NADA website and are included in this reference manual. After logging in with member credentials, authorized representatives can complete an online form to provide prior approval, which is then updated by NADA PAC staff in the NADA membership system. If the person logged in is not eligible to give prior approval, they are given the option to download and print the form.

NADA PAC staff can send you prior-approval forms (including electronic forms) and coordinate sending them to prospective dealer donors. Prior-approval forms should be returned to NADA PAC’s Washington, D.C., office by email (scan the form and then send to nadapac@nada.org}, by fax (202.627.6750) or by mail (NADA PAC, 412 First St. SE, Washington, DC 20003).

NADA PAC also solicits electronic prior approvals via DocuSign. These forms are sent via email to dealers with their information already included to be signed and returned electronically. DocuSigns are most effective as part of a larger campaign to reach out to dealers to urge them to sign the NADA PAC prior approval form. NADA PAC can prepare a DocuSign campaign in your state to increase prior approvals under the name of the NADA PAC team members.

11.               I want to do a solicitation campaign for my state. How do I begin?

First, contact the NADA PAC staff to obtain a list of NADA members in your state who have signed prior-approval forms on file with NADA PAC. Then, on your personal letterhead, or via email, contact those dealers to ask for support for NADA PAC. NADA PAC will provide sample letters and pledge forms to be sure that your solicitation meets all necessary federal legal requirements. NADA PAC can also send a solicitation letter on your behalf on NADA PAC letterhead.

12.               What are the NADA PAC state goals?

In addition to a national goal, the NADA PAC trustees set goals for each NADA district’s fundraising, based on the number of Congressional districts in the state or metro area. These state goals are designed to be challenging but attainable. In 2021, 50 of the 58 NADA districts surpassed their allotted goal.

13.               What are the NADA PAC state and metro award programs?

To recognize the role of the ATAEs and NADA PAC state teams in fundraising for NADA PAC, NADA has established three programs to reward states for surpassing their allotted state or metro association goal. These awards are paid directly to the general operating accounts of the state and metro associations. All the award money is paid by NADA, not by NADA PAC funds raised from dealers. A state of metro association’s annual participation in the NADA PAC award programs is authorized by each association’s elected chair.

14.               How are contributions to candidates determined?

Contributions to candidates are determined by each state’s NADA PAC team. This includes requests received directly from the candidates, through other dealers and from the NADA Legislative Office to attend Washington fundraising events. NADA Legislative and PAC staff are also available to assist with strategy in determining contributions and the most effective method of delivery.

15.               How much can a candidate receive from NADA PAC?

Candidates may receive up to $5,000 per election from NADA PAC; the primary election and general election are counted as separate elections. In a normal two-year (House) or six-year (Senate) election cycle, the total a candidate can receive is $10,000. NADA PAC has a policy of only contributing to Senate candidates’ re-election campaigns in the two-year cycle in which they are running. Runoff elections and special elections are treated as separate elections and are subject to the same per-election limit.

[Automotive News] Three House lawmakers have joined a push in the Senate to delay certain sourcing and manufacturing requirements in the Inflation Reduction Act's tax credit for consumers buying new electric vehicles. Sen. Raphael Warnock, D-Ga., introduced a bill — known as the Affordable Electric Vehicles for America Act — in September that would create a longer phase-in for the tax credit's North American final assembly requirement as well as its critical mineral and battery component provisions.

U.S. Reps. Terri Sewell of Alabama, Emanuel Cleaver of Missouri and Eric Swalwell of California — all Democrats who won midterm reelections in their states — introduced a companion bill this month. Sewell said the bill is a "win-win for Alabama, ensuring that automakers and car buyers alike can take advantage of these tax credits immediately."

Under the newly introduced legislation, only EVs sold after Dec. 31, 2025, would have to be built in North America. Restrictions on critical minerals sourcing and the domestic manufacturing of battery components also would be delayed.

In comments filed to the Treasury this month, Hyundai urged the department to provide transition relief for the North American assembly requirement during the period that EV and battery manufacturing plants are under construction.

"This transition period would allow EVs sold by such companies during the construction period to be deemed eligible and compliant with the North America final assembly requirement," the South Korean automaker said in the comments.

CATA dealers should be aware that Stellantis has issued a “stop-drive” caution for approximately 276,000 model year 2005-2010 Dodge Magnums, Chargers, and Challengers and Chrysler 300s.  All dealers are urged to check their used vehicle inventories for any of the vehicles referenced above.  Vehicles subject to open federal safety recalls involving a “stop-drive” warning should not be resold at retail or wholesale until they are remedied.  Among other things, Stellantis has told its dealers to arrange to have unremedied vehicles subject to the “stop-drive” towed to dealerships for repair (or to arrange for mobile repair) and to offer rental cars or alternate transportation to customers, as needed.  The National Highway Traffic Safety Administration (NHTSA) posted a Consumer Alert addressing FCA’s “stop-drive” and has urged all owners of vehicles with open Takata airbag recalls to follow manufacturer warnings and to arrange with their dealership to schedule a free recall repair as soon as possible.  For further information for dealers about managing new and used vehicles subject to open federal safety recalls, please see NADA’s Safety Recalls FAQ. 

[NADA] The Equal Employment Opportunity Commission (EEOC) recently released a new “Know Your Rights: Workplace Discrimination is Illegal” poster to replace one entitled “EEO is the Law.” Dealerships must prominently display the latest version of the “Know Your Rights” poster in conspicuous locations at their worksites. Such locations include poster boards accessible to applicants and employees with disabilities and employee websites.

The EEOC administers and enforces federal laws designed to protect workers against employment discrimination. The “Know Your Rights” poster is written to provide information on federal anti-discrimination law to applicants, employees, and employers. It stresses that federal law prohibits job discrimination based on race, color, sex (including pregnancy and related conditions, sexual orientation, or gender identity), national origin, religion, age (40 and older), equal pay, disability, or genetic information (including family medical history or genetic tests or services). It also notes that employers may not retaliate against an employee for filing a discrimination charge, reasonably opposing discrimination, or participating in a discrimination lawsuit, investigation, or proceeding.

General questions regarding the EEOC poster may be directed to regulatoryaffairs@nada.org.