CATA News

[From Automotive News] NADA data shows that while new- and used-vehicle sales are down through the first half of the year, demand for both sales and service remains high.

2022 is shaping up to be another good year for the nation's new-vehicle retailers, according to dealership financial data from the National Automobile Dealers Association through the first half of the year.

New-vehicle production remains constrained and likely will stay that way for the rest of the year, if not into 2023, Patrick Manzi, NADA's chief economist, told Automotive News following the release of the NADA Data midyear report. The report offers data on sales, service and other financial trends at franchised dealerships through June.

But consumer demand for new and used vehicles remains strong, and parts and service operations also are performing well, Manzi said.

New-vehicle prices should remain elevated for the rest of the year, he said, in part because of the combination of automakers prioritizing higher-trim models and lower incentive spending. Average incentive spending per vehicle declined every month to a record low of less than $1,000 in June, according to the midyear report. That's down from a record high of more than $4,700 in April 2020.

Used-vehicle pricing remains high but may begin to moderate as wholesale prices have begun to drop in recent months, Manzi said. That could cause some dealers to adjust how much they pay to acquire used vehicles and how they price them, he added.

Read the full Automotive News story here.

In today’s automotive retail landscape, there’s little incentive for dealers to spend money on marketing when inventory is so limited. But, it is an opportunity to hit the reset button in the showroom and back office.

Digital retailing is one place where dealers can shift gears and take advantage of the inventory shortage to “evolve” the car-buying process. Rather than fearing digital retailing, dealers should embrace it as an opportunity to improve the buying process, making it more transparent, customizable, user-friendly and, most importantly, more profitable. Digital retailing is really a win-win for the consumer and the dealer.  Consumers appreciate a more streamlined process to minimize “perceived” pain points and dealers win by providing a digital check out option that requires minimal re-work to close and provides solid front and back-end margins.

According to J.D. Power, 25% of people are willing to conduct the car-buying process online. And more-importantly, the digital retailing process can be controlled to provide a pleasant experience every time. J.D. Power also notes that digital shoppers are more willing to purchase F&I products and dealer accessories when purchasing digitally.

When selecting a digital retailing solution, many dealers don’t realize they have several options.  What is key is to invest in a solution that provides a minimum 25% close rate.

When selecting a digital retailing solution, dealers should make sure of the following:

On the flip side, the keys to digital-retailing success also depend on a 100% buy-in across the store, from the owner to the GM to the used-car manager to the parts manager to the F&I manager. It’s also important to select the right calls to action on your website. And finally, utilize your current marketing tools, like email, social and traditional digital to “brand” your digital marketing tool and create a competitive advantage in your market!

The time is now to hit reset. For many dealers, digital retailing is something that’s being shoved down their throat by automakers. However, that doesn’t necessarily need to be the case as dealers have a great opportunity to demonstrate again to the OEMs that retailing of vehicles belongs in the hands of the franchised network.

[From: Reuters] The U.S. Transportation Department (USDOT) said on Tuesday it has approved the electric vehicle charging station plans for all 50 states, Washington and Puerto Rico covering about 75,000 miles (120,700 kms) of highways.

The November 2021 $1 trillion infrastructure bill provides $5 billion to help states install EV chargers along interstate highways over five years. States now have access to more than $1.5 billion to help build EV chargers, USDOT said. The White House announced earlier this month it had approved 35 of the 50 state plans.

"We’re not going to dictate to the states how to do this, but we do need to make sure that they meet basic standards," U.S. Transportation Secretary Pete Buttigieg said earlier this year. USDOT said states should fund DC Fast Chargers; stations should have at least four ports capable of simultaneously charging four EVs and install EV charging infrastructure every 50 miles (80.5 kms) along interstate highways and be located within 1 mile of highways.

Federal funds will cover 80% of EV charging costs, with private or state funds making up the balance.

Read the full article here.

EV owners and prospective buyers expect automakers to offer both an online and in-person shopping experience, according to the 2022 EVForward Dealer DeepDive. The EVForward team, part of advisory firm Escalent, works to capture the attitudes, behaviors, and opinions of the next generation of EV buyers.

The 2022 Dealer DeepDive report surveyed 1,289 people, of which 88 are EV owners. The survey grouped participants into EV intenders, or those who are most likely to shop for an EV, as well as EV opens, who are somewhat likely to purchase an EV, and EV resistants, drivers who are more comfortable with internal combustion engine vehicles.

The results? Prospective buyers want to use both online and in-person resources to buy an EV. The report suggests both legacy and EV specialist automakers offer an omnichannel buying experience, said K.C. Boyce, Escalent's vice president of powertrain innovation and energy transformation.

The dealership will remain a pivotal part of an EV intender's shopping experience, according to the report. The survey finds 74 percent of respondents would prefer to buy an EV at a dealership, rather than from an auto manufacturer or third party. Participants who own an EV, EV intenders and younger buyers are more likely to prefer purchasing directly from an automaker. However, a majority of each group still prefers buying from a dealership.

Boyce is slated to speak at the CATA this Thursday to national and local media outlets as well as policymakers during the press day for Chicago Drives Electric. 

To read more about the Dealer DeepDive report, click here.

Starting next June, about 50,000 drivers living in unincorporated Cook County will have one fewer tax to pay. The Cook County Board on Thursday voted to do away with its so-called wheel tax. For those affected, it cost $80 or $100 a year, based on the vehicle size. Semis, tractors and buses pay anywhere from $100 to $230, depending on weight.

The county has collected an average of $3.6 million a year from the tax in recent years. Doing away with the charge will save about $500,000 in annual administrative costs, including 80,000 staff hours, according to county finance officials. Those staff hours will be directed elsewhere, they said in a news release.

Several suburban municipalities have done away with city stickers in recent years, but some kept the registration cost in place. According to a 2021 Chicago Metropolitan Agency for Planning report, 159 municipalities in northeastern Illinois impose annual vehicle fees on residents, ranging from $5 to $90. Among those who have either repealed required vehicle sticker charges: Hoffman Estates, Rosemont, Oak Lawn, Des Plaines, Lombard and Palatine.

Chicago has seen several years of fine and fee changes related to vehicle stickers, which cost $90 a year, as well as parking tickets and vehicle booting and towing. Such charges — and late fees or violations related to them — can lead to spiraling debt.

“It is our duty to be responsible fiscal stewards for our working families,” Morrison said. “As many municipalities have eliminated their vehicle stickers, unincorporated Cook County residents should not be taxed more than their neighbors. I will continue to look for opportunities to find savings as well as provide effective services for our residents.”

The ordinance takes effect on June 30 next year.

Earlier this week, CATA Co-Presidents Dave Sloan and Jennifer Morand, along with CATA Treasurer and Government Relations Committee Chairman Jason Roberts, and NADA Directors, Desmond Roberts and Joe Massarelli, attended NADA’s Washington Conference. The two-day conference is an annual gathering of the automotive retailing industry including politically active members, national board members and state association leadership. The event highlighted the top legislative and regulatory issues facing dealers and featured keynote addresses from elected officials. Additionally, while in D.C., the team set up meetings on Capitol Hill with congressional representatives to discuss current issues. 

The 2022 Washington Conference keynote speaker lineup included Senator Amy Klobuchar (D-Minn), Rep. Dan Kildee (D-Mich.), Rep. Ashley Hinson (R-Iowa), political analyst Nathan Gonzales and Marc Short, former chief of staff to Mike Pence.

Congratulations to NADA’s Legislative Committee Chairman Desmond Roberts for what was considered a very successful Washington Conference. He rallied the dealers in attendance from the main stage as they went to the Hill for meetings Wednesday afternoon.

There are three main issues the industry is facing:

FTC Vehicle Transaction Rule

The FTC recently proposed a vehicle transaction rule that would overwhelm car buyers and small businesses with additional paperwork, needlessly lengthening the sales process. The rule was proposed without credible data-driven analysis or the necessary time for public comments to avoid the unintended consequences to consumers and small businesses. Unfair and deceptive practices in vehicle sales or financing are already illegal and heavily regulated. 

FTC’s proposed rule would make the auto buying experience worse—not better—for consumers. As the auto industry works to streamline the purchase process post-pandemic, the FTC’s proposed rule would only swamp dealers and car buyers with greater inefficiency and complexity. NADA is actively urging members of Congress to weigh in with the FTC to ensure that this rulemaking process is fair and based on valid research and data rather than assumptions.

Supply Chain Disruption LIFO Relief Act

Vehicle assembly plants and suppliers around the globe ceased or slowed production during the pandemic, drastically reducing new vehicle inventory. The shortfall worsened with the worldwide shortage of semiconductors, which are essential to complete vehicles manufactured today. With no way to replenish vehicle inventory, dealers using the last-in, first-out (LIFO) accounting method face major unanticipated tax liability due to circumstances beyond their control. Treasury recently indicated its support for a legislative solution to this issue and that they will work cooperatively with Congress to that end. NADA is working hard to urge Congress to pass this legislation to allow businesses on LIFO extended time to replace vehicle inventories as pandemic-related global disruptions and reduced auto production have made it nearly impossible to replenish new vehicle supply.

Catalytic Converter Anti-Theft Legislation

Catalytic converters are being stolen at increasingly higher rates due to their valuable medals. Thieves can easily steal catalytic converters from unattended vehicles and, since catalytic converters aren’t traceable, there is a lucrative market for those stolen parts. This has been a major issue not only for the Chicagoland area, but also for the nation. The act would assist law enforcement in their efforts to combat this crime by providing a national framework that would mark catalytic converters, establish federal criminal penalties and create a more transparent market that deters theft.

Your association’s leadership took these critical messages to local legislators in meetings on Capitol Hill.

U.S. House Representative Jesus “Chuy” Garcia was receptive to the CATA’s issues and asked for more follow-up details on each. Jason Roberts set the stage by introducing himself as the Vice Treasurer and Board of Director for Chicago’s Little Village Chamber of Commerce, the neighborhood in which Garcia resides. This seemed to resonate immediately with Rep. Garcia, and he gave the team more time than originally allotted as they briefed him on the key issues at hand. His Chief of Staff also seemed fully aware of the challenges with which new-car dealers are currently faced. In fact, two of his staff members recently purchased new vehicles and couldn’t imagine the process being further complicated with more disclosure paperwork, lengthening the total time it takes for the vehicle transaction.

Congressman Raja Krishnamoorthi, who represents the 8^th District of Illinois including Chicago’s west and northwest suburbs, was also receptive to the FTC message and acknowledged how this proposed rule would overcomplicate the car buying process for both consumers and business owners. He asked for more information to review, which was a promising sign. He was also in agreement on the catalytic converter issue, already fully aware of the local problem. Note: Congressman Krishnamoorthi already signed on as a co-sponsor of the Supply Chain Disruption (LIFO) Relief bill.

Congressman Brad Schneider, who represents Illinois’ 10^th District, was briefed on the LIFO bill by NADA Directors Joe Massarelli and Desmond Roberts. The first goal was to get Rep. Schneider’s support as a co-sponsor on the LIFO bill, which looks promising. He also understood dealer concerns about the FTC’s proposed rules and suggested taking our counterpoints to the House Oversight Committee.

Congressman Mike Quigley, who represents Illinois’ 5^th District, is another pro-business Democrat who is always willing to listen to dealer concerns.  He and his chief of staff promised to investigate dealer concerns about the FTC overreach on its proposed rulemaking. They also understood the LIFO issue and the catalytic converter issue asked for follow up on each.

EV Federal Tax Credits and Incentives

With the federal push for widespread EV adoption, the team also shared the reasons that franchised new-car dealers are critical to this next phase of the consumer EV revolution. NADA created a helpful infographic that helps break down the timeline for new clean vehicles tax credits available today through 2032.

National, state and metro associations along with dealers’ grassroots efforts remain crucial, and our voices are heard collectively when action is taken. With the help of the NADA, CATA and all our dealers, our voice resonates when tackling these important legislative issues. To that end, we want to reiterate the importance of the NADA PAC to assist in these efforts. To find out more about NADA PAC and its support of pro-dealer candidates, please call Dave Sloan at the CATA at 630-424-6055. If we don’t already have your NADA PAC permission on file, please find the form here and submit it to NADA.

Digital retailing is the future, and the future is now! It is true that adapting digital sales techniques in your dealership will make your digital retailing platform more effective and more profitable, but digital sales also make your sales team achieve these same goals.

Do you really know what digital retailing means? Digital retailing is a solution that drives more online transactions to start the purchase or lease of a vehicle. The goal is to take the shopper from browsing to trade appraisal, to financing, and even the close all from the comfort of their home.

According to Automotive News, 76% of car buyers are open to buying completely online and 64% of car buyers want to handle more of their purchase online compared to the last time they purchased a vehicle. In 2021, U.S Commerce totaled $933B and are projected to grow 23.4% by 2025. Digital retailing applications, such as WebBuy, accounted for 13.3 percent of all eCommerce sales in 2021.

Of course, not all of these sales were completed from the comfort of the buyer’s couch. Many online consumers started the application process outside the dealership and completed the application in the showroom. However, some digital sales savvy dealerships have trained their sales teams to start and close the showroom sale on the digital application.

It's not enough to install an application on your dealership’s website. Effective digital retailing takes total investment and cooperation from the dealership from owners and GMs through the entire sales team. When done properly, digital sales can take your dealership to the next level.

There are many advantages for a dealership to embrace digital retailing as the overall sales program and consumers have seen the benefits including total transparency of the car buying experience.

The CATA is hosting a Digital Sales seminar on Thursday, September 22, 2022, from 9:30 AM – 11:00 AM.

Click Here to Register.

For the first time since 1999, the cars were the stars at an auto show in the Motor City. Slimmed down and transitioning from its traditional January date, the 2022 Detroit Auto Show (formerly known as the North American International Auto Show) begins its 10-day public run today. The ’22 show is about half the size of previous editions and had manufacturer displays from General Motors, Ford, Stellantis, Toyota and Subaru. The show also bade use of the warmer weather to host a few outside events including alternative mobility displays, monster truck demonstrations and a dinosaur exhibit.

Detroit’s media preview was highlighted by a visit from President Biden and Pete Buttigieg, U.S. Secretary of Transportation, and featured a few key vehicle introductions, including the seventh-generation Ford Mustang. Also, interesting to note was a bevvy of new concept vehicles on the show floor, including the Buick Wildcat, Lexus Electrified Sport, Lincoln L100 and Star Concept, and Dodge Charger Daytona SRT. Other notable auto-show debuts included the 2024 Chevrolet Equinox EV, 2023 Chrysler 300C, 2023 Dodge Hornet, 2023 GMC Canyon, and 2023 Toyota Crown.

The return of Detroit to the auto show circuit came with mixed reviews, but bodes well for the future of auto shows, at least in major markets. Many of the concepts are likely to appear at other major shows like Los Angles, New York and in Chicago this coming February.

Speaking of Chicago, plans are well underway for the 2023 Chicago Auto Show. Not only will it grow in size compared to the 2022 show, but also include several manufacturers that we not present and add at least one additional indoor test track opportunity.

[from Automotive News] Ford's U.S. dealers must invest as much as $1.2 million and adhere to rigorous sales standards if they want to sell electric vehicles beyond 2023 as the brand tweaks its retail model to better compete with direct-sales startups.

Dealers have until Oct. 31 to opt into one of two EV certification tiers that cover varying investment levels in fast chargers and staff training. Those who choose not to invest will be limited to selling internal-combustion vehicles and hybrids from the Ford brand.

EV dealers must sell the products at nonnegotiable prices, and those who choose the lower-priced certification tier won't be allowed to carry them in inventory, instead having customers order exactly what they want for later delivery.

Read more here: https://www.autonews.com/dealers/ford-dealers-must-set-no-haggle-prices-invest-12-million-keep-selling-evs

President Biden visited the Detroit Auto Show Wednesday, using the backdrop to announce $900 million in grants for electric vehicle charging systems distributed to 35 states. The grants from the initial investment in what will become $5 billion allocated as part of last November’s bipartisan infrastructure law.

“You are going to be part of a network of 500,000 charging stations,” Biden said a crowd of union workers at the show. “The great American road trip is going to be fully electrified whether you’re driving along the coast, or on I-75 here in Michigan.”

Upgrading the country’s charging network is critical to Biden’s national goal for electric vehicles to make up 50% of all vehicles sold in the United States by 2030. Per the terms of the next round of EV tax credit in the Inflation Reduction Act, the White House and Congress are attempting to make both new and used EVs affordable, as well as bolstering the auto industry generally.