CATA News

New-car sales in the U.S. are expected to rise in 2022, driven by pent-up demand after automakers in 2021 cut production due to pandemic-driven supply chain issues and semiconductor shortages, industry consultant Edmunds said Dec. 16.

The online car shopping guide estimated that 15.2 million new cars would be sold in 2022, a 1.2% increase from its 2021 vehicle sales estimate.

Shortages of semiconductor chips that control everything from heated seats to infotainment systems have caused major automakers to cut production or, in some cases, build vehicles without certain features.  

"Sales have been depressed since the spring, but consumer appetite for new vehicles continues to run high, which will only serve to build up deferred demand next year and beyond," said Jessica Caldwell, Edmunds’ executive director of insights.

Edmunds also expects the average transaction price for new vehicles, which jumped to $45,872 in November from $39,984 a year ago, to hit record levels.

The U.S. electric vehicle market will continue to see growth and will surpass 600,000 units in 2022, Edmunds predicted, adding that Ford’s F-150 Lightning "will be the champion of the segment."

Edmunds, which guides car shoppers from research to purchase, said the booming used-car market will continue to draw more shoppers as inventory shortages squeeze the new-vehicle market.

Data firm IHS Markit reported Dec. 16 that U.S. new-car sales in 2022 would rise to 15.47 million vehicles from an estimated 15.07 million in 2021. It also said it sees mainland China new-car sales rising to 26.92 million in 2023 and to 28.99 million in 2024.

 

Tickets and coupons that admit the holder to the 2022 Chicago Auto Show free or at a reduced price can be ordered by CATA members using the order form posted at www.CATA.info.

 

The passes promote goodwill with customers and even can help persuade a prospect to close a deal. Two kinds of passes are available, General Admission tickets and Weekday Discount coupons. The former, which costs CATA

members $7 each for a minimum 100 tickets, admits the holder to the auto show free, without a box-office wait. The coupon costs members $100 for 100 and admits the holder for $10 during the week.

 

Regular admission is $15.

Illinois’ minimum wage is set for another adjustment on Jan. 1, when the state’s base rate increases to $12 an hour.

 

The rate will continue to rise each year on New Year’s Day until 2025, when it hits $15 an hour. The adjustment comes after Illinois Gov. J.B. Pritzker in 2019 signed legislation to provide a path to grow the state’s minimum wage.

There have been three increases in the minimum wage since the legislation was signed. During 2020, most residents saw two minimum wage increases — first to $9.25 in January, then to $10 in July.

In Chicago, the minimum wage already is $15 an hour for employers that have 21 or more employees and $14 an hour for smaller businesses. The Cook County minimum rate is $13 an hour. Any adjustments to either rate are made July 1, the start of both entities’ fiscal years.

Prior to the increases in 2020, the last time Illinois raised its minimum wage was more than a decade earlier in 2010 when it increased to $8.25. Indiana is among 15 states that follow the federal minimum wage guideline, currently set at $7.25 an hour. That rate last changed in 2008.

A $15 minimum wage would lift more than 200,000 Illinois workers out of poverty, according to a study by the Illinois Economic Policy Institute at the University of Illinois.

Workers under the age of 18 who work fewer than 650 hours in a year will earn a minimum wage of $9.25 an hour beginning Jan. 1. That rate will gradually increase to $13 an hour by 2025, according to the governor’s office.

Illinois employers are advised to review their pay plans to make sure that they meet minimum wage obligations. Remember to obtain an updated Illinois minimum wage poster, as well as other labor law posters that employers are required to display.

 

When: 9:30 a.m. Thursday, Jan. 20

Where: CATA Headquarters, Oakbrook Terrace

Speaker: Steve Zabawa, Dealer Principal of Rimrock Subaru, and CEO & Co-Founder of WebBuy

Given the quickly changing retail landscape, this educational seminar will provide a new-car dealer’s insight into today’s digital-focused marketplace and examine the pressures placed on dealers to balance the demands of the OEM and the customer while still delivering a positive buying experience and maintaining profit margins.

 

Learn the key ingredients to successful digital retailing that ensures the right ROI while achieving a 30% close rate. This seminar also will discuss how OEMs are stepping into the retail arena and what it means from a dealer’s point of view — today and in the future. 

 

Key takeaways

• 4 key things to demand when selecting digital retailing tools and why they are important to achieve 30%+ close rates.

• How to defend your choice with the OEM on your digital retail solution

• How the key ingredients — lenders, dealer process, solution, and customers — equal sales and high close rates

• How Digital Retailing will evolve for the dealer, consumer and OEM in 2022 and beyond ... 

 

About Steve Zabawa

• 34 years’ experience in the retail auto industry, starting as salesperson

• 24 years as Dealer Principal of Rimrock Auto Group

• CEO & Co-Founder of WebBuy, a complete digital retailing solution built for dealers, designed by dealers, and certified/approved by most OEMs

 

Register here.

 

The November marching orders from the Biden administration had seemed clear: Large employers were to get their workers fully vaccinated by early January or make sure the workers were tested weekly. But a little over a month later, the Labor Department’s vaccine rule has been swept into confusion and uncertainty by legal battles, shifting deadlines and rising Covid case counts that throw into question the very definition of fully vaccinated.

The spread of the highly transmissible Omicron variant has seemingly bolstered the government’s argument at the heart of its legal battle over the rule, that the virus remains a grave threat to workers. But the recent surge in cases has raised the issue of whether the government will take its requirements further — even as the original rule remains contentious — and ask employers to mandate booster shots, too. The country’s testing capacity also has been strained, adding to concerns that companies will be unable to meet the rule’s testing requirements.

"My clients are totally confused as, quite frankly, am I," said Erin McLaughlin, a labor and employment lawyer. "My sense is that there are a lot of employers scrambling to try and put their mandate programs in place."

No company has been spared the whirlwind of recent changes, set off by the spike in Covid cases that in some instances have cut into their workforces. Then on Dec. 17, an appeals court lifted the legal block on the vaccine rule, though appeals to the ruling were filed immediately, leaving the rule’s legal status up in the air. Hours after that ruling, the Labor Department’s Occupational Safety and Health Administration urged employers to start working to get in compliance. But OSHA also gave employers some leeway, pushing back full enforcement of the rule until February, recognizing that for all its best intentions the rollout of the rule has been muddled. 

For companies struggling to meet OSHA’s standards because of testing shortages, the Labor Department said that it would "consider refraining from enforcement" if the employer has shown a good-faith effort to comply.

The latest reaction of companies has been muddled as well. Some took the first steps in developing testing programs. Others remained in wait-and-see mode. And some employers went even further than what the government so far has required by mandating boosters, spurred by fears over the spread of Omicron.

"I was just on a call with a client who said he can’t keep his workforce — not because of any vaccine mandate but because people keep getting sick," McLaughlin said.

Adding a layer of confusion, many states and cities have created their own vaccine rules, some more stringent than the federal government’s. There’s also the question of whether companies eventually will be required to mandate boosters, which would require accommodating the six-month delay between the second and third shots.

 

Anthony Capone, president of the technology and health care company DocGo, which sets up Covid testing programs for employers, said he had gotten a rush of inquiries from companies that are scrambling to set up their testing programs. In the past few weeks, DocGo has roughly tripled the number of daily Covid tests it usually conducts. Capone added that he and many of the employers he works with are anticipating resistance if they mandate boosters.

 

"You can’t really mandate booster shots yet," he said. "It hasn’t been signed off on by any federal agency."

 

Legal questions about the OSHA rule are far from resolved. Immediately after the U.S. District Court of Appeals for the Sixth Circuit ruled on Dec. 17, several of the many plaintiffs who have challenged that rule asked the Supreme Court to intervene as part of its "emergency" docket. Appeals from the Sixth Circuit are assigned for review by Justice Brett Kavanaugh, who under Supreme Court rules could in theory make a decision on his own but is more likely to refer the matter to the full Supreme Court. 

 

With the Labor Department now delaying full enforcement of its rule until Feb. 9, the justices have several weeks to ask for abbreviated briefings if they want them.

 

The U.S. Supreme Court has given the U.S. Department of Labor until Dec. 30 to respond to several petitions for an emergency stay of the Occupational Safety and Health Administration’s "Vax or Test" Emergency Temporary Standard (ETS). A divided three-judge panel of the U.S. Court of Appeals for the Sixth Circuit on Dec. 17 lifted a pre-existing stay, effectively reinstating the ETS for covered employees with at least 100 workers. 

The ETS is now in effect. However, OSHA has stated that it will exercise enforcement discretion with respect to employers exercising reasonable, good-faith efforts to come into compliance by not issuing citations for noncompliance before Jan. 10, 2022 for those mandates originally required to be met by Dec. 5, and by not issuing citations before Feb. 9 for noncompliance with the "vax or test" mandates originally required by Jan. 4.

Since the Supreme Court is unlikely to issue a decision prior to the New Year, it is very important that dealers review the mandates set out in OSHA’s ETS now, and consult with their counsel as to what steps toward compliance they should be taking. In that regard, see an NADA webinar, "OSHA’s New COVID-19 Employer Vaccine-or-Test Mandate: A Summary for Franchised Dealerships." 

In addition, recent examples of law firm outreach regarding OSHA’s ETS can be found here. Specific questions on how and when to comply with the ETS or with related state and local laws should be addressed to individual counsel. General questions on the ETS and on related court actions can be directed to regulatoryaffairs@nada.org.

 

The Occupational Health and Safety Administration said Dec. 18 that it would not issue citations tied to its coronavirus vaccination mandate before Jan. 10, giving companies time to adjust to and implement the requirements.

The federal agency separately said there would be no citations of companies regarding its testing requirements before Feb. 9.

The announcement came after the U.S. Court of Appeals for the Sixth District in Cincinnati decided Dec. 17 that the mandate for large employers could go forward, reversing a previous court decision made after 27 Republican-led states, conservative groups, business associations and some individual companies challenged the mandate.

OSHA said in a statement that it would not issue citations before the listed dates "so long as an employer is exercising reasonable, good faith efforts to come into compliance with the standard."

The mandate originally was slated to take effect Jan. 4.

The Biden administration’s vaccine requirement applies to companies with 100 or more employees and covers about 84 million U.S. workers. Employees who are not fully vaccinated have to wear face masks and be subject to weekly COVID-19 tests. There are exceptions, including for those who work outdoors or only at home.

Companies are springing up to help employers meet the mandate. One used by the CATA and a northwest suburban dealer is Centers for Disease Testing, which can visit a business twice weekly to provide Covid testing at no cost to the business.

The Centers for Disease Testing sets up testing booths, gets tests to labs, and returns results in a confidential format. They can test employees and their families. Reach the company's Tony Maxie at (847) 204-2471.

 

Biden administration officials estimate that the mandate will save 6,500 lives and prevent 250,000 hospitalizations over six months.

 

The new, all-electric Mercedes-Benz EQS serves as a technological showcase, with 56 inches of video screens stretching across the instrument panel, a voice assistant capable of operating virtually all onboard functions, the ability to park remotely — and even an electronically controlled HEPA filter.

The question is whether potential customers either want or need all the technology built into the new battery-electric vehicle — or all the other high-tech products now coming to market. In many cases, the answer is "No," according to a new study by J.D. Power.

"New-vehicle prices are at an all-time high, partly as a result of an increased level of content," said Kristin Kolodge, executive director of human machine interface at J.D. Power. "This is fine if owners are getting value for their money, but some features seem like a waste to many owners."

A sizable share of buyers don’t use all the technology built into their vehicles, according to Power’s 2021 Tech Experience Index. In many cases, owners don’t want all those features, and others don’t even know what technology their vehicles contain.

 

What gets low marks and what is well liked

Gesture control systems rank rock bottom with owners, based on the latest study. It found the technology, which tracks hand movements to control features like audio volume, had an "extremely high" number of problems and the lowest overall score based on consumer responses.

At the other extreme, one-pedal driving ranked at the very top and experienced the fewest number of reported problems. The technology, offered in the newest electric vehicles, allows a motorist to rely on the accelerator alone to slow and even stop, rather than having to jump back and forth from throttle to brake.

Automakers are investing heavily in new technology. Most major brands now operate tech research and development facilities in or near Silicon Valley. Some of the features have been borrowed from smartphones, others from voice assistant technologies such as Amazon’s Alexa. But "for more than one in three advanced technologies, fewer than half of owners have used the technology in the first 90 days of ownership," according to a summary of the new study.

 

"Non-users most often say they don’t need these technologies. For example, 61% of owners say they have never used the in-vehicle digital market technology, and 51% of those saying they have no need for it. Owners feel similarly about the driver/passenger communication technology, with 52% saying they have never used the technology, and 40% of those saying they have no need for it."

 

What you like depends on which company supplies it

How well motorists react to their technology often depends upon the brand they buy from. Genesis, the luxury spinoff of Hyundai, ranked highest in the Tech Experience Index, or TXI, followed by Cadillac, Volvo and Mercedes-Benz.

 

(Editor’s note: Tesla would top the study but the EV maker does not let Power access owners in a number of states, so data on the company is limited.)

 

Luxury brands tend to offer the most built-in technology and, on the whole, scored higher than mainstream models, but non-premium marques have begun loading their vehicles up with high-tech features, as well. Among the mainstream brands, Hyundai scored highest, followed by Kia, Nissan, Subaru and GMC.

 

The challenge for manufacturers is to stay on top of technology trends, according to Power and other researchers, while delivering the sort of features that consumers actually want and need. All too often, carmakers appear to be trying to one-up each other without actually paying attention to what works for their customers.

 

Complicating matters, the industry has faced serious challenges with quality and reliability. In recent years, technologies like voice assistants, in-car navigation and infotainment systems have been responsible for the major of "problems" reported by new vehicle buyers in another closely watched Power survey, the annual Initial Quality Study. "The TXI research quantifies the benefits when there is alignment between what owners truly want and what the automakers produce," said Kolodge.

 

Auto loan delinquencies are low — below pre-COVID levels, in fact — even though the size of the average auto loan has increased sharply in the past year, according to the latest State of the Automotive Finance Market report from Experian Automotive for 2021’s third quarter.

"It’s a positive sign to see delinquencies remain so stable. Consumers are demonstrating their ability to manage these larger loans and higher monthly payments," said Melinda Zabritski of Experian.

With delinquencies remaining flat despite bigger loan amounts, that also makes it likely auto lenders will continue to offer easy access to financing, especially for applicants with good credit histories.

The ongoing shortage of new-vehicle inventory is driving higher average transaction prices, along with lower average incentives and the consumer shift away from sedans and into bigger and more expensive CUVs, SUVs and pickups, Experian said.

The average new-vehicle loan amount financed was $37,280 in the third quarter, a substantial increase of 8.5% versus a year ago. The average new-vehicle monthly auto loan payment reached $609 in the third quarter compared to $565 a year ago. The average used-vehicle loan amount financed in the third quarter was $25,909, up 8% from a year ago and up 26% compared with two years ago.

 

In the third quarter, auto loans that were at least 30 days past due accounted for 1.66% of the outstanding accounts, almost exactly flat versus the third quarter of 2020, and down from 2.35% in third-quarter 2019, before the COVID-19 pandemic, Experian reported. Delinquency figures are for new- and used-vehicle loans combined.

 

Notably, the share of auto loans to borrowers with subprime credit was near a record low in the third quarter, Zabritski said. Shrinking share for subprime loans is a longer-term trend that predates the pandemic, she added.

 

Tickets and coupons that admit the holder to the 2022 Chicago Auto Show free or at a reduced price can be ordered by CATA members using the order form posted at www.CATA.info.

 

The passes promote goodwill with customers and even can help persuade a prospect to close a deal. Two kinds of passes are available, General Admission tickets and Weekday Discount coupons. The former, which costs CATA members $7 each for a minimum 100 tickets, admits the holder to the auto show free, without a box-office wait. The coupon costs members $100 for 100 vouchers and admits the holder for $10 during the week.

 

Regular admission is $15.