CATA News

The National Automobile Dealers Association will kick off its 2022 Show in Las Vegas with a blockbuster Welcome Kickoff Reception at the brand new Allegiant Stadium adjacent to the Las Vegas Strip.

 

The Welcome Kickoff Reception on March 10, 2022, will bring together the entire auto industry for a rousing indoor tailgater, with a festive sports theme and a wide array of experiences and activities for Show attendees, exhibitors and industry partners. Reception attendees will have access to the field, various lounges and exclusive areas of the state-of-the art stadium. Attendees also will enjoy gourmet food and top-shelf beverages.

"This is one of the biggest — if not the biggest — event that the NADA has hosted to date," said Scott Dube, a Massachusetts dealer and chairman of the NADA Show Committee. "The grand scale of this event signifies the importance of personal connections in our industry. We are excited to bring back the sense of community that our industry has been lacking since the coronavirus pandemic began, and help bolster relationships between the NADA, its members, automakers and the vendor community."

Headlining the Welcome Kickoff Reception will be a concert by the Grammy and Billboard Award-winning band Train. Since the release of their self-titled debut album, the San Francisco group has had 14 songs on Billboard’s Hot 100 list. Also performing: the Drumbots, the official drum line of the NHL Vegas Golden Knights.

"We see this Welcome Kickoff Reception as a phenomenal way to bring the industry together in person after a long hiatus," said NADA President and CEO Mike Stanton. "The NADA Show has so much to offer everyone who attends, and this year in particular we wanted to combine our outstanding agenda with a landmark event that will create life-long memories for anyone who attends."

NADA Show is returning to an in-person event in Las Vegas March 10-13, 2022. Tickets for the Welcome Kickoff Reception are included as part of NADA Show 2022 registration for NADA dealers, managers and their guests. Nonmember dealers, managers, international affiliates and exhibitors can purchase Welcome Kickoff Reception tickets for $250.

 

Automobile dealers are some of the finest entrepreneurs in America, but their command of car retailing was tested as never before by the pandemic and the sudden rise of e-commerce. Now, add two more trends that are shaking up their industry: the rise of fleet sales and vehicle electrification.

Ohio megadealer Rick Ricart is leaning into those two developments as he aggressively recasts his seven new-car stores and one used-car outlet in Columbus for a different future. He’s a third-generation dealer, but Ricart said he can’t afford to live on his family’s substantial legacy. So he’s rolling up his sleeves to attack those important new areas of potential vulnerability — and immense opportunity.

Electrified vehicles aren’t going to dominate Ohio sales anytime soon, but they’re in the process of doubling in the U.S. every year or so. And while Columbus isn’t California in terms of demand for EVs, it is a college and government town with a consumer appetite for EV models that is going to be ahead of the pack.

"We want to get as far out over our skis as we can, without crashing," Ricart said. "I don’t think it’s a bad investment. As a dealer, we have to be certified [to service] all of our brands, to sell and service all the EVs coming out."

Ricart also needs to "adapt our own facilities to create charging stations and our own infrastructure," including a Level 3 DC fast charger and a "safe warehouse" for batteries and EVs that may be in for recalls. As underscored by the current problems General Motors is experiencing with onboard fires in its Chevrolet Bolt EVs, "we must have the right facility to secure and store these."

Ricart is installing charging stations now for the use of the dealership’s 550 employees, with use of them free for workers and customers. The number of charging stations could total as many as two dozen over the next three years.

"We want to be leaders in our industry rather than say we won’t put charging stations in until it’s a necessity," Ricart said. "Otherwise, from a PR standpoint, we look like we’re environment-killers. ‘This dealership wants to keep burning gas.’ People are going to want to drive their [Ford] GT on the weekends and an electric to work. It’s a balance."

Even more dramatic a change than EV sales, for now, is how quickly fleet sales have risen in importance for Ricart and other U.S. car dealers. It’s one big reason Ford said recently that it’s going to emphasize its fleet business more than ever before. "We’ve gone from private retail transactions to more people driving a vehicle that’s owned by a fleet," Ricart said. "We saw that transition begin two years ago when we sold more F Series trucks through our fleet and commercial division than through our retail showroom."

As for the fleet business, Ricart has created a dedicated division called R2B (Ricart to Business) to service the booming demand. "A lot of companies in our area are looking for a simple way to buy a package of vehicles," he said. "They may be an auto-parts chain making deliveries, a landscaping company, an insurance company that has a fleet." While individual retail customers used to drive the business, Ricart said, now demand is being led by fleet and commercial customers.

"They’ll plan ahead and let us know that they need, say, 20 cars and two big trucks within the next three to six months," Ricart said. "And it’s great when Ford Credit makes it easy for companies to buy fleets," with financial packages that include all regular maintenance and other costs of ownership in a monthly payment.

 

"The service side on fleets is really what’s pulling this along," he said. "Companies want to make their vehicles last until their accountant says it’s time to take it out of the fleet or replace it. But there is such a technician shortage throughout our industry that a lot of times those fleets and companies can’t justify what we pay a technician. So we are doing more maintenance contracts."

 

Premium brands occupy most of the low spots in the customer-survey-based 2021 J.D. Power Initial Quality Study in which the Ram pickup truck ranks No.1 with the fewest reported problems.  

It may seem ironic that many luxury brands lag behind mainstream nameplates, but there are a couple of logical explanations for that, said Dave Sargent, J.D. Power’s vice president-automotive quality.

First, upmarket vehicles contain more new and complex technology. "Customers tend to struggle with it," he said. But that is less of an issue than something not working right. 

Second, mass market automakers "continue to catch up in terms of fundamental build quality," Sargent said during an online briefing on the latest study results.

Only two luxury brands performed above average.

Still, "the industry continues to improve," Sargent said, citing a 3% improvement rate this year in fewer problems reported, "which is not bad" considering the environments of COVID, vehicle shortages and lots of newly introduced technology.

Twenty of 32 brands improved their quality from 2020. Surveyed consumers’ complaints ranged from powertrain issues to squeaks and rattles, but these days the most beefs by far center on infotainment systems.

"It’s the biggest challenge for the industry," Sargent said.

Specifically, Android Auto and Apple Car Play draw the most consumer criticism. It’s not that they don’t work but rather that many consumers reported struggling to connect with them properly. Sargent attributes that in part to more vehicles offering wireless connectivity.

"It’s not necessarily that (Android Auto and Apple Car Play) are not operating correctly." But the connectivity issue is to a point where "some consumers gave up trying to use it," he said. "That’s not good."

Of all problems cited by new-vehicle owners, one in four are in the infotainment category, and six of the top 10 problems across the industry are infotainment-related. Smartphone connection is the top problem.

The Android Auto and Apple Car Play complaints have surpassed voice-recognition technology. For more than a decade, the latter was the No.1 problem in the annual survey. 

 

"With more vehicles being fitted with the wireless technology owners want, the study reveals an increase in connectivity problems between smartphones and vehicles, leaving many owners unhappy," Sargent said.

That’s led to finger-pointing between automakers and technology companies which blame each other for the consumer discontent. "It shows a need for the auto and tech industries to work together better," he said.

 

He added: "Owners want wireless connectivity, and the industry has responded. However, this has created a bigger technical challenge."    

 

Automakers generally face the wrath of owners on this issue, but it’s a shared problem, he said. "Owners don’t care who’s at fault. They just want their phone and their vehicle to talk to each other."

 

Surveyed consumers’ overall complaints can range from something not working correctly to the way a feature is designed. The former is easier to resolve.

 

"Defects and problems can get fixed at the dealership," Sargent said. "If there’s a design problem, there’s nothing the dealer can do. The consumer is stuck with it throughout the ownership of the vehicle."

 

The 2021 U.S. Initial Quality Study, now in its 35th year, is based on responses from 110,827 purchasers and lessees of new 2021 model-year vehicles who were surveyed early in the ownership period. The study is based on a 223-question battery organized into nine vehicle categories (infotainment; features, controls and displays; exterior; driving assistance; interior; powertrain; seats; driving experience; and climate).

 

The study was conducted from February through July 2021.

 

The automotive sector was hit the hardest by supply chain disruptions during the Covid-19 pandemic, according to a survey that covered six broad industries.

The survey was conducted by the Economist Intelligence Unit and sponsored by Citi. It surveyed 175 supply chain managers — more than 70% of which were based in Asia — in February and March this year, and its findings were released Aug. 25.

In addition to auto, the respondents came from five other industries:

 

• Footwear and apparel;

• Food and beverage;

• Manufacturing;

• IT, tech and electronics;

• Healthcare, pharmaceuticals and biotechnology.

 

About 51.7% of respondents from the auto sector said disruptions to supply chains were "very significant" — the highest proportion across the six industries.

The footwear and apparel industry came in second with 43.3% respondents reporting "very significant" disruptions. Meanwhile, only 6.7% from the IT, tech and electronics sector indicated the same.

Over the past year, the movement of goods was disrupted as the global spread of Covid forced many countries to shut borders, close workplaces or limit exports.

The spread of the more transmissible delta variant again heightened such worries, as major Asian manufacturing hubs such as China and Vietnam in recent weeks locked down parts of their countries to curb a rise in Covid cases.

The auto industry was particularly affected by a shortage of semiconductors, which caused several carmakers to cut production at some of their plants. The chip shortage was caused by a surge in demand for personal computers and other consumer electronics as many people were kept at home during Covid lockdowns.

 

New locations

The pandemic has led some businesses to rethink their supply chains for the longer term, with about a third of respondents conducting a complete overhaul, the survey found.

One in five supply chain managers surveyed have invested or are looking to invest in the Philippines and India in the next 12 months as part of their strategy.

"Cheap labor costs and young populations in both those countries are important factors in this choice," said the report outlining the survey findings.

The report noted that the Philippine government is keen to attract manufacturing investments in sectors including electronics, automotive, aerospace, health and IT. 

India, meanwhile, was a preferred location for many supply chain managers in the auto sector, according to the report.

 

Douglas A. Rockenbach, a lifelong resident of Grayslake and owner of a namesake Chevrolet dealership in that town for more than 50 years, died Aug. 4. He was 96.

Mr. Rockenbach graduated in 1943 from Warren Township High School in Gurnee and was drafted by the Army, seeing World War II action in North Africa, Italy, France, Belgium and Germany.

He was active in community organizations, including as chairman and a board member of the Lake County Easter Seal Society and as commander of Grayslake American Legion Post 659. He owned Rockenbach Chevrolet, founded in 1925.

Industry achievements include a nomination for the Time Magazine Quality Dealer of the Year; four-time General Motors Dealer of the year; chairman of the Illinois Automobile Dealers Association; and president of the Chicago and Northwest Indiana Chevy Dealers Advertising Association. One highlight of Mr. Rockenbach’s time as president of the ad association was signing Michael Jordan to his first contract as a spokesman for the Chevy dealers. He was in studio during Jordan’s first commercial shoot.

Survivors include a son, Gregg; a daughter, Gail; one granddaughter and three great-grandsons. His wife, Bonnie, and another son, Gary, preceded him in death. Memorial donations appreciated to the Grayslake Historical Society or to A Cure in Sight, an organization that supports the ocular melanoma community. 

 

Pamela A. Grace, 69, who had been the CATA’s receptionist and meeting rooms coordinator since 2001, died July 11. Illness forced her retirement in early June.

In her role, Mrs. Grace also served as the receptionist in the Exhibitors Office during Chicago Auto Shows.

She and Jeffrey Grace, her husband for 44 years, were avid racquetball players for many years, and they forged many friendships in the sport. She also served on the board of directors of the Illinois State Racquetball Association.

Other survivors include sons Dion, Anzel and Jeffrey II; a daughter, Nichole; and eight grandchildren.

 

Twelve area dealerships are winners of J.D. Power’s 2021 Dealer of Excellence award, for providing exceptional customer service: Arlington Heights Ford, Audi Westmont, Fair Oaks Ford (Naperville), Gerald Subaru of North Aurora, Bill Jacobs BMW (Naperville), Bill Jacobs Volkswagen (Naperville), Laurel BMW of Westmont, Loeber Motors Mercedes-Benz (Lincolnwood), Mercedes-Benz of Naperville, Napleton’s Valley Hyundai (Aurora), Phillips Chevrolet of Frankfort, and Porsche Exchange (Highland Park).

 

A claimed 70 percent of electric car buyers said they would miss the smell of gasoline when switching to a plug-in vehicle. That is according to Ford, which to promote its new Mach-E GT has created a fragrance intended to smell like petroleum.

 

Yes, that statement is correct and no, today is not the first of April. Ford goes on to say the smell of gasoline ranked as a more popular scent than wine and cheese, and was almost identical to the aroma of used books, according to its own research.

Named Mach-Eau, Ford said the fragrance is "designed to please the nose of any wearer; a high-end fragrance that fuses smoky accords, aspects of rubber and even an ‘animal’ element to give a nod to the Mustang heritage."

 

Ford worked with U.K.-based Olfaction to create the fragrance. Olfaction said the starting point for the fragrance was "the chemicals that are emitted from car interiors, engines and petrol." 

The company added: "This included benzaldehyde, which is an almond-like scent given off by car interiors, and para-cresol which is key in creating the rubbery scent of tires. These were blended with ingredients like blue ginger, lavender, geranium and sandalwood that added metallic, smoky and further rubbery accents, as well as an overdose of Timut pepper, utilizing the petrol-like top note."

The point of all this is to promote Ford’s new Mustang Mach-E GT, the high-performance flagship of the company’s EV range.

 

Today’s car buyers are different than before. Consequently, dealers should handle them in new ways, according to automotive consultant Merlin Stevenson.

"The auto industry is one of the most disrupted in the world, across the whole chain," said Stevenson, vice president of automotive for GP Strategies. "Retail is the most affected part."

Accordingly, many sales staffs are shifting their approaches from consulting to curating customer experiences.

"It’s less about selling," Stevenson said recently at an online CXAUTO2021 conference presentation entitled "People as a Key to Automotive Retail Transformation."

"When handling empowered customers," Stevenson said, "it comes down to (customer) experience and convenience."

Fifty-five percent of modern customers have done their online homework and arrive at the dealership fully informed about their vehicle of interest, he said. With such people, salespeople "need to do deep listening."

The main reason 70% of car shoppers visit a dealership is for a test drive, Stevenson said. "Don’t just make the test drive a spin around the block. Let them experience the vehicle." 

He breaks down today’s customers into four categories: dealer-trusting traditionalists who usually are older; hybrid customers who shop and research both digitally and in-person; online savvy modernists; and online-focused information seekers.

Because empowered customers’ online shopping and researching extends to vehicle pricing, "wiggle room is reduced" when it comes to price negotiation, Stevenson said.

Dealership service departments should strive to provide positive experiences, too, but for service customers, "every service visit is considered an inconvenience," he said.

Then there’s the new and varied dealership workforce, he said, noting dealerships now cover four generations of employees: Baby Boomers and Generations X, Y and Z.

"It is a big challenge managing all of them," Stevenson said. "They range from experienced salespeople to digital natives. The challenge is managing an organization that enables all employees to reach their potential and contribute to the team."

In the digital age, frontline salespeople need traditional skills but also virtual-selling and social-media skills, he said. Moreover, dealerships should use data in decision-making. "Properly used data brings us closer to customers."

 

The average cost of new-vehicle ownership is approaching $10,000 a year amid a shortage of cars and trucks that has driven up prices, according to a new study.

The rising cost of vehicles stems from multiple factors, including a global semiconductor chip shortage that has limited car production and led to price hikes.

The average annual cost for owning a new vehicle is now $9,666, or $805.50 a month, according to the 2021 Your Driving Cost study released by AAA.

The study, conducted from May 2020 to May 2021, reviewed costs for the five top-selling vehicles in nine categories. The vehicles were then assessed across six categories of expenses: fuel, maintenance/repair/tire costs, insurance, license/registration/taxes, depreciation, and finance charges.

The vehicles studied by AAA had an average price tag of $32,903, which is $1,502 or 4.78% higher than last year. That suggests that the average cost of owning a new vehicle is even higher, since the average price of new vehicles recently topped $40,000, according to car-research site Edmunds.

Depreciation, a measure of how quickly a car loses value, makes up 40% of all ownership expenses, the report said. Cars typically decline in value over time, though used-car values have temporarily increased in some cases due to the new-car shortage.

Fuel is the second-highest cost of owning a vehicle at 17% of the total, while maintenance represents 15%, insurance 14%, taxes 7% and finance 7%.

"We like to talk often about other aspects like cost of fuel or insurance," said Greg Brannon, AAA’s director of automotive engineering and industry relations. "But whenever you look at what the important costs are for all costs, depreciation is really the major factor."

Fuel on average costs 10.72 cents a mile, while maintenance and repairs cost 9.55 cents. 

While maintenance costs vary depending on the vehicle, this year’s most expensive are those in the half-ton pickup trucks category. 

This year’s list includes two new categories that have never been included in the 71 years AAA has done this study: subcompact SUVs and midsize pickups. 

With how strained vehicle inventory has been, Brannon said it is important to do research before buying or simply hold off until prices aren’t as high. With a little research, consumers can save thousands of dollars per year.

Brannon said that consumers who are ready to pull the trigger on a new car should buy a gently used car instead because new cars lose a tremendous amount of value in the first year of ownership.

By finding a used vehicle that is 2-3 years old with lower mileage, consumers will pay less, and "that’s because somebody else already paid" off part of the depreciation, Brannon said.

"While we all like that new car smell, which is actually plastic leaching into the car, the truth is that new cars depreciate at a quicker rate than used cars," he said.