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  • Friday, March 19, 2021 5:51 PM | Anonymous
    Legislation to repeal the $10,000 cap on the value of traded-in vehicles passed out of the Illinois Senate on March 10 and has moved to consideration by the state House.
    Representatives are not believed to view the bill as emergency legislation, so the General Assembly’s lower chamber is not expected to take up Senate Bill 58 before first addressing bills that originated in the House. Supporters of the measure should plan to start contacting their state representatives about mid-April to appeal for its passage.
    Capping the trade-in credit increases the cost of new vehicles and used vehicles bought at retail. Votes thus far on SB 58 have been unanimous in support, and Gov. J.B. Pritzker has voiced his backing. The cap took effect in 2020 following moves to find funding for Pritzker’s multibillion dollar state capital infrastructure plan.
    Under SB 58, infrastructure projects would instead be funded, in part, by increasing the sales tax charged in private vehicle sales. For instance, the current $390 sales tax on a 1-year-old vehicle sold privately for less than $15,000 would increase to $465. If the same vehicle sells for $15,001-$20,000, the sales tax would be increased from $750 to $850. The tax rates for private transactions haven’t changed in more than 30 years, and the modest increases are much less impactful than a trade-in credit cap, which costs consumers hundreds of dollars and harms dealers state-wide.
    If the General Assembly passes the legislation, the change to restore the full trade-in allowance on First Division vehicles would take effect 120 days after the governor signs the bill. As currently written, the trade-in credit cap exempts Second Division vehicles. According to the Illinois Vehicle Code, a First Division vehicle is designed for carrying not more than 10 persons. A Second Division vehicle is designed to carry more than 10 persons; be used for living quarters; pull or carry freight, cargo or implements of husbandry; or be a First Division vehicle remodeled for use and used as a Second Division vehicle.
    Sen. Antonio Muñoz (D-Chicago) first sponsored the bill, then about a quarter of the state’s senators followed suit. Rep. Marcus Evans Jr. (D-Chicago) is the first House sponsor.

  • Friday, March 05, 2021 6:03 PM | Anonymous
    While the global COVID-19 pandemic has negatively impacted nearly every measure of life, Cox Automotive’s 11th annual Car Buyer Journey Study, released Feb. 23, suggests the automobile buying process improved during the prolonged downturn. Both new- and used-vehicle buyers in 2020 reported the process took less time and was more efficient than before. Overall, buyer satisfaction reached an all-time high in 2020.
    The Cox study involved a survey of 3,016 shoppers who bought a vehicle between mid-March and September 2020 and used the internet during the buying process. It is designed to offer a detailed look at the vehicle buying process in America, from start to finish.
    Identifying the consumers who were buying cars in 2020 is key to understanding the latest Car Buyer Journey Study findings. The average vehicle buyer last year was 50 years old and had a reported income above $75,000. The above-average income was particularly true with new-vehicle buyers: 70% of new-car buyers in 2020 had incomes above $75,000. Conversely, the number of new-vehicle buyers with reported incomes below $75,000, at 30% in 2020, was down 3% from 2019, indicating that many lower-income buyers stayed out of the new-car market last year.
    In 2020, 30% of vehicle buyers were identified by the Cox research team to be "Straight Shooters," a cohort of buyers more likely to be Gen X or Baby Boomer suburbanites who are experienced at car buying and careful with finances. By comparison, only 15% of vehicle buyers in 2018 were in the Straight Shooter cohort. Less experienced, budget-conscious buyers tended to stay out of the market in 2020. 
    Purchase motivation shifted in 2020
    Vehicles buyers in 2020 were more likely to be motivated by "want," as opposed to "need," according to Cox. Many buyers in 2020 were motivated by attractive deals — whether they searched for them on their own or a dealer reached out with special offers. Important, 35% of buyers knew exactly what vehicle they wanted at the start of the car buying process, up from 29% in 2018. Nearly 60% of buyers considered both new and used vehicles in 2020, up from 53% in 2019.
    With a high level of buyer certainty, the amount of time spent actively shopping and buying dropped significantly in 2020, according to the study. Buyers reported spending an average of just over 13 hours in the entire process, from start to finish, down from nearly 15 hours in 2019. New-car buyers spent just over 11 hours on the necessary steps, everything from shopping and negotiating the deal to taking delivery of the new vehicle. The biggest time savings in 2020 was in the online shopping phase.  
    Pandemic revolutionized purchase process
    As dealers adapted their business due to COVID-19, consumers took advantage of a new digital experience. The overall vehicle-buying process was streamlined by proactive dealer outreach to in-market consumers and new digital retailing tools designed to drive efficiency. As a result, the number of dealerships visited and the amount of time spent in dealerships dropped in 2020. 
    One of the top steps added because of COVID-19 was home delivery of test drives. Notably, an estimated 22% of vehicle buyers said they did not test drive a vehicle at the dealership; however, of the buyers who took a test drive, about 81% were satisfied with the process, the highest satisfaction rating for any step.
    According to the Cox study, as the vehicle-buying process becomes more efficient, satisfaction levels increase. "Heavy Digital" buyers in the survey — those buyers who performed more than half the steps online — were more satisfied with the process than "Light Digital" buyers, who performed less than 20% of the vehicle-buying steps online. 
    The Heavy Digital buyers reduced their time at the dealership by more than 40 minutes compared to Light Digital buyers, with the biggest time savings delivered in negotiating price and signing paperwork, the two steps that historically have had the lowest satisfaction ratings. The study shows that Heavy Digital buyers also were more likely than Light Digital buyers to trust the deal they received.
    2020 saw a sharp rise in the usage of what Cox researchers call "New Form Online Retailers": used-vehicle-only sales sites that include Carvana and Vroom. According to the study, about 17% of car buyers visited a New Form Online Retailer during their buying process, a significant increase from 11% in 2019 and just 7% in 2018. 
    The Cox study demonstrates that online shopping continues to be a central activity in the car buyer’s journey, although decisive shoppers spent less time in this phase in 2020. Third-party websites still are the No. 1 destination for vehicle shoppers as they enter the process, with up to 79% of buyers saying they used a third-party site in 2020, a figure generally unchanged from recent years. 

  • Friday, March 05, 2021 6:03 PM | Anonymous
    The late Bob Rohrman, whose namesake dealer group operates about 30 new-car dealerships stretching from Indianapolis to Kenosha, Wisconsin, was named Feb. 18 as the 2021 recipient of the AIADA’s David F. Mungenast Lifetime Achievement Award.
    Rohrman died Sept. 1, 2020, at age 87.
    The annual award is presented by the American International Automobile Dealers Association to an industry leader who possesses a community spirit and devotion to the international nameplate auto industry.
    "Those of us who knew Bob Rohrman and his legendary generosity saw that he embodied the spirit of the award more than almost anyone else in our industry," said AIADA President Cody Lusk. "There are many things we remember Bob for, but at the very top was his giving spirit and commitment to leaving the world a better place than he found it." 
    Perhaps the most famous car dealer in the Midwest thanks to his iconic television commercials, Rohrman got his start in the car business in Lafayette, Indiana. During his life, he was the recipient of numerous awards, including Indiana’s 2019 Sagamore of the Wabash, and he served in multiple auto industry leadership roles, including on the AIADA’s board of directors. 
    But Rohrman’s generosity was even bigger than his television personality. Highlights include a $15 million donation to Purdue University for Rohrman Field at Ross-Ade Stadium, $3.5 million for the Rohrman Performing Arts Center at Jefferson High School, and multiple other donations to organizations including Susan G. Komen, Meals on Wheels, and the Make-a-Wish Foundation. 
    Since 1975, the AIADA has presented an annual lifetime achievement award to dealers who are set apart by a deep commitment and contributions to the international auto industry and community involvement.

  • Friday, March 05, 2021 6:02 PM | Anonymous
    COVID-19 has wrought overwhelming negatives to the auto-retailing world, but in one respect it’s had an unwittingly positive effect: It accelerated progressive projects that had been in the works or were on the drawing board, said participants in a Feb. 16 WardsAuto/Ally Insurance webinar, "The Consumer Revolution and the Auto Retailing Future."
    Panelist Ronald MacEachern of the Troy, Michigan-based Suburban Collection described what happened when the dealership group resumed showroom sales after a state-imposed pandemic-related shutdown in early 2020.
    "When we reopened, we went from thinking to acting fast" in executing new initiatives, said MacEachern, Suburban’s platform vice president and general manager.
    "Before, one store had DocuPAD (an interactive tabletop digital device that aids in finance and insurance menu presentations and document processing). Within three months, all the stores had it. I was encouraged by how quickly we adapted."
    In retrospect, "We’ve made more changes in the last six months than in the last 10 years," he said. "It was a bad couple of months (March and April 2020) — more than we could ever have imagined. But more importantly, we positioned ourselves for 2021 and beyond."
    He anticipates Suburban and dealers in general will do well this year, especially ones that have been "practicing and working out."
    The dark days of auto retailing "offered an opportunity to look in the mirror and analyze some things we had talked about, and then implemented," said Ryan LaFontaine, CEO of the Highland, Michigan-based LaFontaine Automotive Group.
    "It changed our mindset," he said. "It was an education in adversity. We got a great education there."
    For one thing, it resulted in greater employee accountability, especially when it came to adapting to new ways. "A lot of employees can be resistant to change. This (the pandemic) forced change," LaFontaine said. 
    He noted home delivery of purchased or serviced vehicles "has been around for 20 years," but not as a regular offering. Now it is.
    The LaFontaine group is poised for a "gangbuster" 2021, its CEO said, noting the need to focus on both customers and "the controllables."
    The ability of large dealership operations such as Suburban and LaFontaine "to get ahead of the curve (serves as an example) for smaller players to get in the digital hunt," said webinar panelist Patrick Hennessey of Ally Insurance.
    Whether a car consumer prefers to shop online or at the dealership, LaFontaine said the same process applies. "We make sure we accommodate them wherever they want to connect."
    In a self-critique of its digital retailing efforts, MacEachern said Suburban "had the process down, but we didn’t have the proper handoff from when people went offline and into the store."
    Now, staffers meet daily to discuss how to make that transition seamless, especially in knowing at what point in the car-buying process customers are when they visit the store.
    "We’ve made progress, but we’re not there yet," said MacEachern.  "But it’s got to happen."
    It requires dealer diligence to know what shopping and research consumers have done digitally and what vehicles they’ve shown an interest in. Surveys indicate consumers expect dealership staff to know that when they ultimately go to the store.
    They don’t want to start from scratch in the showroom. "They don’t want to reset," said Hennessey, who added "nearly everyone looking to buy a car today starts online."
    To accomplish that seamless transition from offline to in-store requires "everyone on the team pulling in the same direction," he said. Often, the best ways to make meaningful changes "are done in the trenches."
    LaFontaine added, "If you don’t want a challenge, you shouldn’t be in business in the first place."
    Still, he said, "Anyone who said they were prepared for (how COVID has affected business operations) is lying."
    In conjunction with the webinar, Wards Intelligence and Ally surveyed dealers to gauge how the digital age might alter their operations, expectations and consumer buying habits.
    Among the findings:
    • Large dealership groups appear better prepared for digital sales than are smaller stores.
    • Management tends to be more bullish than staff regarding internet initiatives.
    • Digital tools aren’t seen by most respondents as a way to reduce inventory through build-to-order customization.
    • Selling consumers F&I products online remains a challenge. Customers initially may become familiar with those products online, but most surveyed dealers expect completing the F&I process will remain at the dealership.

  • Friday, March 05, 2021 6:02 PM | Anonymous
    In his first remarks as the NADA’s 2021 chairman, Paul Walser urged dealers to look inward, think differently and take on new challenges in order to promote and strengthen the franchise system during a pivotal year for the industry.
    "This is an important moment for dealers everywhere, because the truth is that we don’t live in the same world we used to," Walser said during his keynote address at February’s virtual NADA Show 2021.
    "If we want to improve; if we, as an industry, are serious about becoming stronger; and if we want to have a sustainable shield against the disruptions of the world, we need to start looking at things differently," Walser said. "Sometimes you just need a clean sheet of paper to evaluate how we would do things without the usual playbook, as if we were starting over."
    Walser, the CEO of Walser Automotive Group in Bloomington, Minnesota, rallied dealers to focus on diversity and inclusion efforts, dealer-OEM relationships, and becoming more involved in their trade associations, including the NADA and the CATA.
    Regarding a renewed commitment to diversity and inclusion, Walser said that it’s the right thing to do, it’s good for business, and it will strengthen the franchise system. "This year," he said, "I want to challenge all of us to make this a priority. Let’s find the path to attract a more diverse workforce. Then let’s implement training to help them succeed."
    On dealer-OEM relationships, Walser said "we must look at everything through the lens of the customer; the sales process, the online process, the way we advertise, the way we interact in showrooms, in our service centers, and after the sale."
    "Every time we touch a customer, we ought to think about how our decisions impact them," he said. "At the end of the day, customers want three things: speed, transparency and control in the process."
    Walser also urged dealers to become more active and engaged in the work of advocating for their businesses and the auto retail industry.
    Dealers across the country "must get more involved with your state legislators, with your members of Congress, and with your state, metro and national trade associations, because our elected officials don’t always understand our business. So we need to help them understand what we do, and why it’s important," Walser said.
    "If we can improve what we do and how we work, if we create a culture where more of us can succeed, and if we all take accountability for our industry, then there will be no question about the franchise system — that it is, in fact, a system that people do want, and that they will always need," he said.

  • Friday, March 05, 2021 6:02 PM | Anonymous
    Some of the nation’s biggest dealership groups expect service and parts business, especially body shop and collision repair, to recover in the second half of this year, as consumers begin to drive more.
    "The forecast for 2021 is definitely heavier weighted on the second half," said Jeff Dyke, president of Sonic Automotive. "As the vaccine gets out and people get more comfortable with traveling, we’re going to have people back on the road again."
    Mike Jackson, AutoNation chairman and CEO, has similar expectations for parts and service, which AutoNation calls the "customer care" department, according to a conference call to announce fourth-quarter earnings.
    "We estimate at the moment that miles driven are down about 10%. Our actual customer care business in the fourth quarter was down 4%, 5%, something like that. And so, we view it as a gradual recovery," Jackson said.
    AutoNation CFO Joe Lower said other pieces of the chain’s service and parts business, such as customer-pay and warranty, are almost back to year-ago levels, while collision repair is down nearly as much as miles-driven are down.
    "Again, I think as the miles recover, we’ll see that portion of the business in particular improve, and we are very optimistic about customer care as we go through 2021," he said.
    Analysts on the fourth-quarter earnings conference calls noted that starting in March and April, year-ago comparisons should get much easier for the dealership groups, percentage-wise, because dealership business really bottomed out in March and April 2020, due to business shutdowns related to the pandemic.
    That’s also true of Vehicle Miles Traveled, a closely watched statistic from the Federal Highway Administration.
    In November 2020, the latest month for which statistics are available, travel on all U.S. roads and streets was down 11.1% versus year-ago, to 231.6 billion miles. Year-to-date through November, U.S. travel was down 13.7%, to 2.6 trillion miles.
    Back in April 2020, it was down 39.8%, to 169.6 billion miles, the FHWA said. That was the biggest year-over-year percentage drop in 2020.
    "At the end of the day, the body shop business is really defunct, a lot less driving, a lot less accidents," said Dyke of Sonic Automotive, in an earnings conference call. "And so that’s been a big struggle for everybody in the industry in total.
    "We expect that to really change as we move into the back half of the year. "That’s going to make a big difference for us, and we expect the back half of the year to be much better from a fixed perspective than the first half."

  • Friday, March 05, 2021 6:01 PM | Anonymous
    Des Plaines police said a luxury car delivery driver was beaten badly by a group of four thieves early Feb. 25. The thieves stole three cars, and it was all caught on video.
    Police said officers responded to the Jidd Motors used-vehicle service center on Rand Road about 1 a.m. Feb 25. They found a man lying in a snow bank with injuries to his wrist and leg. The victim was taken to a local hospital with serious but not life-threatening injuries.
    Video captured the entire incident, from initial break-in to the quick and violent attack. Police said three of the attackers were Black and one was white. An investigation into the attack and thefts is ongoing.
    It began when four men broke into the nearby dealership showroom, stealing some laptops and office supplies, then moving to a huge warehouse. At the warehouse, they tried to steal several vehicles, but could not find ignition keys for any of them.
    About 20 minutes later, they moved down the road to the dealership’s service center at 855 Rand Rd., where the men encountered the delivery truck. They violently attacked the driver, leaving him badly injured. He limped away, eventually pleading for his life, as the thieves stole two BMWs and an Alfa Romero.
    "They’re really quick," said Adam Jidd, owner of Jidd Motors. "Professional. They’re all masked up. They have gloves on them. They know what they’re doing."
    No arrests have been made as of this newsletter deadline.
    Jidd said the driver underwent two surgeries that day and has a broken leg, adding there now will be armed security at both dealership locations.
    Jidd Motors also has set up a GoFundMe page to raise money to help pay the driver’s hospital bills.

  • Friday, March 05, 2021 6:01 PM | Anonymous
    Hinsdale police arrested a man at a Hinsdale dealership on Feb. 27 and charged him with burglary in connection with his attempt to purchase a vehicle using a fake ID. He remained in custody March 2.
    Hinsdale Police Detective Carter Sward described the man, whose actual name he declined to disclose, as "not the big guy" but instead someone who answered to a kingpin who offered the man a chance to make some money by taking delivery of vehicles.
    The man’s photo appeared on several driver’s licenses with different names, and he used them to obtain vehicles at several area new-vehicle dealerships in recent months, including at least three in February.
    Sward said the man was charged with burglary with intention to commit forgery, for signing falsified documents. Additional charges might be forthcoming, the detective said.
    Patrick McGowen, general manager at the Hinsdale dealership where the man was arrested, said, "This is my 40th year in the business, and I think we’ve had more issues of ID theft in the store than we’ve had in the last 35-40 years."
    McGowen said the man confessed to other crimes during his arrest.

  • Friday, March 05, 2021 6:01 PM | Anonymous
    Illinois lawmakers in February introduced legislation to eliminate the trade-in allowance cap that took effect in 2020, plus a bill that addresses the compensation manufacturers grant dealers for warranty repair work.
    Senate Bill 58, filed Feb. 9 by Sen. Antonio Munoz (D-Chicago), would restore the full sales tax credit on traded-in vehicles. The bill passed out of the Senate Revenue Committee March 3 on an 11-0 vote. Dealers and others who back it are encouraged to contact their state senators to support SB 58, which could be heard for passage by the full Senate March 9-11. Senators in early January voted unanimously to pass them same argument, but then the 101st session of the General Assembly expired before the House could act on it.
    The trade-in cap first emerged in the final days of the legislature’s 2019 session, as Illinois Gov. J.B. Pritzker and lawmakers sought funding for the governor’s $45 billion capital infrastructure plan. The CATA and other groups back an alternate path for raising state revenue: increasing the tax on private party vehicle sales.
    House Bill 3940, introduced Feb. 22 by state Rep. Lawrence Walsh Jr. (D-Joliet), changes the manner in which dealers are reimbursed by manufacturers for labor work, mandating that it be no less than the amount the customer pays for the same services.
    Under HB 3940, "Adequate and fair compensation requires the manufacturer to pay each dealer no less than the amount the retail customer pays for the same services with regard to rate and time. Any time guide previously agreed to by the manufacturer and the dealer for extended warranty repairs may be used in lieu of actual time expended. In the event that a time guide has not been agreed to for warranty repairs, or said time guide does not define time for an applicable warranty repair, the manufacturer’s time guide shall be used, multiplied by 1.5."
    Mechanics Local 701, the union representing area technicians at dealerships, is joining the CATA in its support of the legislation.

  • Friday, March 05, 2021 6:01 PM | Anonymous
    A bipartisan group of eight governors from U.S. auto states have urged President Joe Biden to do more to press semiconductor firms to address a global shortage of automotive chips that has cut some vehicle production.
    The governors of Michigan, Indiana, Ohio, Kentucky, Kansas, South Carolina, Alabama and Missouri asked Biden in a Feb. 26 letter to join foreign governments in urging semiconductor and wafer companies to expand production and "temporarily reallocate a modest portion of their current production to auto-grade wafer production."
    Michigan Gov. Gretchen Whitmer, who led the effort to get other governors to sign, said she was urging Biden "to do everything in his power and to leave no stone unturned to protect auto jobs throughout the supply chain at risk because of this shortage."
    The White House did not immediately comment, but auto executives met with White House officials on Feb. 24 and discussed the issue. Lawmakers have also urged the White House to pressure chip manufacturers to boost auto chip supply.
    Biden said he would seek $37 billion in funding for legislation to supercharge U.S. chip manufacturing and he signed an executive order aimed at addressing the global semiconductor chip shortage.
    Automakers hit by the shortage include General Motors, Ford, Volkswagen, Toyota, Nissan, Stellantis and Subaru.
    Ford said a lack of chips could cut production by up to 20% in the first quarter and lower the company’s adjusted earnings by $1 billion to $2.5 billion.
    GM said the shortage could shave up to $2 billion from 2021 profit as it has been forced to cut output at factories in the U.S., Canada, Brazil and Mexico.
    A shortage of auto semiconductor chips could impact nearly 1 million units of global light vehicle production in the first quarter, data firm IHS Markit reported.

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