CATA News

By Jason Courter, 2020 AIADA Chairman

 

We’ve all heard the phrase "new normal" a lot this year, but lately it’s really resonating with me.

These days, I don’t back out of the driveway without a mask in the car. That’s the new normal. My youngest is starting her senior year on a laptop. That’s the new normal. And sales at our Honda stores are finally leveling off after some pretty dramatic ups and downs since March. That’s the new normal, too.

None of us are thrilled to be living in this new normal (my high school senior least of all), but it’s the reality we must navigate, for now. There haven’t been any magic bullets for running a dealership group during a pandemic. Every success my team has had has been the result of hard work, persistence, and stamina.

That’s why I’m taking this moment, after nine months of tumult, to say, "Nice job," to my fellow dealers. You’re still here. You’re still opening your doors every morning. You’re still making payroll and making customers smile. It hasn’t been easy and it hasn’t often been fun, but we’re surviving.

This new normal will require from dealers a new type of advocacy. It might be a while before you walk through the halls of Congress or shake hands at a political fundraiser, or even vote in-person at your local polling place. But that doesn’t mean you can’t be an active and involved dealer advocating on behalf of your employees and your stores.

One big thing you still can do under social distancing guidelines is hold a Virtual Dealer Visit with your Representative at your store. With the AIADA’s help, you can set up an online meeting between your lawmaker and your employees, give your member of Congress a virtual tour of your store, and help him or her understand the value you bring to their district.

Another easy but impactful action is to be an online advocate for your business. Use your personal or business accounts on Twitter and Facebook to share the good work your stores do with the hashtag #DealersDoGood. Visit the AIADA’s social media toolkit for more ideas on what you can share. And get ready-to-post images from our 2020 Economic Impact Report.

Together, we will show Washington, D.C., just how well dealers are adapting to the new normal. 

 

By Peter Welch, NADA President and CEO

 

For the better part of two years, the NADA spent considerable time and energy combating the narrative that the arrival of Millennials and Generation Z as consumers, combined with the proliferation of app-based ride-hailing services, would soon usher in the end of personal vehicle ownership.

We all know now, as the NADA knew then, that this narrative didn’t actually hold up under close scrutiny. But for a time, it was all anyone would talk about. For a little while there, you couldn’t attend an auto show or automotive conference without hearing from 12 different "luminaries" who all would explain why vehicle ownership was a relic whose demise was inevitable.

But around 2019, the hype started to fade and the reality started sinking in, even for those reluctant to embrace it. And the reality was this: The desire to own cars and trucks did not vanish with Gen X; neither was it disappearing even among regular users of ride-hailing services such as Uber and Lyft.

Millennials were not choosing to live differently than their parents or older siblings; they were just forced to delay, because of the Great Recession, their inevitable transition into adults who had kids, bought homes, moved to the suburbs and — you guessed it — bought cars. And outside of a small core of dedicated urbanites  — who, by the way, were using ride-hailing services exclusively back when they were simply called "taxis" — the vast majority of even heavy Uber and Lyft riders viewed those services as a supplement to, not a replacement for, owning their own vehicles.

At this point, scores of data have confirmed these realities. So why bring up these narratives now? What’s the point of reviving the "shared mobility will take over" hype curve of 2017-2018 if it’s been completely flattened by facts?

Because another narrative is emerging: The global coronavirus pandemic is forever changing attitudes toward shared mobility and personal transportation. Except this time, forces are combining to dramatically increase everyone’s desire to own their own vehicles. 

After all, if it’s not safe to touch anything or breathe anyone else’s air, it’s a lot more sensible to get from A to B in your own sealed environment, as opposed to a metal can being used by dozens or thousands of other people a day.

Well, I’d like to suggest, perhaps counterintuitively, that this curve might get flattened out with the benefit of time and data, as well. And here’s why: I don’t think the desire for personal vehicle ownership ever really waned to begin with. And if no one shelved their desire to own their own cars and trucks, there are not a lot of people to "win back," even with changed attitudes brought on by the pandemic. 

Put another way, it’s hard to convert folks if they never lost religion in the first place.

Again, there’s ample evidence now that the universe of personal ownership "deserters" of a few years ago was truly miniscule. In fact, pre-pandemic, car ownership was increasing just about everywhere in America from 2011 to 2018 — Uber and Lyft’s heyday. And it was on the rise in our cities, too, the theoretical backyard of Uber and Lyft’s takeover of our personal transportation modes. In a study of America’s large cities, car ownership was either steady or on the rise in all but one year between 2011 and 2018.

And most post-hype, pre-pandemic, credible studies forecast continued growth of vehicles sold and vehicle ownership well into the future. These studies accounted for ride-hailing, bolstering the understanding that most consumers see these services as added benefits to, not replacements for, owning their own vehicles.

Has the arrival of a pandemic changed the equation? At this point, there is lot to suggest that attitudes toward mass transit and shared mobility options have plummeted in the face of the pandemic. According to a 2020 McKinsey Global COVID-19 Automotive Consumer Survey, less than 10% of respondents said they view carsharing, ridesharing or "shared micromobility" to be safe forms of transportation — versus 81% who said that traveling in their own vehicle was safe. 

Similarly, an IBM survey of 10,000 Americans in late April 2020 found 26% planned to use ride-hailing services less or not at all once COVID restrictions were lifted, and 32% said the same about public transportation. Conversely, in that same survey, 17% said they plan to use their personal car more, and 26% said they will use their personal car exclusively for travel or commuting.

 

There’s plenty of anecdotal and even some statistical evidence to suggest that many people who didn’t see the need for a personal vehicle before the pandemic surely do now. But an honest assessment is that it was a small number to begin with. The vast majority of Americans already had their cars and trucks pre-pandemic. And post-pandemic, the vast majority will still continue to buy and need and value owning their own cars and trucks—whether the virus decimates mass transit and shared mobility or not.

 

But what if large numbers of us continue working from home even after the pandemic passes? Won’t such a permanent shift in commuting patterns trigger an exodus of personally owned vehicles? In short: No. Our daily treks to the office account for only two of our average 10 vehicle trips per day. Eliminating our drives to the office may well cut down on our miles driven, but won’t do anything to reduce our need for our own cars, for countless other reasons, if that need was present prior to the arrival of COVID-19.

 

What does this all mean for dealers? I think America’s auto dealers understand full well that they provide their customers with something that is irreplaceable under any circumstance, and that will continue to be irreplaceable under any circumstance well into the future.

 

The sky wasn’t falling in 2018, and the post-pandemic world won’t usher in a windfall. The vital importance of personal vehicle ownership won’t be established, and probably won’t be broadened much as a result of the pandemic. Simply reaffirmed.

 

For the past seven years, Chicagoland’s new-car dealers have led the charge in supporting hometown heroes by hosting Barbecue for the Troops community fundraisers for the USO of Illinois. 

While this year is unique, local dealers know the need is there — perhaps now more than ever — to help local military families, which is why dealerships are encouraging the public to stop in on Saturday, Oct. 3, or at any time in the month of October, to make a donation to the USO of Illinois. Donations also are accepted online through participating dealership websites and at DriveChicago.com. 

The partnership between the Chicago Automobile Trade Association and the USO of Illinois dates to 2013 when the first Barbecue for the Troops fundraisers were held. Since then — and nearly 600 fundraisers later — local dealerships have rallied their communities in support of the USO of Illinois to raise nearly $900,000 for local military who are serving on the home front during the COVID-19 pandemic and on the frontlines around the world.

"Despite these challenging times, it’s evident that dealers want to make a difference," said CATA Chairman Kevin Keefe. "The mentality to help others is deeply rooted within local car dealers, and they’re among the first to roll up their sleeves and help when people need it most. 

"While the USO Barbecue for the Troops campaign is just one of many charitable initiatives that dealers support, it’s a perfect example of how these local businesses can rally their communities like not many can to all come together around one great cause." 

USO of Illinois Executive Director Christopher Schmidt said: "In these unprecedented times, the generous support of local new-car dealers and our hometown communities is more important than ever. Throughout the COVID-19 pandemic, the brave men and women who wear the cloth of our nation continue their mission without pause, deploying around the world as well as here at home in support of the fight of COVID-19 across Illinois. 

"The USO stands with our service members and their families as the ‘Force Behind the Forces,’ continuing to provide essential services, programs and activities even through the pandemic. Thank you to all our local dealerships and their patrons — without whom we could not continue our mission." 

The CATA also is providing an opportunity for people to get involved on social media. Beginning Sept. 21, fans can nominate someone who deserves to win the contest’s grand prize, the #BBQ4Troops Ultimate At-Home BBQ. The prize is complete with a Real Urban Barbecue catering gift card, BBQ essentials for at-home grilling and a Chicago Blackhawks Patrick Kane autographed hockey puck. Visit Drive Chicago on Facebook, Instagram and Twitter for more details and to enter.

See DriveChicago.com for the complete list of dealership fundraisers on Oct. 3 and details on how to make an online donation. 

The USO, a nonprofit, non-political organization, has for more than 75 years provided Americans with a tangible way to express appreciation and gratitude for the dedication and sacrifice of the nation’s troops and their families.

For more information about the USO of Illinois, visit USOofIllinois.org.

 

Under a new system that begins its rollout Oct. 1, Illinois dealerships will use paper stock issued by the secretary of state’s office to print temporary registration permits and hand them to customers.

The change comes as an effort to improve the process and because the plastic sheath that covers the fiberboard material used for the current TRPs no longer is available, said Thomas Steven, the managing assistant to Ernie Dannenberger, director of the office’s Vehicle Services Department.

Existing TRPs will be discontinued after Nov. 3. Expirations on the new TRP will remain the same at 90 days. A secretary of state facility could issue a subsequent TRP, if needed.

In the new system, SuperUsers (an administrator or manager) will assign packages of 25 TRPs to each User (issuer), who cannot share or reallocate any from that supply. Each lost, stolen or destroyed TRP will result in a $151 fine. Further misuse of any permit will be met with a $175 fine per instance and possible loss of system access or criminal charges.

The secretary of state will reach out to dealer licensees in early October and issue usernames and passwords to access its system to generate TRPs. Based on their recent registration activity, the office also will issue licensees 90-day supplies of TRP stock.

 

The secretary of state prepared a slide deck to help train users on the new system. It faces refinement, as one field that calls for a driver’s license number actually seeks to obtain the dealership number issued by that office.

Whereas Illinois license plates can contain no more than seven characters, the new TRP features eight — six numerals separated by two letters. The smaller TRP for motorcycles has four numbers and two letters.

Dealerships must maintain envelopes to store receipts for each set of 25 TRPs plus any voided TRPs from that set. Voided TRPs must be returned on a monthly basis to Springfield.

The secretary of state is operating a hotline, (217) 524-4329, for dealership employees to call with questions.

 

Arlene Drabek, 77, the wife of longtime dealer and CATA director Lee Drabek (Gateway Chevrolet-Oldsmobile, Chicago), died Aug. 22.
  
In addition to Lee Drabek, survivors include a son, Lee "Buddy" Drabek; a daughter, Tracey Napora; four grandchildren; and one great-granddaughter. Memorials appreciated to the Alzheimer’s Association.

Bob Rohrman, who during a 65-year career built his business into one of the biggest family-owned auto groups in the nation, died Sept. 1 at age 87.
 
An Army veteran and a lifelong resident of Lafayette, Indiana, Mr. Rohrman started selling cars there in 1955. In 1963, he opened his first store, a used-car lot, also in Lafayette, then his first franchised store in 1970. The Bob Rohrman Auto Group now counts about 30 new-car dealerships selling 13 different brands and stretching from Indianapolis to Kenosha, Wisconsin.
 
Mr. Rohrman was widely recognizable from his frequent television commercials that saw him hyping cars while sometimes attired as various characters and for the blooper outtakes gathered during their production.
 
His benevolence included giving $3.5 million to his high school alma mater to help build the Rohrman Performing Arts Center, and $15 million to Purdue University to renovate what now is named Rohrman Field.
 
Mr. Rohrman often gave his customers a copy of his 2015 autobiography, "A Fantastic Ride."  Survivors include three sons, two daughters, 16 grandchildren, and 18 great-grandchildren.

 

A U.S. court of appeals on Aug. 31 overturned a fuel economy regulatory rollback implemented under the Trump administration which sought to delay the more than doubling of penalties for automakers failing to meet the requirements.
 
The decision could increase automakers’ compliance costs substantially, the auto industry argued when the Obama administration adopted the hike in 2016. The industry at large has not met the country’s fuel efficiency requirements since 2015, despite more electric vehicles being offered.
 
In its 3-0 decision, the U.S. Court of Appeals for the Second Circuit said the National Highway Traffic Safety Administration’s rule in July 2019 that said the penalties no longer applied was far too delayed. It would have had to make that determination over their economic effects in January 2017 at the latest.
 
"We reject the NHTSA’s argument that, at the time it issued the 2019 Final Rule, it was permitted to reverse the penalty increase on the grounds that the increase would create a ‘negative economic impact,’ " Circuit Judge William Nardini wrote. "... We need not reach the merits of the NHTSA’s conclusions regarding negative economic impact because it was not authorized to undertake this reconsideration at the time it did so."
 
The NHTSA declined to comment.   
 
The Alliance for Automotive Innovation, a trade association for the automotive industry in Washington, D.C., did not immediately have comment.
 
As a part of wide-ranging reforms to civil penalties ordered in 2015 by Congress, the NHTSA issued rules to raise fines to $14 from $5.50 for every 0.1 mpg of fuel more that new vehicles use over the standards.

A group of states that did not include Michigan and two environmental groups challenged the Trump administration’s decision to ignore the increase. They noted that the penalties had increased once in more than 40 years — to $5.50 from $5 in 1997 — and that inflation had reduced their impact.
 
When automakers do not meet the standards, they can purchase credits from their competitors or pay the fines that have cost companies in the tens of millions of dollars.
 
Detroit manufacturers lagged behind foreign-owned competition in meeting the fuel economy standards. General Motors, Ford and Fiat Chrysler Automobiles ranked 12th, 13th and 14th, respectively, among the 14 manufacturers measured, according to data from the Environmental Protection Agency.
 
In a separate case, a group of 23 states sued the administration over its March decision to roll back annual increases in vehicle efficiency from 5% through 2026 to just 1.5%.

 

New-vehicles sales in August, overall, were down 11% compared to last year, according to estimates from industry forecaster ALG. In July, the decline was 15%.
 
Several factors outside of the control of automakers hurt sales results. There were two fewer sales days last month as compared to August 2019, and sales over Labor Day weekend last year fell within August, but this year will be tallied in September.
 
As a result, for many automakers, their daily selling rate, or the number of new-vehicle sales per selling day, showed a much less negative month.

Regardless, tight inventory across the industry weighed heavily. Toyota, Lexus, and BMW all had inventories of less than 40 days — normal levels are around 60 days — and as Charlie Chesbrough, senior economist at Cox Automotive, pointed out, "Obviously, you can’t sell what you don’t have."
 
Transaction prices also slipped slightly compared to July, but remain up 3.9% compared to the same time period in 2019.
 
"Vehicles are continuing to sell at higher transaction prices when compared to the prior year even amidst the pandemic," said Eric Lyman, Chief Industry Analyst for TrueCar subsidiary ALG. "However, we are seeing month-over-month declines in average transaction price since May due to pullbacks on the richer automaker incentives that were in the market at the beginning of the pandemic.
 
"Consumers leaned into those offers to upgrade to higher priced trims and models, which drove up transaction prices."

 

The U.S. government’s road safety agency is offering a smartphone app that will alert drivers if their vehicles are recalled.
 
The National Highway Traffic Safety Administration rolled out the free app for both Android and Apple phones on Aug. 27.
 
Owners key in or scan their 17-digit vehicle identification number, and the app will search the agency’s database for recalls. If there is an open recall, the app will send an alert, the agency said.
 
People also can add child seats, trailers and tires, and the app will check those for recalls.

 

Private services such as Carfax already offer similar apps for vehicle recalls, but this is a first by NHTSA, which is part of the U.S. Department of Transportation. Owners already could go to www.nhtsa.gov/recalls and check the NHTSA database for recalls. DriveChicago.com also has a prominent link to the NHTSA database.
 
Full information about the app can be found at www.nhtsa.gov/safercar-app.
 
The safety agency said vehicle information is kept on the owner’s phone and no personal information is shared with the government.
 
"The SaferCar app allows you to store your information locally on your device, and then the app goes to work to inform you of recalls as they occur," NHTSA Deputy Administrator James Owens said in a statement.
 
The NHTSA says that one in four vehicles now on the road has an unrepaired recall, which is a safety risk. Automakers must fix safety recall problems at no cost to owners. The CATA’s current advertising encourages car owners to take their vehicles to a new-car dealership to have them checked for open recalls, then to get the free recall service work.
 
Last year, 53 million vehicles, car seats, tires and equipment were recalled, according to the agency.

 

The U.S. government’s road safety agency is offering a smartphone app that will alert drivers if their vehicles are recalled.
 
The National Highway Traffic Safety Administration rolled out the free app for both Android and Apple phones on Aug. 27.
 
Owners key in or scan their 17-digit vehicle identification number, and the app will search the agency’s database for recalls. If there is an open recall, the app will send an alert, the agency said.
 
People also can add child seats, trailers and tires, and the app will check those for recalls.

 

Private services such as Carfax already offer similar apps for vehicle recalls, but this is a first by NHTSA, which is part of the U.S. Department of Transportation. Owners already could go to www.nhtsa.gov/recalls and check the NHTSA database for recalls. DriveChicago.com also has a prominent link to the NHTSA database.
 
Full information about the app can be found at www.nhtsa.gov/safercar-app.
 
The safety agency said vehicle information is kept on the owner’s phone and no personal information is shared with the government.
 
"The SaferCar app allows you to store your information locally on your device, and then the app goes to work to inform you of recalls as they occur," NHTSA Deputy Administrator James Owens said in a statement.
 
The NHTSA says that one in four vehicles now on the road has an unrepaired recall, which is a safety risk. Automakers must fix safety recall problems at no cost to owners. The CATA’s current advertising encourages car owners to take their vehicles to a new-car dealership to have them checked for open recalls, then to get the free recall service work.
 
Last year, 53 million vehicles, car seats, tires and equipment were recalled, according to the agency.