CATA News

While 2021 NADA Show registrants won’t be able to convene in-person in New Orleans Feb. 9-11, the auto industry’s "event of the year" will still go on — offering all the benefits the event has to offer, including the opportunity for dealers to get exclusive insights into their respective brands via franchise meetings with OEM representatives.

Over the three-day event, registrants will be able to tune in to more than 100 speeches, panels and interviews. Dealers and their managers also will have access to up to 25 rolling meeting invitations to directly connect with fellow attendees and exhibitors.

Joe Massarelli, president of Liberty Auto City in Libertyville and the National Automobile Dealers Association director who represents his fellow dealers in Cook, DuPage and Lake Counties in Illinois, said he favors the virtual format because it won’t take him or his employees away from the store. He has tasked his employees who register to implement two or three good ideas they glean from the presentations.

"I biasedly, strongly encourage dealers to watch the presentations," Massarelli said.

Registration for dealers who are NADA members is $199; nonmembers cost $399. For allieds, registration is $399. New this year, the NADA is offering group registration rates. Save $50 per registration when 10 or more attendees from a dealership group register.

Mike Stanton, NADA’s president and CEO, said the show’s franchise meetings offer dealers a prime opportunity to connect with OEMs and ask questions. 

"Dealers consistently tell us that franchise meetings are one of the top reasons for attending the Show," Stanton said. "For many dealers, this is the only time they have a chance to directly interact with senior OEM leadership.

"Given the accelerated change of pace for the industry and the country as a whole due to the coronavirus pandemic, a new President and administration, etcetera, senior OEM executives will be providing the latest news and what all these changes mean for the brands dealers sell. Just as importantly, dealers have the opportunity to share with OEMs what is working on the ground at their stores, and what needs improvement."

Stanton said franchise meetings are not like OEM meetings that automakers host over the course of the year. They are dealer meetings, and dealers invite OEMs to participate. It is a unique opportunity for dealers to set the agenda and get answers to their questions, and to discuss the importance of the relationship and how things can improve.

"The meetings are important for OEMs as well," he said. "They provide our auto manufacturer partners with an opportunity to hear directly from the dealer body who are on the front lines with customers every day."

For more information on franchise meetings, including the full schedule, and to register for NADA Show 2021, click here.

 

After eight months of inaction on legislation to eliminate the $10,000 limit on the trade-in value of vehicles retailed in Illinois, state senators voted unanimously on Jan. 10 to pass the bill and send it to the state House.

But then the 101st session of the General Assembly expired before the House could act on Senate Bill 2481. 

Lawmakers pledged to reintroduce the bill in the new session, which dawned Jan. 13. Sen. Antonio Muñoz, a Chicago Democrat, has said he would take up the matter immediately when his chamber returns beginning Jan. 26.

The trade-in cap, which took effect Jan. 1, 2020, 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 backed an alternate path for raising state revenue — increasing the tax on private party vehicle sales — but an abbreviated fall veto session in 2019 and the chaotic atmosphere in 2020 did not enable that argument to gain traction.

Lawmakers rarely gathered during the General Assembly’s regular session in 2020, then the fall veto session was canceled amid a worsening COVID-19 pandemic. The Senate plans to be in session nine days before March 1; the House, 13 days.

 

Jerry L. Sloan, an award-winning automobile industry executive before becoming a decorated public relations professor, died Dec. 10, 2020, at age 84. He was the father of CATA President David Sloan.

Mr. Sloan held a variety of public relations managerial positions at Ford from 1960 to 1982. He became American Motors Corporation’s vice president of public relations from 1983 to 1987 before returning to Ford, culminating as executive director of civic and corporate affairs.

He retired from Ford in 1992 to join the faculty at his alma mater, Ohio University, where he won a number of teaching awards before retiring in 2001. The Detroit Public Relations Society of America Hall of Fame inducted Mr. Sloan in 1998.

In addition to David Sloan, survivors include Jeanne, his wife of 62 years; sons Timothy and Jeffrey; a daughter, Betsy; 11 grandchildren; and six great-grandchildren. Donations appreciated to Centre Presbyterian Church in Mooresville, North Carolina, or to The Ohio University Foundation, designating the Jerry L. Sloan Visiting Professionals in Public Relations Award. 

 

John Guido Sr., who with his brother Tony opened Arlington Heights Ford in 1984, died Dec. 28, 2020. He was 73.

Beginning in 1989, Arlington Heights Ford won the President’s Award 30 straight years, the only U.S. Ford dealership to accomplish the feat. The dealership carries an A+ rating by the Better Business Bureau.

Mr. Guido served 26 years as chairman of the local Ford Dealers Advertising Fund. He also was a CATA director from 1999 to 2008.

"Thirty-five years total on two boards shows John’s dedication to the industry and his fellow dealers," CATA President Dave Sloan said.

Tony Guido added that his brother loved golf and was an avid fan of the Chicago Bears and White Sox.

Survivors include his wife, Diana; a daughter, Deana; a son, John Jr.; and five grandchildren.

Chevrolet of Homewood on Dec. 24 continued its annual tradition of giving away a car every Christmas Eve by donating a 2020 Chevy Sonic to a local grandmother who is taking care of four grandchildren after her daughter and son-in-law died in October in a tragic car accident.

Dollena Colvin’s daughter and son-in-law, Jeremy and Michelle Steward, borrowed Colvin’s car Oct. 6 and were en route to a laundromat when they were killed instantly in a collision.

"[The accident] left them with me now," Colvin said of her grandchildren, one of whom is recovering from brain cancer and another who is only 10 months old.

"This is such a blessing for me" the Blue Island resident said as she touched her new car. "It will never replace my daughter. Never. But I tell everybody she’s looking down like, ‘Y’all better get my momma a car!’ "

Under the Homewood Chevy Cares contest, Colvin was nominated to win the car by her niece, DeAnna Taylor, a South Holland resident.

 

"She kind of inherited a new life," Taylor said of her aunt, "If an accident like that happened to me, I would want someone to support my mom."

 

Helping those in need

This was the sixth year Chevrolet of Homewood donated a car on Christmas Eve, though this year’s donation was done with less fanfare — and fewer people — than in years past, due to COVID-19 concerns. Dealership staff were present at the event, as were some of Colvin’s relatives.

More than 700 submissions were made in the latest giveaway, far surpassing the roughly 400 that were received in 2019. Chevrolet of Homewood principal Steve Phillipos attributed the increase in submissions to the toll the COVID-19 pandemic has taken on so many families. 

"They’re all touching stories, they really are," Phillipos said. "It made it very difficult for us to pick these nice folks. But we think it’s a great thing."

He added: "These are beautiful people. I know they believe in miracles, and we believe in miracles."

Even the plates and sales tax on the vehicle were paid for by the dealer, as was the car’s first six months of insurance. 

 

"All you have to do," Phillipos told Colvin, "is drive your new car."

 

As a reminder, the U.S. Department of Transportation hazard class ORM-D (Other Regulated Material) expired Dec. 31. ORM-D is a hazard class specific to the United States. 

ORM-D is widely used for consumer commodities which are hazardous materials subject to the DOT Hazardous Material Regulations but which present a limited hazard during transportation due to their form, quantity and packaging. DOT defines a consumer commodity as a material that is packaged and distributed in a form intended or suitable for retail sales for consumption by individuals for purposes of personal care or household use. 

Common examples of ORM-D materials include household cleaners, drain openers, and aerosol cans.

The DOT’s original rulemaking phased out the ORM-D class for air shipments by Dec. 31, 2012, and ground shipments by Dec. 31, 2013. After industry challenged the deadline for ground shipments, DOT extended the deadline to Dec. 31, 2020.

The DOT phased out the ORM-D classification in order to align U.S. regulations with international transportation standards, specifically the Limited Quantity exceptions. The Limited Quantity exceptions for highway shipments are very similar to the ORM-D requirements. 

Limited Quantity shipments by highway are also exempt from labeling and placarding requirements, as well as from shipping paper requirements provided the materials are not hazardous wastes, hazardous substances, or marine pollutants. Shippers and carriers of Limited Quantity shipments must receive full DOT hazardous materials training.

Because hazardous waste transporters use public roads, highways, rails, and waterways, regulations for container specifications, labeling, marking, and placarding primarily are developed by the DOT, with input from the EPA.

The federal DOT was established by an act of Congress in 1966 as a federal Cabinet department concerned with all facets of transportation: cars, trains, trucks, planes, boats — anything with wheels or wings or a keel — and especially if hauling hazmat is involved.

 

Dealership leaders have entered 2021 with many important lessons learned on pivoting and keeping their businesses moving forward despite industry disruption. 

Proactive dealerships stayed ahead of the curve by adapting to their customers’ needs, accommodating new buying behaviors and meeting their customers where they are by embracing new sales models. According to IHS Markit, 65% of dealers now expect an acceleration in the development of online vehicle sales and booking platforms.

However, as growing car-buying trends cement into ongoing consumer buying habits, dealers are challenged to strategize for success for the long haul — with no time (or resources) to waste. 

In recent forecasts, automotive sales are projected to grow 9% year-over-year in 2021, rising from under 75 million in 2020 to almost 82 million.

To embrace these 2021 car sales opportunities, dealers need to ensure their sales team and process are nimble and ready to adapt. In a blog post, AutomotiveMastermind, a software firm that helps dealerships target potential customers, offered three ways for dealerships to embrace auto industry trends and strategize for success in 2021: 

 

• Put the right people in the right roles 

• Refocus your sales and marketing processes on the customer experience

• Deploy an inventory strategy driven by data

 

Right people, right role

In previous years, sales processes — and sales teams — likely were structured differently than they are today. Dealerships and team members that resisted change and digital transformation inside the dealership now can’t afford to ignore growing consumer demand for new buying experiences. 

 

In one recent study, consumers who purchased at the peak of the pandemic and completed their entire transaction at the dealership interacted with 3.8 dealership personnel on average. That number drops to 3.0 for consumers buying partially online and partially at the dealer and to just 2.1 personnel on average for online-only buyers.

With digital platforms automating the process, customers can take a self-serve approach to actions such as negotiating their trade-in, reducing the overall number of staff touchpoints and improving the efficiency of the sales process. 

But the physical dealership experience is an automotive trend that still matters. The same previously mentioned IHS Markit study found 79% of all surveyed consumers test drove their vehicle prior to purchase — 69% of those consumers at the dealership. 

By embracing an omnichannel approach, dealers are empowered to both implement new cost-saving efficiencies and ensure their dealership’s online and offline experiences are seamlessly integrated. But the right team is needed to support the process.  

When hiring new employees, seek out recruits who are digitally proficient, as well as those who are willing and excited to expand their horizons and seek out ways to grow beyond their current experiences.

Don’t forget to inspire and incentivize the team to continue growing their sales skills by participating in ongoing training and education opportunities. With the increasing popularity of virtual events, these previously cost-prohibitive trainings are more accessible than ever. 

 

Refocusing on the customer experience

When consumers are deciding how to buy, whether if that’s online or in-store, convenience is critical. Research finds both online and in-person car buyers ranked convenience as the leading factor when deciding where to buy a vehicle — ahead of any other consideration, including price.

 

Every experience customers have with the dealership online and in-store should reflect the dealership’s internal brand values. With dealerships around the country competing for attention and sales, it’s critical to cut through the noise by delivering the right message at the exact right time.

By leveraging high-quality data and intelligent marketing technology, dealers can identify prospective buyers predicted to begin shopping for a vehicle soon and begin targeted and tailored outreach before the competition.  

 

Commit to inventory strategy driven by data

With so many aspects out of a dealer’s control when it comes to inventory constraints, dealership success in 2021 rides on "controlling what is controllable" starting with utilizing the wealth of data locked away in the CRM and DMS to fuel a data-driven inventory strategy.

With wholesale pre-owned prices performing consistently strong, many dealers are sending cars to auction now more than ever. But with wholesale prices slowing, some dealers are holding onto trade-ins they may not have in the past to help fill their lots.

With retail typically generating less overhead than auction, this approach poses a valuable opportunity for dealers with the right customer and market insights. Before sending vehicles to auction, identify prime retail opportunities by analyzing factors like the vehicle’s maintenance history report to better predict reconditioning costs and see how quickly similar vehicles have sold in the past.  

 

Despite rising prices for new cars, SUVs, and especially pickup trucks, experts predict low interest rates should continue to work in the favor of buyers and lessees throughout the year. That’s welcome news not only for those who intend to buy or lease a vehicle, but it should help automakers and dealers move the metal in the wake of falling sales caused by the latest surge in coronavirus cases.

According to BankRate.com’s chief financial analyst Greg McBride, CFA, the national average for a five-year new-vehicle loan should drop to 4.08% in the coming months, with four-year financing expected to average 4.75%. By contrast, auto loan rates were at 4.60% last January for five-year terms, and 5.33% for five-year financing. They subsequently dropped to 4.22% and 4.88%, respectively, by year’s end.

With the typical new vehicle now costing about $39,000, the expected rate cuts would mean a consumer could expect a monthly payment of $627 on a five-year loan with $5,000 down and $779 on a four-year term.

"The backdrop of low interest rates and a recovering economy will bring about an easing of terms, especially rates, as competition heats up," McBride said. "We’ll see rates for both new- and used-car loans trending lower throughout the year, but at a snail’s pace."

Lower financing costs and still strong residual values will likely help new-vehicle leasing stay affordable as well. That’s because monthly payments are based on the difference between the transaction price and what it’s expected to be worth at the end of the term, financed at current rates. It also would make it easier for automakers’ financing subsidiaries to offer low-rate or zero-percent-interest loans on select models as needed to spur sales.

If Bankrate’s predictions are, in fact, on the money, that would mean five-year auto financing would be the cheapest since early 2015, with four-year rates being the lowest since 2014. That’s when the Federal Reserve Board first began raising interest rates since the onset of the Great Recession.

As it is, the Fed has already signaled to keep borrowing rates at 0% through 2023 at the earliest to keep the U.S. economy in positive territory in wake of the COVID-19 pandemic’s punishing effects. 

 

The U.S. Department of Energy and the Environmental Protection Agency have released the 2021 Fuel Economy Guide. The Guide provides prospective purchasers with detailed fuel economy estimates for MY 2021 light-duty vehicles, along with other information including estimated annual fuel costs. 

 

To ensure that customers have ready access to fuel economy information for current model year vehicles, dealers may choose to print copies to have on hand or provide access to the electronic version/website on a computer or other electronic device. 

 

Dealership profitability is good on average this year despite the pandemic, but this is no time for dealerships to let up on cutting costs, said the president of consulting firm StrategicSource.

 

"Sales are strong in dealerships right now. But will that continue? And if it doesn’t continue, we’re going to need a plan," Doug Austin said in a webinar this month hosted by the American International Automobile Dealers Association.

StrategicSource specializes in working with dealerships to manage their costs, particularly spending on suppliers, such as office and janitorial supplies, uniforms and laundry, waste and recycling, health insurance and more.

Even a relatively small dealership probably spends money in about 100 different categories, potentially as many as 150, Austin said. "Twenty years ago, when I started this business, I thought it might be 30 or 40," he said.

Centralizing procurement at a dealership typically saves about 25% on those costs, compared with decentralized decisions on hiring suppliers and negotiating prices and contracts, according to StrategicSource.

Therefore, for a dealership with annual revenues of $25 million, conservatively assuming 18% savings instead of 25%, centralizing procurement represents a potential annual savings of $180,000, which goes straight to the bottom line, Austin said.

 

"Think how much you’d have to sell to achieve that much net," he said. For a bigger dealership group at $300 million revenue, that could be about $2.2 million in savings. "The numbers can be pretty compelling."

For example, the firm recommends measures such as strictly limiting the number of suppliers for a given category and negotiating longer-term contracts in return for price concessions.

It also may make sense, Austin said, to bring certain services in-house instead of hiring an outside vendor, such as paintless dent repair or auto glass replacement.

"We should have corporate-directed suppliers, not everybody making their own decisions," he said.