CATA News

Legislation to repeal the $10,000 cap on the value of traded-in vehicles was poised on March 5 for passage by the Illinois Senate. It then would move to consideration by the state House.
 
Members of the CATA are encouraged to contact their state lawmakers in support of Senate Bill 2481. The General Assembly is in recess and legislators are in their districts until March 18.
 
Votes thus far on SB 2481 have been unanimous in support, and Gov. J.B. Pritzker has voiced his backing. The cap took effect Jan. 1 following moves last spring to find funding for the $45 billion state capital infrastructure plan sought by Pritzker.
 
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 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.
 
If the General Assembly passes the legislation, the change to restore the full trade-in allowance on First Division vehicles would take effect upon the governor signing 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 initially sponsored the bill, then about a quarter of the state’s senators followed suit.

 

Some banks are "bunkering down" on credit and are likely to continue tightening standards throughout the year, according to an analysis of the Federal Reserve’s Senior Loan Officer Opinion Survey by Moody’s Investors Service. The SLOOS collected responses from 74 domestic banks and 22 U.S. branches and agencies of foreign banks.
 
"There’s a continual tightening that’s going on," Warren Kornfeld, senior vice president of Moody’s financial institutions team said. A small group of banks — 8.9% of respondents — indicated in the Fed’s survey that auto loan underwriting "tightened somewhat" during the fourth quarter of 2019.
 
"That’s a pretty big pivot to jump to 8.9% from 0% net the previous quarter," Kornfeld added. "It’s a response, a solid move that indicates the financial crisis is still very much on people’s minds."
 
Similarly, 8.9% of banks reported in the Fed’s survey that credit standards will "tighten somewhat" over the course of this year, compared with current lending standards.
 
Still, Moody’s projected outlook for auto loans is marked as a "credit negative," in Moody’s Investors Service’s report analyzing the SLOOS results. Despite the stricter credit standards, auto underwriting is weak compared with the historical average and other consumer asset classes, Kornfeld said. However, "it’s a positive trend, and we see it with delinquencies coming down," he said.

 

Illinois Sen. Jim Oberweis, R-Sugar Grove, is expected to request a deadline extension for legislation he filed last year to repeal the Sunday closing law. It would mark the seventh consecutive spring that Oberweis has pushed legislation to open dealerships to Sunday operations. A similar bill also was introduced in the Illinois House.
 
Senate Bill 22, also known as the "Religious Equity Act," would allow dealerships to be open on any six days of the week of their choosing, including Sundays.
 
First introduced last year, SB 22 was itself a repeat of legislation Oberweis introduced in 2018 that he called the Freedom to Choose Act, which would have allowed dealerships the opportunity to be open on any six days of the week of their choice, including Sunday. Oberweis reasoned that if one dealership opened on Sundays, many others would follow.
 
Sunday car sales have been banned in Illinois since 1984. Automobile dealers largely supported the ban when it was enacted because it gives them a chance to close one day a week, giving workers a day off and saving the business the cost of opening. The CATA still supports the Sunday ban.
 
In the House, Rep. Yehiel "Mark" Kalish in January filed House Bill 4212 to eliminate the Sunday sales ban. He has since softened his position on the matter.

 

 

Despite a decline in new-car sales during the past few years, plenty of Americans are still on the hunt for their latest ride. For automakers, the question is, ‘How do I get them to pick something from my lineup?’ "
 
Easy. Make sure their friends and family like their cars, according to a new study by Autolist.com, which interviewed more than 1,100 current new-vehicle shoppers for the study.
 
The website polled new-car shoppers to find out more about their buying processes — more precisely, what impacts their decision the most. Word-of-mouth endorsements from friends and family were most often the influence cited (52%) to impact them the most when it came to making a new-vehicle selection.
 
"When someone in your immediate circle has a good or bad experience with anything, it makes you feel better about making the same decision," said Chase Disher, an analyst at Autolist. "Because cars are such a huge purchase in our lives, word-of-mouth means that much more here."
 
Everyone likes a winner, and if a vehicle has captured an award — voted on by automotive journalists, or something similar from a publication or consumer site such as Motor Trend, Car & Driver, KBB.com and Edmunds.com — that makes a difference. It was the third-ranked factor, with 26% of shoppers citing their influence. KBB, Edmunds and AutoTrader were the top three choices.
 
YouTube reviews, such as those posted by Doug DeMuro, who has 3.36 million subscribers, offer detailed insights which were cited by 22% of respondents as influencing their decisions.
 
Since the average age of a new-vehicle buyer puts them between Baby Boomer and Gen Xer, the impact of social media influencers isn’t as pronounced, with just 11% of respondents across all age groups citing them as influential. However, that changes significantly if the focus is solely on younger buyers. Then the script gets flipped.
 
Younger shoppers ages 18-23 had different influences than all other age groups; the cohort relied more on social media influencers and YouTube than any of the other age groups, and less on data-backed organizations, the website noted.
 
This age group cited YouTube as the second-most influential source (behind friends/family/coworkers), with 36% of respondents choosing it. That compares with the aforementioned 22% of respondents of all ages citing YouTube as influential.
 
The younger age group also placed the least importance on the grouping of data-backed organizations; just 15% of people 18 to 23 years old said these were influential, compared to the survey average of 33% across all age groups.

 

By Matt Aukofer, NADA Director of Online Communications

 

Auto dealerships have many tools at their disposal to recruit and retain quality employees, and small tweaks to their hiring processes can pay dividends, according to Tina Amelchenko of Indeed.com, who spoke this month on the topic at the 2020 NADA Show.
 
In the current "candidate-centric" market, there are more jobs available than job-seekers, and the competition for talent is fierce. Potential employees hold the upper hand and are performing a lot of detailed research before deciding where they want to work.
 
Their No. 1 motivating factor is salary, but they also care about other things, such as the work environment and culture, work-life balance, opportunities for advancement, and more, Amelchenko said in the session presented by Indeed.com.
 
If dealerships can’t offer higher salaries, they need to focus on other benefits, which Amelchenko defined as their "employer value proposition." Potential employees are researching dealerships, looking at their online profiles, reviews by current and past employees, and more, so a dealership’s online reputation is paramount. Amelchenko stressed that dealerships need to be "transparent and authentic" in building their employer brands online.
 
Dealers also can streamline their hiring and application processes because most potential employees won’t spend more than 15 minutes applying for a job, she said. These processes should be extremely mobile-friendly, as most job-seekers these days are applying for jobs on their mobile devices.
 
In the current tight job market, Amelchenko said it is imperative that dealers sell themselves to candidates rather than expect applicants to sell themselves to dealers.

 

U.S. auto loan originations rose by the most in four years in the final quarter of 2019, driven by demand for light trucks and SUVs.
 
Loan originations for new and used vehicles rose by 7.5 million accounts — a 4.3% quarterly jump — bringing the total to 83.8 million. A majority of the increase came from the purchase of new trucks and SUVs — a category which now accounts for 71% of the new financed vehicle market compared with 68% a year earlier, according to data released Feb. 11 by TransUnion, a consumer report provider.
 
Borrowers have been increasing the time needed to repay. The average pay-back period for new vehicles grew to 69 months in the third quarter compared with 68 months the same period a year earlier. Additionally, consumers taking out car loans increasingly purchased used vehicles. Used-vehicle financing accounted for 53.3% of the loan-origination market, up from 52% four years earlier.
 
Meanwhile, 60-day delinquency rates for vehicle loans have been rising, reaching 1.5% at the end of 2019 from 1.44% a year earlier, though the level remains "well managed," TransUnion said.
 
"Used vehicles can be an attractive alternative for consumers, especially those who are in the market for pricier vehicles such as a truck or SUV," said Satyan Merchant, senior vice president of TransUnion. "On average, they can save approximately $13,000 by opting for a used vehicle over a new one."
 
Car buyers are paying more for high-tech features such as voice-activated entertainment systems and semi-autonomous driver-assist technology that steers wandering cars back into their lane and automatically brakes to avoid read-end collisions.
 
Overall, U.S. consumers added $18 billion in auto debt in the third quarter, according to the latest data from the New York Federal Reserve.

 

The average monthly payment for new vehicle loans rose to $561 in the third quarter, up by about $20 per month from a year earlier.

 

The 2020 NADA Show’s opening general session celebrated the contributions of local dealership leaders and the power of many voices speaking as one.

 

"This past year, there were many challenges in the auto industry, but your NADA Chairman Charlie Gilchrist never backed down from a single one," said Michael Joe Cannon, chairman of the industry convention.
 
Gilchrist expanded on his "We Are NADA" theme from last year during his presentation at the Opening General Session. "A year ago, I challenged you not to just be part of the NADA, not to be just a member" but to be an active part of the team, Gilchrist said. "Because one dealer can accomplish some things, but many dealers together can accomplish anything. Over the course of this year, I saw it."

 

Later in the program, representatives from Time magazine and Ally named Susan Moffitt, from Shreveport, Louisiana, as the 2020 Time Dealer of the Year winner. The award, which is held in partnership with Ally and the NADA to celebrate the many ways in which auto dealers excel not only in the industry but also in the ways they give back to their communities.
 
The CATA’s nominee for the award was Terry D’Arcy, principal of D’Arcy Buick-GMC and D’Arcy Hyundai, both in Joliet. Dan Roesch, president of the Roesch Automotive Group in Elmhurst, was nominated by the Illinois Automobile Dealers Association.

 

In the wake of Illinois legalizing the recreational use of marijuana, the CATA is expanding the syllabus of a course that teaches dealership managers how to detect whether employees are under the influence of the drug at work.
 
The collective bargaining agreement with Mechanics Local 701 stipulates that, for a manager to accuse an employee of being under the influence of drugs or alcohol, the manager must be trained to do so.
 
The association offers a 90-minute online training certification course, "Reasonable Suspicion Training for Supervisors," for $20.
 
Course topics include:

• The effects of substance abuse in the workplace
• The Supervisor’s role and responsibilities in making and documenting reasonable suspicion determinations
• Confidentiality
• Alcohol: its effects on the human body, stages/levels of intoxication
• Dangers and costs of alcohol misuse in the workplace
• Alcohol testing (such as types of testing and best practices),
• Detailed Signs and Symptoms of alcohol use
• Binge drinking, alcohol abuse, alcohol poisoning, and hangover
• The costs and dangers of drug abuse in the workplace
• How drug use affects a person’s life, health, and safety
• An in-depth breakdown of the most common drugs of abuses
• The Signs and Symptoms of the most common drugs of abuse
• Signals indicating possible substance abuse on the job

 

According to the 701 contract: "Current employees shall not be tested for drugs or alcohol unless the Employer has reasonable suspicion to believe that the employee is under the influence … .
 
"Reasonable suspicion shall be established where Employer supervisors who are trained in the detection of drug or alcohol abuse reasonably believe that an employee is under the influence as defined above."
 
Reasonable suspicion also can be established if an employee is involved in a workplace and/or work-related accident that involves bodily injury or damages of $500 or more.

 

The Chicago Auto Show’s black-tie benefit, held the evening before the show’s public opening, raised $2.9 million for 18 vital area nonprofits, with results still being counted.
 
A highlight of First Look for Charity was the drawing for the event’s grand prize, this year a 2020 Ford Explorer ST. After the five-minute allowance for a winner to match the first ticket stub drawn expired, Mychel Watts of Calumet Park, in south suburban Cook County, screamed that she’d matched the second number even before the countdown clock began ticking.
 
Watts directed the proceeds of her $275 ticket purchase to benefit all the event’s charities.