Industry News

Auto Dealers Stuck in Neutral but Hopeful for Future

Two years ago, the Sacramento region and parts beyond were hit harder by auto dealership closures than nearly anywhere else in the United States. This region got the bloodletting out of the way early. During the past year, the four-county region lost only four dealerships, which in this woeful economy is viewed as a good thing.  The United States lost 258 dealers between January 1 and July 1, dropping the dealer count to 18,223, Urban Science found. That’s on top of the 1,603 dealerships that closed last year. California has lost 315 dealers since January 2008. As for the national outlook, Urban Science predicts that a higher-than-normal rate of closures will continue nationwide through this year due to bankruptcies, continued shutdowns of General Motors and Chrysler dealerships, and Mercury calling it quits.

Sacramento’s auto landscape, though, appears pretty stable now after its earlier major upheaval. “The market has right-sized itself and should be fairly stable going forward,” said Randy Berlin, Global Practice Director for Urban Science. But when will consumers start shopping again in a big way? New-car dealers and industry professionals are trying to forecast what comes next. Peter Welch, President of the California New Car Dealers Association, also is “pretty confident that we’ve hit the bottom” in California. The bottom was severe. California had been averaging new-car sales of two million vehicles a year for almost nine years until the big drop of 2008, he noted. That year sales dropped to 1.45 million and last year sales fell further, to 1.04 million vehicles. That’s the lowest in almost 35 years. Source: Sacramento Business Journal

Biden Tells Ohio Auto Workers Industry Will Thrive

Vice President Joe Biden recently told U.S. automakers that the automotive industry will thrive in the coming years despite the economic challenges still facing the industry. Addressing auto workers, Biden painted a picture of an industry that only a year ago was facing questions about whether it could survive and still is struggling to sell cars and other vehicles.  "Don't believe those who will say this is temporary," Biden said at a Chrysler assembly plant less than a week after General Motors announced plans to return to the stock market this year. But he was less confident that the government will end its ownership of the automaker any time soon. Chrysler has made strides in the past year, lowering its losses and increasing demand for its cars after emerging from bankruptcy protection. But the automaker still needs to show it can make a profit and pay off government loans.

He later said that he had no idea how much money the government will get back this year. "I don't know what the number will be, but it's a big number," he said. The U.S. government now owns about 61 percent of GM, which it got in exchange for giving the company $50 billion in survival aid last year. GM has repaid $6.7 billion and Chrysler CEO, Sergio Marchionne, said that the company will pay back its governments loans within four years. The automaker received about $15 billion in government help and was placed under control of Italian automaker Fiat as part of its bankruptcy. "We've got faith in you," Biden told a worker on the Jeep Wrangler assembly line. He told the workers that letting the industry fail a year ago would have crippled not only the automakers but also parts suppliers that employ more than 420,000 people nationwide. Source: Associated Press

Financial Reform Law Keeps Auto Financing Affordable

With President Obama’s signature, the most significant overhaul of the nation’s financial system is now law and with it, consumers will still be able to find competitive financing options at auto dealerships.  Ed Tonkin, Chairman of the National Automobile Dealers Association (NADA), praised the efforts of lawmakers who fought to preserve the existing regulatory structure for dealer-assisted financing, which protects consumers and ensures affordable auto credit.

“The newly-created Bureau of Consumer Financial Protection will have direct federal oversight over all auto loans and those that underwrite, fund or service auto loans, such as banks, credit unions, finance companies, and ‘buy here-pay here’ operations at dealerships. As the new law is fully implemented, we urge regulators to closely examine how new rules will impact a family’s ability to finance a vehicle,” said Ed Tonkin.

Tonkin also cautioned that any regulatory overreach could hurt the very people it is looking to protect by disrupting the extremely competitive auto finance marketplace. “Car buyers will ultimately benefit from the new law because it preserves dealer-assisted financing as a convenient and affordable option for consumers. The Brownback-Campbell auto dealer language received strong bipartisan support because Congress clearly understood that placing burdensome and unnecessary rules on small business dealers who merely arrange loans would make it harder and more expensive for car buyers to access auto credit. Source: NADAFrontPage.com

Dealers: We Want More Cars!

It's a puzzling refrain heard across the industry. While most dealers and automakers struggle with soft sales, many dealers say they could sell many more vehicles if the automakers would produce them. A handful of hard-to-get vehicles, such as the Terrain, accounts for much of the problem. And many of the complaints are from General Motors, Ford, and Chrysler Group dealers. Those automakers are determined to boost profits with lean inventory.  In an Automotive News informal online survey last week, 73 percent of the 244 dealer respondents, representing nearly all brands, reported they had too few new vehicles in inventory. And 77 percent of those respondents said they thought they had lost vehicle sales as a result.  The factories say they are doing what they can to help dealers get vehicles – without returning to the bad old days of overproduction.

Dealers who responded to the Automotive News survey said they, too, want to avoid massive inventories. But Paul Benton, owner of Chevrolet-Cadillac, thinks he would have sold 20 percent more new vehicles if he had had adequate inventory over the past several months. That equates to about five additional vehicles a month.  Benton said Chevrolet needs lots of stock on the ground because it has many more models and product variations than Toyota, Honda, and other import brands do. Pickups, for example, have multiple cab configurations, different engines, varying beds and other attributes that his customers want to experience firsthand.  A healthy inventory for his store is about 80 days and he expects to sell 300 to 350 new vehicles this year. Source: Automotive News

ATD Leads Effort to Stimulate New Truck Sales with Letter to President

Earlier this week, the American Truck Dealers (ATD) division of NADA sent a letter to President Obama signed by a coalition of heavy and medium-duty truck makers and industry associations urging the creation of a federal stimulus program to boost new-truck sales and put cleaner, more fuel-efficient trucks on the road.  In the letter, ATD outlines why stimulus is needed now, as U.S. truck retailing slowly recovers from historically low sales in 2009 and new 2010 emissions standards have added as much as $13,000 to the cost of a new truck. Together with the economic downturn, costly 2010 emission standards are forcing trucking companies and owner operators to hang on to their older trucks for longer, ATD argues, causing safety concerns and undermining the administration's efforts to curb emissions and improve air quality.
 
With the help of NADA's Legislative Affairs group and input from truck manufacturers, ATD leaders, including Chairman Kyle Treadway and Vice Chairman, Dick Witcher, have drafted a proposal being distributed to members of Congress. It institutes a short-term ten percent investment tax credit on the purchase of Class 8 trucks with engines meeting 2010 emissions regulations and a "green voucher" of $6,000-$8,000 for the purchase of Class 6 and 7 trucks, totaling no more than $3 billion.  Witcher says he is hopeful the coalition's message that a new truck is an environmentally friendly truck will resonate with the President and Congress. "We're building a coalition of support for these federal tax incentives to make sure the trucks on the road are cleaner, greener, and safer," Witcher said. Source: NADAFrontPage.com

FTC Delays Enforcement of the Red Flags Rule

The FTC has delayed enforcement of the Red Flags Rule until December 31st, 2010. The Red Flags Rule requires businesses and organizations to implement a written Identity Theft Prevention Program designed to detect the warning signs, or "red flags," of identity theft in their day-to-day operations.

  • Find out if the rule applies to your business or organization
  • Get practical tips on spotting the red flags of identity theft, taking steps to prevent the crime, and mitigating the damage it inflicts 
  • Learn how to put in place your written Identity Theft Prevention Program

By identifying red flags in advance, you'll be better equipped to spot suspicious patterns when they arise and take steps to prevent a red flag from escalating into a costly episode of identity theft. For more information visit: Fighting Fraud with the Red Flags Rule: A How-To Guide for Business.