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CATA Bulletin
January 25, 2021

 

Ill. Senate passes bill to end tax credit cap, then session ends

January 22, 2021

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.
 
 

NADA gears up for its 'industry event of the year'

January 22, 2021

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.
 
 

What a Biden/Harris administration means for auto sales, finance

January 22, 2021

By Eric L. Johnson, Hudson Cook, LLP
 
The general consensus is that a Biden/Harris Administration will mean lots of change for automotive finance. But exactly what types of change and how quickly will that change occur? And just how bad for the industry will it be? If you were waxing nostalgic for an aggressive watchdog and that "regulation by enforcement" we lived through under former CFPB Director Richard Cordray during the Obama Administration, where the Bureau’s success was measured in terms of dollars recovered for the consumer and penalty amounts, you’re in luck!
Let’s start with change at the Consumer Financial Protection Bureau. The bureau’s latest director, Kathy Kraninger, resigned upon Biden’s inauguration on Jan. 20. As President-elect on Jan. 18, Biden announced several appointments, including FTC Commissioner Rohit Chopra to head the CFPB. We should see a gradual move by the Bureau to take a more aggressive stance toward consumer protections; especially given the economic and other effects of Covid-19.
You can expect a renewed focus on fair lending practices in the industry, particularly as it relates to race. We should expect to see more cooperation with state attorneys general and state regulators on these issues.
In an April 2020 letter to Kraninger, Cordray proposed helping avoid vehicle repossessions by working with Congress to impose a moratorium on auto repossessions "for the duration of the crisis and its economic aftermath." In addition, he recommended taking "steps to ensure that consumers facing repossession of their vehicles are informed, treated fairly and have the remaining equity in their car or truck fully applied to the balance of their loan."
He also called for supervision staff to require brief summary reports to monitor industry performance on a biweekly basis — on issues such as call volume, hold times, accounts place in forbearance, accounts missing a payment and other items that may be useful to assess the status of the economic crisis affecting consumers. And, he called for this anonymized data to be made public claiming that "This will help identify the best practices the industry is developing to address the growing economic crisis. The CFPB’s market-monitoring teams were designed for precisely this purpose." Expect a ton more scrutiny by the CFPB on your servicing and collections activities.
 
What about changes at the Federal Trade Commission? You may know that the Commission is headed by five Commissioners, nominated by the President and confirmed by the Senate, each serving a seven-year term. No more than three Commissioners can be of the same political party. The President chooses one Commissioner to act as Chairman. The makeup of the Commission currently is three Republications to one Democrat, and a successor is needed for Chopra (D). Commissioner Rebecca Kelly Slaughter (D)’s term expires September 2022. The Republicans’ terms expire in 2023, 2024 and 2025.
 
All of the Commissioners were appointed at roughly the same time and there will be a period of at least 2 years (barring more resignations) with a Republican majority. Commissioners can only be removed for cause. President Biden can appoint a new Chairman of the Commission; probably a Democrat.
 
I doubt we’ll see a lot of change at the FTC on consumer protection matters, at least not initially. The FTC has certainly taken a more aggressive enforcement posture the past few years and I expect that posture to continue. You may remember that two of the Commissioners issued concurring statements in the Bronx Honda settlement, calling for the FTC to employ its rulemaking authority to combat abuses by auto dealerships. They concluded that an enforcement strategy, by itself, is insufficient. We may very well see some rulemaking authority to combat those perceived abuses by dealers.
 
What about the FTC’s Bureau of Consumer Protection and its current Director? You may remember that this is the Bureau responsible for protecting consumers against unfair, deceptive or fraudulent practices. The current Director has been very effective, but under a Biden/Harris Administration he and other FTC staff may decide to head for greener pastures. If that happens, you can bet your bottom dollar you’ll see more liberal leadership and staff in that Bureau. I expect we’ll see a continuation, and possibly increased focus, by the FTC on dealer safeguards policies, privacy policies and identity theft prevention policies.
 
Finally, there’s the Department of Justice. As I noted above, I expect we’ll see a renewed emphasis on fair lending and racial equity and justice by the DoJ. Biden’s choice to take over as attorney general is Merrick Garland, who is undergoing Senate confirmation. We could see more investigations by the DOJ, leading to more enforcement actions and settlements with dealers and their principals for alleged criminal activity.
 
If you’ve spent the past four years being lax in your compliance efforts, it’s not too late to act. What can you do? If you don’t have one, get a Compliance Management System in place. If you do have a CMS, make sure it’s updated, taking into account the Bureau’s CMS findings for other companies they’ve enforced against or examined and ensure it tracks your actual policies and practices. Review and update, if needed, your Safeguards and Identity Theft Prevention Policy (Red Flags policy). Finally, if you’re a dealer and you haven’t adopted the NADA’s Fair Credit Compliance Program and Voluntary Protection Products Policy, you need to look at doing so. A call to your friendly compliance counsel would be a great start!
 
 

Consumers still not quite ready to switch from internal combustion

January 22, 2021

The long-term trend toward electric vehicles continues to solidify. But because of the pandemic, consumer anxiety might be shifting automotive priorities toward familiarity and affordability.
According to a new report from Deloitte, that could be a reason why 74% of U.S. consumers are looking for a traditional internal combustion engine in their next vehicle.
For the report, "2021 Global Automotive Consumer Study," Deloitte surveyed more than 24,000 consumers from 23 countries, seeking opinions regarding issues impacting the global automotive sector.
Those issues include implications of the pandemic on consumer perceptions, the development of advanced technologies and the impact of digital automotive retail platforms.
A major portion of the report covers vehicle electrification and connectivity, but the report also covers vehicle financing trends and future vehicle intentions, noting that in India and the Republic of Korea, about a third of consumers plan to delay the acquisition of their next vehicle. In the U.S., 34% of respondents said the pandemic made them either delay or accelerate the acquisition of their next vehicle.
 
But in the area of electrification, the report notes that before the transportation torch passes from internal combustion to electric powertrains, consumers want more assurance regarding mileage, charging infrastructure rollouts and electric segment affordability.
"While the pandemic continues to play a large role in exacerbating this apprehension, stricter carbon emission regulations on the horizon point to a ‘closing window’ for the traditional ICE segment experience," the report states.
According to the report, only 26% of U.S. consumers are considering alternative engines for their next vehicle.
That is a 15% decline year-over year.
In the U.S. and Germany, battery range is the top concern about EVs. In the Republic of Korea, Japan and India, the lack of charging infrastructure is at the top of consumers’ minds.
Most consumers in the United States, Japan, Germany and India expect to charge their vehicles at home.
But in China, 51% of respondents intended to use available charging stations at work or on the street instead.
 
Perception rises on connectivity
In Asia, consumer perception of connected vehicles appears to be edging up. As many as 83% of Chinese consumers say the technology is beneficial.
But only 44% of U.S. consumers feel that way.
Sixty-four percent of U.S. consumers feel that with increased connectivity, they are most concerned about the possibility of hacking, and approximately the same percentage of consumers in Germany, the Republic of Korea and India feel that way.
Seventy percent of U.S. consumers like advanced vehicle features that promote greater safety capabilities such as blind-spot detection. But 65% of Germany residents say built-in navigation systems are their most important future vehicle option, according to the report.
 
Cost continues as a factor against advanced vehicle technologies. Seventy-four percent of U.S. consumers are not willing to pay more than $500 for infotainment.
 
Harald Proff, Deloitte Global automotive leader and partner, Deloitte Germany, said the pandemic has had a major impact on the global automotive industry.
 
"That said, the momentum toward a more connected vehicle future remains bright and full of promise. Ever stricter vehicle emissions requirements in many markets around the world are also pushing the goal of electric mobility forward. Efforts to realize these technologies will open up a new world of possibility," Proff said in a news release.
 
Financial concerns affect future vehicle intentions
Across the globe, the COVID-19 pandemic is making consumers in many markets rethink when they will buy their next vehicle and the type of vehicle they will buy.
 
Many people are deferring vehicle loan/lease payments. Some intend to acquire a less-expensive vehicle than originally planned.
 
Ten percent of Americans deferred their automotive payment in 2020. But 23% of consumers aged 18-34 did the same.
 
Eighty-four percent of U.S. consumers plan to purchase a similar vehicle in the future. But in India, the pandemic has made 57% of consumers plan to enter a completely different vehicle segment.
 
Sixty-six percent of U.S. consumers remain on the same timelines they originally had for purchasing their next vehicle. But 38% of consumers in India and 32% in the Republic of Korea say they might delay their next vehicle purchase.
 
Another finding of the study is that the COVID-19 pandemic has resulted in more virtual transactions. But because some aspects of the buying process are still difficult to digitize, that reinforces consumers’ desire for an in-person experience.
 
U.S. consumers remain largely in favor of in-person sales experiences. But consumers in India seem the most open to a virtual automotive transaction. Twenty-seven percent of those consumers prefer a fully virtual buying experience.
 
Authorized dealers will remain a part of the virtual buying process. Fifty-nine percent of U.S. consumers prefer to interact with a franchised seller.
 
Karen Bowman, vice chairman of Deloitte and U.S. automotive sector leader, said that unlike many other retail sectors that have seen a shift to online buying, many consumers see purchasing a vehicle as a personal experience.
 
"However, some people will be looking for a virtual sales experience to maximize convenience, speed and ease of use. This will likely result in a more complicated, and potentially costly, set of consumer expectations for dealers to meet at a time when businesses are looking to recover and thrive in the wake of the pandemic," Bowman said.
 
 

Do It Stevie's Way a beneficiary of Chicagoland Dealers Care

January 22, 2021

The Chicago Automobile Trade Association this month donated $1,500 to the Do It Stevie’s Way Foundation. The donation came via the CATA’s Chicagoland Dealers Care program in conjunction with a $4,000 donation from Apple Chevrolet in Tinley Park. Through Chicagoland Dealers Care, the CATA matches up to $1,500 when a member dealer donates to local charitable organizations.
The Do It Stevie’s Way Foundation was created in 2010 by Mark and Karen Bajenski, Stevie’s parents, after their son died tragically at age 17. The foundation identifies and directs its resources by teaching young men and women to do things the right way — Stevie’s Way — in the classroom and community, with their families, and on the athletic fields. Based on those values, Do It Stevie’s Way awards numerous scholarships to kids of all ages each year. The foundation also supports a variety of important initiatives ranging from suicide awareness to supporting other families who have lost children.  
"Our motto is ‘Be a team player and make a difference every day,’ just the way Stevie did," said Mark Bajenski. "The foundation doesn’t support just one specific mission. Instead, it promotes helping children lead their best lives so that then, hopefully one day, those children will also become team players and help future generations once they’re able."
"Do It Stevie’s Way has given me a new purpose in life, which is to give back and teach important lessons," Bajenski added.
Apple Chevrolet dealer Principal John Alfirevich has helped support and champion Do It Stevie’s Way since the foundation began 11 years ago.  
"This foundation is unique in that it supports a variety of missions that represent Stevie’s character; it doesn’t just focus on one effort," Alfirevich said. "Giving is receiving in my world, and this cause is very near and dear to my heart." 
Stevie had a passion for baseball and he played for his school, Mount Carmel High School in Chicago, and in a developmental league in Lockport that today is named the Cangelosi Sparks.
Dealerships are closely weaved into the fabric of their local communities, and many individuals and organizations turn to them in times of need. The CATA has been a longtime supporter of local nonprofit organizations including the Do It Stevie’s Way Foundation. Since its inception in 2008, the grassroots Chicagoland Dealers Care program has donated more than $120,000 to local charitable organizations. 
Additionally, since 1992, the association has raised more than $56 million for significant Chicago-area charities during the annual First Look for Charity black-tie event, traditionally held the evening before the Chicago Auto Show opens to the public.  
"The CATA’s Chicagoland Dealers Care program not only helps stretch our members’ donation dollars for wonderful organizations like this foundation, it also shines a spotlight on new-car dealers’ positive impact within their communities," said CATA Chairman Kevin Keefe. "We applaud local dealers like Apple Chevrolet for their very generous contributions to their communities and for helping those in need."
For more details on the Chicagoland Dealers Care program, visit www.ChicagolandDealersCare.com. To learn more about the Do It Stevie’s Way Foundation, see www.doitsteviesway219.com.
 
 

Auto shows and the GOAT: a perspective

January 22, 2021

By Larry Carl, CEO, Automobile Dealers of Greater Kansas City
 
The auto show is one of the most core approaches for automakers to reach auto buyers — there is no denying or refuting it.
The first known auto show held in the United States occurred in 1900 at Madison Square Garden in New York City. And 121 years later, that event and others like it continue to implement the most basic of marketing philosophies: Put the product in front of consumers to see it, feel it, experience it and buy it. 
Over the course of more than a century, we have seen countless approaches to reaching consumers come and go, yet there are some fundamental methods to attracting customers to products that should never fade away. The auto show is one of the most core approaches for automakers to reach auto buyers — there is no denying or refuting it. 
If the ultimate goal of an automaker is to sell a vehicle, it should be presented firsthand to create an in-person, emotional connection that motivates the consumer to purchase. It worked 120 years ago and it still works today. Exiting that tangible platform is a disservice to consumers. 
Using a relevant sports analogy, the ageless quarterback Tom Brady, who is recognized in most circles as football’s Greatest Of All Time, continues to play at a high level, delivering a hapless NFL franchise to the playoffs and a shot at another Super Bowl championship. Critics and experts scoffed at any NFL owner who would invest millions in an ancient player, but his track record of delivering the goods is unmatched. 
Yes, there are numerous younger, flashier, sexier, hipper players out there but none of them have the resume of success as Tom Brady. He is the equivalent of the auto show: He’s there year-in, year-out, providing leadership, wisdom and return on investment. He still brings victories and just because he’s 43 years old doesn’t mean he should be abandoned — and neither should the auto show.
 
 

Congratulations! January 2021

January 22, 2021

Kunes Country Chrysler-Dodge-Jeep-Ram of Woodstock, Kunes Country Ford of Antioch, and Sunrise Chevrolet (Glendale Heights) were named among Automotive News’ 2020 list of the 100 Best Dealerships to Work For.
Kimberly Schimmer, of Schimmer Buick-Chevrolet in Mendota, was among the NADA Academy’s December 2020 graduating class.
 
 

In Memoriam: Jerry L. Sloan

January 22, 2021

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.