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CATA Bulletin
January 19, 2015


January 2015 CATA vitality report

January 16, 2015


More automotive mergers ahead?

January 16, 2015

Fiat Chrysler CEO Sergio Marchionne said his company has no immediate plans to merge with another automaker, but he added that consolidation will be necessary in the automotive industry’s future.
Marchionne, speaking this month at the Detroit Auto Show, has long argued that the capital-intensive industry has too many players and that consolidation would enable it to better mitigate risks and make it more attractive to Wall Street, which he said undervalues automakers.
"The cost of executing (product launches) is in excess of what a mature industry is able to afford," he said. "Look at how capital markets value auto stocks. We are assigned incredibly poor valuation."
Marchionne said Wall Street formed a pessimistic view of the industry due to the way capital has been used in the past, notably when expensive product launches failed to resonate with the public, leading to massive losses.
The capital market only views premium automakers in a positive light, he said.
"We also have a history of trying to do mergers and (have built) unmanageable monsters," Marchionne said. "I understand the skepticism."
FCA may not consolidate with another automaker during his tenure, but Marchionne said the industry needs to embrace the idea in an open way without the bias of CEO egos.
When asked if he thinks other automaker CEOs share his view on mergers, Marchionne quipped, "Because of their body posturing, that’s unlikely."
Meanwhile, Marchionne said there have been no changes to FCA product plans due to falling gasoline prices. The automaker sets product plans based on carbon-dioxide reduction targets, he said, noting it will continue to do so.
"The CO² stuff is wagging the dog," he said. "CO² regulations are what’s driving the portfolio. We don’t look at oil prices, we look at CO², which is a healthy thing. A painful but healthy thing."
Marchionne said falling gasoline prices may lead FCA and other automakers to ask CAFE regulators to alter the timeline of government-imposed fuel-economy regulations during the mid-term review of the policies in 2017.
"There is an argument that says we should slow down the rate of regulations," he said. "There’s an opportunity (in 2017) to take a look at that. Not minimizing CO² reduction, but reviewing the application of (fuel-economy) regulations."
If fuel prices stay low and CAFE timeline requirements remain the same, Marchionne said there is a question as to whether consumers will be willing to pay extra for the technologies needed to reach the fuel-economy targets.

Form 8300 notices dues Jan. 31, 2015

January 16, 2015

As a reminder, dealers by Jan. 31 must contact any purchaser for whom they were required to file a Form 8300 (Cash Reporting) in 2014, and tell them that the form has been filed with the Internal Revenue Service.
Potential language of the written statement:
"Dear Customer:

We are required by the Internal Revenue Service to report transactions involving more than $10,000 in cash and "cash equivalents," under the provisions of 25 U.S.C. 60501. We have filed a Form 8300 with the IRS on (month, day, 2014), indicating that you provided us with (dollar amount) in connection with the purchase of your (year, make, model). We wanted you to know that we have complied with this federal reporting requirement. Again, we thank you for your patronage."
Dealerships should make sure they are using the most recent Form 8300, revised in August 2014.

Better Business Bureau ramping up online customer-review efforts

January 16, 2015

Consumer reviews now are part of everyday decision-making. Review websites such as Yelp, TripAdvisor, and Angie’s List have become increasingly popular over the past decade and now exist for nearly every product and service. 
Yelp alone contains more than 60 million reviews of restaurants, barbers, mechanics, and other services, and has a market capitalization in excess of $4 billion. Moreover, there is mounting evidence that these reviews have a direct influence on product sales.
But what of the reliability of those websites?
A study released in November by researchers from Harvard University and the Boston School of Management, "Fake It Till You Make It: Reputation, Competition, and Yelp Review Fraud," charges that roughly 16 percent of restaurant reviews on Yelp are fraudulent, and owners of small businesses have complained of Yelp’s practices, saying Yelp is slow to remove fake reviews or promotes negative reviews of businesses that don’t advertise on the site.
Officials from Yelp said earlier this month that the Federal Trade Commission had ended an inquiry of the company without taking action.
Enter the Better Business Bureau.
Imagine customer reviews like the ones on Yelp except that the reviews all are from real people who had actually used a product or service. No fake reviews from PR agencies or competitors are tolerated. No one is allowed to manipulate reviews to make businesses seem better or worse.
Sound too good to be true?
A program being rolled out nationally by the BBB is aimed at accomplishing this seemingly impossible task.
Katherine Hutt, a BBB spokeswoman, said online reviews in the process of being launched by the non-profit group are tied to the organization’s original mission. In an email interview, Hutt explained:
"For more than a century, the BBB has been all about fostering trust in the marketplace between businesses and consumers. What started out as a truth-in-advertising campaign in 1912 has grown to include dispute resolution, industry self-regulation, consumer education, and charity reports."
Hutt insists the BBB’s online reviews have more credibility because of the way they are screened.
As with the complaints it takes from customers, Hutt says the BBB employs a verification process for all reviews appearing on its sites.
Identities of reviewers are not shared with the public, said Hutt. But the BBB insists that all reviewers share their names and other details sufficient to verify that they are indeed customers of the businesses they are reviewing.
She says the information also is shared with the businesses being reviewed as part of the verification process, adding: "If a consumer cannot prove he or she is a real customer, we will not publish the review. … It’s as simple as that."
History of the Program
While the first BBB online review pilot program was launched back in 2004 (the same year Yelp was founded), it wasn’t until 2012 that it was announced as an option for local BBBs to implement. 
The BBB office overseeing Chicago and northern Illinois launched its Customer-Verified Review program in July 2014. On that first day, office President Steve Bernas said 13 consumers offered a review of a business or service — before the program had even been advertised locally.
During the first six months, Bernas said reviews are running about 60 percent positive to 40 percent negative.
When a consumer submits a review, Bernas said the BBB shares the review with the business to confirm the consumer was a customer. A business can respond to the review (the majority do), ignore the review, or challenge it. Reviews are posted online three days later.
Third-party comments are not permitted; only the reviewer and the business may add comments to a Customer-Verified Review. Also, a Customer-Verified Review is not part of the BBB rating formula and does not affect a company’s BBB letter grade.
Hutt said the organization’s careful benchmarking and exacting verification standards have caused it to move more slowly than many startups and has led to fewer reviews being published.