Chicago Automobile Trade Association
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CATA Bulletin
September 17, 2012

 

Congratulations! (September 2012)

September 14, 2012

In an inaugural list, Automotive News has identified Continental Audi of Naperville and Kunes Country Ford of Antioch as two of the best 100 dealerships to work for in 2012.
 
 

Dealers hammer legislative goals, meet legislators at NADA summit

September 14, 2012

Nearly 400 U.S. new-car and truck dealers descended on the nation’s capital Sept. 12 for the National Automobile Dealers Association’s 37th annual Washington Conference and fly-in.
 
The three-day conference included briefings from the NADA, lawmakers and government officials.
Local dealers who attended included Mark Scarpelli who is an NADA director representing Metro Chicago, and Desmond Roberts, an at-large NADA director.
 
Dealers will met with their members of Congress to discuss issues affecting their businesses, such as extending the current estate tax rates, preserving the LIFO accounting method, and reducing regulatory burdens on dealerships.
 
CATA President Dave Sloan joined Scarpelli, Roberts and representatives of the Illinois Automobile Dealers Association to host a reception for the state’s congressional delegation. Eight Republican representatives attended, including Reps. Judy Biggert (Hinsdale), Robert Dold (Winnetka), Randy Hultgren (Wheaton), Peter Roskam (Wheaton), and Joe Walsh (North Barrington).
 
Roberts, Scarpelli and Sloan also met separately with Democratic Reps. Dan Lipinksi (Western Springs) and Mike Quigley (Chicago).
 
• Legislation passed in 2010 set the estate tax through 2012 at a 35 percent rate and a $5 million per spouse exemption. Unless Congress acts before Dec. 31, the tax will revert to a 55 percent rate and a $1 million exemption. Dealers petitioned legislators to maintain the current tax rate and exemption level.
 
• The Obama administration has proposed repealing the LIFO accounting method, which many dealerships have used for decades. That would trigger a tax on “phantom income” and strip dealerships of working capital.
Particularly in a fragile economy, LIFO repeal would make it harder for dealers to maintain current employment levels and manage inventory inflation.
 
• Dealers appealed for Congress to retain the overtime exemption for service advisors. The Department of Labor is attempting to roll back the decades-long exemption despite no changes in the law or factual circumstances that might justify such a change.
 
• House Resolution 5859, a bipartisan bill, would repeal a mandate that requires the National Highway Traffic Safety Administration to distribute to dealers a booklet regarding vehicle insurance costs. But the Obama administration called the booklet “not useful” to new-car buyers, who rarely request it. The bill passed the House and awaits consideration by the Senate.
 
• The so-called Right to Repair legislation, dealers argued, is unnecessary. A coalition of aftermarket parts manufacturers is seeking federal and state legislation to force automakers to turn over proprietary information under the guise that independent technicians do not have access to the information they need to make repairs. Recent data from the Automotive Service Association shows that 75 percent of non-warranty repairs are completed by independent repair facilities.
 
 

NADA launches campaign against stair-steps

September 14, 2012

The National Automobile Dealers Association kicked off a national print ad campaign on Sept. 10 detailing the many negative aspects of manufacturer stair-step incentive programs.
 
The full-page ad, "Stair-Step Incentive Programs are Bad for the Auto Industry," began running in that day’s edition of Automotive News.
 
The ad points out that "stair-step programs create too many negatives to justify their use."
 
Stair-step programs "harm brand credibility; hurt dealers of all sizes; undermine relationships between dealers and their customers; have an adverse affect on CSI scores; and destroy consumer confidence in dealers -- and in manufacturers’ brands."
 
Dealers who want to comment about the programs and other manufacturer intrusions into dealers’ businesses are encouraged to send comments to stairsteps@nada.org. All messages will be kept confidential.
 
 

Drivers--but not all--love push-button-start vehicles

September 14, 2012

Push-button starts have become one of the hottest amenities in new vehicles, now offered on more than half of all car models — and appreciated or wanted by more than half of American car buyers.
 
But while glimpses of this handy option have become ubiquitous in automotive ads, a sliver of the American public refuses to embrace push-button starts, regarding them as actually complicating the entry and ignition process rather than simplifying it.
 
There’s a reason that auto nameplates from the Scion tC to the Acura TLX make sure to show their nifty push-button starts in TV commercials: Most Americans would just as soon have one, and highlighting the device is a quick and easy way for a carmaker to illustrate how it has packed even its lower-priced vehicles with the latest technologies.
 
“It’s a convenience, like the TV remote, and Americans love that kind of thing,” noted Joe Oddo, practice lead for CapGemini’s auto-consulting operation.
 
“It also makes it a lot more difficult for thieves to steal cars. So it’s rapidly moving down from the luxury market to mid-luxury and beyond,” said Oddo.
 
Alan Batey, new interim CMO for General Motors, said that “at 30,000 feet, consumers see it as a high-tech feature. Some of that is because it traditionally has been positioned as more of a high-end product.” At GM, for instance, the feature has spread from Cadillac into Chevy models including Malibu and Volt.
 
Overall, 193 out of 334 U.S. 2012 models, or 58 percent, offer standard or optional “keyless ignition” or push-button start, according to Edmunds.com data.
 
The progression of the feature through Nissan’s lineup is typical. The brand began offering push-button start in 2007 on its Altima mid-size sedan, a mainstream product if ever there was one, and has continued to expand the offering across its portfolio.
 
Here’s the reason: The take rate for push-button starts in luxury cars already was pushing 71 percent in 2010, according to an AutoPacific study, and topped 60 percent for large luxury SUVs. Buyers of sporty models already were opting for the feature 62 percent of the time, and buyers of mid-size cars and of compact and mid-size crossovers were selecting it 51 percent of the time.
 
A quick poll of KBB.com visitors in August found that 36 percent of respondents “love[d]” their push-button starts and another 17 percent would “ love to” have one but didn’t.
 
And while only one in 10 of respondents to a recent AutoTrader.com poll currently owned the feature, four in 10 wanted it in their next vehicle. AutoTrader.com found that, for future purchases, push-button start was one of the top three desired features, right behind GPS and MP3.
 
The feature’s obvious appeal is the convenience, in most models, of not having to haul out a key fob to start the car as long as you know it’s on your presence somewhere or in close proximity, such as in a purse or jacket. And many executions of push-button start also include the car’s recognition of the device as the driver approaches, automatically unlocking at least the driver’s door.
 
“I have this feature in my 2010 RAV4 Limited V-6,” an owner named Roger Carr told Edmunds.com recently. “Just like that I can lock, unlock and start my car without ever having to dig a key out of my pocket [and] my wife enjoys not having to dig through her purse.
 
“Also, with a small child, it can make things extremely easy when coming and going from the car with your arms full. [And] the fact that it won’t let you lock your keys in the car is nice.”
 
Auto executives indicated that women tend to favor the feature somewhat more than men because of the security aspects. “Women going up to their car in the dark, or with armfuls of groceries or carrying a baby, have no need to hunt through a purse or pockets for a key,” noted Elizabeth Robinson, president of a marketing firm.
 
There even are positive implications for families with young drivers. “This is a great way to market the car to anyone who’s worried about their teenager having the car out in bad neighborhoods at night,” said April Masini, an online advice columnist.
 
At the same time, however, the KBB.com survey found 13 percent of respondents “hate[d]” push-button starts, another 20 percent “ have never used it” and were “not interested,” and also 14 percent who counted themselves “indifferent” to the feature’s charms.
 
Marcia Brier, a public-relations pro in Needham, Mass., objected to several aspects of the push-button start in her BMW. She thinks the fob is awkwardly large. Her car also has a slot that must house the fob before the push-button works “and sometimes we forget it’s there.”
 
Some owners have come to dislike the feeling that their key fob could be floating just about anywhere in their vehicle instead of being able to count on its being anchored in an ignition slot on the steering column or dashboard.
 

 
 

Highlights of recent DealersEdge webinars

September 14, 2012

DealersEdge provides weekly access to industry experts on a variety of time-critical management issues.  The CATA offers special discounts to these programs.  Check out everything offered at the CATA Online Learning Portal.  (http://cata.dealersedge.com)
 
Almost very week we all learn something we did not know before. Sometimes that little "factoid" provides the viewer a ‘light-bulb moment" ... revealing the one piece of the puzzle that will launch a department into new growth and profitability.
 
Here are some factiods from recent webinars:
 
• One simple addition to your store’s Google account can reduce your cost-per-referral AND improve your sales results.
 
Pay-per-click online advertising is often overlooked by dealers because they think it is too expensive.  PPC does cost more, but the added expense is almost always offset by the benefits. Research performed by PCG Digital Marketing shows that effective use of a pay-per-click budget reduces a car dealer’s cost-per-visitor by a factor of 12. Google also allows dealers the option of capping their monthly charges.
 
• Are you making the most of your Google account?  Google Analytics is an option that allows dealership managers to track the source of online leads and to measure the effectiveness of the money spent on various Internet referral sources.  If you haven’t seen a Google Analytics report, ask your Internet marketing manager to pull one and review it with you. 
 
Action item: Review the cost-per-visitor for all of your advertising channels, print, TV, radio, and Internet.
 
• BIG DATA comes to car dealerships, and the results often are counterintuitive to what dealers expected.
 
Big Data refers to the explosion of structured and unstructured data about people — you, me and everyone.
 
Computers, smart phones, GPS devices, embedded microprocessors, sensors – all connected by the mobile Internet – are generating a cloud of data about people that is growing at an exponential rate.
Often, the data proves the opposite of what we think. 
 
For example, on December 19, 2011, Saab announced that it was filing for bankruptcy.  In the three weeks leading up to that announcement, search traffic for new Saab vehicles was down 10% to 50% depending on the day.  But a funny thing happened on the day of the bankruptcy announcement: searches for new Saab vehicles surged 150% and maintained an average increase of 10% for the next thirty days.  What’s more, the increased web traffic continued even after Saab said it would no longer support warranty service for its vehicles.
 
Action item: There are free or nearly free resources available to car dealer that track customer search activity well before they make a buying decision.  Identify those resources and use them. 
 
Here is one to get started: http://www.dataium.com/portal/cart.php?a=view
 
 
 

Sedgwick deflects Q2 2012 unemployment claims

September 14, 2012

One hundred forty-five CATA dealer members reported a combined 706 unemployment claims during the first quarter of 2012 to Sedgwick Claims Management Services, Inc., which has been serving CATA dealers under various names since 1979. The company’s efforts saved those dealers a total of more than $1.4 million in benefits by contesting the claims.
 
Sedgwick CMS monitors any unemployment claims against its clients and contests all unwarranted claims and charges. The company counts about 250 CATA dealers among its clients.
 
Claims that can be protested and subsequently denied help minimize an employer’s unemployment tax rate. The rate can vary between 0.55 percent and 9.45 percent of each employee’s first $13,560 in earnings. The 2012 average unemployment tax rate among Illinois employers is 4.35 percent, or about $590 annually per employee ($480 in 2011).
 
“With the downturn in the economy, unemployment remains at record highs (9.9 percent in Illinois through August) and a drain on the Illinois Department of Employment Security trust fund, markedly higher tax rates for 2011 and probably for a couple of years after that,” said Paul Schardt, a Sedgwick senior vice president.
 
“The unemployment tax is really the only controllable tax, in that it’s experience-driven,” Schardt said. An ex-employee’s claim affects the employer’s tax rate for three years.
 
For new enrollees, client fees amount to $2.60 per employee, per fiscal quarter. For the fee, Sedgwick monitors all unemployment claims; files any appeals; prepares employer witnesses for hearings, as necessary; represents the client at any hearings; verifies the benefit charge statements; and confirms the client’s unemployment tax rate.
 
To discuss retaining the company, call Schardt at (773) 824-4325.
 
 
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