Chicago Automobile Trade Association
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CATA Bulletin
July 22, 2013

 

60 stores to host BBQs for USO

July 19, 2013

Meteorologists predict weather on July 20 that is favorable for an outdoor barbecue. And that’s a good thing, with 60 area dealerships poised to host cookouts that day to help raise funds for the USO.
 
Participating dealerships are identified on www.drivechicago.com, with links to each of their websites and Facebook pages. And both the Chicago Automobile Trade Association and the USO are furnishing the dealerships with banners to display in their showrooms or outdoors.
 
The CATA has worked with many radio, print, television and social media partners to develop an aggressive promotional campaign leading up to the July 20 barbecues. All proceeds collected at the events will be donated to USO programs that support deployed troops, military families, wounded, ill and injured troops and their caregivers, and families of the fallen.
 
The USO, a nonprofit, non-political organization, has for 70 years provided Americans with a tangible way to express appreciation and gratitude for the dedication and sacrifice of the nation’s troops and their families.
 
The CATA and the USO also are jointly hosting a “Salute the Troops” social media contest, July 8-21. Dealers who best support this contest will win 500 tickets to the 2014 Chicago Auto Show.  
 
Some of the planned fundraising activities include car washes, with dealers asking for donations; and on-demand DJs, with donations made for song requests.
 
The CATA is eager to report how much money the fundraisers collect.
 
 

Study: The more time spent car shopping on Internet, the less time spent car shopping

July 19, 2013

The amount of time consumers spend shopping for a car has decreased dramatically in the past two years, and the percentage of that time spent online has increased, a new study found.
 
According to the 2013 Polk Automotive Influence Study, new-car buyers who used the Internet in the shopping process reported spending 13.75 hours shopping for a vehicle, a decrease of 5.25 hours since Polk’s 2011 study. Similarly, used-car buyers who used the Internet during the shopping process spent 15.25 hours shopping, 2.75 hours less than in 2011.
 
And while consumers are spending less time shopping overall, they are spending a greater percentage of their shopping time online than they were in 2011. Previously, buyers spent an average of 60 percent of their shopping time online, but that percentage increased to 75 percent in 2013 (77 percent for new-car buyers and 73 percent for used-car buyers).
 
Several factors likely drove the changes, including the improved quality and quantity of listings, better merchandising online, greater use of mobile devices and also macro factors such as the continually improving economy.
 
“When we commissioned the first study a few years ago, the economy wasn’t as strong as it is now, and we believe that shoppers were being much more cautious, taking longer before arriving at their final purchase decision,” said Kevin Filan of AutoTrader Group, which commissioned the study. “Now that the economy is stronger, buyers are taking less time overall, but they are devoting more of that time to shopping online. This is significant, as it points to the increasing influence of the Internet during the shopping process.”
 
The study also revealed that the role of traditional media in the shopping process has decreased notably. Though all forms of traditional media showed decreases in use, the biggest declines in use of traditional media during the shopping process for both new- and used-car buyers were seen in print newspapers, television and direct mail.
 
• For new-car buyers, use of television showed the biggest decline, going from 34 percent in 2011 to 22 percent in 2013. Close behind was print newspaper, which dropped from 28 percent in 2011 to 18 percent in 2013. Use of direct mail went from 16 percent in 2011 to 8 percent in 2013.
 
• For used-car buyers, use of television also exhibited the biggest decline, though the decrease was slightly less pronounced. Use of television by used car buyers went from 18 percent in 2011 to 12 percent in 2013. Use of print newspaper went from 26 percent in 2011 to 17 percent in 2013, and use of direct mail went from nine percent in 2011 to 4 percent in 2013.
 
“While dealers, OEMs and their advertising agencies have shifted more money into online advertising, there is still a large imbalance in the allocation between traditional and digital mediums,” Filan said. “We know from the study that buyers who use the Internet are spending the most time on third-party sites, so dealers and automakers should ensure they are marketing their brands, their dealerships and their inventory where the active car shoppers are going online.”
 
The study also found that:
 
• Three-quarters of car buyers indicate that they used the Internet during the shopping process, making it the most used source.
 
• Among Internet users, 62 percent of used car buyers and 47 percent of new car buyers indicated that the Internet was the primary source that led them to the dealership where they bought a car, which was more than fifteen times that of any other media source cited in the study.
 
• The rise in Internet usage was driven primarily by domestic and luxury buyers, who turned to the Internet in greater numbers in 2013 versus 2011.
 
• New-car buyers use the Internet more to find special offers while used buyers look for actual vehicles for sale to a greater extent.
 
• About two out of three of all car buyers do not contact the dealership prior to their first visit, with 62 percent of used car buyers and 67 percent of new car buyers citing “walked in” as the most common method of establishing initial contact with the dealer.
 
The Polk study was conducted among more than 2,700 car buyers and ran from December 2012 through April 2013. Ninety percent of buyers who were surveyed purchased a vehicle in the six months preceding their participation. The study used a combination of online and offline survey methods, resulting in a large, random representative sample of online and offline car buyers.
 
 

Some vehicle technology doesn't sync with drivers' smartphones

July 19, 2013

Some of the latest in-dash “infortainment” systems are turning into a giant headache for drivers, as problems with phone, entertainment and navigation functions were the biggest source of complaints in the latest J.D. Power & Associates survey of new-car quality.
 
The glitches easily outstripped traditional issues in the survey such as fit and finish and wind noise.
 
Much of the problem lies in the disconnect between product cycles for cars and smartphones. The technology in cars, which take years to come to market, can’t keep pace with relentless smartphone updates.
 
The compatibility issues highlight an industry debate: Should cars come with their own communication and navigation systems? Or should they simply mirror smartphones on their dashboard screens, tapping into the constantly updated mobile-application environment?
 
Meanwhile, car companies are spending millions of dollars developing interfaces, voice recognition software and navigation systems, many of which either already come loaded on phones or can be downloaded at the swipe of a finger. For instance, an automaker’s optional satellite-linked navigation and traffic system can cost $2,000. But Waze, a division of Google Inc., provides the same functionality in a free app.
 
Automakers are attacking in-dash technology in a piecemeal way that could take years to sort out. Think of it as a modern version of the old Betamax-versus-VHS battle over videocassette recorder formats.
 
Ford Motor Co. has its own system. Apple Inc. is working with one set of automakers to design an interface that works better with its iPhone line. Some of the same car companies and others have joined the Car Connectivity Consortium, which is working with the major Android phone brands to develop a different interface.
 
All of this is complicated by the growing role of smartphones in daily life. “People today bond more with their smartphones than their car,” said Tom Mutchler, the senior engineer at the Consumer Reports Auto Test Center. “Car companies are going to have to live up to the expectations that come with that.”
 
Some car brands, including Ford and Lincoln, are sticking to building their own systems into cars.
 
“For the safety and overall experience for our customers, we think allowing developers to create apps that will work with our system, using our specifications, is the best way to go,” said Jim Buczkowski, director of electrical and electronics systems at Ford Research and Innovation.
 
He’s not a fan of handing control of these functions to a smartphone, because many of the features in the vehicle’s infotainment system “are very deeply integrated into the overall vehicle.”
 
“It’s arguable that a phone does all just as well or better,” Buczkowski said. “And if you forget your phone, you’re out of luck.”
 
 

CFPB responds (sort of) to letters on auto lending guidance

July 19, 2013

By Mark Scarpelli, Chicago Metro NADA Director
 
Democratic and Republican members of the House Financial Services Committee sent separate letters last spring to the Consumer Financial Protection Bureau regarding its earlier guidance on fair lending, requesting all relevant documentation that supports the CFPB’s assertion that discrimination exists in indirect auto financing.
 
The letters also requested the studies the CFPB relied on to support its attempt to pressure indirect finance sources to compensate dealers for arranging financing with a flat fee instead of allowing consumers to negotiate competitive rates with dealers.
 
Combined, the signers of the two letters represent a majority of the Financial Services Committee. Richard Cordray, acting director of the CFPB, responded to the Democrats’ letter by providing virtually no new information on the background information and methodology to explain the Bureau’s conclusions, despite a specific request.
 
In NADA news ...
 
• Beginning in 2015, the NADA Convention and Expo will be held Thursday to Sunday instead of Friday to Monday.
 
“After surveying the membership and exhibitors, the consensus was to end the convention on Sunday, instead of Monday,” said Desmond Roberts, chairman of NADA’s convention committee and a Chevrolet dealer in Hodgkins, Ill. “The Thursday-to-Sunday timeframe will allow convention attendees to be back at work earlier the following week.”
 
The 2014 NADA and American Truck Dealers (ATD) conventions will be held concurrently in New Orleans from Jan. 24-27 as scheduled from Friday to Monday.
 
Here are the revised dates for the NADA and ATD conventions:
 
2015: San Francisco, Jan. 22-25
2016: Las Vegas, March 31 - April 3
2017: New Orleans, Jan. 26-29
2018: Las Vegas, March 22-25
 
In other news ...
 
• The Occupational Safety and Health Administration is targeting automotive repair and maintenance businesses, including new-car dealerships, through a Region 8 Local Emphasis Program. This focused inspection activity, scheduled for between April 16 and at least Sept. 30, 2013, stems from five complaints OSHA Region 8 received in FY 2010, all of which resulted in citations.
 
The NADA urges dealerships nationwide to review the inspection directive (www.osha.gov/oshdir/r08.html) and their health and safety compliance. Dealerships with specific questions regarding their compliance should contact Lauren Bailey, of NADA Regulatory Affairs, at regulatoryaffairs@nada.org or (703) 821-7040; or contact their state or local dealer association.
 
• New-vehicle dealers sold more than 17.1 million used light vehicles last year; of these, 9.4 million were retailed and 7.8 million wholesaled.
 
The average 2012 used retail selling price was $17,547, up 1.6 percent from $17,267 in 2011.
 
New-vehicle dealers acquired 61 percent of the used units they retailed from trade-ins, 24 percent from auctions and the remaining 15 percent from street purchases or other sources.
 
• As the U.S. economy gains momentum and auto sales increase, employment at franchised new-car dealerships continued to rise, up 3.2 percent last year, the National Automobile Dealers Association indicated in its latest state-of-the-industry report. In 2012, total employment at new-car dealerships increased to 963,400 employees, up from 933,500, according to NADA Data 2013, a report on dealership sales and financial trends.
 
The average number of employees per dealership rose from 53 to 55 last year. New-car dealerships had an annual average payroll of $2.9 million in 2012, up 12 percent from the previous year. The total payroll for all U.S. new-car dealerships was $51.6 billion, up 12.6 percent. Average weekly earnings of employees at U.S. new-car dealerships last year was $1,030, up 9.1 percent from the previous year.
 
• As the U.S. economy gains momentum and auto sales increase, employment at franchised new-car dealerships continued to rise, up 3.2 percent last year, the NADA reported in its latest state-of-the-industry report.
 
In 2012, total employment at new-car dealerships increased to 963,400 employees, up from 933,500, according to NADA Data 2013, a report on dealership sales and financial trends. The average number of employees per dealership rose from 53 to 55 last year.
 
There also was a net increase of 95 franchised dealerships, bringing the total to 17,635 at the end of 2012.
 
New-car dealerships had an annual average payroll of $2.9 million in 2012, up 12 percent from the previous year. The total payroll for all U.S. new-car dealerships was $51.6 billion, up 12.6 percent.
 
Average weekly earnings of employees at U.S. new-car dealerships last year was $1,030, up 9.1 percent from the previous year.
 
Sales, payroll and employment at new-car dealerships as a percentage of total U.S. retail activity in 2012:
Sales accounted for 14.1 percent of total U.S. retail sales, and payroll accounted for 12.3 percent of total U.S. retail payroll.
Employees accounted for 6.3 percent of total U.S. retail employment.
 
 

Sedgwick deflects Q2 '13 unemployment claims

July 19, 2013

One hundred forty-three CATA dealer members reported a combined 810 unemployment claims during the second quarter of 2013 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 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 260 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 .55 percent and 8.95 percent of each employee’s first $12,900 in earnings.
 
The 2013 average unemployment tax rate among Illinois employers is 4.15 percent, or about $535 annually per employee ($590 in 2012). It marks the first time since 2007 that the average Illinois unemployment tax rate declined the following year.
 
“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 or Bruce Kijewski at (773) 824-4322.
 
 

Marketplace, July 22, 2013

July 19, 2013

License and Title Clerk 25 years’ industry experience, adept at all phases of electronic vehicle registration, billing, contracts, filing. Organized, skilled with Reynolds and Reynolds system. Teri Ranachowski, (630) 759-8750.
 
Controller/CFO 30 years of experience, including working with various dealerships in my capacity as a licensed CPA providing traditional assurance and tax services for both single and multipoint dealership groups. I also have experience working for a dealership in fixed operations and ADP systems administration. Jim Kegl, CPA, (815) 354-6374.
 
 
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