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CATA Bulletin
July 17, 2017

 

Dealer-friendly legislation awaits the pen of Illinois governor

July 14, 2017

SPRINGFIELD — Illinois Gov. Bruce Rauner has yet to act on legislation passed by the state’s General Assembly that would improve the dealer-manufacturer dynamic.  
Senate Bill 1687 was sent to Rauner’s desk on June 29. He has 60 calendar days, until Aug. 28, to sign it or to return it with his veto. If he does nothing, the bill will automatically become a law after the 60-day period. 
The legislation forbids a manufacturer from forcing a dealer to substantially alter a dealership twice within 10 years. The term "substantially alter" does not include routine maintenance, such as interior painting, that is reasonably necessary to keep a facility in attractive condition.
It also would prohibit manufacturers from forcing a dealer to use a manufacturer-designated vendor for building-improvement materials if the dealer can find substantially similar materials at a lower cost.
The bill also would require a manufacturer to consider local factors in the dealer’s market area when evaluating a dealer’s sales performance as part of the termination process, and it would halt the manufacturer from exercising a right to buy the franchise from a selling dealer unless several steps are taken.
Further, Senate Bill 1687 would forbid a manufacturer from rescinding sales incentives paid to a dealer whose customer exports a vehicle out of the country, unless the manufacturer can prove that the dealer knew or should have known that the vehicle would be exported.
The bill is backed by the Chicago Automobile Trade Association and the Illinois Automobile Dealers Association.
 
 

100 dealerships to host barbecues for USO on July 15

July 14, 2017

Meteorologists predict weather on July 15 that is favorable for an outdoor barbecue. And that’s a good thing, with 100 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 have furnished the dealerships with banners and other items to display outdoors and in their showrooms.
The CATA has worked with many radio, print, television, outdoor and social media partners to develop an aggressive promotional campaign leading up to the 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 75 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. 
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.  
The CATA also is in the midst of a month-long campaign to award the Ultimate Backyard BBQ to someone who submits the top photo or short video to #BBQ4Troops. Real Urban Barbecue will go to the winner’s home and prepare a delicious barbecue for 50 people, and the Chicago Blackhawks will send an ambassador to the gathering.
A list of dealerships hosting a barbecue is posted at DriveChicago.com.
 
 

OSHA sets new injury, illness reporting date

July 14, 2017

The Occupational Safety and Health Administration has set Dec. 1, 2017, as the new deadline by which certain dealerships must electronically file their employee workplace injury and illness records. OSHA initially wanted its Form 300A to be submitted electronically beginning July 1, 2017.
Dealerships required to report electronically by filing Form 300A or equivalent include: 
• Commercial truck dealerships with 20 to 249 employees at a single "establishment." "Establishment" is defined by OSHA as a single location where business is conducted or where services or industrial operations are performed.
• Light-duty and commercial truck dealerships with 250 or more employees at a single "establishment."
Note that light-duty dealerships with fewer than 250 employees at a single "establishment" are required to record workplace injuries and illnesses, but are not required to submit Form 300A to OSHA. 
For more information on existing federal injury and illness recordkeeping and reporting mandates, visit the National Automobile Dealers’ injury and illness recordkeeping page, or contact NADA Regulatory Affairs at regulatoryaffairs@nada.org.
 
 

Sales down, incentives up, credit scores fall, but don't worry?

July 14, 2017

Vehicle sales are down, automaker incentive spending is up and some consumer credit scores have fallen.
But no need for handwringing, say Mark Scarpelli and Steven Szakaly, chairman and chief economist, respectively, for the National Automobile Dealers Association. That trio of apparent negatives needs perspective, they said this month during an economic briefing with journalists.
The NADA predicts light-vehicle sales of 17.1 million this year, following dealer deliveries of about 17.4 million in both 2016 and 2015.
"Sales have been softening, but the overall outlook is strong," Scarpelli said. "It’s critical to remember we’ve had two back-to-back record sales years."
Szakaly added: "Record sales years do not last forever. We’ve seen the sales pace come down, as expected."    
Some out-there analysts predict annual sales will plummet to 12 million units after 2020, citing the prospects of fewer Americans buying cars, as ride-hailing and car-sharing services proliferate.
But Szakaly said such doom-and-gloom forecasts are "ridiculous" and fail to account for Americans’ propensity for personal-vehicle ownership.
Consumers’ desire to own vehicles is "alive and well," said Scarpelli, a Chevrolet and Kia dealer in Antioch. "We see it every day."
Increased incentive spending has reached an average of 10.8 percent, according to ALG. But that doesn’t mean automakers are recklessly throwing money around to spur vehicle sales, the NADA representatives said.
"The rising incentive spending is on sedans," Scarpelli said, noting the car segment has fallen in popularity as the market demand for light trucks, SUVs and CUVs has increased to about two-thirds of the automotive market.
Szakaly described incentive spending as "very specific," adding a time for concern would be if "incentives creep across the board."
On the vehicle-financing front, "we’ve seen some deterioration in credit scores," but there’s no cause for alarm there, he says, citing a couple of positive factors.
One is that people who saw their credit scores fall as a result of unemployment now have jobs and consequently the wherewithal to buy vehicles.
"They are entering the car market as they repair their credit," Szakaly said.
The slight increase in non-prime and subprime levels "is indicative of more consumers entering the market rather than indicative of a rising risk, as some have characterized it."
 
 

Some words matter more to car shoppers

July 14, 2017

American car consumers are power hungry. Or at least the word "power" appeals to them when they’re vehicle shopping.
That’s according to a new CDK Global analysis of what terms resonate with people as they read car reviews. Those are descriptors most likely to get a potential buyer off a review website and on a dealership’s, a big step toward an ultimate purchase.
"Power" is a high converter across different demographics, including women, Generation X and college graduates. "Truck" is a strong performer among Gen X, college grads and parents, although not so much women.
On the low-performing side, "bigger" doesn’t strike it big with women, and Gen Xers are unmoved by vivid descriptions of a vehicle’s "design."
Many businesses covet star-spangled reviews, but the study says a vague 5-star review is less rousing than a specific 4-star review. That’s where the importance of words comes in.     
The study is the latest installment of CDK’s ongoing data-crunching assessment of what it calls "the language of closers."
Here’s a demographic breakdown of words that work and ones that fall flat with certain people:
 
Women: Female shoppers focus more on the experience than on vehicle specifics. Mentions of power and handling help describe the experience of driving in a relatable way, the study says.
 
Women also connect with "driven" (as in how much they’ve driven a vehicle or compare it with others) "trip" (relating to positive reviews on how a vehicle did on a road trip) and "luxury" (a key selling point, even if the vehicle isn’t a premium brand).
 
Ho-hum words for women review readers include "transmission" (too technical) and "cargo," even though mentioning cargo space seems like it would carry more weight.    
 
Generation X: These are people ages 34 to 54 who (speaking of words and their effects) as youths, were branded as "slackers." They outgrew that unfair moniker that had more to do with their inability to secure employment in a tough economy than it did to their alleged laziness.
 
Gen X responds positively to three "p" words: power, package (as in different available options) and performance. With this age group, reviews that mention how a vehicle performs are stronger than those citing technical specifications.
 
For Gen Xers, low-converting words include "design" (they care more about how the vehicle act than how it looks) and "built" (similar to why "design" doesn’t cut it). Xers also seem indifferent to seat-specification references.
 
College graduates: The study calls this fresh-faced group as practical. They’re typically buying their first car to drive to their first serious job. "Price" and "fast" mentions in a review are low-converters.
 
"Price didn’t seem to be as much of an indicator for conversion in a review as you might think," the study says of the grad set.
 
For that group, "‘sound’ and ‘fast’ are surprisingly low-converting words" despite their overall positive connotations, the study says.
 
High-converting ones for this crowd are "work," and "highway." Commute-focused college grads seem to want a vehicle that reviewers say is highway-worthy.
 
Parents: Car shoppers with children have their own special needs.
 
Mentions of seating don’t do much for Gen X in general, but parents place top priority on seating, both the number of rows and adjustable agility.
 
The "rents" might have wanted a kick-out-the-jams stereo in the vehicles of their youth, but CDK says "a good sound system was a low priority for parents."
 
A cynic might say they’ve become the squares they thought their parents were. But back to the study:
 
"Consumer needs are always changing, and there is no one-size-fits-all solution," says Jason Kessler, CDK’s lead data scientist. "The needs of those graduating college are going to be much different than those of new parents."
 
CDK advises dealers, in picking consumer reviews to feature on their websites, to choose ones that leverage high-converting words and conversely avoid critiques containing terms that fail to motivate shoppers.
 
The company also recommends dealers include high-converting words in targeted ads and emails aimed at the different buyer groups.
 
And "by making subtle changes to the language used on vehicle-description website pages, dealers can help customers easily identify cars that they both connect with and that fit their lifestyle needs," says Kessler, adding "these changes will prime both dealers and customers."
 
 

Forecast: 1 day your car will know all your habits

July 14, 2017

Picture this: You’re checking your friends’ Facebook updates on the windshield display screen while your car drives you to the other side of town.
Suddenly, a coupon for a special deal at the Applebee’s a mile ahead pops up because the car remembers you stopped there two months ago. It asks if you’d like to pre-order your two-for-one special so it’s ready when you arrive. Then it sniffs out the spot closest to the front door and parks you.
It’s a scene that could play out in the not-so-distant future.
The average car already produces enough data from the engine, infotainment system and other components to fill an iPhone in less than an hour. As cameras, radar and sensors on self-driving cars begin to gather even more information, carmakers and auto suppliers are expected to sort that information and sell it to marketers eager to cater to your living-room on wheels. By 2030, some forecasts say all that data could have generated as much as $750 billion.
For now, data generated by vehicles doesn’t leave the automaker (see related story, this week's issue), where it is used to monitor performance to improve the next generation — or signal that it’s time for an oil change or other maintenance.
But Ford President and CEO Jim Hackett spoke in May of a time when Ford could pair global-positioning information with traffic data and work with a company like Starbucks so the car could tell the driver that one location has a four-minute wait, but the Starbucks three highway exits ahead has a shorter wait time.
Drivers could order and pay for their Frappucino before getting in the drive-through line, and it would be ready when they hit the window.
David Ploucha, president and CEO of Allen Park-based Control Tec, a company that works with carmakers to sift through data for the "important" nuggets, sees a future when a repair shop would know that a passing truck needs an oil change, and could "push" the driver a digital coupon.
Ploucha pointed to the GasBuddy mobile app, which already uses a user’s location to find the cheapest gas. He says if GasBuddy could connect with your car so it knew how thirsty it was and how much gas remained in the tank, it could send a push-alert as you approach a station with the cheap gas.
The "digital signature" that identifies your car will track your patterns and remember your habits, just like pop-ups on your smartphone remember you were shopping for sneakers a few weeks ago. "This is no different," Ploucha said, "than browsing for whatever it is you’re looking for on Amazon."
Rolling smartphone
It helps to think of a car as a big smartphone on wheels. In the same way Apple and Samsung modify the next generation of phones based on data about how people use the devices, experts on automotive data say that patterns such as how fast you drive, how hard you brake or how much you drive are already used for improvements.
 
As more information is gathered, automakers make tweaks to a vehicle based on that information, according to Ploucha, and Sam Abuelsamid, an analyst with Navigant Research.
 
Ford Motor Co. recently gathered information on daily driving habits from 33,000 electric-vehicle owners through the MyFord Mobile app. The company was able to see how often the customers charged-up, when they charged and how far they drove between charges. That knowledge will help Ford develop its new electric cars, the company said.
 
There is a lot of data to be had: The average vehicle made in 2015 produces roughly 19 gigabytes of information every hour. By 2025, that will increase to 1,957 gigabytes per hour, which could fill 122 base-level iPhones.
Automakers are gearing up for that future. Ford expects its storage needs to grow 15-fold from the 13 million gigabytes of space it needs today. General Motors Co. has 12 million vehicles connected by OnStar on the road today; it has data warehouses across the country.

Who wants to share?
 
Customers will have to decide how comfortable they are with sharing all that information. Christine Sitek, chief operating officer of OnStar, said GM has 500,000 customers enrolled in an insurance discounts program. Drivers consent to give insurance carriers access to information, like how often they hit the 80 mph mark or hit the brakes hard. Those who play it safe can get discounted premiums.
 
"Customers are willing to opt-in if they see value in the service provided," Sitek said in an email.
 
In most cases, that information is not shared with outside companies without the driver’s consent. Details on what’s collected from the car through certain systems are laid out in the terms of use for telematics systems like OnStar, Ford’s Sync Connect, Fiat Chrysler Automobiles’ UConnect and Hyundai’s Blue Link. Like other online contracts, those terms are frequently in the fine print that many drivers don’t bother to read.
 
GM’s privacy statement says it may share the "information it collects about you or your vehicle ... with third parties for research and development purpose." GM lists university research institutes that work on highway safety as an example of third parties. Ford in its privacy statement says it may share the information with companies within the "Ford family of companies or subsidiaries ... who are under a similar obligation to protect data."
 
Agreeing to the terms allows the companies to collect information such as location and speed.
 
Bruce Schneier, a computer security expert who is chief technology officer of cybersecurity company IBM Resilient, said the data from a connected car isn’t much different than that collected from a phone. Still, he said, there are definite privacy concerns and potential for monitoring law-breaking behind the wheel.
 
"Do we want a society where you basically get a bill at the end of the month for the amount of speeding you did?" he said. "We might say ‘yes,’ but that’s a very different sort of world ... The privacy risks are real, but there’s so much privacy invasion it’s hard to get worked up about the additional privacy risks in a car when you’re carrying a cellphone."
 
Automakers are looking at ways to compensate drivers for sharing information, possibly in the form of a lower monthly car lease payment, according to Ben Volko, CEO and co-founder of Otonomo, an Israel-based company developing this third-party marketplace.
 
Navigant’s Abuelsamid said, "(People) probably don’t have any more to fear than they do by using credit cars or the internet."
 
But as in-vehicle technology gets more complex, and connected systems require more people to accept more muddled and lengthy terms of use, Abuelsamid worries customers might lose track of what’s being collected, and which company sees it.
 
As more third-party companies get involved, that data is at a greater risk to be leaked or hacked. He said automakers should provide customers with an easy-to-use portal where they can check out every provider with access to their data.
 
"Unfortunately, I don’t expect to see anything that user-friendly," he said. "While data going to these companies is generally supposed to be anonymized, it’s often not hard to start making connections that can identify users. If those providers have a data breach, this can lead to privacy loss, identity theft and fraud."
 
 

Privacy advocates: Regulators need more tools to prevent car cyberattacks

July 14, 2017

U.S. regulators should do more to ensure data transmitted among vehicles to prevent crashes on the road can’t be stolen and used against drivers, privacy advocates cautioned at a federal forum on June 28.  
"Privacy issues are incredibly important in connected cars," said Joseph Jerome, policy counsel with the Center for Democracy and Technology. "As we add more and more sensors, more and more cameras, it will lessen our privacy."
As cars become more connected (see related story, this week's issue), regulators are looking to safeguard communications involving a range of vehicle advances — from high-tech safety features already in operation to completely self-driving cars expected on the road, perhaps within a few years.
"Consumers should know what data their car is collecting, and who has access to this information," said William Wallace, a policy analyst for Consumers Union, the policy and mobilization arm of Consumer Reports. "Also, consumers’ trust is critically important to the broader acceptance of advanced features — including lifesaving safety systems."
The forum on vehicle privacy and cybersecurity was hosted by the Federal Trade Commission and the National Highway Traffic Safety Administration. 
The major stakeholders, including regulators, automakers, software companies, and consumer groups, expressed hope that coming technologies will save lives on the highways. At the same time, the emerging technology presents unprecedented challenges for automakers to protect against hacking and ensure that customer data doesn’t get into the wrong hands.
As currently envisioned, vehicle-to-vehicle data would include very precise information about vehicle size and weight that could be used to extrapolate make and model information, said Jeremy Gillula, senior staff technologist at the Electronic Frontier Foundation. Independent evaluations have shown that vehicles could be hacked, even though regulators tried to design the system to ensure consumer privacy, he said.
"They tried," Gillula said. "We appreciate they put some effort in, but it’s not there yet. The system as being talked about today wouldn’t protect privacy in any meaningful way."
That assessment was disputed by Christopher Hill, a principal at Booz Allen, a consulting firm that worked with the Department of Transportation in evaluating vehicle-to-vehicle communication protocols. He said security experts concluded that data transmitted through V2V technology would be sufficiently encrypted and limited to protect individuals’ identities.
Overall, consumers are excited about the potential to improve highway safety through new technologies, said Carrie Morton of the University of Michigan’s Mcity automated-vehicle research center. She said V2V communications are limited to a range of about 1,000 feet, which should limit the hacking risk. Even using basic technology today, a person could take a picture of a license plate and acquire a lot of information about who’s driving, Morton added.
Drivers already use services that expose their personal driving and vehicle information, such as Waze, a mobility app where consumers enter their personal commuting information to crowdsource traffic information, Morton said. If they see a benefit, then "they’re OK with the trade-off," she said.
But car dealers are hearing concerns about car data collection and privacy, said Andrew Koblenz, executive vice president of legal and regulatory affairs at the National Automobile Dealers Association. Event-data recorders and what happens to personal data from phones that are synced with infotainment systems are among the most common questions asked of dealers, he said. The NADA felt compelled to publish a brochure to answer such common privacy questions.
"We’re entering into a new age, where people don’t know what the realm of the possibility is with this data," said Jason Carter, a research scientist with Oak Ridge National Laboratory who has worked on vehicle privacy and security. "It’s not that they’re not concerned, it’s that they’re not aware of what an adversary can do with the data."
 
 

Neutrals, blues are the future of North American cars: BASF

July 14, 2017

Paint and chemical producer BASF predicted recently that neutral car colors such as black, white, silver, and gray would remain popular in the North American region.
Paul Czornij, head of design for BASF’s color division, said the rationale could be that people want a car in a color that will appeal to buyers in the used market, but it also could be simply that people like the look of those colors. 
However, BASF also expects blue hues to gain traction. The company sees blue as a color representative of technology and also of nature, both of which the company says are important issues and topics for Americans. Three colors consisting of two blues and a black were chosen as the most representative, with "Undercurrent Blue" highlighted. 
"Blue continues to gain strength as an automotive color position, and it has a calming effect and a strong correlation with natural things, which is why we selected Undercurrent Blue as our key color for this region," Czornij said of Undercurrent Blue. 
The move toward blue is even evident in some of the neutral colors. Czornij said that whites have moved from being warmer, "off-white" shades, to cooler, bluer undertones. Other things to look out for in the future are paints with more pearl and metal flake, in part because they highlight aspects of the bodywork nicely. 
Also, while neutral tones will be the most popular, Czornij said that where there is color, people will be choosing more saturated hues, so expect to see some richer, bolder paints down the road. 
Matte finishes aren’t out either, as Czornij said about 10 percent of the colors they’re presenting have a matte finish. He also said this amount is greater than in some years past.
BASF predicts colors for the rest of the world, too, and it’s expecting more color variety than the neutrals and blues of North America. For Europe, the Middle East, and Asia, BASF predicts a desire for luxury, new spins on old styles, and individuality. As a result, the colors chosen to represent this broad region include a solid brick color, a matte gold, and a matte green metallic.
 
 
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