Menu
Log in
Log in


CATA News

  • Friday, October 29, 2021 4:35 PM | Anonymous
    Finding a car may be harder than in recent memory, but shoppers who do line up a new vehicle are more likely to qualify for a loan.
    Researchers found access to loans in September was 5.5% easier than during the same period a year earlier. Generally speaking, credit access from banks, credit unions, and captive finance arms at automakers is nearly back to pre-pandemic levels.
    However, only automakers have loosened up loans to the level where consumers were just as likely to qualify in October 2021 as they were in February 2020, before the pandemic took hold of the global economy.
    That doesn’t mean car dealers are flush with vehicles, however. Inventory levels remain at historic lows with little change in sight as automakers struggle to source parts needed to assemble new vehicles. Supply chain bottlenecks, compounded by the global labor and computer chip shortage, make new cars challenging to locate.
    Similarly, discounts on new vehicles — as well as incentive and rebate spending from automakers — are few and far between. Some automakers are now offering unusual spiffs, such as credit for accessory items, in place of rebates. 
     


  • Friday, October 29, 2021 4:35 PM | Anonymous
    While there may be some potential headwinds in 2022, brokers for dealership mergers and acquisitions report the dealership buy-sell market remains red hot.
    "Our book of business is at a robust pace, and so is the rest of the industry," said George Karolis, president of the Presidio Group. "I think we’re at record levels."
    The question for buyers and sellers is how long the current, favorable environment can last, with demand outpacing supply, record average transaction prices for new and used vehicles, and pent-up demand for parts and service. Cuts in dealership head counts and marketing budgets also have contributed to record profitability.
    At the same time, interest rates are low, and for publicly traded dealership groups share prices are high, and that makes it more affordable to purchase dealerships partly with shares of stock, said Brodie Cobb, founder and CEO of the Presidio Group.
    "The one thing that is just unbelievable is how inexpensive capital is today, how inexpensive debt is," Cobb said. "And every time those stocks go up, it gets cheaper and cheaper."
    Another dealership brokerage firm, Kerrigan Advisors, said the total number of completed dealership transactions in first-half 2021 was 144, an increase of 27% year over year, and on track to surpass the record of 289 buy-sells last year. For the 12 months ended June 30, the total number was 320, up 11%, the company reported.
    "Today, we are tracking to hit another record," said Erin Kerrigan, founder and managing director of Kerrigan Advisors. In a webinar hosted by the American International Automobile Dealers Association., she predicted 2021 buy-sells will pass 350.
    One of those potential headwinds mentioned earlier is that would-be buyers may balk at high prices for dealerships, to the extent that high prices are based on the record profits they’re raking in, in the current highly unusual circumstances.
    Earl Hesterberg, president and CEO of Houston-based Group 1 Automotive, said during a conference call to announce second-quarter earnings that the acquisition market is "as frothy as it’s ever been."
    Kerrigan predicts the "froth" Hesterberg describes will last at least well into 2022.
    "Dealers do not believe their dealerships will fully return to the low margins" at pre-pandemic levels, she said — not even when supply eventually recovers and high demand subsides. "Yesterday’s valuations seem ludicrous with regard to today’s profits."
     


  • Friday, October 29, 2021 4:35 PM | Anonymous
    A growing number of people who seek vehicle repair and maintenance work say they prefer auto dealership service departments over other repair facilities.
    That’s according to the newly released 2021 Cox Automotive Service Industry Study. It indicates 34% of consumers prefer dealership service centers, a percentage point increase from 2018, and ahead of general repair shops. 
    That is good news for dealers who over the years have faced challenges from independent shops and national car-care chains, which are geographically more prevalent than are car dealerships. 
    Because of such competitors, Cox Automotive estimates dealers aren’t capturing about $214 billion in potential annual revenue.
    Dealerships enjoy a reputation for doing quality service work — one reason for their popularity.
    They also are cited as preferred because of their existing relationships with customers. The Cox Automotive survey indicates 55% of consumers say they go to a dealership because its service personnel know their vehicle better.
    But dealerships continue to combat the perception that they are overpriced compared with the competition. The top barriers to returning to the dealership are not only cost but also location.
    Another negative: Nearly 25% of polled consumers say their dealership service visits take longer than expected.
    Exacerbated by the COVID pandemic, service departments cite parts delays from manufacturers (58%) and finding or hiring the right technicians (45%) as their primary operational frustrations. Both issues can affect consumer experiences.
    On average, the survey found dealerships citing a recent decline in the consumer satisfaction they deliver, with only 55% of dealers believing satisfaction has improved in the past 12 months (down from 71% when surveyed in 2018).
    Dealers have struggled for years with hiring and retaining qualified service technicians.
    That remains a problem, according to the survey. Fifty-seven percent of dealership respondents say their service department is not fully staffed. Eight in 10 expect these labor shortages to continue or even worsen in the future.
    Yet, the majority (60%) say they plan to hire more service technicians this year, indicating an investment priority.
    "The industry is ripe for transforming the consumer experience," said Tracy Fred, vice president of operations for Xtime, a Cox Automotive business unit that offers online dealership appointment scheduling and other service-related digital tools on dealer websites.
    "Elevating the entire service experience with a consumer-first mindset and the use of technology can help raise overall profits, capture additional market share and help mitigate the frustrations service departments are currently facing," she says. 
    Dealers who say they’ve improved the customer experience in the past year more often offer services such as service pick-up and delivery, ridesharing, work progress tracking, online cost estimates and mobile check-in.
    The survey says car owners’ feedback is that they want the ability to schedule their appointment online. Nearly 75% of dealers offer that option today. Some polled consumers said they didn’t know that.
    Consumers also want to online review and approve repair estimates (67%) and access their vehicle service history (66%) which, according to those surveyed, are among the most critical digital features a service center should readily and transparently offer.
    Top-performing service departments possess a consumer-first mindset and use technology to enhance the experience by offering digital tools and convenience-focused services, Fred said.
    "Consumers," she said, "continue to stress the importance of a digital experience, and dealerships must evolve and offer flexibility by enhancing online capabilities.
    "Meeting consumer demand for convenience by considering new service lines like ridesharing also can help combat location as a barrier."
     


  • Friday, October 29, 2021 4:34 PM | Anonymous
    Illinois legislators on Oct. 28 loosened the provisions passed three months ago on dealership reimbursements for repairs of vehicles under warranty, reducing payouts on engines and transmissions to 30% of what the franchisee paid.
     
    Gov. J.B. Pritzker is expected to sign the bill.
     
    Strong opposition from the dealer community to House Bill 1769’s initial drafts softened the blows sought by OEMs, including one provision which stated that "no debit reduction or charge back of any item on a warranty repair may be made absent a finding of fraud or illegal actions by the dealer."  Vehicle manufacturers could have manipulated that to deny many warranty claims.
     
    Dan Marquardt, a Barrington dealer and CATA director who led efforts to first pass House Bill 3940 in July, said strong dealer outreach as HB 1769 was crafted "shows how critical support and relationships with our legislators is, both state and federal."
     
    "At the end of the day," Marquardt said, "the changes to HB 3940 were the reduction of our margin on engines and transmissions to 30% markup, and reimbursement for other warranty parts must be reasonable based on market norms."
     
    HB 1769 passed the House last spring but did not initially advance out of the Senate. During the veto session, legislators used it to jump-start the state’s electric vehicle industry by providing major tax credits for electric vehicle manufacturers and for makers of electric vehicle component parts.
     
    To win support from the vehicle manufacturers, Pritzker’s office first added language to remove provisions tied to manufacturer reimbursements to dealerships for work performed on vehicles under warranty. The reimbursements are scheduled to take effect Jan. 1, 2022.
     


  • Friday, October 15, 2021 4:42 PM | Anonymous
    Average prices for new and used vehicles are at all-time highs, forcing monthly loan payments to cross new thresholds.
     
    New-vehicle monthly payments passed $600 during the third quarter of this year, climbing to $614 a month, according to experts at car shopping website Edmunds. That’s nearly $30 a month higher compared with Q2’s average payment of $586 and $578 in the first quarter.
     
    Meanwhile, the average monthly payment on a used car now is $500, up from $473 in the previous quarter and from $420 in the year’s first period.
     
    There currently is just an 18% difference between the average monthly payments on new and used vehicles — the smallest gap ever, the website noted.
     
    Prices high despite efforts to ease the pain
    The average transaction price for a new vehicle is more than $42,000, a new record. Unsurprisingly, that has trickled down to the used-vehicle numbers as well. Edmunds expects it to climb to a record high of $27,306, compared to $25,854 in Q2 2021 and $21,697 in Q3 2020.
     
    "Just when we thought we’d see a cooldown in used vehicle prices, they roared back in September, creating a bit of a roller coaster in the third quarter," said Jessica Caldwell, Edmunds’ executive director of insights. 
     
    "These high prices combined with higher interest rates on the used side have shrunk the difference between new and used monthly payments more than we’ve ever seen before. Consumers considering a used vehicle rightfully might pause at the fact that today’s used monthly payment is nearly the same as a new monthly payment five years ago — particularly when they factor in the maintenance that might happen sooner rather than later."
     
    Edmunds experts note that used purchase conditions are likely to continue to be unfavorable for car shoppers through the rest of the year and advise consumers who need to make a car purchase to consider alternatives such as leasing or exploring certified pre-owned vehicles. 
     
    What’s a buyer to do?
    Aside from getting incredibly lucky and finding a dealer or individual seller who doesn’t realize prices are at all-time highs, what’s a consumer to do? Lease.
     
    "Leasing might offer cheaper monthly payments, and since a lease is a much shorter commitment than a purchase, you can explore makes or models that you might not have considered previously," said Ivan Drury, Edmunds’ senior manager of insights.
     
    "If you have your heart set on used, it’s worth doing some additional research into CPO options. Although they might seem pricier than other used vehicles at first glance, you’re more likely to get a subsidized interest rate, and can have a bit more peace of mind as these vehicles come with a warranty and are generally newer with lower mileage."
     


  • Friday, October 15, 2021 4:39 PM | Anonymous
    Date: Monday, Oct. 18
    Where: Rich Harvest Farms, a private golf course and country club near Sugar Grove
    Host: Dynatron Software 
     
    MEETING PURPOSE 
    Review of new revenue opportunities stemming from OEM warranty legislation effective Jan 1. As you may be aware, House Bill 3940 was signed and takes effect Jan 1, 2022. This groundbreaking legislation requires your IMMEDIATE ATTENTION to capitalize on significant short-term net profit impact.
     
    AGENDA
    • 11:00-11:45 a.m.: CATA introduction and business meeting to review financial opportunity associated with new legislation, to be held in the private auto collection and museum of Jerome "Jerry" Rich, the estate’s owner and president. 
    • 11:45 a.m.-12:30 p.m.: Lunch and tours of the Auto Collection and Museum
    • 12:30 p.m.: Practice and warmup
    • 1:00 p.m.: Shotgun start (Dealers only)
     
    HOW TO REGISTER 
    RSVP is required. To RSVP, please visit www.dynatronsoftware.com/golf. Please indicate if you will be joining for just lunch and meeting or if you will be joining for lunch, meeting and golf. Limited golf spots are available, so please be certain of your availability before RSVPing.
     


  • Friday, October 15, 2021 4:39 PM | Anonymous
    ABB Ltd. is preparing to roll out the first of its ultra-fast charging stations in a matter of weeks, providing enough power in less than three minutes to charge any electric car to drive 100 kilometers (62 miles). 
    The rollout of the Terra 360 stations, where a single charger can feed electricity into four vehicles at once, is starting in Europe before the end of the year, and will spread to North and South America as well as Asia in 2022, ABB said in September. The technology can fully charge any auto battery in 15 minutes or less. 
    "The demand for EV charging infrastructure, especially charging stations that are fast, convenient and easy to operate, is higher than ever," said Frank Muehlon, president of ABB’s e-mobility division.
    With road transport accounting for nearly a fifth of global CO2 emissions, e-mobility is critical to achieving the Paris climate goal, according to Theodor Swedjemark, the company’s chief communications and sustainability officer.
    Carmakers are churning out a wave of new electric models to keep up with tightening carbon emissions regulation that need to overcome consumer turnoffs like slow charging times and patchy infrastructure. With EV demand taking off, ABB Chief Executive Officer Bjorn Rosengren in July predicted the charging business to double with the company preparing to list the business next year.
    ABB high-power chargers are already being deployed through partnerships with operators such as Ionity GmbH and Electrify America.
     


  • Friday, October 15, 2021 4:38 PM | Anonymous
    More than 100 U.S. House lawmakers on Oct. 12 urged Speaker Nancy Pelosi to keep a $4,500 tax credit incentive for union-built electric vehicles in a massive spending bill.
     
    In a letter seen by Reuters, 107 Democrats urged Pelosi to retain the credit supported by the United Auto Workers union, the AFL-CIO and U.S. automakers. The $4,500 credit would provide a significant boost to Detroit's three automakers — General Motors, Ford and Chrysler-parent Stellantis.
     
    "We strongly support leveling the playing field between non-union and unionized workforces by including the added $4,500 incentive to support union-made EVs," the letter said. The push was led by Rep. Thomas Suozzi, D-N.Y.
     
    Suozzi said the incentives "help guarantee that working men and women are an integral part of that success story."
     
    Pelosi's office declined to comment.
     
    Foreign automakers do not have unions representing assembly workers in the U.S. and many have fought efforts to organize U.S. plants.
     
    Twelve major foreign automakers in September urged Democrats to reject the proposed $4,500 tax incentive and have been lobbying lawmakers to reject the union incentive.
     
    A House panel last month approved legislation to boost EV credits to up to $12,500 per vehicle, including $4,500 for union-made vehicles and $500 for U.S.-made batteries.
     
    The foreign automakers said the proposal "would unfairly disadvantage American workers who have chosen not to join a union and produce more than half of all vehicles in the United States and the vast majority of American-made EVs."
     
    The tax credits, which are part of proposed $3.5 trillion spending bill, would cost $15.6 billion over 10 years.
     
    The EV proposal also does away with phasing out tax credits after automakers hit 200,000 electric vehicles sold, which would make GM eligible again for the $4,500 credit. Tesla vehicles would not get the credit.
     
    Tesla Chief Executive Elon Musk suggested on Twitter that the EV proposal was "written by Ford/UAW lobbyists ... . Not obvious how this serves American taxpayers."
     


  • Friday, October 15, 2021 4:38 PM | Anonymous
    Consumer preferences are always shifting. In the case of the auto industry, this means sales of cars with internal combustion engines may have hit their peak in 2019. 
    Tom Libby, an IHS analyst who studies brand loyalty, said during a recent seminar, data collected this year indicates there has been a migration to hybrids and electric vehicles. Moreover, the loyalty of buyers purchasing vehicles with alternative powertrains is very high. Part of the high loyalty numbers reflect the loyalty of Tesla’s buyers, but it also extends to other brands, he said.
    Even with the semiconductor shortage, one trend apparent this year is the growing acceptance of electrified vehicles. Toyota, Hyundai, Volvo and Ford introduced several electrified vehicles this year. The numbers for a variety of hybrid and battery electric models overall are quite high when measured against gasoline engines, Libby said.  
    The 20 highest volume hybrids across all brands tripled their registrations during the first half of 2021. Sales of pure battery electric vehicles are up by 50%, Libby added. 
    So far this year, Toyota, a battery-electric skeptic, reports alternative powertrains, mostly hybrids, accounted for 24.2% of its vehicles sold in North America in 2021. Toyota’s decision to lower the price of several hybrid models and add hybrid versions in other categories have boosted sales 113.7%, according to figures released by Toyota Motor North America.
     
    Trend reflected in sales figures
    The same trend prevails at Volvo where the so-called alternative powertrain vehicles account for more than 18% of total sales. Hyundai reported sales of its eco-friendly vehicles increased by 348% thanks to strong demand for vehicles such as the Nexo, Kona EV and Ionic PHEV. 
    EVs and hybrids accounted for more than 5% of Ford’s sales in September and the number is likely to go higher with the introduction of the hybrid Maverick this month. 
    Meanwhile, the Financial Times this month reported sales of electrified vehicles across Europe jumped from 118,000 in 2018 to more than 1.1 million units this year. 
     
    Consumer sentiment shifts 
    The growth in sales also reflects changes in consumer sentiment and expectations. EVs and hybrids cost more initially but their operating costs are lower long term, survey indicated. With fuel prices on the upswing, long-term considerations make EVs and hybrids more affordable for a wider swath of consumers. 
    A survey by Pew Research done this summer showed 39% of the consumers in the U.S. are willing to consider an EV for their next purchase. At the same time, surveys show younger consumers, who are becoming the majority of vehicle buyers, are more likely to consider and EV or a hybrid than older Baby Boomers.
     


  • Friday, October 15, 2021 4:37 PM | Anonymous
    Two more vehicles were stolen this month from Highland Park dealerships, police for the city reported Oct. 11.
    In one incident, Brian Bodden, a detective with the Highland Park Police, said a video camera recorded a white Jeep Grand Cherokee parking next to a service bay door during lunchtime and two Black subjects creeping next to the open door. The men proceeded to enter the service area while many technicians were away at lunch and searched for unlocked vehicles with their keys inside. Then the recording showed them leaving with one stolen car.
    In the other incident, a technician had just moved a vehicle inside the dealership for service and connected it to a computer before leaving for lunch. When he returned, the vehicle was missing. According to surveillance video, one male subject similarly snuck through the open service bay door and stole the vehicle.
    The northern suburbs have experienced an increase in car burglaries and auto theft. By late 2020, Highland Park, Highwood, Lake Forest, and Deerfield officials had logged 94 instances of stolen vehicles for the year, a nearly 130% increase over 2019, and 175 instances of theft or burglary to vehicles, an increase of over 70 percent from 2019.
    The vast majority of vehicle burglaries and thefts occurred because car doors were left unlocked or keys/key fobs were left in or near the vehicle. Proximity to well-traveled highways is also associated with increased vehicular crimes.
     


Chicago Automobile Trade Association
18W200 Butterfield Rd.
Oakbrook Terrace, IL 60181 
(630) 495-2282

EMAIL US

Copyright © Chicago Automobile Trade Association.

Powered by Wild Apricot Membership Software