CATA News

In his final remarks to dealers as outgoing NADA chairman, Rhett Ricart — who led the organization through one of the most tumultuous years in recent memory — had a simple message during Feb. 9 remarks at NADA Show: "Never forget what we went through, because it shaped who we are today."

Ricart took over as NADA chairman at the previous NADA Show in mid-February 2020. Less than a month into his tenure, the coronavirus pandemic upended everything in the auto industry, including the priorities of the organization Ricart was tapped by his fellow dealers to lead in 2020.

Even though "no playbook was ever written for the challenges we faced in 2020," Ricart said, the NADA rallied immediately and refocused on the single goal of steering America’s franchised auto dealers through the pandemic.

"This association has never fought harder, worked faster, or given so much of itself so that business owners, like you and me, had a franchise that remained valuable and protected," Ricart said at the opening session of NADA’s first-ever virtual Show.

From advocating for dealerships to be deemed essential businesses, to helping dealers navigate coronavirus-related regulations, to maintaining dealership workforces, Ricart reminded auto dealers nationwide of the importance of the NADA’s efforts on behalf of, and hand-in-hand with, franchised dealers.

"We’ve lived through a year we’ve never witnessed before, but the NADA rose to the occasion," Ricart said. "It is a forcefield that covers every dealer. I am in awe of the NADA staff, our state and metro associations, and their leadership. Everything they did, they did on our behalf."

And Ricart, president and CEO of Ricart Automotive Group in Columbus, Ohio, credited his fellow dealers for their perseverance, determination and flexibility in the face of a constantly changing and ever-challenging business environment.

"Despite the darkest days, we kept people on the payroll, we reformulated our business model, we prioritized the health of customers, employees and our families, and we continued to sell and service cars," Ricart said. "Through the chaos, I saw the strength of auto dealers like I never have before. Dealers became life preservers, contortionists and survivors."

Ricart urged dealers to stay vigilant and remain confident in their ability to thrive in the face of adversity. And he reiterated his belief that the challenges dealers survived in 2020 will leave them better positioned to succeed well beyond 2021.

"After the year we’ve been through, I know one thing for sure: We are a bulletproof band of brothers and sisters who are stronger, tougher and wiser," Ricart said.

 

The NADA’s annual Dealership Workforce Study is now open. Dealers are encouraged to participate in the study, which provides valuable compensation and retention data on more than 60 dealership positions. 

Participants receive a custom report that compares and ranks their dealership against a peer group of participating dealerships; a national and regional analysis report; and access for one year to NADA’s Database Search Tool. 

The study closes April 15. Enroll at www.nada.workforcestudy.com. For questions, contact workforcestudy@nada.org.

 

AutoNation Inc., the country’s largest auto dealer chain, expects U.S. sales of new cars and trucks to hit 16 million vehicles this year, rebounding on a pandemic-fueled increase in demand for personal transportation.

Chief Executive Mike Jackson predicts the growth despite disruptions to vehicle production caused by a global semidconductor shortage and lingering inventory issues from pandemic-related shutdowns last year. He expects the seasonally-adjusted rate of U.S. new-car sales to grow 7% this year, up from 14.5 million vehicles in 2020, which was the lowest since 2012.

"The demand is higher than that, but I think it’ll be constrained by production," Jackson said in a phone interview. "The situation is very opaque, no one knows exactly how this is going to unfold, production is definitely unpredictable."

Vehicle production by carmakers this year has been pinched by the shortfall in supplies of chips, as semiconductor makers have allocated more capacity to consumer products than cars. Now snowstorms are adding to carmakers’ woes by forcing plant shutdowns in states in the central part of the country.

 

Industry executives and analysts predict strong consumer demand will continue this year and expect a return of commercial fleet sales as local officials distribute the Covid-19 vaccine.

"While the coronavirus was something that no one in the auto industry expected, the industry rallied and adapted to the new state of play," Patrick Manzi, chief economist at the National Automobile Dealers Association, said in a statement. "Looking forward, we are optimistic about the continued recovery of the new light-vehicle market."

 

The U.S. Labor Department has published a final rule that helps clarify how to distinguish an  "employee" from an "independent contractor" for purposes of the Fair Labor Standards Act. The FLSA is the law that governs an employer’s minimum wage and overtime obligations, among other things. 

The final rule, which takes effect March 8, contains: 

 

• a multifactor test for determining when workers are employees or independent contractors; 

• a clarification that when applying the test, no one factor is conclusive and that the actual practices between workers and employers are more relevant than what is stated contractually or is theoretically possible; and

• six fact-specific examples applying the multifactor test.

The multifactor test is designed to determine whether a worker is economically dependent on a business and is its employee, or whether the worker is self-employed. The test identifies and explains two "core factors" and lists three other factors that are probative to worker classification determinations.

The two core factors are:

• the nature and degree of control over the work; and

• a worker’s opportunity for profit or loss based on initiative and/or investment.

The three other probative factors are:

• the amount of skill required for the work;

• the degree of permanence of the working relationship between a worker and a business; and

• whether the work is part of an integrated unit of production.

 

Caution to dealers: The final rule applies to dealerships with respect to their federal FLSA compliance. It does not necessarily apply to other federal or state laws governing the relationship between dealerships and workers, including federal and state tax laws.

Dealers are advised to work with their attorneys and HR professionals to carefully evaluate those relationships where it is not readily apparent whether workers are employees or independent contractors.

 

WASHINGTON — The Internal Revenue Service has posted updated FAQs about recent legislation that extended and amended tax relief to certain small- and mid-sized employers under the Families First Coronavirus Response Act (FFCRA).

The FAQs are available at COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses FAQs.

The updates to the FAQs cover how the COVID-related Tax Relief Act of 2020, enacted Dec. 27, 2020, extends the availability of the tax credits created by the FFCRA to eligible employers for paid sick and family leave provided through March 31, 2021, as well as other amendments to the credits.

The paid sick and family leave credits, which previously were available only until the end of 2020, have been extended for periods of leave taken through March 31, 2021.

The paid sick leave credit is designed to allow qualified businesses — those with fewer than 500 employees and who pay "qualified sick leave wages" — to get a credit for wages or compensation paid to an employee who is unable to work (including telework) because of coronavirus quarantine or self-quarantine or has coronavirus symptoms and is seeking a medical diagnosis. 

Eligible employers may claim credit for paid sick leave provided to an employee for up to two weeks (up to 80 hours) at the employee’s regular rate of pay up to $511 per day and $5,110 in total.

In addition, an eligible employer can receive the paid sick leave credit for employees who are unable to work due to caring for someone with coronavirus or caring for a child because the child’s school or place of care is closed, or the paid childcare provider is unavailable due to the coronavirus. Eligible employers may claim the credit for paid sick leave provided to an employee for up to two weeks (up to 80 hours) at 2/3 the employee’s regular rate of pay, or up to $200 per day and $2,000 in total.

Employers also are entitled to a paid family leave credit for paid family leave provided to an employee equal to 2/3 of the employee’s regular pay, up to $200 a day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.

Eligible employers are entitled to immediately receive a credit in the full amount of the paid sick leave and family leave plus related health plan expenses and the employer’s share of Medicare tax on the leave provided through March 31, 2021. The refundable credit is applied against certain employment taxes on wages paid to all employees.

Eligible employers may claim the credits on their federal employment tax returns (e.g., Form 941, Employer’s Quarterly Federal Tax Return), but they can benefit more quickly from the credits by reducing their federal employment tax deposits. If there are insufficient federal employment taxes to cover the amount of the credits, an eligible employer may request an advance payment of the credits from the IRS by submitting a Form 7200, Advance Payment of Employer Credits Due to COVID-19.

 

The attorney general’s office probably would not treat the matter as a stand-alone issue to pursue, but it could use it to bundle with other advertising infractions by a dealership.

 

In May 2020, DriveChicago.com made a significant programming change designed to drive in-market shoppers direct to CATA dealer websites. Prior to this change, DriveChicago.com sent customers to dealers in the traditional portal method, with email leads, phone ups and map views. 

Since last May, DriveChicago.com is driving site visitors directly to dealerships’ vehicle detail pages. Over the past nine months, more than 50,000 customers have been sent to CATA dealership websites.

More specifically, the change involved deep linking into dealer website vehicle detail pages. Previously, a DriveChicago.com visitor would search through the more than 100,000 vehicles in inventory and land on a DriveChicago.com vehicle details page that provided links to contact the dealership or send an email lead.

Now, instead of landing on a DriveChicago.com vehicle details page, that site visitor is sent directly to the vehicle details page on dealership websites. 

For many dealers, this change has resulted in DriveChicago.com becoming their No. 1 referral site.

"As traditional email leads continue to dry up, we realized that dealers best convert from their vehicle details pages," said Richard Wickstrom, chairman of the CATA’s DriveChicago.com Committee. "So, by making this simple change, DriveChicago.com instantly becomes significantly more relevant to CATA dealers and better fulfills its mission to drive in-market shoppers to members."

While this lead-generation change continues to drive 6,000-7,000 site visitors directly to CATA dealer websites each month, DriveChicago.com is also upping its marketing spend to identify and connect with current vehicle shoppers. Though its partnership with Automotive Internet Media, DriveChicago.com has gone all-in on the CarClicks program. As a result, DriveChicago.com traffic went up 35% in one month with a spend of less than $1,500. 

 

Together the lead-generation change and enhanced CarClicks marketing continue to provide CATA dealers a free alternative to expensive programs of competing automotive shopping portals such as Cars.com and AutoTrader. DriveChicago.com is just another way that the CATA provides benefit to its members.

For more information on DriveChicago.com, contact Mark Bilek at (630) 424-6082 or mbilek@drivechicago.com.

 

The Illinois General Assembly in January passed the Predatory Loan Prevention Act, which will implement a 36% interest rate cap on consumer loans, including car title loans and payday loans. 

Specifically, the PLPA would apply to any non-commercial loan made to a consumer in Illinois, including closed-end and open-end credit, retail installment sales contracts, and motor vehicle retail installment sales contracts.

 

Senate Bill 1792, filed as part of the Illinois Legislative Black Caucus’ economic equity omnibus bill, replaces the traditional Truth-in-Lending Act definition of APR with Military APR as defined in the Military Lending Act. The latter distorts the calculation of the amount financed in a retail installment contract, thus complicating motor vehicle transactions.

The bill, which cleared both General Assembly chambers in two days, could impact dealers when products and services such as GAP waivers and service contracts are financed with a vehicle purchase. If the interest rates grow beyond 36%, dealers would be in violation of the PLPA.

 

Dealers are urged to contact Gov. J.B. Pritzker’s Chicago office at (312) 814-2121 and urge for the bill to be vetoed, so that other legislation can be written to protect consumers from predatory lending practices without limiting their access to dealer products and services.

 

Loans that violate the Act would be considered void and uncollectable. "Any loan made in violation of this Act is null and void and no person or entity shall have any right to collect, attempt to collect, receive, or retain any principal, fee, interest, or charges related to the loan," the legislation states.

 

The General Assembly has until Feb. 12 to send the bill to Pritzker, and the governor has until mid-March to sign it. The rate cap would be imposed on all loans made on or after the effective date.

In Illinois, the average annual percentage rate on an auto title loan is 179%. On payday loans, the average APR is 297%. Federal law already protects active-duty military with a 36% APR cap. SB 1792 would extend the same protection to Illinois veterans and all other consumers. Seventeen states plus the District of Columbia have 36% caps or lower.

 

By John McElroy

 

Are electric cars at a tipping point? A lot of people think so. Sales of EVs are far stronger than anyone expected in Europe. They’re growing fast in China. And on a percentage basis, they’re growing faster than any other segment in the American market.

The barriers to EV ownership are coming down. Battery costs are dropping and will reach parity with ICE powertrains in just a few years. Range anxiety is becoming less of an issue as more public charging stations get built. And consumers soon will have a rich choice of models to choose from in almost every showroom.

But the auto industry faces a major development challenge with EVs: They don’t like winter weather. Or, more properly stated, EV batteries don’t like cold temperatures.

I’ve test driven a number of electric cars and plug-in hybrids in cold weather and the drop-off in driving range is significant. My observations are not carefully calibrated engineering tests but do represent what a typical owner would encounter.

As a rule of thumb, I would say EVs lose about 30% of their range around 33 degrees Fahrenheit and close to 40% of their range at 24 degrees. I can only imagine it drops off much more at colder temperatures, but I have not personally tested EVs at those temps. EV advocates don’t talk about this, but automakers clearly face a challenge marketing EVs to people who live in winter climates.

Having said that, Norway has the highest EV ownership rate in the world. But that market is heavily skewed by tax policies that make it far cheaper to buy an EV than an ICE car. And Norway is a small country with much shorter driving distances. For example, while Norway has nearly 58,000 miles of roads, the state of Michigan, where I live, has 120,000 miles.

My rule of thumb represents a worst-case scenario. Owners can mitigate cold weather problems by pre-heating the battery and the interior of their car while it’s still plugged in. That way the battery is ready to go as soon as you unplug it, and you’ll use less stored battery power keeping the cabin warm.

But that only works if you can keep your EV plugged in for all situations. If your car sits unplugged in a parking lot at work, or in the parking lot of a hotel when you’re on a road trip, that cold battery will lose a lot of range. And it’s these worst-case scenarios that will feed range anxiety.

Automakers have to step up and provide honest range numbers to consumers. Everyone knows the NEDC (New European Driving Cycle) is a misleading test. It’s an easy-breezy procedure that generates great driving ranges for electric cars and wonderful fuel economy numbers of cars with internal combustion engines.

 

But it’s inaccurate. That’s why Europe moved on and adopted the WLTP (Worldwide Light Vehicle Test Procedure), which provides numbers much closer to the real world. The U.S. EPA test is even more accurate.

 

Yet Mercedes-Benz chose to use NEDC numbers when it unveiled its EQA electric CUV in early January, and Nio did the same when it unveiled the ET7. It’s easy to see why. Both companies reported amazing range numbers, and that got all the headlines. But it was deceptive, and they should know better.

 

Here’s another caveat for EV owners to be aware of in the U.S.: The EPA gives two ratings for an EV. One is how many kilowatt hours per 100 miles (kWh/100 m) your car will consume. The other is the total range the car will deliver. But there is a discrepancy between the two, which I discovered while test driving a Mustang Mach-E.

 

The model I drove, an AWD Extended, is rated at 37 kWh/100 miles. It has an 88-kWh battery, so that would imply a range of 237 miles. But the EPA says the range is 270 miles.

 

How did it gain an extra 33 miles? Because in the EPA’s FTP-75 test procedure there is a good amount of deceleration in city driving. And that puts regenerative energy back into the battery, which increases the range. But it also means EVs will be less efficient in highway driving – the complete opposite of ICE vehicles. 

 

Consumers should be aware of this.

 

BTW, I fully charged the battery in the Mach-E at 33º F and it only indicated 175 miles of range – a 35% drop.

 

The auto industry is investing a fortune to manufacture EVs. It has a lot riding on this bet. The sooner it addresses cold weather issues, uses honest numbers and educates consumers, the faster people will adopt them.

 

John McElroy is editorial director of Blue Sky Productions and producer of "Autoline Detroit" for WTVS-Channel 56, Detroit.

 

President Joe Biden has vowed to replace the U.S. government’s fleet of roughly 650,000 vehicles with electric models, as the new administration shifts its focus toward clean-energy.

"The federal government also owns an enormous fleet of vehicles, which we’re going to replace with clean electric vehicles made right here in America made by American workers," Biden said Jan. 25.

Biden criticized existing rules that allow vehicles to be considered U.S.-made when purchased by the U.S. government even if the vehicles have significant non-American made components.

Biden said he would close "loopholes" that allow key parts such as engines, steel and glass to be manufactured abroad for vehicles considered U.S. made.

The White House did not immediately answer questions about over what period Biden planned to replace current vehicles. It could cost the U.S. $20 billion or more to replace the fleet.

Biden’s "Buy America" executive order, signed Jan. 25, does not direct the purchase of electric vehicles.

As of 2019, the U.S. government owned 645,000 vehicles that were driven 4.5 billion miles consuming 375 million gallons of gasoline and diesel fuel, according to the General Services Administration. The GSA said the U.S. government spent $4.4 billion on federal vehicle costs in 2019.

Of U.S.-government vehicles, just 3,215 were electric vehicles as of July 2020, the GSA said.

During the campaign, Biden vowed to "make a major federal commitment to purchase clean vehicles for federal, state, tribal, postal, and local fleets."

He also vowed to create 1 million new jobs in the "American auto industry, domestic auto supply chains, and auto infrastructure, from parts to materials to electric vehicle charging stations."

Biden backs new consumer rebates to replace old, less-efficient vehicles with newer electric vehicles and incentives for manufacturers to build or retool factories to assemble EVs and parts.

The new president has vowed to build 550,000 EV charging stations and spend more in clean energy research.