[courtesy of CATA member Woodward & Associates]

2022 YEAR-END CHECKLIST FOR DEALERS
Woodward & Associates
P.O. Box 1584, Bloomington, IL 61702
309.662.8797

As another tax year comes to a close, it is time to consider your tax planning opportunities and year-end tasks.

Year-End Planning:

1. Owners who operate their businesses as sole proprietors or as a pass-through entity such as Partnerships and S Corporations are potentially eligible to a deduction of up to 20% of their qualified business income (QBI). The deduction can be maximized through salary planning and entity aggregation.
2. The Section 179 expensing limit for 2022 is $1,080,000 with a $2,700,000 investment limit phase-out. This allows businesses to expense the cost of fixed assets such as equipment and furniture and fixtures. This expensing opportunity is also available for certain qualified improvements to property. Consider placing eligible assets into service before the end of 2022 to take advantage of this expensing limit.
3. 100% bonus depreciation also can be used to write off the cost of both used and new fixed assets that are placed in service before year end. The amount is reduced to 80% for assets acquired and placed in service in 2023. This is not available if you will need to use the floor plan interest exception to fully deduct interest expense for 2022. For tax years ending on or after December 31, 2021, Illinois no longer allows a deduction for bonus depreciation.
4. If you plan to make any charitable contributions, consider making them in 2022 to receive a tax deduction. Payments by credit card are deductible on the day they are made even if the payment to the credit card company occurs on a later date. With the increase in the standard deduction, consider bunching two years of contributions into one year in order to benefit from itemizing your deductions.
5. Confirm you have made all required personal and corporate income tax estimated payments for 2022 and see that your personal income tax withholding is adequate.
6. Consider maximizing your 401k retirement contribution, which is $20,500 for 2022. An additional $6,500 catch up deferral is allowed for age 50 or over.
7. If you or the dealership own stock that has unrealized losses, consider discussing with your tax or investment professional the benefit of selling them by year end to offset realized gains recognized earlier in the year.
8. Confirm you have substantiation for your 2022 meal and travel expenses. Travel expenses continue to be 100% deductible. Meals, including those provided to employees purchased from a qualified restaurant are 100% deductible. Entertainment expenses are not deductible.
9. Accrued interest on loans from shareholders and other related parties, as well as rents, must be paid in order for the dealership to deduct these amounts in the current year.
10. The pass-through entity income tax election (Illinois and certain other states) allows owners to increase their federal deduction for state taxes and bypass the $10,000 SALT limitation. This tax must be paid by December 31, 2022 to be deductible in 2022.

Keep the Accounting Records Open at the End of December:

1. Maximize LIFO deductions. Record all new vehicles that were built and invoiced in 2022 as vehicle purchases in 2022 by keeping the new vehicle purchase journal open the first few days of 2023.
2. You must include a reasonable estimate of your LIFO adjustment for the year on all versions of your December financial statements. There are no exceptions.
3. Compare your actual parts inventory to the accounting parts inventory and make adjustments where appropriate. Have your parts manager determine which parts should be considered worthless and disposed of by year end.
4. Make sure all miscellaneous inventories are adjusted to actual, including labor inventory, sublet, gas-oil-grease, etc.
5. Record December finance chargebacks in December.
6. Keep your accounts payable journal open to record all 2022 expenses in 2022.
7. If you did not pay your 2022 real estate taxes by year end, adjust your property tax payable account to equal what you anticipate it will be.
8. If any vehicle deal is not a 100% completed deal in 2022 (all paperwork and funding in 2022), then treat it as a 2023 vehicle sale.
9. All wages and commissions paid in 2023 for 2022 services should be accrued in 2022. Make sure the first payroll in 2023 (even though some portion of the payroll was for 2022 services) is not included on your W-2s for 2022, but will instead be on the W-2s for 2023.
   1.  All accrued payroll for non-shareholders must be paid no later than March 15, 2023 to be deductible in 2022.
   2. If you are a C Corporation, make sure you pay any salaries, commissions, or bonuses to stockholders and related parties in December (if their ownership exceeds 50% including related party interests) in order to take a 2022 tax deduction.
   3. If you are an S Corporation, wages to any shareholder (or certain related family members) cannot be accrued and deducted for tax purposes. You must pay them in 2022 and include the wages on the 2022 W-2.
10. Distributions paid to S Corporation shareholders should be equalized in accordance to their ownership percentage before year end.
11. Reconcile, where possible, all balance sheet accounts before closing the year.

Additional Year-End TO DOs:

1. If you are not on LIFO for used vehicles, adjust all of your used vehicles to current wholesale market value at year end. On an annual basis, used vehicle LIFO should be discussed with your tax advisor.
2. Businesses should consider the “de minimis safe harbor election” to expense the costs of lower value capital assets, materials, and supplies. Regulations allow businesses to write off small asset purchases. The safe harbor amount that can be written off is up to $5,000 per item or invoice if you have an audited financial statement and $2,500 if you do not. However, you can set a write-off policy at any level that is material to you. (As long as the write-off policy is at or below these thresholds, the regulations will support the expensing treatment.)
3. Review all past due accounts receivables, including employee receivables. Write off those receivables that are uncollectible.
4. Review prepaid assets and expense all items in this account that are not valid as prepaid at year end.
5. All payroll tax and sales tax payable accounts must equal the actual amount of the applicable taxes paid in 2023 for the 2022 fourth quarter and year-end filings.
6. Compute the December 31, 2022 accrued vacation wages payable and adjust the books accordingly. Accrued vacation wages paid January 1, 2023 through March 15, 2023 are deductible in 2022 for tax purposes. No vacation accrual is allowed for any shareholders.
7. Review bank reconciliations for checks (including payroll checks over 60 days old) not expected to clear. These checks should be voided and reissued.

Year-End Tax Reporting:

1. IRS Form 1099-NEC must be issued to all individuals who are not employees and all unincorporated businesses who received $600 or more for payment for services, commissions, or fees. This includes payments of fees for services to all attorneys, whether incorporated or not. Form 1099-MISC must be issued for all rents, royalties, prize, awards, and other income paid to non-corporate taxpayers, including shareholders. Forms 1099-INT and 1099-DIV must be used to report interest payments to shareholders and others and dividend payments to shareholders, respectively. 1099-NEC forms must be filed with the IRS and sent to recipients by January 31, 2023. 1099-MISC, 1099-INT and 1099-DIV forms must be filed with the IRS by February 28, 2023 if you file on paper or March 31, 2023 if you file electronically and must be sent to recipients by January 31, 2023.
2. W-2s for S Corporation shareholders must include in wages health insurance premiums paid by the corporation. This amount is not subject to social security or Medicare tax.
3. W-2s are required to be filed electronically if there are 250 or more.
4. Under the Affordable Care Act, if you have 50 or more full-time or full-time equivalent employees, you are considered an Applicable Large Employer (“ALE”). ALEs are required to complete Form 1095-C, Employer-Provided Health Insurance Offer and Coverage for all full-time employees. 

Review Procedures for the Use of Demonstrators to Ensure You Comply With the Current IRS Regulations:

1. All individuals who are provided a demo to drive should sign a written demonstrator agreement.
2. There are two IRS approved methods that can be used for full-time salespeople. The first method, used by most dealers, is the partial exclusion method. Under this method, an amount is added to wages on a monthly basis. The IRS has provided daily income amounts based on the value of the vehicle. For example, for a vehicle valued at $40,000, the daily inclusion is $9.00. Under this method, employees are not required to maintain logs. The second method provides them with tax-free use of the demo. This method is fairly complicated and restrictive.
3. For employees who are not full-time salespeople and any other individuals who drive demos, the annual lease value method is used. The amount included in income is based on personal-use mileage and the IRS annual lease table. The IRS requires that logs be maintained in order to verify business versus personal use of the vehicle.
4. The amount included in income is to be added to each employee’s W-2. Non-employee family member income amounts must also be included in the employee’s W-2. This income is subject to social security, Medicare tax, state, and federal withholding. Shareholders not on the payroll and any other non-employees must be issued a Form 1099-MISC for the income.
5. You can obtain more information about the personal use of autos, including sample demonstrator agreements, by requesting our Dealer Demonstrator Guidelines.

Other:

1. Form 8300 must be filed if you receive cash in excess of $10,000 from a customer. This includes cashier checks, money orders, and traveler’s checks except those issued by financial institutions requiring a lien on the vehicle.
2. If the dealership has a Section 125 plan (cafeteria plan), make sure eligible employees complete the 2023 election forms before the first 2023 payroll. Remember that stockholders owning more than 2% in S Corporations (LLCs, etc.) are not eligible to participate.
3. If you offer a health care Flexible Spending Account (FSA) as part of your cafeteria plan, in order for it to be a qualified benefit under a cafeteria plan, the maximum salary reduction contribution to the health care FSA for 2022 is limited to $2,850. Stockholders owning more than 2% in an S Corporation or an LLC are eligible to participate with certain restrictions. If your company offers a qualified high deductible health insurance plan, you and employees might be able to contribute to individual Health Savings Accounts (HSAs). Contribution limits for 2022 are $3,650 for an individual and $7,300 for a family with a $1,000 additional contribution for those who are age 55 and over.

Here are the results from the 2022 CATA Dealer Holiday Hours Survey.

Former CATA and Chicago Auto Show Chairman Mike McGrath, Sr. passed away on Monday. Nov. 28 at the age of 75. McGrath, Sr. was CATA Chairman in 2002-03 and Chicago Auto Show Chairman in 2004. Visitation was Tuesday, Dec. 6. In lieu of flowers, donations can be made to USO of Illinois, www.uso.org, 312-822-6699. More information can be found here. 

[NADA] The Federal Trade Commission on Nov. 15 announced it is extending by six months the deadline for companies to comply with some of the amendments to the FTC’s Safeguards Rule. Earlier this year, NADA submitted comments to the FTC seeking an extension of the deadline. The deadline for complying with some of the updated requirements of the Safeguards Rule is now June 9, 2023.

The provisions of the updated rule specifically affected by the six-month extension include requirements that covered financial institutions:

• designate a qualified individual to oversee their information security program,
• develop a written risk assessment,
• limit and monitor who can access sensitive customer information,
• encrypt all sensitive information,
• train security personnel,
• develop an incident response plan,
• periodically assess the security practices of service providers, and
• implement multi-factor authentication or another method with equivalent protection for any individual accessing customer information.

Dealers are encouraged to continue in their efforts to expeditiously comply will all the new requirements of the Rule but should consult with their attorneys, service providers and IT professionals about the potential impact of this deadline extension. More information can be found here: https://www.nada.org/nada/issues/issues/ftc-safeguards-rule.

CATA will be sending 2023 dealer kits to dealer members shortly after the new year. These kits include:

• CATA window decal
• Annual Report & Membership directory
• DOC fee poster
• 2 CAS honored guest tickets
• 50 CAS Employee Appreciation Day tickets
• 200 CAS vouchers for half-priced tickets
• 2 CAS posters
• 2 CAS poster easels
• 1 FLFC poster
• 1 FLFC invite + response card
• 1 order form for complimentary tickets
• 1 order form to Adopt a School

While factory direct sales have been a shiny button in auto retail over the last decade, new research shows that when it comes to customer satisfaction, local new car and truck dealerships dramatically outperform their direct seller counterparts.

According to research by Pied Piper Management Company, luxury brands Cadillac, Infiniti and Mercedes-Benz held the top spots in customer satisfaction among 25 luxury brands. Direct sellers Tesla, Lucid and Rivian scored 21st, 23rd and 25^th, respectively.

Pied Piper’s process measured customers’ shopping experience, starting with responsiveness to website customer inquiries, and continuing when customers visited retailers in-person. Measurement of responsiveness to website customer inquiries was based upon 22 best-practice behaviors, while effectiveness of shopping in-person was based upon more than 50 best-practice behaviors, using 1,657 measurements of response to website customer inquiries, and 1,096 measurements of the in-person sales experience. The evaluation took place between July 2021 and July 2022.

“We have found that when their customers reach out for help or with questions, they are usually met with brand reps who answer only simple, scripted questions without being proactively helpful,” said Fran O’Hagan, CEO of Pied Piper, regarding direct sellers Tesla, Rivian and Lucid. “It’s a missed opportunity that does not currently compensate for the missing retail experience.”

O’Hagan continued: “Tesla compares poorly today for helping website customers too. … Tesla’s model today appears to be, ‘If you want what we sell, and require no assistance, it’s easy to order.’”

For more information on Pied Piper’s study, click here. 

[Automotive News] Auto dealerships have another six months to beef up their consumer information security following a Federal Trade Commission Safeguards Rule extension announced Tuesday, Nov. 15.

The last-minute reprieve moves the date for dealerships and other financial institutions to comply with the revamped Safeguards Rule, from Dec. 9, 2022, to June 9, 2023. The Safeguards Rule is part of the Gramm-Leach-Bliley Act regulating business customer information practices.

FTC commissioners voted 4-0 in favor of the extension. On Monday, Nov. 14, FTC Commissioner Christine Wilson issued a separate statement noting that she still opposes the FTC's 2021 decision to change the rule in the first place.

The agency cited reports — including from the Small Business Administration Office of Advocacy — of a lack of qualified personnel to oversee the changes and businesses having difficulty sourcing necessary technology.

"These difficulties were exacerbated by the COVID-19 pandemic," the FTC wrote in a news release Tuesday. "These issues may make it difficult for financial institutions, especially small ones, to come into compliance by the deadline."

The National Automobile Dealers Association, auto lender trade group American Financial Services Association, credit bureau organization Consumer Data Industry Association and collections association ACA International made a similar point in a July letter to the FTC. The associations had requested a year-long extension, to Dec. 9, 2023.

"Our members appreciate the FTC's work to protect customers' information," NADA and the others wrote. "At the same time, the residual effects of COVID-19 on the labor market and supply chain, as well as dueling regulatory demands and the technological changes required for proper compliance, make it difficult for covered entities to uplift their information security programs to meet the requirements in the Final Rule."

NADA did not respond to a request for comment. AFSA said it appreciates the FTC's action.

"AFSA member companies provide crucial services in our economy," AFSA Senior Vice President Celia Winslow said in a statement. "Extending the implementation date of the rule means that companies will be able to make appropriate enhancements to systems and staffing, ultimately benefiting consumers."

The Small Business Administration Office of Advocacy, an independent SBA entity tasked with advancing the views of small businesses, wrote to the FTC in August asking for an additional year, citing similar points as the trade groups.

The updated Safeguards Rule instituted in 2021 lists nine elements that must be found in a dealership's cybersecurity program by the compliance deadline.

A business must hire or outsource a "qualified individual" to oversee the program and report to company leadership; assess risks and act to minimize them; have an incident response plan should a breach occur; test or monitor its system; train staff; monitor vendors for information security; and adapt the system to changes at the business or other developments.

[Cox Automotive] New-vehicle inventory closed October at its highest level since May 2021, and prices stayed high, according to Cox Automotive’s analysis of vAuto Available Inventory data. Over the past three months, all but four major brands have seen an increase in inventory. The question is: Will demand keep up with supply?

“The supply situation in the new vehicle market has significantly improved over recent months,” said Charlie Chesbrough, Cox Automotive senior economist. “But with interest rates rising, and consumer optimism falling, the key question now is whether buyers will be willing and able to buy.”

The total U.S. supply of available unsold new vehicles stood at 1.56 million units at the end of October, compared with a revised 1.32 million vehicles at the end of September. Days’ supply climbed to 49, the highest since May 2021, and compared with a revised 43 days’ supply at the end of September.

Supply at month end was 78% higher, or 680,000 units, than at the end of October 2021. Days’ supply was 70% higher than at the same time a year ago.

While inventory showed a significant bump, it remains low by historical standards. At the end of October 2020, supply stood at 2.59 million vehicles for a 65 days’ supply. For pre-pandemic October 2019, supply hit 3.49 million vehicles for an 86 days’ supply.

Closing October, the industry had non-luxury vehicle inventory totaling 1.32 million vehicles for a 49 days’ supply. That was up from 1.12 million a month earlier for a 40 days’ supply. Luxury supply stood at 222,469 vehicles for a 51 days’ supply. That compares with a month earlier when it was just shy of 200,000 units for a 47 days’ supply.

The Cox Automotive days’ supply is based on the daily sales rate for the most recent 30-day period, in this case, ended October 31, when about 941,368 vehicles were sold. That was the highest for a 30-day period since May 2021. The official full-month sales rose 10% from a year ago for an October seasonally adjusted annual rate (SAAR) of 14.9 million, the highest since January.

Asian and European Brands Still Have Lowest Supply
Asian non-luxury brands and Japanese and European luxury brands continue to have the lowest inventories as measured by days’ supply, according to Cox Automotive’s analysis of vAuto Available Inventory data.

As measured by days of supply, non-luxury brands with the lowest inventories were Toyota, Kia, Honda and Subaru, respectively. Luxury brands with the lowest inventories were Lexus, Land Rover, Acura and BMW, in that order.

Aside from low-volume high-performance cars, minivans had the lowest supply followed by compact, subcompact and midsize cars, which are in high demand for their fuel efficiency in a market with elevated fuel prices. Hybrid supply remained at the low end as well.

At the high end of the supply range were large and luxury cars, luxury subcompact SUVs and full-size pickup trucks from domestic automakers.

“Typically, the final quarter of the year is a brisk selling season for big trucks, but this year may be different,” said Chesbrough. “A decline in housing starts, which correlates to truck sales, combined with high interest rates may stifle truck sales, which, in turn, could hurt profits, especially for domestic manufacturers. We may see incentives on those trucks as inventories return to pre-pandemic levels.”

Of the 30 highest-selling models in the 30 days ended October 31, most were Asian brands, mostly Kia, Toyota, Honda and Subaru. A couple of domestic models – the Chevrolet Trailblazer and the Ford Bronco – fell to the low end this month. Kia Sportage and Toyota RAV4 were at the very bottom with a scant 19 days’ supply. Of the 30 top-selling models, full-size domestic pickup trucks and SUVs had the most inventory with Ram 1500 having the very most.

As has been the case for months, the lower the price category the tighter the supply. Under $20,000, days’ supply was 24. Between $20,000 and $30,000, days’ supply was 32. All other price categories had 50 days’ supply and higher.

Rise in Asking Price Slows The average listing price – or the asking price – was $46,317 at the end of October, up slightly from a revised $46,212 at the end of September, according to Cox Automotive’s analysis of vAuto Available Inventory data. The listing price is running only 4% ahead of a year ago and remains elevated from years past.

The average transaction price (ATP) – or the price paid – increased to $48,281, but remained below the all-time high of $48,301 set in August, according to Kelley Blue Book, a Cox Automotive company.

Incentives remained stable in October 2022 at 2.1% of the average transaction price. One year ago in October 2021, incentives averaged 4.3% of ATP.

1.                   What is NADA PAC?

NADA PAC is the political action committee sponsored by NADA. NADA PAC raises funds from individuals at NADA/ATD member dealerships and contributes those funds to pro-dealer candidates for the U.S. House and Senate.

2.                   Who is the staff of NADA PAC that assists state teams?

NADA PAC is staffed by three full-time employees:

3.                   Where is NADA PAC located, and how can I contact it?

NADA PAC is located at NADA’s Capitol Hill Office
412 First St. SE, Washington, DC 20003

202.627.6755; f 202.627.6750; nadapac@nada.org; www.nada.org/nadapac

4.                   Who pays for the expenses of NADA PAC?

NADA PAC is a “connected PAC,” and all administrative and fundraising expenses incurred by NADA PAC are paid by NADA, not out of fundraising receipts. One hundred percent of every donation goes toward contributions to federal candidates.

5.                   Who is eligible to contribute to NADA PAC?

Dealers and managers, and their immediate families, of NADA member dealerships are eligible to contribute to NADA PAC. Additionally, the NADA member dealership must have a signed prior-approval form on file with NADA PAC for an individual to be eligible to contribute.

6.                   What types of contributions can NADA PAC accept?

NADA PAC can only accept contributions made by personal check or personal credit card. NADA PAC can manage auto renewal credit card payments or divide a contribution into equal increments to be paid over time. Corporate contributions to NADA PAC are prohibited by federal law.

7.                   What is the contribution limit to NADA PAC?

An individual may contribute up to $5,000 per year to NADA PAC.

8.                   Where should dealers send contributions to NADA PAC?
9.                   What is prior approval?

Because NADA’s members are corporations, federal election law requires that the dealership give “prior approval” to NADA PAC so that dealers and other eligible employees within the dealership can receive communications and invitations to participate in NADA PAC’s activities. The form can be signed only by the dealer principle or NADA authorized representative of the dealership, and may be granted for multiple years.

Each dealership can only grant prior approval to one federal trade association PAC each year. This does not prevent a dealer from contributing to a “non-connected PAC,” such as the Automotive Free International Trade PAC (AFIT-PAC). Contributions received from individuals whose dealerships do not have a prior-approval form on file will be returned to the contributor. A signed prior-approval form does not create an obligation to contribute to NADA PAC.

10.               Where do I find prior-approval forms, and where do I send completed ones?

Prior-approval forms are located on the NADA website and are included in this reference manual. After logging in with member credentials, authorized representatives can complete an online form to provide prior approval, which is then updated by NADA PAC staff in the NADA membership system. If the person logged in is not eligible to give prior approval, they are given the option to download and print the form.

NADA PAC staff can send you prior-approval forms (including electronic forms) and coordinate sending them to prospective dealer donors. Prior-approval forms should be returned to NADA PAC’s Washington, D.C., office by email (scan the form and then send to nadapac@nada.org}, by fax (202.627.6750) or by mail (NADA PAC, 412 First St. SE, Washington, DC 20003).

NADA PAC also solicits electronic prior approvals via DocuSign. These forms are sent via email to dealers with their information already included to be signed and returned electronically. DocuSigns are most effective as part of a larger campaign to reach out to dealers to urge them to sign the NADA PAC prior approval form. NADA PAC can prepare a DocuSign campaign in your state to increase prior approvals under the name of the NADA PAC team members.

11.               I want to do a solicitation campaign for my state. How do I begin?

First, contact the NADA PAC staff to obtain a list of NADA members in your state who have signed prior-approval forms on file with NADA PAC. Then, on your personal letterhead, or via email, contact those dealers to ask for support for NADA PAC. NADA PAC will provide sample letters and pledge forms to be sure that your solicitation meets all necessary federal legal requirements. NADA PAC can also send a solicitation letter on your behalf on NADA PAC letterhead.

12.               What are the NADA PAC state goals?

In addition to a national goal, the NADA PAC trustees set goals for each NADA district’s fundraising, based on the number of Congressional districts in the state or metro area. These state goals are designed to be challenging but attainable. In 2021, 50 of the 58 NADA districts surpassed their allotted goal.

13.               What are the NADA PAC state and metro award programs?

To recognize the role of the ATAEs and NADA PAC state teams in fundraising for NADA PAC, NADA has established three programs to reward states for surpassing their allotted state or metro association goal. These awards are paid directly to the general operating accounts of the state and metro associations. All the award money is paid by NADA, not by NADA PAC funds raised from dealers. A state of metro association’s annual participation in the NADA PAC award programs is authorized by each association’s elected chair.

14.               How are contributions to candidates determined?

Contributions to candidates are determined by each state’s NADA PAC team. This includes requests received directly from the candidates, through other dealers and from the NADA Legislative Office to attend Washington fundraising events. NADA Legislative and PAC staff are also available to assist with strategy in determining contributions and the most effective method of delivery.

15.               How much can a candidate receive from NADA PAC?

Candidates may receive up to $5,000 per election from NADA PAC; the primary election and general election are counted as separate elections. In a normal two-year (House) or six-year (Senate) election cycle, the total a candidate can receive is $10,000. NADA PAC has a policy of only contributing to Senate candidates’ re-election campaigns in the two-year cycle in which they are running. Runoff elections and special elections are treated as separate elections and are subject to the same per-election limit.

[Automotive News] Three House lawmakers have joined a push in the Senate to delay certain sourcing and manufacturing requirements in the Inflation Reduction Act's tax credit for consumers buying new electric vehicles. Sen. Raphael Warnock, D-Ga., introduced a bill — known as the Affordable Electric Vehicles for America Act — in September that would create a longer phase-in for the tax credit's North American final assembly requirement as well as its critical mineral and battery component provisions.

U.S. Reps. Terri Sewell of Alabama, Emanuel Cleaver of Missouri and Eric Swalwell of California — all Democrats who won midterm reelections in their states — introduced a companion bill this month. Sewell said the bill is a "win-win for Alabama, ensuring that automakers and car buyers alike can take advantage of these tax credits immediately."

Under the newly introduced legislation, only EVs sold after Dec. 31, 2025, would have to be built in North America. Restrictions on critical minerals sourcing and the domestic manufacturing of battery components also would be delayed.

In comments filed to the Treasury this month, Hyundai urged the department to provide transition relief for the North American assembly requirement during the period that EV and battery manufacturing plants are under construction.

"This transition period would allow EVs sold by such companies during the construction period to be deemed eligible and compliant with the North America final assembly requirement," the South Korean automaker said in the comments.