CATA News

The Chicago Auto Show will be alive with motion next month, with the show securing two indoor tracks, two more outdoor tracks, and outdoor ride-and-drives by nine and maybe 10 brands. The show is July 15-19.

Outdoor activities will be at an all-time high for the 120-year-old show. Of course, the 2021 edition will be the only one not to have been held in late January or February. A high-octane street fest will close the show’s first four days.

Admission tickets cost $13 each and are sold exclusively online at www.chicagoautoshow.com. Full information for visitors to plan their trip also is on the website.

As it is among the first U.S. auto shows since the curtain came down on the 2020 Chicago Auto Show, expect plenty of global and North American debuts next month. For one, Ford will introduce its Maverick compact pickup truck, which will be introduced along with the all-new F-150, all-electric F-150 Lightning, Bronco, Bronco Sport and Mustang Mach-E.

"Ford jumped at the opportunity to take advantage of our expanded outdoor space to showcase its latest models to the public," said Chicago Auto Show General Manager Dave Sloan. "It’s also exciting that show attendees will be the first in the world to experience both the ‘Built Wild’ and ‘Built to Electrify’ activations, as both make their global debuts at our show."

Ford is planning a Bronco heritage outdoor display to show off the model’s robust history and evolution over the years. Indoors, a highly interactive display called "Ford Built Tough" will highlight the brand’s latest truck lineup, performance vehicles, passenger cars and commercial products.

  

Other fan-favorite attractions such as the Camp Jeep and Ram Trucks Territory test tracks return indoors.

    

"Those experiences are among the top reasons people love to attend the Chicago Auto Show," Sloan said. "Because of their popularity, people were used to waiting in long lines. This summer, the consumer experience will be elevated because now people will be able to electronically book a time slot for these experiences in advance as they plan their visit, which is a benefit of the effort we’re taking to diminish lines and reduce congestion within the exhibits."

The outdoor street fest will treat attendees to an array of shiny new cars, trucks, and SUVs parked along Indiana Avenue; local food from pop-up food trucks and tents — including Smoke Daddy, Tuco and Blondie, Connie’s Pizza, Monk’s Burger Bar, Sausage Fest and Nice Buns — tasty sweets from vendors such as Andy’s Frozen Custard, Cookies w/Flavor and A Sweets Girl Cupcakes; local brews from Chicago-based Goose Island; and music by varying local musicians spanning an array of genres.

"We’re very appreciative of the cooperation from Chicago Alderman Pat Dowell and McCormick Place officials who have been so accommodating as we bring the vision of our special edition auto show to life," said CATA Chairman Kevin Keefe. "The Chicago Auto Show street fest is a prime example of the cooperation extended to us."

 

Admission tickets that are secured for the evening time block grant attendees access to the show and to the street fest.

Outdoor ride-and-drives will be hosted by Chevrolet, Chrysler, Dodge, Fiat, Ford, Jeep, Kia, Lincoln, Ram, and Subaru, and possibly Volkswagen.

The Chicago Auto Show is committed to providing a safe environment for all involved and will carefully adhere to the health and safety protocols and guidelines set forth by city and state officials. 

Beyond the electronic ticketing process, show management will regulate the number of attendees throughout each day to control the number of people on the show floor at any given time. 

Masks are recommended for individuals who are not fully vaccinated. It is suggested that all attendees bring a mask in the event it is required for participation in one of the test tracks.

The day before the show opens to the public, during an abbreviated Media Preview, brief news conferences will be held in the displays of Ford, Jeep, Kia, Lexus, Nissan, Ram, Toyota and Volkswagen.

 

First Look for Charity will not be held in 2021.

 

The economy continues to rebound from the COVID-19 pandemic, but with the ongoing semiconductor chip shortage, many consumers are traveling far and wide just to get the car they desire. It doesn’t matter whether a vehicle is new or used, dealerships are running on empty. 

Nearly 10% of vehicle shoppers traveled out of state to purchase the ride they wanted, according to a new survey by Cars.com. Of the 12,000 respondents, 56% bought a new vehicle, while 43% bought a used vehicle.

A shortage of computer chips has caused a number of automobile factories to shut down temporarily in recent months, as they can’t finish building new vehicles without adequate parts.  

Those issues have contributed to a spike in used-car prices. With newer vehicles harder to come by, used cars are suddenly a hot commodity. And that means many people are willing to cross state lines to get what they want.

"We’ve seen inventory dive both from a new and used standpoint as the chip shortage really kind of continues to impact the industry," said Kelsey Mays, assistant managing editor at Cars.com.

Domestic auto inventory has steadily decreased over the course of the year, reaching an all-time low, said Bryce Gill, an economist at First Trust Portfolios, an investment management firm. 

Inventory of new vehicles assembled in North America at the beginning of 2021 totaled 396,500. That has dropped to 254,800 units now, according to the U.S. Bureau of Economic Analysis.

"People have a specific car that they want, and their local dealership just doesn’t have it in stock," Gill said. "That’s why they search and find a place, you know, 200 miles away that has what they’re looking for."

The distance traveled to get a new vehicle varies, with 51% traveling 25 miles, 20% traveling 50 miles and 13% trekking over 250 miles.

Supply chain issues and labor shortages will continue for the rest of the year and the struggle to keep up with vehicle demand won’t go away overnight. It is like "a bunch of gears turning together," Mays said. 

Even a drive to another state may not be enough for shoppers to get precisely what they want. Car buyers should "be ready to compromise on things like color and specific features," Gill said.

 

By Jonathan Collegio, National Automobile Dealers Association

 

 

While automakers, utility companies and third-party charging station providers all have roles to play in educating consumers about electric vehicles, dealerships arguably have the biggest role — and biggest incentive — with creating demand by engaging with non-EV owners. They are in the best position, physically, to engage with the shopper in a local context. As a result, dealerships can provide important insights into the resources, policies and incentives that are unique to their community.

New daily driving habits must be developed. Charging awareness is the key to addressing range anxiety and is an issue that will subside as a robust infrastructure evolves to support the growing fleet of EVs on the streets. Since most owners likely will have a charging kit at home, they can simply charge the battery overnight, similar to what they do with their mobile devices. This means that in most cases a sufficient charge is available in the morning when owners go to work or run errands. It simply is a different experience than with a gas-powered vehicle. And to EVs’ credit, owners of internal combustion vehicles can’t top-off gas tanks at home.

Beyond education on the local landscape, prospective buyers must understand what it means to live with an EV. It requires a unique approach to planning for different driving experiences so that potential pitfalls can be avoided.

 

Take for instance, the all-American road trip tradition. Conventional vehicle owners simply need to know how to gas up and go. EV owners need to be aware of their vehicle’s range and the charging infrastructure that is available over the course of their route.

As consumers figure out how to integrate EVs into their daily lives, driving range ceases to be the deterrent that many think it is. The key issue revolves around when and how consumers are put behind the wheel, literally and figuratively.

 

It will be up to the industry to determine the investments that should be made to engage and educate EV shoppers sooner rather than later.

 

U.S. consumer borrowing rose by $18.6 billion in April, fueled by a big rise in auto and student loans that offset a drop in credit card use.

 

The April gain reported June 7 by the Federal Reserve was the third straight month of strong increases in consumer borrowing. It followed a similar $18.6 billion increase in March.

The latest increase reflected a $20.6 billion increase in the Fed’s category that covers auto and student loans. It was the biggest increase in those loans since a $22.7 billion rise in June 2020.

Consumer borrowing is followed closely for signals it can send about households’ willingness to finance consumer spending, which accounts for more than two-thirds of economic activity.

Total borrowing in the Fed’s monthly report stood $4.24 trillion in April, 0.4% above the pre-pandemic peak of $4.22 trillion set in February 2020.

"From our perspective, it’s been a very strong year on the consumer lending front," said Jay Magulski, chief executive of Landmark.

The Fed’s monthly borrowing report does not cover home mortgages or any other loans secured by real estate such as home equity loans.

Nancy Vanden Houten, senior economist at Oxford Economics, noted that despite a rebound in consumer spending fueled by stimulus checks and an economy reopening after pandemic lockdowns, consumers are still reluctant to use their credit cards.

Consumer borrowing is followed closely for signals it can send about households’ willingness to finance consumer spending, which accounts for more than two-thirds of economic activity.

High student loan debt can leave graduates less qualified for loans for cars and homes.

 

Average wholesale used-vehicle prices cracked the $14,000 mark for the first time ever in April and then proceeded to set new highs above $15,000 in May, Tom Kontos, chief economist for KAR Global, said in a recent webinar.

"This," Kontos said, "is the latest sign of the seemingly never-ending rise in wholesale values, resulting from a deluge in demand and a drought in supply."

Wholesale prices in April averaged $14,436, according to KAR Global’s latest monthly analysis. That was an increase of 5.9% versus March 2021, and up 50% relative to April 2020.

Kontos said retail used-car sales at franchised new-car dealerships and independent used-car dealerships were down 8.1% in April 2021 versus pre-COVID April 2019. But he concluded the volume decline, "might have been supply-constrained, not demand-constrained."

Used vehicles are a notoriously fast-depreciating asset, especially right after they’re first sold as new. But while it lasts, a combination of high demand and relatively short supply has turned the used-vehicle world upside down.

KAR Global sells millions of vehicles annually through wholesale, dealer-only, used-car auctions.

 

Amid reports of rising car prices, it turns out that consumers seem to understand that there’s no way around that if they want to buy a new car today. In a study to examine just how receptive buyers are to higher prices, Cox Automotive found that 40% would not shy away from being charged a 12% premium.

Given that the average new-car MSRP in the U.S. is almost $42,000, that means four in 10 people would accept a price that’s $5,000 more than what the sticker says. Despite the higher expected prices, only 37% said they’d wait to buy a vehicle, with 70% of those saying they’ll wait at least three months to purchase and 23% saying they’ll look at used vehicles instead. 

"The current auto market, with low inventory and high demand, is anything but normal. And we know it’s driving people away," Cox Automotive spokesman Mark Schirmer said.

 

Cox’s research shows that 87% of consumers recognize the issue is impacting both domestic and import nameplates. 

As the issue is industry-wide, 73% of consumers are expecting to face higher prices at dealerships, and nearly 60% believe they will find lower incentives. One main reason for this non-sticker shock is the limited supply times that are upending the industry. Cox’s survey, conducted in May, found that 75% of car shoppers knew about the global semiconductor chip shortage and that it was wrecking havoc on new-car production. Almost as many, 73% said they expected to see higher prices at the dealership, and almost 60% said they expected that any incentives they might find would be lower than before.

However, Cox’s Schirmer also said: "Our recent research shows nearly 40% of buyers who were considered ‘in market’ for a vehicle are now dropping out or deciding to delay their purchase. High prices and limited selection likely are the cause.

"For the most part, car-buying in America continues to be driven by the deal," he said, noting that even under current conditions, "Older shoppers — and specifically older male shoppers — [are] less willing to pay over sticker. These older buyers are a cohort we call ‘Straight Shooters,’ and they are experienced vehicle buyers, with plenty of good deals in their past. Paying above sticker is an unnatural act for this group."

 

After more than a year of dealing with the COVID-19 pandemic and its resulting shutdowns, one thing that has not changed is the demand for new vehicles and interest in viewing them at auto shows. 

Juliet Guerra, the media relations director at the National Automobile Dealers Association, said that auto show organizers throughout the country are revamping shows to meet COVID-19 guidelines because the value of auto shows to consumers has not changed. 

  

"Bringing auto shows back for our industry is a big deal, and consumers are absolutely ready," Auto Shows of North America Chairwoman Jenn Jackson said, according to the NADA website. "Auto Shows are the quintessential opportunity to contrast and compare different makes and models in a low-pressure environment. For a consumer who is close to purchase, visiting an auto show will often solidify their decision on their next vehicle."

The first auto show that kicked things off was the first-ever summertime Houston Auto Show, which took place May 19-23, Mega Dealer News reported. The Chicago Auto Show will hold a special summer edition July 15-19 at McCormick Place’s West facility.

The Chicago and Houston shows, like others that are in the works for the upcoming months, followed Centers for Disease Control and Prevention guidelines to protect customers at the venues, which included not requiring vaccinated people to wear masks, but strongly recommending masks to be worn at the show. 

"While offering consumers a first-class auto show experience, attendee safety is the top priority for show organizers. Show organizers have adopted enhanced cleaning and safety protocols, including temperature checks, mandatory mask use, increased sanitization stations and enhanced vehicle cleanings between visitors," the NADA website said. 

According to the NADA, all shows are working with health and safety officials "to ensure that all applicable local, state and federal sanitation guidelines are followed."

 

And now, the waiting game.

 

The just-concluded Illinois General Assembly in late May passed several bills that would benefit dealers, their technicians, and their customers. But Illinoisans could be readying for their year’s last dip in the pool before Gov. J.B. Pritzker acts on any of them.

One measure, Senate Bill 58, would restore the tax credit on traded-in vehicles to their full amount. Another, House Bill 3940, would change how manufacturer pay is calculated on warranty work. And Senate Bill 573 would extend driveaway permits from 30 days to 90 days.

A bill passed by both houses must be sent to the governor within 30 days. The governor then has 60 calendar days to sign it or to return it with his veto. If the governor does nothing, the bill will automatically become a law after the 60-day period. 

That means Pritzker does not have to act on any of the three bills until the last days of August. At least for the warranty labor legislation, CATA officials said they are asking the governor to sign it before the July 31 expiration of the current collective bargaining agreement with the union representing area technicians, to help negotiations of the next bargaining agreement.

Supporters of the bills are urged to contact Pritzker’s office now to help move him to sign the bills. Dan Marquardt, a Buick-GMC dealer who leads the CATA’s Government Relations Committee, noted that few constituents ever contact their elected officials on pending legislation, so if supporters of the three bills prod Pritzker to signthese, it will have an impact.

Capping the trade-in credit increases the cost of new vehicles and used vehicles bought at retail. Pritzker has voiced his backing of SB 58. The cap took effect in 2020 following moves to find funding for Pritzker’s multibillion dollar state capital infrastructure plan.

Under SB 58, infrastructure projects would instead be funded, in part, by increasing the sales tax charged in private vehicle sales. For instance, the current $390 sales tax on a 1-year-old vehicle sold privately for less than $15,000 would increase to $465. If the same vehicle sells for $15,001-$20,000, the sales tax would be increased from $750 to $850. 

 

The tax rates for private transactions haven’t changed in more than 30 years, and the modest increases are much less impactful than a trade-in credit cap, which costs consumers hundreds of dollars and harms dealers statewide.

 

Regarding HB 3940, automakers consider different time guides for the same repair when technicians fix a car under warranty versus the longer time considered when customers pay for the work. The bill requires manufacturers to compensate dealerships for warranty work in the same manner that retail customers pay for retail work, in terms of time allowances, labor rates, and parts prices.

 

Mechanics Local 701, the union representing area technicians at dealerships, is working with the CATA to advance the legislation. Supporters say HB 3940 would bring a fairness to the payment process that could attract new technicians to dealerships. Wisconsin has had similar policy in place for more than a decade.

 

In addition to establishing an equitable compensation scheme for warranty work, the bill would prevent manufacturers from imposing cost recovery fees or surcharges to overcome the bill’s effect. For manufacturers, it would preserve their right to approve or disapprove dealership claims, and it ensures manufacturers have a way to charge back any false or unsubstantiated claims they paid.

 

Three-month permits

Under SB 573, a registration permit valid for 90 days could be provided for a fee of $13 for registration plus 1/10 of the flat weight tax. Permits currently are valid for one month.

 

Also, beginning Jan. 1, 2022, the secretary of state would be authorized to issue a certificate of title in the name of the dealership to a licensed dealer for $20 if the surrendered certificate of title has no space to assign the certificate of title again.

 

GSM/Finance Manager Dynamic relationship builder, effective communicator skilled at prospecting. Great closing ability. Young and highly motivated, actively seeking to continue investment in a managerial or administrative role. Jonathon Moroni, (630) 819-9368. Résumé on file at the CATA.