'Fiscal Cliff' Bill Extends Most Bush Tax Cuts, Changes Estate and Dividend Rates

First Up 01/02/13

January 2, 2013

U.S. New-Auto Registrations to Grow 6.6% in 2013
Sales of new autos, a bright spot for the U.S. in 2012, will grow further this year as an improving economy and demand for pickups and for midsize cars boosts registrations 6.6 percent, according to R.L. Polk & Co. Bloomberg reports that about 15.3 million new light-vehicle sales will be registered in 2013, up less than 1 million from last year. The growth rate may be less than half that of 2012 as the industry has already regained much of the volume lost to the recession. “There’s going to be growth, but some demand has been satisfied at this point,” Anthony Pratt, Polk’s director of forecasting for the Americas, said in a phone interview. “The spigot has been on, but it hasn’t been on at full blast.” Deliveries of cars and trucks in 2012, due to be reported tomorrow, were the best since 2007 as new model introductions and consumer confidence grew. The U.S. averaged 16.8 million light-vehicle deliveries annually from 2000 to 2007 before dropping to 10.4 million in 2009, a 27-year-low. Auto sales in December probably climbed to 1.36 million, the average of estimates by eight analysts surveyed by Bloomberg. That would push full-year deliveries to 14.5 million. For more on the sales outlook, click here.

Sidestep Google? Vexed Dealers Try
Eley Duke III, vice president of Duke Automotive, could watch worry-free this year when Google deleted thousands of customer reviews from dozens of dealerships nationally. He had almost no exposure to the purge because nearly all of the Virginia retailer's reviews were on DealerRater.com, 232 vs. just 11 on his store's Google+ Local page. Duke sells Chevrolet, Buick, GMC, and Cadillac vehicles in one store in Suffolk, Va. Since Google's mass review purge in late summer, dealers have tried to figure out where best to send customers to write online reviews. It has been a challenge because Google is so well-positioned to influence online shoppers. Two of every three visitors to a dealer Web site get there by clicking on a Google-generated link. Dealers are using other review sites, such as DealerRater and cars.com, to gather customer reviews. They are also improving the search characteristics of their Web sites so their dealership sites show up on shoppers' first Google search page. "We never solicited Google reviews – not because we were really smart or anything," Duke, 40, told Automotive News. "We just felt the reviews we got on DealerRater would be authentic and legitimate." For more on the history between dealers and Google, click here.

'Fiscal Cliff' Bill Extends Most Bush Tax Cuts, Changes Estate and Dividend Rates
Congress has passed a bill aimed at averting wide tax increases and budget cuts scheduled to take effect with the new year. The measure would raise taxes by about $600 billion over 10 years. It would also delay for two months across-the-board cuts to the budgets of the Pentagon and numerous domestic agencies. The House and Senate passed the bill and sent it to President Barack Obama for his signature late last night. According to the Associated Press, the bill extends decade-old tax cuts on incomes up to $400,000 for individuals and $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent. Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent. For more highlights of the bill, including its impact on the payroll tax, click here.

VW, Nissan, Others Look to Tap Growing Demand for Budget Cars
Volkswagen's desire to launch a low-cost brand and Nissan's plan to sell Datsuns for as little as 2,300 euros underline the rising interest from automakers to tap demand for budget cars in fast-growing markets to offset falling sales in mature, stagnant markets such as Europe and Japan. Following the lead of Renault's Dacia brand, more and more carmakers will begin offering low-cost models within the next five years. "If they want to survive, they will have to," said IHS Automotive analyst Christoph Stuermer. Stuermer expects the world auto market to grow by 3.4 million cars between 2012 and 2015. "Most of that growth can be tapped with affordable types of vehicles aimed at new buyers," he said. "Now that VW is entering, I think everybody's going to ratchet up their efforts." Stuermer told Automotive News that developing affordable cars for high-growth markets poses a significant challenge to companies such as VW. "They would normally fire with their full engineering power to develop the smartest product," he said. He added that selling a car for less than 8,000 euros means that companies must innovate on the business side and put as little new technology into the vehicles as possible. For the full story, click here.

Rear Visibility Rules for Vehicles Delayed
The National Highway Traffic Safety Administration said Monday it would not meet its Dec. 31 deadline to set new rear visibility rules that could lead to backup cameras. It's the fourth delay since Congress approved legislation in 2007 requiring new standards for rear visibility amid concerns about the costs raised by automakers. The Detroit News reports that the regulation is aimed at helping eliminate blind zones behind vehicles that can hide the presence of pedestrians, especially young children and the elderly. "The department remains committed to improving rearview visibility for the nation's fleet and will issue a final rule upon completion of the regulatory review process," NHTSA said in a statement. In a Detroit News interview this month, Transportation Secretary Ray LaHood said he had hoped to finalize the rules by year's end. Congress initially required the new standards by February 2011, but LaHood has exercised his authority to delay the rule three times. In 2010, NHTSA acknowledged that on a cost-benefit analysis, the proposal doesn't save money. On a net basis it will add $700 million to $1.6 billion in added costs by 2014. For more on the future of rear visibility rules, click here.


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