Tax Threat Heightens Concerns About Affordability

First Up 02/13/17

February 13, 2017 

Tax Threat Heightens Concerns About Affordability 
Prices for new cars and trucks, being pushed ever higher by fuel economy improvements, safety equipment, and advanced technology, could soar out of range for many buyers with the addition of an import tax to the equation, reports Automotive News. House Republicans have floated the idea of taxing vehicles and other goods that enter the nation's borders, while providing more favorable tax treatment to exports. "We already have an affordability issue with the auto industry," said Cody Lusk, president of the American International Automobile Dealers Association. "We're already pushing it with consumers, with the average payment going up and loan terms being stretched out." AIADA, which represents dealers selling foreign nameplates, is gathering dealers for a "fly in" summit in Washington next month to lobby against the proposal. Click here to register. "It isn't just on a new-car purchase. Everything having to do with a vehicle is going to go up. And this isn't just a tax on the auto sector – it’s everything that comes across the border," said Lusk, the AIADA president. "We believe that the tax code needs to be reformed, but we don't think it ought to be on the backs of American consumers." For more on how a border adjustment tax would impact vehicle affordability, click here.

At Chicago Auto Show, Trucks and SUVs Hit the Gas 
Less than a decade ago, Americans traded trucks and SUVs for more fuel-efficient cars, sacrificing utility to save money at the gas pump. What a difference a few years make. Last year, sales of pickups, SUVs, and crossovers accounted for nearly 60 percent of all sales in the United States, an uptick of almost 4 percentage points from the year before. Any automaker without a strong lineup of those profitable vehicles is feeling the pinch. To that end, reports The Detroit News, carmakers rolled out new and updated trucks and SUVs this week at the Chicago Auto Show. Big-cab options and expensive trim packages enhanced existing lineups. “Trucks are now becoming more the main family vehicle,” said Fred Diaz, who oversees trucks and light commercial vehicles for Nissan Motor Co. in North America. Nissan on Thursday rolled out the final two models in a five-model overhaul the company began just over a year ago when it introduced the new Titan and Titan XD pickups. In Chicago this week, it pulled the covers off the King Cab versions of the trucks. For more on the rollouts at last week’s Chicago Auto Show, click here.

Buy-Sell Business Could Boom This Year
According to Automotive News, this year's buy-sell activity is expected to outpace 2016's in volume – if sellers continue to come to market and prices drop, buy-sell advisers say. "We have projected this to be the most active buy-sell market in history," said Erin Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif. Kerrigan said the number of buyers and her client base of sellers are growing. In addition, sellers are starting to temper their price expectations, dealers and advisers said. The anticipated robust activity is driven by continued low interest rates, stable new- and used-vehicle sales volumes, and expected growth in fixed operations revenue all resulting in profitable dealerships that appeal to buyers, Kerrigan said. Finally, many of the public dealership groups are returning to the buy-sell arena after spending much of last year buying back their stock instead. One big uncertainty hangs over the market: possible policy actions that could impact taxes. For more on this year’s buy-sell business, click here.

Auto CEOs Want Trump to Order Review of 2025 Fuel Rules 
According to CNBC, the chief executives of 18 major automakers and their U.S. units urged President Donald Trump to revisit a decision by the Obama administration to lock in vehicle fuel efficiency rules through 2025. In a letter sent late Friday and viewed by Reuters, the chief executives of General Motors, Ford Motor, Fiat Chrysler Automobiles, along with the top North American executives at Toyota Motor, Volkswagen, Honda Motor, Hyundai Motor, Nissan Motor, and others urged Trump to reverse the decision, warning thousands of jobs could be at risk. On Jan. 13, the head of the U.S. Environmental Protection Agency finalized a determination that the landmark fuel efficiency rules instituted by then President Barack Obama should be locked in through 2025, a bid to maintain a key part of his administration's climate legacy. The auto CEO letter asked Trump to reopen the midterm review "without prejudging the outcome" and praised Trump's "personal focus on steps to strengthen the economy in the United States and your commitment to jobs in our sector." For more on why automakers are requesting that President Trump review 2025 fuel rules, click here.

Opinion: Changing the Tax Code 
When it comes to changing our tax code, Washington should trust the free-enterprise system, writes Sen. David Perdue in a Washington Times opinion piece. Four major ideas to rewrite our tax code are currently being discussed by the House of Representatives. Three are pro-growth and level the playing field with the rest of the world. However, the fourth idea being crammed into this comprehensive proposal by the House is the so-called “border adjustment tax.” This 20 percent tax on all imports is regressive, hammers consumers, shuts down economic growth, and is proven to grow the federal government. Increased consumer prices would hammer consumer confidence and lower overall demand, thus putting downward pressure on jobs. This is exactly the wrong approach to take right now. A University of Maryland study estimates that some industries could face employment declines of up to 20 percent. Read more of Sen. David Perdue’s full editorial at The Washington Times here.

Driver Distractions: Are They Worth Dying For? 
Join AIADA and its Affinity Partner, Federated Insurance, on Tuesday, February 21, with online sessions held at 10:00 a.m. and 4:00 p.m. EST, for an online webinar focusing on the dangers distracted driving pose to dealerships and their employees. Learn more about the distracted driving epidemic, its potential impact on dealerships, and what dealers and their employees can do to prevent the problem in this webinar titled, "Driver Distractions – Are They Worth Dying For?"

To register for the 10:00 a.m. EST session, click here.


To register for the 4:00 p.m. EST session, click here.

Around the Web

Why Small Cars Make Sense [Automobile Magazine

Subaru Secures Permit to Test Self-Driving Car in California [Autoblog

UK Supercar Maker to Join Ranks of U.S. Producers [WardsAuto]

Top 10 Non-American Cars Made in America [AutoGuide