AutoNation Buys Stock, Lithia Buys Dealerships
Auto retail giant AutoNation Inc. has turned up the heat on share repurchases amid record-high prices for dealership acquisitions, a strategy that contrasts with rival Lithia Motors Inc.'s push to continue acquiring dealerships at a feverish pace, reports Automotive News. It's a pace that one analyst says could vault Lithia ahead of AutoNation in annual revenue this year or next. AutoNation, the largest new-vehicle retailer in the U.S., last week said that through July 15, it repurchased 15 percent of its outstanding shares, spending $1.2 billion. The Fort Lauderdale, Fla., retailer, which said its board also has approved repurchasing up to $1 billion more in AutoNation stock, made the announcement as it reported surging net income and record second-quarter revenue of $7 billion. Read more here (Source: Automotive News).
GM Sues Ford in Fight Over Branding of Self-Driving Cars
General Motors Co. is suing its competitor Ford Motor Co. for violating a trademarked driver-assist technology that’s used for hands-free features, according to a lawsuit, reports Bloomberg. The automaker’s taking action to protect the Cruise and Super-Cruise brands after Ford in April renamed its Co-Pilot360 automated driving system as Blue Cruise, GM said in court documents filed Friday. Talks to resolve the issue had been unsuccessful, the firm said. The claim by GM is “meritless and frivolous,” Ford spokesman Mike Levine said in an emailed statement. “Drivers for decades have understood what cruise control is, every automaker offers it, and ‘cruise’ is common shorthand for the capability.” In documents filed with the U.S. District Court Northern District of California, a unit of Detroit-based GM said “Ford knew exactly what it was doing.” Read more here (Source: Bloomberg).
Hot Used-Car Market Boosts Auto Lenders and Borrowers
Red-hot demand for used cars is turning the auto-lending world upside down, reports The Wall Street Journal. Prices are so high that some lenders are coming out ahead on defaulted auto debt. And far fewer borrowers are underwater on their car loans, meaning they don’t owe more than the car is worth when they trade it in. It is a tricky time to buy a car, but a pretty good time to owe money on one. It is a silver lining of the surge in used-car prices. Americans are shopping for cars at near-record numbers, but a computer-chip shortage has starved dealers of inventory. The severe shortage of vehicles to sell, including previously owned ones, has cars acting more like houses—growing in value and delivering meaningful gains to their owners. About 20% of owners were underwater when trading in their cars in June, down from 32% a year earlier, according to car-shopping site Edmunds. Read more here (Source: The Wall Street Journal).
With Few Cars to Sell, Where do Ad Dollars Go?
Some dealerships have refocused marketing messages around acquiring used vehicles, reports Automotive News. There are two schools of thought on how dealerships should approach advertising in a time of low inventory. One, said Sariah Heaton, marketing director for Jerry Seiner Dealerships in Salt Lake City, is to pull back on spending while dealerships have so few cars to sell. "A lot of dealerships are really, really slashing their budgets down because the demand is there either way," she said, "and we are subscribing to that for the most part.” The second: Keep a foot on the pedal and stay top of mind with consumers through brand awareness messaging until vehicle supply normalizes. Read more here (Source: Automotive News).
Tesla Poised for Record Earnings as It Navigates Global Chip Shortage
Tesla Inc. is expected to report a record quarterly profit, largely evading the effects of a global chip shortage that has constricted the global auto industry, reports The Wall Street Journal. The Silicon Valley electric-car maker produced more than 206,000 vehicles in the second quarter, more than doubling its year-earlier output. Global auto sales have cooled somewhat amid a shortfall of semiconductors. Many auto makers, including Ford Motor Co. and General Motors Co., have been forced to idle assembly plants over supply constraints, squeezing vehicle inventories and pushing up prices. Wall Street expects Tesla’s vehicle-delivery growth to help drive second-quarter revenue to roughly $11.4 billion, up from $6 billion a year earlier, according to analysts surveyed by FactSet. Net income, when the company posts results after the bell Monday, is forecast to reach about $600 million, nearly six times the year-earlier profit. Read more here (Source: The Wall Street Journal).
Around the Web
Future Volvos Will Get Names, Not Numbers [The Detroit Bureau]
These Vehicles Are Dead for 2022 [Car and Driver]
