AutoNation Profit Jumps as Strong Demand, Tight Inventory Drive Prices

First Up 10/22/20

New Jersey Joins California in Calling for Gas Powered Vehicle Sales Ban by 2035

New Jersey is joining California in calling for a future ban on the sale of gasoline-powered motor vehicles to combat global warming, reports The Detroit Bureau. The recommendation to stop the sale of gasoline-powered vehicles starting in 2035 was included in a new report from the New Jersey Department of Environmental Protection, which was asked by the state’s legislature to find ways to fight global warming. Global warming has led to rising sea levels, which threatens the swamp the state’s long coastline on the on the Atlantic Ocean, the DEP report noted. Last month, California Governor Gavin Newsom, in a move that is certain to kick off a major legal, philosophical, economic and political row, plans to outlaw the sales of motor vehicles that use gasoline or diesel oil for fuel by 2035 as part of its effort to reduce emissions of carbon dioxide that contribute to climate change and global warming. Read more here (Source: The Detroit Bureau). 

Penske's Q3 'Most Profitable' in History

Penske Automotive Group Inc. reported Thursday that its third quarter was the most profitable quarter in company history, driven by big per-vehicle profit gains, higher finance-and-insurance income, and lower costs. Penske, the second-largest new-vehicle retailer in the U.S., said third-quarter net income more than doubled to $247.6 million. Revenue fell 0.1 percent to $5.97 billion. Adjusted net income from continuing operations rose 99 percent to $231.1 million. That figure excluded a $15.4 million tax benefit related to changes in tax legislation in the U.S. and abroad. Penske's third-quarter gains "were primarily driven by same-store retail automotive revenue and margin expansion, coupled with expense reductions," CEO Roger Penske said in a statement. The company's 16 standalone used-vehicle supercenters in the U.S. and the U.K. generated higher revenue and profits. Read more here (Source: Automotive News). 

AutoNation Profit Jumps as Strong Demand, Tight Inventory Drive Prices

AutoNation Inc's quarterly profit nearly doubled on Wednesday as a stronger-than-expected recovery in demand and tight inventories helped drive more profit per vehicle just months after the pandemic slammed the economy, reports Reuters. Chief Executive Mike Jackson told Reuters he is optimistic looking ahead. Interest rates will be “very low for a long time,” he said. The pandemic has driven consumer demand for their own vehicles rather than sharing rides, or taking trips on a plane. “We had far more demand than supply,” Jackson said. “We have adjusted pricing to reflect that.” AutoNation said it had 43 days supply of new vehicles in the third quarter compared with 55 a year earlier. The pace of U.S. car and light truck sales has increased each month since lockdowns were lifted, on the back of strong demand for high-profit sport utility vehicles and pickup trucks amid tight inventories. Read more here (Source: Reuters). 

Lithia Motors Plans to Expand Footprint as it Rolls Out At-Home 'Driveway' Strategy

While Lithia Motors is focused on building out its online dealership strategy, the Oregon-based car retailer continues to make moves to expand its brick-and-mortar footprint, reports CNBC. Lithia has gobbled up a dozen car dealerships in the past two months, padding its network with locations from New York state to California. Bryan Deboer, who has led the $6.9 billion company for more than three decades, is looking to continue growing its roster of stores. The company is also investing heavily in its online operations with hopes of taking advantage of customers where they’re at, as individuals shift their shopping habits to the internet at an even faster-than-expected pace. Driveway, where users can search for, purchase and sell motorized vehicles, is expected to be available in six regions by 2023. Read more here (Source: CNBC). 

Honda, Arizona Reach $5M Settlement Over Air Bags

Honda has agreed to a $5 million settlement with Arizona over allegations that it failed to disclose defects in air bags that led to two deaths there, the state’s top attorney said Wednesday. The Detroit News reports that Attorney General Mark Brnovich announced the settlement over the faulty airbag systems manufactured by Takata Corp. and used in certain Honda and Acura cars. Under the agreement, roughly $1.7 million will go toward consumer restitution in Arizona. Another $2.1 million will pay for a gift card program incentivizing owners to get their air bags replaced. “We estimate more than 40,000 of these dangerous airbags are still on the roads in Arizona, and we are pleading with the owners to get their vehicles repaired immediately,” Brnovich said in a statement. Read more here (Source: The Detroit News). 

Federated Insurance Takes Action in Response to an Emerging Catastrophic Trend

Devastating vehicle crashes have not slowed during the global pandemic; in fact, data suggests roads are more dangerous than ever. Unfortunately, Federated’s association member clients are not immune to this as they have been involved in an alarming number of vehicle crashes in recent months. In response to this emerging catastrophic trend, Federated Insurance is taking additional action. 

Federated Chairman and CEO Jeff Fetters is personally addressing member clients about the incredible human toll of auto crashes and the unsettling rise in related claims we’ve seen in 2020 via a special video message and letter. He urges business leaders to spend a few minutes discussing driving safety with their valued employees.

Federated marketing representatives have been providing this message, along with supplemental talking points document to help owners and managers having a necessarily conversation about safe driving with their employees, to businesses since late September. Federated cares deeply about protecting businesses, employee drivers, and all those whose lives are forever changed due to senseless, preventable vehicle crashes.

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