Car Dealerships Face Conundrum: Get Big or Get Out

First Up 04/09/18

Trump Seeks Stiffer Emissions Rules for U.S. Light Vehicle Imports 
The Trump administration wants to require imported automobiles to meet stricter environmental standards in order to protect U.S. automakers and factory jobs, according to two sources familiar with the administration's thinking. According to Automotive News, two U.S. automotive executives said Friday they believed the idea had been floated in White House talks last week by Commerce Secretary Wilbur Ross, but said the auto industry had not asked for the changes or backed them. The costs, if implemented, would likely be passed on to consumers. “The possibility of holding vehicles built outside the United States to stricter environmental standards than those produced domestically is a direct threat to America’s free market. It takes the car buying decision, one of the most important and expensive choices American families face today, and allows the government to weigh in," said Cody Lusk,  President and CEO of AIADA. "This kind of non-tariff barrier is a tax on consumers and will absolutely result in higher priced vehicles and more limited choices." Lusk added the AIADA's 9,600 U.S. dealerships and their 577,000 U.S. employees would "strongly oppose this measure.” Read more here

Car Dealerships Face Conundrum: Get Big or Get Out
Americans who have been buying cars from the same mom-and-pop dealership for generations could be greeted by a different kind of for-sale sign the next time they visit, reports The Wall Street Journal. Small to mid-size dealer groups are selling their businesses to auto-retail giants or investment firms at a robust clip even as auto sales remain strong. The trend—highlighted by Warren Buffett’s entry into the dealership business in 2014—has gathered momentum as electric, shared and autonomous vehicles threaten to reshape the car business. Dealers say they need to as much as triple revenue in the next half-decade to offset shrinking margins and increasing competition from companies that didn’t exist a decade ago. Erin Kerrigan, founder of Kerrigan Advisors, said about 200 dealerships changed hands in 2017, near an all-time high with a similar level of transactions to take place this year. Read more here

Trump Calls China's Tariffs on U.S. Cars 'Stupid Trade'
According to Politico, President Donald Trump decried the taxes the Chinese government imposes on the import of U.S. cars, insisting that his announced tariffs on Chinese goods are the antidote to “stupid trade” practices allowed for years by his predecessors. “When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%,” Trump wrote on Twitter just after 6 a.m. Monday morning. “Does that sound like free or fair trade. No, it sounds like STUPID TRADE - going on for years!” Long a part of his political platform, trade has become an especially key point for the president in recent weeks as he has begun to ramp up his pledge to level the playing field of international trade. Although he has imposed some across the board tariffs, the bulk of Trump’s announced trade moves have targeted China, with which the U.S. runs a significant trade deficit. Read more here

The 0% Auto Loan Era is Fading Into America's Rearview Mirror
Carmakers that used zero-percent financing offers to juice sales at the height of the American auto boom are starting to abandon them as rising interest rates lift their own borrowing costs. According to Bloomberg, the average interest rate on consumers’ new-car loans climbed to 5.7 percent in March, the highest since 2009 and up from 5 percent a year ago. Zero-percent offers fell to 7.4 percent of auto loans last month, down from more than 11 percent the prior year and the lowest share in more than two years, Edmunds said. “Nobody wants to be the first one to go from zero to 0.9 percent, or from 0.9 percent to 1.9 percent, but you’re going to see zero no longer be the norm,” Jim Lentz, the chief executive officer of Toyota Motor Corp.’s North American operations, said in an interview at the New York auto show last week. “That has to be pushed along. That will impact, marginally, some people getting pushed out of the market.” Read more here

New Paths to Scale the Heights
Paths to the tops of automotive companies have changed over the years. A mechanical engineering degree from say, Purdue, or a Harvard MBA, were once the ticket — and, yes, they're still extraordinary launch pads. But these days, the means of scaling the heights of an auto giant have become more varied. Growing complexity and the industry's focus on a wildly different future have created new opportunities, reports Automotive News in its list of rising stars at automakers and suppliers. In an era when traditional car companies and suppliers are competing with tech startups (or acquiring them) there are new methods of finding and furthering their careers of the best and brightest. For example, Vishnu Sundaram, 35, vice president of telematics at Harman International, founded a telematics company in India that was acquired by Harman. A crisis can create opportunity. Stephanie Davis, 34, was a director in the forensics investigations practice at accounting giant KPMG when she was hired last year as Volkswagen of America's first chief compliance officer — a job intended to help the company avoid further legal trouble. Read more here

Join AIADA's Legislative Action Network TODAY! 

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With free trade increasingly in the crosshairs in Washington, D.C., AIADA is prepared to swiftly respond to any legislative threats to the way international nameplate dealers do business and serve their customers. But to be successful, we need your help. Simply text AIADAJOBS to 52886 to join AIADA’s Legislative Acton Network (L.A.N.), and stand at the ready with your fellow international nameplate dealers and industry partners to face down bad ideas from Washington. The L.A.N. is a network of dealers and dealership employees that are willing to make their voices heard on issues important to the auto retail industry. By signing up today, you will ensure you’re on the list to receive our urgent updates on trade issues and be entered to win a $500 Visa Gift Card. It takes less than 20 seconds to sign up and it’s the most important thing you can do to send a signal to Congress that dealers are watching policy decisions closely and are ready to get engaged.

Around the Web

You Really Need to Be Watching Japan's Awesome Super GT Series [Jalopnik]

Acura NSX Roadster Finally on its Way This Year? [Autoblog]

The Steadily Disappearing American Car [CNBC]

Quietly, Trump Officials and California Seek a Deal on Car Emissions [NY Times

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