Dealer Optimism Builds for '20
A looming, unavoidable downturn seemed to hang like a storm cloud as dealers headed to the 2019 NADA Show. A year later, it seems the skies are clearing, reports Automotive News. Auto retailers generally seem more optimistic, as potential profits from used-vehicle sales and the service business, plus stronger economic trends, drive a rosier outlook for 2020. "Going into 2019, there was a prediction that [we] may have a recession," said Lee Payne, owner of Planet Honda and Planet Hyundai stores in Golden, Colo. "The stock market took a big hit at the end of 2018, and I think that was a little bit of a hangover. ... Everybody was kind of waiting for the business to get bad. You don't hear that talk now." A recession hasn't materialized, and macroeconomics have been generally favorable for auto retail. Dealers seem encouraged, for the most part. An Automotive News survey of 189 dealership executives shows general optimism about the business for 2020 — though dealers did express worry the presidential election could be a drag on results. And long term, they are concerned about the future of the franchised dealership model. Read more here.
GM, Hyundai, and Kia Escape U.S. Auto Tariffs on South Korean-Made Cars
As the Trump administration weighs a plan to increase tariffs on European-made vehicles and continues unprecedented trade negotiations with China, a safe haven for automakers to import vehicles to the U.S. tariff-free is South Korea, reports CNBC. It’s a situation that’s unlikely to change anytime soon as President Donald Trump renegotiated a trade deal with the country in 2018. South Korean-made vehicles are forecast to account for about 5.5%, or 923,000, of U.S. vehicle sales this year, according to LMC Automotive. That’s up from 4.5% last year and comparable with European-made vehicles at about 7%. Despite South Korea’s tariff-free status, automakers aren’t flocking there due to the country’s tough labor unions that are known for striking, as well as benefits of avoiding tariffs not outweighing the associated costs of moving there. Read more here.
NY Dealers Threaten to Sue Fiat Chrysler Over Sales Tactics
Fiat Chrysler Automobiles NV dealers in New York escalated a months-long feud with the manufacturer regarding its sales practices by threatening to sue over incentives that may disadvantage smaller stores, reports The Detroit News. The cease-and-desist letter sent this month by the New York State Automobile Dealers Association is the starkest indication yet of tensions that Bloomberg News first reported in November. The frustrations spring from Fiat Chrysler adopting a system that attempts to anticipate the types of vehicles dealers are likely to order and aligns those internal analytics with manufacturing. Mismatches between the models Fiat Chrysler has been building and the cars and trucks that dealers actually order saddled the company with tens of thousands of unassigned vehicles last year. The automaker has cleared that inventory by offering incentives that have been cause for consternation at the dealer level. Fiat Chrysler has been sending daily emails to dealers across the country offering $1,500 “bonus cash coupons” to entice them to take cars from its inventory pool, according to the letter Robert Vancavage, the president of the New York dealers association, sent to Reid Bigland, the automaker’s U.S. sales chief. Read more here.
Virus Concerns Delay Volkswagen Production Restarts, China's Biggest Car Show
Volkswagen AG said Monday it would postpone production restarts at some of its Chinese plants until next week, while the organizers of China’s biggest car show said the event would not go ahead in April as planned, as the outbreak of a new coronavirus continued to weigh on the world’s biggest automotive market. The Wall Street Journal reports that Volkswagen’s delay, by an additional week until Feb. 24, highlights the difficulties that companies are facing amid the virus epidemic. The German auto giant, which has extended Lunar New Year holidays at its plants, blamed “national supply chain and logistics challenges as well as limited travel options for production employees.” Volkswagen, which operates 33 plants in various locations in China away from the outbreak’s epicenter, ceased production on Jan. 23. Some of its plants have already resumed production. Read more here.
Nissan Lays Out Plan to Reverse U.S. Slump
Posting its first quarterly net loss since the Great Recession, Nissan outlined a three-point plan to reverse its tumbling fortunes in the key U.S. market. According to Automotive News, the strategy is to make U.S. vehicle sales more profitable, introduce eight new U.S. models and make sure dealers are on board with the plan. But CEO Makoto Uchida, who took office Dec. 1, pleaded for patience with a global recovery campaign that still hasn't crystalized. Hard times will continue into the coming year, he warned. "We thought that 2019 would be a bottom, and from 2020 onward, we envisioned a picture of growth," Uchida said while announcing last week that the carmaker slumped into red ink in the October-December quarter. "However, it will take more time." Read more here.
Happening Today: AIADA's 50th Annual Meeting and Luncheon
It's not too late to make plans to gather with other leading dealers TODAY at 11:30 a.m. during the NADA Show to celebrate AIADA's 50th year.
This special event will include: the passing of the Chairman's Gavel from 2019 Chairman Howard Hakes of California to 2020 Chairman Jason Courter of Washington, a special ceremony honoring past chairs, and keynote remarks by Henio Arcangeli, Jr., Senior Vice President of the Automobile Division of American Honda Motor Co.
Registration will be available at the door.
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