Dealerships Close in Florida as Hurricane Ian Unleashes ‘Catastrophic' Conditions
Florida experienced "catastrophic" conditions the last two days after dealerships from Tampa to Florida's Atlantic Coast closed before Hurricane Ian blasted the state. By Thursday morning, Ian was downgraded to a tropical storm and was making its way through central and northern Florida — threatening the Georgia and South Carolina coastal areas. "Most, if not all, of my dealers have closed Wednesday and Thursday," Central Florida Auto Dealers Association CEO Evelyn Cardenas wrote in an email to Automotive News. "They have been working hard over the past two days to prepare to ensure the safety of their staff and stores." The Category 4 hurricane made landfall near Fort Myers, Fla., around 3:05 p.m. EDT. Maximum sustained winds were estimated to be near 150 mph, the Weather Channel reported. More than 2.5 million electric customers in Florida have no power, the Weather Channel said. The National Weather Service said Ian was "causing catastrophic storm surge, winds and flooding" in the state. "Hurricane conditions are ongoing within the Hurricane Warning area now and will slowly spread northeastward through the day," the weather service said Wednesday. Catastrophic flooding was predicted in the storm's wake. Click here for the full story.
At Car Lots, the Best Deal May Be the Real Estate
Standing on the outdoor terrace of an office tower being built on the west side of Los Angeles, Dan Martin sees history: His family’s car dealership, Martin Cadillac. A massive bank of garages and maintenance bays will be replaced by 600 apartments. The idea of finding new uses for car lots has existed for decades, but the transformation of Martin Cadillac illustrates how trends in real estate and the auto industry are rapidly converging. The rising cost of land and a premium on walkable commercial districts have recently made urban car lots tempting targets for developers. And with the move toward online car shopping, dealerships no longer need large sales spaces, reports NYT. “The car dealership is not going away, but it may look a lot differently in urban centers in the next 10–15 years,” said Brady Schmidt, president, and co-chief executive of National Business Brokers. “What dealers are hoping for, at least the dealers that I’m talking to, is to be able to get the best of both worlds: They want to redevelop these sites to include high-density housing and not have to sell or give up their dealership to do it.” Click here for the full story.
What the Latest Fed Interest Rate Hike Means for Auto Dealers — Ryan Kerrigan
Ryan Kerrigan, Managing Director of Kerrigan Advisors joins CBT News to give an update on what the recent interest hike means for your car dealership and the auto industry as a whole. Kerrigan first speaks about the recent interest rate increases from the Federal Reserve. Last week, the Fed passed a highly anticipated increase of 75 basis points. Projections show a strong likelihood that rates will reach 4 percent by the end of this year and could top 4.5 to 5 percent by the end of 2023. Kerrigan says these interest rate increases will eventually influence the industry and dealer profits but says that those effects have yet to be seen as of right now. However, Kerrigan points out that public markets are feeling the squeeze of higher rates. The S&P is down nearly 18 percent year-to-date. The Kerrigan Index, which tracks automotive retailers, is down around 24 percent. Kerrigan says the stock market is trying to look ahead, and profits will likely come down across the board in the U.S. But according to Kerrigan, auto dealers aren’t feeling the impact just yet. Click here for the full story.
U.S. New Vehicle Sales to Increase on Strong Demand
U.S. new vehicle sales are set to rise in September as consumers spent more money on new vehicles than any previous September on record, an industry report from consultants J.D. Power-LMC Automotive showed on Wednesday. Customers have been unaffected by higher vehicle prices and lack of incentives or discounts from automakers, who have been taking advantage of strong demand and tight inventory, reports Reuters. "Transaction prices still rose, and consumers spent more money on new vehicles this month," said Thomas King, president of the data and analytics division at J.D. Power, adding auto sales are yet to see an impact from the ongoing monetary policy tightening by the U.S. Federal Reserve to curb inflation. Retail sales of new vehicles this month are expected to reach 958,948 units, a 5.4 percent increase from September 2021. September seasonally adjusted annualized rate for total new vehicle sales is expected to be 13.6 million units, up 1.5 million units from 2021, the report showed. The report, however, said that the per unit pricing and profitability may see deterioration in the coming quarters as broader macro-economic conditions affect demand and pressure affordability. Click here for the full story.
California Cracks Down on Auto Loan GAP Coverage
California this month established new limits on guaranteed asset protection sales with two new laws, including one an opponent predicted would reduce GAP sales to service members. Assembly Bill 2311, signed into law Sept. 13 by Gov. Newsom, caps the price of GAP and bans its sale in certain situations. It also requires lenders to refund charges automatically when consumers cancel the finance-and-insurance product or pay off their auto loans. Automotive News reports GAP coverage pays any loan balance not reimbursed by traditional auto insurers, who are only obligated to cover the vehicle's actual value, in the event of a total loss. Like other F&I products, it is often bundled and financed within auto loans rather than purchased separately. But Senate Bill 1311 would void a lender's security interest in a vehicle if "the loan also funds the purchase of a credit insurance product or credit-related ancillary product" sold to a service member. Coverage including GAP and credit life/accident and health insurance, which handles debt if something disastrous happens to the borrower, would seem to fall under the scope of this language, according to Stephen McDaniel, founder and CEO of compliance provider F&I Sentinel. Click here for the full story.
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