Inflation Risk or Profit Engine? High Car Prices Are Both
What started as a short-term disruption in shipments of automotive semiconductors is becoming a long-term problem that is driving average prices of new and used vehicles to luxury-car levels, fueling inflation fears and causing concern in the White House. Average new car prices have reached $42,000 and used vehicle prices have surged to an average of around $25,000, according to Cox Automotive. Reuters reports that rising prices for vehicles and other goods are a problem for the administration of U.S. President Joe Biden. Some Republicans have blamed runaway prices on massive federal spending under Biden, which they want to curtail. While high vehicle prices cause anxiety in Washington, they are fueling record profits for U.S. auto dealers. Auto manufacturers are enjoying pricing power they have not experienced in decades. U.S. aggregate dealer profits from new vehicles in July are projected to reach an all-time high of $5.1 billion, with average profit per vehicle estimated to top $4,200, according to JD Power. For the full story, click here (source: Reuters).
Beltway Talk Podcast: How to Be a Dealer Advocate
In this 50th episode of Beltway Talk, Ashley Burch, AIADA’s Senior Manager of Grassroots & Advocacy, once again dials in to discuss AIADA’s Dealer Visit Program. She emphasizes the importance of bringing lawmakers to dealerships so that they can see firsthand the investment dealers make in their districts, and the brand-new opportunities AIADA has made available to help dealers jump start their advocacy efforts. Click here to listen.
Electric Cars for Everyone? Not Unless They Get Cheaper
President Biden and automakers face a challenge as they push Americans to go electric to help address climate change. These cars cost much more than gasoline vehicles, which can make it hard for people who want to buy an E.V. — regardless of reason — to purchase one. According to the New York Times, a federal tax credit can lower the sticker price by as much as $7,500, but it no longer applies to Tesla and General Motors models. In addition, some Americans do not owe enough in income taxes to take advantage of the credit, and others can’t manage to pay thousands of dollars in anticipation of a refund the following year. As a result, many Americans cannot buy an E.V. because they cannot make the large investment needed to reap savings that the cars can deliver on fuel and repairs. To read more, click here (source: New York Times).
Senate Passes $1 Trillion Bipartisan Infrastructure Bill, Sending Key Part of Biden’s Economic Agenda to the House
The Senate passed a $1 trillion bipartisan infrastructure plan Tuesday, a huge step for Democrats as they try to push President Joe Biden’s sweeping economic agenda through Congress. CNBC reports that the legislation, which includes $550 billion in new funding for transportation, broadband, and utilities, got through in a 69-30 vote, as 19 Republicans joined all 50 Democrats. The chamber in a 50-49 party line vote then proceeded to a budget resolution that would allow Democrats to approve what they see as a complementary $3.5 trillion spending plan without Republican votes. House Speaker Nancy Pelosi, D-Calif., has stressed she will not take up the infrastructure bill or Democrats’ separate proposal to expand the social safety net until the Senate passes both of them. The House does not return from recess until Sept. 20. It could take months for Congress to pass both measures. For more on the infrastructure bill, click here (source: CNBC).
Hyundai Santa Cruz a Car? No, it’s a Sport Adventure Truck
Is it a four-seat sedan with a small truck bed? Or is it a small pickup that drives like a car? To Hyundai, which has dubbed its all-new Santa Cruz a sport adventure pickup, it’s both. Wards reports that the Santa Cruz represents Hyundai’s entry into the North American pickup market without going head-to-head with General Motors, Ford, Jeep, or Toyota. Even the automaker’s Irvine, CA-based design teams occasionally refer to the Santa Cruz as a car, other times as a truck. The Santa Cruz has been well thought out from grille to tailgate, engineered to be easy and fun to drive and to provide a good level of safety and driver assistance. Click here to see it. The Santa Cruz feels like a solid choice for the target markets with a range of prices from $23,990 for the naturally aspirated front-wheel-drive SE model to $39,720 for the fully tricked-out all-wheel-drive Limited edition. Click here for the full review and specs (source: Wards).
Federated Insurance’s Claim of the Month — Could it happen to you?
An employee’s daughter took a company vehicle back to college over the weekend to attend a festival. While driving in heavy traffic, the daughter did not see an oncoming motorcycle and made a left turn in front of it. The driver of the motorcycle was severely injured in the accident and litigation has commenced against the dealership.
CLAIM AMOUNT: Not resolved but the limits of the policy are at risk.
Employee training is an important factor in helping to reduce vehicle-related incidents. Employers should consider providing introductory and ongoing training. If you have a situation where non-business use of a vehicle is unavoidable, consider a transfer of risk.
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Transfer the company title out of the dealership name.
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Lease the vehicle to the employee and require the user to obtain personal auto insurance on the vehicle with adequate limits.
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Offer the employee a car allowance and require the user to obtain personal auto insurance on the vehicle with adequate limits.
Visit federatedinsurance.com or contact your local marketing representative for resources you can use to create or enhance your own risk management program.
