Moody's Downgrades Auto Industry Outlook from Stable to Negative on Falling Demand

First Up 03/12/19

Earl Hesterberg to Join Lineup of Speakers at AIADA's Tariff Fly-In
Earl Hesterberg, President and CEO of Group 1 Automotive, will join the lineup of speakers during next month’s Tariffy Fly-In, happening April 9-10 in Washington, D.C. Dealers attending the Fly-In will hear from Hesterberg on the outlook for the auto retail industry in 2019. Earl Hesterberg is a 43 year veteran of the automotive industry with extensive experience in both North America and Europe. He is unique in that he has worked with three of the world’s great automobile companies – Ford, Toyota, and Nissan – and has manufacturer, independent distributor, and retailing experience. Hesterberg currently serves as President and CEO of Group 1 Automotive, Inc., a Houston-based Fortune 500 specialty retailer and a top five-dealer group in the U. S. market. Since joining Group 1, Hesterberg has led an organizational restructuring that has streamlined the operating model and improved efficiencies. In addition to Hesterberg, dealers attending AIADA’s Tariff Fly-In on April 9-10 will also hear from the Honorable Newt Gingrich. Learn more and register by clicking here, or by calling 1-800-GO-AIADA.  

Moody's Downgrades Auto Industry Outlook from Stable to Negative on Falling Demand
Weakening demand for cars and trucks has pushed credit rating company Moody's to cut its outlook for the auto industry from stable to negative, reports CNBC. Slowing economic growth, a better-than-expected end to 2018 and a host of potential political pitfalls are all expected to dampen global auto sales in 2019, Moody's said in a research note Monday. The company cut its 2019 growth forecast for worldwide light vehicle sales by more than half, saying they won't totally recover from a slowdown in the latter part of 2018. Moody's expects global auto sales to grow by 0.5 percent this year, down from its previous forecast of 1.2 percent, "which had assumed a stronger finish in 2018." For 2020, Moody's forecast growth of 0.8 percent. Auto sales are likely to continue falling in the first half of 2019, before regaining lost ground in the last two quarters of the year, Moody's said. Read more here. 

With Ghosn Gone, Nissan, Renault, Mitsubishi Form Board
The Detroit News reports that the chief executives of Renault, Nissan, and Mitsubishi have announced a new board to oversee the French-Japanese auto alliance, seeking a “new start” for the partnership after the arrest and dismissal of Nissan’s former chairman, Carlos Ghosn. “This is a very special day for the alliance,” Renault SA’s chairman, Jean-Dominique Senard, told reporters after a meeting at Nissan’s Yokohama headquarters. He spoke to reporters along with Renault’s chief executive, Thierry Bollore; Nissan CEO Hiroto Saikawa and Osamu Masuko, CEO of the smaller Japanese alliance partner Mitsubishi Motors Corp. The alliance did not announce any changes in mutual stake holdings. The new board, consisting of those four executives, will meet every month in Paris or Tokyo and oversee various projects, helping to make the companies’ operations more efficient, they said. Read more here. 

Volkswagen Supercharges Electric Car Push as Profits Weaken
Volkswagen AG will accelerate development and production of electric vehicles, the German carmaker said on Tuesday, increasing its bet on the technology as profitability in China and at its core Volkswagen-brand unit is slipping. The Wall Street Journal reports that global automakers are stepping up investment in new technology and preparing to replace many of their best-selling vehicles with new electric vehicle models under pressure from ever tougher emissions regulation and a shift in demand from ownership to car-sharing that is expected to boost demand for electric-vehicle fleets. Addressing journalists as the company published its full 2018 earnings, Volkswagen CEO Herbert Diess said the company wouldn’t be able to avoid layoffs as it ramps up electrification in coming years. Earlier in the day, Volkswagen had announced plans to roll out 70 new electric models across its array of automotive brands that include VW, Porsche, Audi, Skoda, Seat, Bentley, Bugatti, and Lamborghini, up from previous plans for 50 new models by 2028. Read more here.  

Honda to Recall Around 1M Vehicles with Dangerous Takata Air Bags
Honda is likely to recall around 1 million older vehicles in the U.S. and Canada because the Takata driver’s air bag inflators that were installed during previous recalls could be dangerous. The Detroit Free Press reports that documents posted Monday by Canadian safety regulators show that Honda is recalling many of its most popular models for a second time. The models are from as far back as 2001 and as recent as 2010. Affected models include the Honda Accord from 2001 through 2007, the CR-V from 2002 through 2006, the Civic from 2001 through 2005, the Element from 2003 through 2010, the Odyssey from 2002 through 2004, the Pilot from 2003 through 2008, and the Ridgeline from 2006. Also covered are Acura luxury models including the MDX from 2003 through 2006, the EL from 2001 through 2005, the TL from 2002 and 2003, and the CL from 2003. Read more here. 

Urgent Tax Update – Extensions Might Be Your Best Tax Plan This Year

  • Final IRS regulations on the Tax Cuts and Jobs Act (TJCA) have not been issued on interest limitations, causing confusion on how to apply the law. 
  • Every dealer should consider filing an extension for 2018 returns even if they file by the original deadline. Filing an automatic extension provides additional timeto wait for guidance and for CPAs and clients to make better choices, some of which are irrevocable. 
  • If you extend and then file, the IRS normally allows for the filing of a "Superceding Tax Return," rather than requiring an amendment for business tax returns. 
  • Many dealers avoid extensions, but this year is the most significant tax change in decades. Some laws are still being drafted and filing an extension this year gives you time to study regulations yet to be issued and make smarter tax decisions.

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