Staying Informed: The Link Between Automotive Politics and Car Dealers — Cody Lusk | AIADA

First Up 05/25/23

Staying Informed: The Link Between Automotive Politics and Car Dealers — Cody Lusk | AIADA

While politics may often appear irrelevant to car dealers, retailers must stay informed on the conversations taking place in Washington, D.C. as even small decisions could have far-reaching effects on the automotive industry. On this episode of Inside Automotive, CBT News anchor Jim Fitzpatrick is joined by Cody Lusk, president and CEO of AIADA. The potential fallout of political gridlock can impact car dealers as much as any business, but the government’s decisions on electric vehicle policy is of special importance to the automotive industry. The EPA plans to require 67 percent of all vehicle sales to be electric by 2035, a rule which House Republicans are attempting to forestall. While retailers mostly agree that the internal combustion engine’s days are numbered, they are more concerned that demand, affordability, infrastructure, and availability will not scale in time to meet the EPA’s guidelines. “…it’s going to be tough to get to the numbers…by the timeline the governments in a lot of these states are pushing,” states Lusk. Click here for the full interview.

Hybrids Continue to Rule the EV Market — KBB Report

According to the Kelley Blue Book Brand Watch study for the first quarter of 2023, hybrid vehicles continue to be more popular among vehicle shoppers despite the significant attention paid to EVs and new tax advantages. The quarterly Brand Watch reports for non-luxury and luxury companies also evaluate the purchase of fully electric, hybrid, and alternative fuel vehicles, reports CBT News. The Kelley Blue Book Brand Watch report compares a brand or model to its competitors in the industry based on a dozen parameters crucial to a consumer’s purchasing decision. It’s a consumer perception survey that also takes into account shopping behavior. The IRA, passed by the U.S. Congress last year, allows for a $7,500 tax credit on some EVs and plug-in hybrids, or a fraction of that entire credit depending on the consumer’s income and the cost of the car. Some models are no longer eligible for tax credits because of even stricter regulations regarding the domestic content of battery components that come into effect on April 18. However, shopping habits remained the same. Click here for the full story.

BMW's Sebastian Mackensen: BEVs will Drive Demand Long Term

Tesla knocked the U.S. luxury sales crown off BMW's head last year, ending the German marque's three-year reign in the segment. But BMW plans to beat the American upstart at its own game. Over the next few years, BMW will add competitively specced battery-powered models to its lineup of sedans and crossovers. Last year, electric vehicles accounted for 5 percent of BMW's U.S. sales, Sebastian Mackensen, CEO of BMW of North America, told Automotive News. Mackensen predicts battery-electric vehicle share will "more than double" this year and outpace BMW's overall sales growth in the U.S. "There's still a healthy and robust demand for plug-in hybrids, but [BEVs] will drive demand long term," he said. Despite the expected long-term market shift toward battery power, Mackensen is confident of near-term demand for combustion engines. "We're selling the Ultimate Driving Machine — that can be the ultimate combustion engine-driving machine, and it can be the ultimate electrified machine," he said. Mackensen, spoke with Staff Reporter Urvaksh Karkaria in April about BMW's business outlook, tightening emission regulations and the changing retail landscape. Click here to read the interview.

F&I Offices Are Facing More Cash Deals

The percentage of "cash deals" has grown over the past year, a trend that can eat into auto dealership finance-and-insurance revenue. Dealerships earn money from arranging indirect loans between lenders and consumers, revenue they can't collect when a consumer has cash, a cashier's check, or a personal check in hand, reports Automotive News. Cash deals might also jeopardize finance-and-insurance product sales because consumers typically finance F&I coverage within auto loans. If a customer is paying cash, the finance manager must persuade the consumer to pay those premiums out-of-pocket or take out a loan for the coverage. G.P. Anderson, finance manager at Thielen Motors in Park Rapids, Minn., recalled a run of 38 deals in 2022 that either involved either cash or outside financing. "It's like you're losing your brain because you don't get paid on a cash deal in your brain," he said. "And what happens is 99 percent of the finance people, they just get absolutely hellbent for leather.” Click here for the full story.

Fewer Americans Are Buying New Cars. That's a Problem for the Climate

There is a new population of the elderly in the U.S. They are 284 million strong, their numbers are growing every day, and their age is eye-popping: 12.5 years on average. That may not be much for you and me, but this senescent set is not made up of people, but cars. Never has the American fleet of vehicles been so old — and that spells bad news for the long dreamed-of phase-out of gas-powered vehicles, and the environment as a whole, reports TIME. The new news on old cars comes courtesy of a recently released study by S&P Global Mobility, which regularly tracks the state of the U.S. auto fleet and has seen some troubling trends of late. For six years in a row, cars on American roads have been getting older, with the biggest jump coming in the last three years, thanks in large measure to the COVID-19 pandemic. Supply chain issues caused by the pandemic and the related lockdowns led to a global shortage of computer chips on which new cars are increasingly dependent, driving down automotive supply and driving up vehicle prices. Click here for the full story.

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