U.S. Auto Dealer Sentiment Remains Slightly Negative, Despite Stronger Traffic, Profits

First Up 06/10/19

U.S. Auto Dealer Sentiment Remains Slightly Negative, Despite Stronger Traffic, Profits
According to data from the Q2 2019 Cox Automotive Dealer Sentiment Index (CADSI) released today, U.S. auto dealer sentiment is similar to the first quarter as the overall current market index remained in negative territory. The current market index – a measure of business conditions in Q2 2019 – rose one point to 49, which is not a statistically significant increase. Again this quarter, the index shows that slightly more dealers feel the current market is weak compared to those who feel the current market is strong. In the second quarter survey, dealers were again surveyed on expectations of the impact of proposed new auto import tariffs on business profitability in the future. The results were statistically similar to last quarter with only two exceptions—more independents and more dealers in low tax states expect that tariffs could have a positive impact by making the auto market stronger overall. The majority of franchises, however, continue to expect a negative impact on their business and profitability from a new tariff on imported automobiles and parts, and their principal concerns are about higher prices. Download full results of the Q2 2019 Cox Automotive Dealer Sentiment Index here. 

Trump Threatens More Tariffs on Mexico Over Part of Immigration Deal
According to Reuters, President Donald Trump on Monday hinted more details were to come about a migration pact the United States signed with Mexico last week, saying another portion of the deal with Mexico would need to be ratified by Mexican lawmakers. He did not provide details but threatened tariffs if Mexico’s Congress did not approve the plan. “We have fully signed and documented another very important part of the Immigration and Security deal with Mexico, one that the U.S. has been asking about getting for many years. It will be revealed in the not too distant future and will need a vote by Mexico’s legislative body,” Trump tweeted. “We do not anticipate a problem with the vote but, if for any reason the approval is not forthcoming, tariffs will be reinstated.” Last month, Trump threatened 5% tariffs on Mexican goods to be imposed on Monday. The duties would have increased every month until they reached 25% in October, unless Mexico stopped illegal immigration across its border with Mexico. 

The New York Times reports that on Friday, he backed off his plan to impose tariffs on all Mexican goods and announced via Twitter on Friday night that the United States had reached an agreement with Mexico to reduce the flow of migrants to the southwest border.

Read more from The New York Times here. Read the latest on Monday morning’s developments from Reuters here

Out-of-Trust Cases Raise Concerns of 'Bloodbath' for Retailers
Automotive News reports that when Reagor Dykes Auto Group collapsed in a messy bankruptcy case in August, fellow Texas dealer Rick Ford had seen the trouble brewing. Before it was accused of massive floorplan fraud, Reagor Dykes paid Ford's RFJ Auto Partners for three dealer trade vehicles with bad checks. If Ford Motor Credit Co. hadn't "stepped in and made us whole," Rick Ford said, RFJ could have been out tens of thousands of dollars. The Reagor Dykes case is just the tip of the iceberg. Ford said he has been warned to be careful about doing business with certain troubled retailers and also approached by dealers offering to sell stores for "fire sale" prices. Ford said he last saw this level of financial distress in 2008 and 2009. Operating dealerships requires more working capital than it used to, said Erin Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif., a sell-side dealership brokerage. If dealerships grew aggressively and spent a lot, they might not have enough cushion to absorb the higher interest rates and slowing auto sales. "It's like a game of musical chairs," Kerrigan said. "If the music stops, you don't have enough working capital." Read more here. 

Fiat's U.S. Dealers, Once Optimistic, Are in the Dark on the Brand's Future
In the U.S., more Jeeps are sold every four days than the number of Fiats likely to be purchased in all of 2019. That's the bleak reality for Fiat, a brand whose stylish Italian veneer and youthful energy have been sapped by an unforgiving market, reports Automotive News. Lower gasoline prices removed a major selling point for the brand's small cars, and its road map has no clear destination. One Fiat dealer described the factory's guidance about the brand's future as "radio silence." This wasn't how the late FCA CEO Sergio Marchionne drew it up. The hard-charging executive compiled a list of successes with his stewardship of the profitable Jeep and Ram brands, but a U.S. comeback by Fiat isn't among them. "They came out thinking Fiat was going to be Gucci, that it would be this sophisticated thing," said one Northeast dealer who was awarded a Fiat franchise in 2010 but backed out before building a store. "As time evolved, it became obvious to us that this was a dream in someone's brain named Sergio Marchionne." Read more here. 

Rolls-Royce, Aston Martin, Lamborghini Car Prices Plunge as Ultra-Luxury Market Expands
Had your eye on an Aston Martin? Always dreamed of a Lamborghini? Looking for a Rolls-Royce? Now might be your time. Sure, you may still need a couple hundred thousand dollars. But you probably won't need as much as you used to, reports USA Today. (Let's just say it's all relative.) "Values peaked in 2017 and are now falling – for both old cars and newer stuff," said Max Warburton, auto analyst at Sanford Bernstein, in a recent note to investors.  Average prices of Aston Martin, Rolls-Royce, and Lamborghini used vehicles, in particular, have declined sharply, according to data analytics firm Thinknum, which assessed data from more than 130 auto retailers on behalf of USA TODAY. "You're seeing significant drops," said Josh Fruhlinger, editor-in-chief of Thinknum. One likely culprit: Ultra-luxury carmakers have flooded the market with new vehicles as overall sales flourish, minimizing their exclusivity factor and driving prices down. Read more here. 

Around the Web

Ultima Returns with 1,200 HP RS Supercar [MotorAuthority]

How Mercedes-Benz and Audi Designed Their Electric SUVs [Autoblog]

These Are the 25 Hottest Collector Cars of 2019 [Fox News]

Fiat Chrysler in Deal for Self-Driving Car Technology [NY Times]

Error | American International Automobile Dealers


The website encountered an unexpected error. Please try again later.