Dealerships

AIADA concerned about major changes or elimination of NAFTA

ALEXANDRIA, Va., and WASHINGTON, D.C. - 

With President Trump evidently having no objections to seeing the North American Free Trade Agreement (NAFTA) potentially disappear, the American International Automobile Dealers Association (AIADA) expressed great concern over the impact changes to the policy involving the U.S., Canada and Mexico would likely have on the cost of vehicle prices.

This past Wednesday, Trump hosted Prime Minister Justin Trudeau of Canada where the leaders discussed a wide array of issues, including NAFTA, which apparently isn’t favored by the current administration.

When replying to a question that NAFTA only needed some “tweaks,” Trump replied, “Well, I don’t think anything changed. We’re negotiating a NAFTA deal. It’s time, after all of these years, and we'll see what happens.

“It’s possible we won't be able to make a deal, and it’s possible that we will,” the president continued according to a transcript released by the White House. “We have a great personal relationship, and we have a relationship now as two countries, I think, that's as close as ever.

“But we'll see if we can do the kind of changes that we need,” Trump went on to say. “We have to protect our workers, and, in all fairness, the Prime Minister wants to protect Canada and his people also. So we'll see what happens with NAFTA, but I've been opposed to NAFTA for a long time. In terms of the fairness of NAFTA, I said we'll renegotiate. And I think Justin understands this: If we can't make a deal, it'll be terminated, and that will be fine. They're going to do well; we're going to do well, but maybe that won’t be necessary. But it has to be fair to both countries.”

After the country’s leaders met, AIADA president Cody Lusk issued his assessment.

“America’s 9,600 international nameplate dealership franchises, and the 577,000 Americans they employ, are concerned about the prices their customers may be forced to pay if certain aspects of NAFTA are changed. In 2017, Edmunds predicts that the average vehicle transaction price will increase to an all-time high of $35,000. American consumers can’t afford the additional costs that would come with disruptive changes to NAFTA,” Lusk said.

"The auto industry is one of NAFTA's biggest success stories and helped international nameplate dealers — located in cities and towns across America — to sell 8.4 million vehicles to American consumers last year resulting in 59 percent of total U.S. retail vehicle sales,” he continued.

“While NAFTA modernization is important, we urge caution in considering the jobs that might be lost and the prices American consumers may incur as the result of changes to key aspects of the agreement,” Lusk went on to say.

More analysis from AIADA can be found at AIADA.org/our-impact.

NIADA picks Wheel’s Automotive as exclusive supplier of CPO point-of-sale tools

ARLINGTON, Texas and NIAGARA FALLS, N.Y. - 

A service provider sporting relationships with nearly 20 automakers now is in place to help independent dealerships retail certified metal.

Wheel’s Automotive Dealer Supplies has been selected by the National Independent Automobile Dealers Association as the exclusive supplier of point-of-sale merchandising, collateral and printing services for the NIADA Certified Pre-Owned program.

Wheel’s Automotive, which also services 19 CPO programs for OEMs and other providers and has some 9,000 dealership clients, can combine all the elements of a successful national CPO program into one phone call or click, according to the company.

The NIADA CPO program now includes Wheel’s print-on-demand and direct-from-manufacturer convenience to furnish NIADA member dealers with the exact customized CPO marketing materials desired.

Print-on-demand means highly customized printed items are delivered practically overnight in most cases to support dealers’ CPO sales and marketing efforts.

“Wheel's Automotive represents best-in-class promotional tools and marketing resources for our CPO program dealerships,” NIADA senior vice president of member services Scott Lilja said. “That allows our member dealers to more effectively compete in the CPO marketplace with new car franchise stores and enhances their ability to differentiate their digital and physical lot inventory, driving increased inventory turn, gross margin and customer loyalty.”

Renee Perri, vice president of Wheel’s Corporate Division and a member of Auto Remarketing’s annual Remarketing & Used-Car Industry’s 40 Under 40, welcomed the opportunity to work with independent dealers.

“Independent dealers are a vital part of the automotive retail industry,” Perri said. “Proper signage and marketing materials can help them merchandise and market CPO inventory with more authority and appeal as they service the transportation needs of a wide variety of consumers.”

For more information, contact Perri at (800) 465-8831, ext. 105, or visit www.wheelsauto.com.

NADA chair describes how stair-step incentives kills trust in dealers, brands

DETROIT - 

It’s probably been a topic mentioned during sales staff meetings and around the coffee pot at franchised dealerships — stair-step programs sometimes leveraged by automakers to incentivize stores to get new metal rolled over the curb.

Current National Automobile Dealers Association chairman Mark Scarpelli took on the subject this week within a test drive of the three domestic OEMs. Scarpelli urged all automakers to consider how stair-step incentive programs are damaging their brands and alerted manufacturers about the unintended consequences of such programs that erode consumer trust and lead to a lack of loyalty to — and desire for — their brands over time.

“Any dealer who’s had to deal with these programs can tell you that they are not only trust killers, but they’re brand killers, too,” Scarpelli said in remarks to the Automotive Press Association in Detroit, later provided to the media. “Not being able to offer two customers the same price on the exact same equipped vehicle, just because they came into the dealership on different days of the month, destroys consumer confidence.”

The ongoing proliferation of market strategies such as indiscriminate price coupons and unfair stair-step incentive programs are leading to severe, unintended, negative consequences for consumers, dealers and manufacturers alike, Scarpelli said.

The president of Raymond Chevrolet and Raymond Kia in Antioch, Ill., and co-owner of Ray Chevrolet and Ray Chrysler-Jeep-Dodge-Ram in Fox Lake, Ill. then asked this question:  “In a world where customers rightfully expect fairness and transparency in price, why do so many manufactures still deploy unfair marketing strategies that produce huge discrepancies in price between various customers — discrepancies that aren’t transparent, that can’t be explained rationally, and that run afoul of everything our customers really care about?”

The 2017 NADA chairman then followed with, “Shoppers of brands that use stair-step incentive programs see large discrepancies in price for the same or similar vehicles across different dealers. Or, worse, at the same dealer, but at different points in time. Or, even worse still, a discount applied to a vehicle they don’t want, but that can’t be applied to a vehicle they do want.

“So these consumers see wild discrepancies and fluctuations in prices; and discrepancies that aren’t transparent, and that can’t be explained by pointing out meaningful differences in the product itself,” he said.

Scarpelli then made the connection to the badge on the front of the vehicle.

“That lack of consistency, lack of transparency, and lack of explanation is leading directly to a lack of trust — lack of trust in both the individual dealer, and, in fact, lack of trust in every dealer who also carries that make. And when you have a lack of trust in every brand dealer, guess what? You have a lack of trust in that brand itself. And that lack of trust in the brand leads directly to a lack of loyalty to the brand,” Scarpelli said.

“Over time, the consumer’s lack of loyalty to the brand will lead to less consumer demand for that brand. Yes, that’s right: To less demand for that automakers’ vehicles in general,” he added.

Scarpelli closed by mentioning that he hopes to continue having constructive conversations with manufacturers about this issue.

“America’s dealers and manufacturers have the same exact goal — selling our inventory in large volume and at competitive prices. But we believe that goal should be achieved in the right way: Meaning in a way that enhances customer experience, and that maintains the integrity of the brand,” Scarpelli said.

“Ours is a symbiotic relationship that has stood the test of time, and that is ready to take on the next 100 years of making and selling cars and trucks — if we let it. And so to our manufacturer partners, I say: Let us be entrepreneurs. We’re pretty good at it,” he went on to say.

Scarpelli’s entire remarks can be viewed here or through the window at the top of this page.

AutoWeb finalizes license agreement with DealerX

IRVINE, Calif. - 

A day after officially changing its name, dealership lead provider AutoWeb — formerly Autobytel —  on Tuesday entered into a license agreement with DealerX Partners,a provider of data-driven marketing products for car dealerships and OEMs.

Under the terms of the agreement, AutoWeb will receive a perpetual license to access and use DealerX’s proprietary platform and technology for targeted online marketing. The company indicated this process will be implemented through the creation of consumer information databases and audiences, which will allow AutoWeb to generate traffic, clicks, and leads.

Officials explained DealerX will operate the platform for AutoWeb and provide enhancements to and support for the platform for an initial five-year period, which may be extended in perpetuity.

“Today, most dealers know very little about users of their websites and many display the same message to all users—a ‘one size fits all’ strategy,” AutoWeb president and chief executive officer Jeff Coats said in a news release. “Dealers can only hope that the offers presented are relevant and attractive.

“At AutoWeb, our critical mission is to know what users want and when they want it in order to deliver the best marketing at the best time — and to deliver that user to the right dealership at the right time,” Coats continued. “In DealerX, we have found a powerful partner in this mission, and we look forward to leveraging the DealerX platform to further capitalize on the evolving consumer and automotive marketplace.”

At the end of 2016, AutoWeb promoted Billy Ferriolo to chief operating officer to accelerate improvements in its clicks and lead generation businesses. AutoWeb said this licensing arrangement is a prime example of that improvement.

 “DealerX has created a unique, all-in-one automotive online marketing platform encompassing data collection, activation, analytics and attribution,” Ferriolo said. “Its platform employs extensive machine learning in the determination of what content to show which consumer across multiple devices, where and when. This is all derived from the real-time capture and scoring of consumer-driven behavioral events.

“We look forward to using this audience intelligence to deliver a better car-buying experience for consumers,” he went on to say.

AutoWeb mentioned the transaction consideration consists of a lump-sum payment to DealerX of $8.0 million upon the execution of the agreement.

During the initial five-year support period, DealerX will have the ability to earn shares of AutoWeb common stock representing approximately 5 percent of AutoWeb’s outstanding common stock if AutoWeb’s market capitalization reaches $225 million.

If these shares are issued to DealerX, its obligation to provide platform operation, enhancements and support for the platform will continue in perpetuity.

Alternatively, AutoWeb may elect to make a lump-sum payment of $12.5 million upon the occurrence of certain events in order to extend DealerX’s obligations in perpetuity. If such a lump-sum payment is made, DealerX’s right to receive shares of common stock is terminated.

Tax and stock implications

As of Dec. 31, AutoWeb reported that it had approximately $75.8 million in available net operating loss carryforwards (NOLs) for U.S. federal income tax purposes.

In light of the company’s recent stock repurchases, the company reminds stockholders about AutoWeb’s Tax Benefit Preservation Plan dated May 26, 2010, as amended on April 14, 2014 and May 26 of this year between the company and Computershare Trust Company, N.A., as rights agent.

AutoWeb explained the plan was adopted by the company’s board of directors to preserve the company’s NOLs and other tax attributes, and thus reduce the risk of a possible change of ownership under Section 382 of the Internal Revenue Code. Any such change of ownership under Section 382 would limit or eliminate the ability of the company to use its existing NOLs for federal income tax purposes.

In general, AutoWeb pointed out that an ownership change will occur if the company’s 5 percent shareholders, for purposes of Section 382, collectively increase their ownership in the company by an aggregate of more than 50 percentage points over a rolling three-year period. The plan is designed to reduce the likelihood that the company experiences such an ownership change by discouraging any person or group from becoming a new 5 percent shareholder under Section 382.

The company acknowledged rights issued under the plan could be triggered upon the acquisition by any person or group of 4.9 percent or more of the company’s outstanding common stock and could result in substantial dilution of the acquirer’s percentage ownership in the company.

“There is no guarantee that the Plan will achieve the objective of preserving the value of the company’s NOLs,” officials said.

As of Oct. 1, there were 13,082,948 shares of the company’s common stock, $0.001 par value, outstanding.

“Persons or groups considering the acquisition of shares of beneficial ownership of the company’s common stock should first evaluate their percentage ownership based on this revised outstanding share number to ensure that the acquisition of shares does not result in beneficial ownership of 4.9 percent or more of outstanding shares,” officials said.

In connection with the license agreement, the company’s board of directors considered and granted to DealerX an exemption under the plan with respect to the shares of common stock that may be issued to DealerX under the license agreement, and DealerX and the company entered into a stockholder agreement that provides for various restrictions on transfers of the shares and the grant of a proxy to the company to vote the shares as long as the restrictions remain in effect.

For more information about the Plan, please visit investor.autoweb.com/tax.cfm.

NADA provides guide to help dealers educate customers about leasing

TYSONS, Va. - 

The National Automobile Dealers Association recently rolled out a resource for members to help stores leverage vehicle leasing in a way that results in happy customers and compliant deliveries.

In light of the vehicle leasing business reaching an all-time high in 2016 with 4.3 million new units being leased, NADA said consumers are still leasing new cars at near-record levels. In fact, Experian Automotive reported that 30.83 percent of all new-vehicle turns during the second quarter came via a lease.

To help store manage that volume, NADA is offering its members a resource titled, “A Dealer Guide to Leasing Fundamentals.” The material aims to help dealers and their sales staff explain leasing, including how it compares to purchasing, so that customers can make the right decision for their individual needs.

Discussed are: closed-end consumer leases, how leasing benefits both customers and the dealership, and who are the best and worst candidates for leasing.

“Leasing appeals to many consumers who are able to acquire a more expensive vehicle, often with lower monthly payments, than they could have afforded as a purchase — and they can get into a new car every few years, with no depreciation risk,” NADA said.

“Still, many consumers don’t understand the leasing concept or vocabulary,” the association added.

NADA members can obtain this leasing guide by going to this website.

KeyBanc dealer survey recaps August used slowdown

CLEVELAND - 

Along with projecting how third-quarter results might land for a trio of the large publicly traded dealer groups, KeyBanc Capital Markets recently shared its latest dealer survey that offered more clarity on how much Hurricane Harvey impacted used-vehicle sales in August.

The survey results showed just a third of dealers who participated had used-vehicle sales increases in August. And if they did, it was for 5 percent or less.

Meanwhile, another third posted a used-vehicle sales decrease of 5 percent or less while the remaining third sustained a more significant used-metal slowdown, with sales softening anywhere from 5 percent to 10 percent.

While used vehicles might not have been rolling over the curb at the frequency surveyed dealers likely wanted, KeyBanc’s report indicated 70 percent of stores kept their used-car gross margins either intact or managed an increase below $50.

In the finance office, F&I performance continues to be strong part of dealership activity. KeyBanc highlighted that over the past three months, an average of 72 percent of respondents reported intact or increasing F&I gross profit per unit.

“However, we caution upside appears limited from these record highs, which is also reflected in more mixed responses in latter months,” analysts said.

Over in parts and service, KeyBanc noticed the dealer survey showed the weather impacted sales in that store segment, too. A third of participants said P&S sales dipped by 5 percent or less and another third added that service drive sales activity decreased by 5 percent to 10 percent in August.

But like used-vehicle deliveries, nearly 70 percent of dealers surveyed said that P&S gross per unit remained intact in August.

Moving on to a discussion about some specific dealer groups, KeyBanc’s report touched on estimates for how AutoNation, Sonic Automotive and Group 1 Automotive might fare when they release their third-quarter financial statements.

For AutoNation, KeyBanc pointed out that the company does not adjust earnings for nonrecurring items, and “we believe, in addition to the deleverage effect of temporary store closings, earnings results will likely be impacted by insurance deductibles,” analysts said.

Over at Sonic, KeyBanc mentioned the company will likely adjust for nonrecurring items. “However, the deleverage effect of temporary store closings will likely weigh on adjusted earnings in Q3,” analysts said.

Finally for Group 1 which had the most stores impacted by Harvey, KeyBank recapped what company officials recently shared “immaterial” new- and used-vehicle volume impact on full Q3 results as volumes picked up “substantially in September, and management agrees replacement demand will likely remain a tailwind to volume in the near future.”

Dealer.com introduces Autotrader, KBB site optimization to personalize dealer content for shoppers

ATLANTA - 

Dealer.com announced Thursday it has unveiled a new website experience optimization that personalizes content for car buyers based on individual shopper behavior across Autotrader and Kelley Blue Book.

The new data integration is designed to help dealers deliver personalized shopping experiences online in a way that saves time and money, according to the company.

Using shopper behavior data from Autotrader.com and KBB.com, the new product deploys inventory and fixed ops marketing content, specials and assets automatically on the site.

"The leading consumer sites have succeeded by creating a highly personalized customer experience that anticipates what they want, and consumers today are expecting that experience from every company," Dealer.com senior director of website and platform products Bob George said in a news release.

"Our new integration will provide dealers with an essential asset to remain competitive amid the challenging sales outlook and evolving consumer preferences. Experience Optimization generally results in click-through rates two to two and a half times higher on personalized content than on non-personalized content," he explained.

This month, the new automated technology will be featured at the Driving Sales Executive Summit Innovation Cup Product Showcase in Las Vegas, beginning on Oct. 22.

CarGurus joins CDK Global Partner Program

HOFFMAN ESTATES, Ill. - 

CDK Global announced Thursday CarGurus has joined its partner program to allow dealers using CDK websites to gain exposure for their inventory on CarGurus.com and access leads from the site.

As a CDK Global Partner Program participant, CarGurus reporting will be integrated into the CDK Dealer Command Center.

The company said the integrated solutions will be first available to dealers early this month.

"We are excited to be able to offer our dealers more leads and more inventory exposure through CarGurus based on our new integration," CDK Global product officer of consumer-facing products Max Steckler said in a news release. "The CDK Customer Cloud becomes that much more powerful in being able to deliver more targeted and personalized messaging with the addition of CarGurus data."

CDK will integrate CarGurus' anonymized, aggregated data in its suite of automotive digital marketing personalization solutions.

The integration will amplify CDK’s ability to create personalized shopping experiences and cross-site consumer behavior attribution.

Dealers with CDK websites can target personalized content for shoppers who previously visited CarGurus on their own websites.

"Car shoppers rely on CarGurus for transparency and validation, and we are excited to be working closely with CDK Global to enhance that experience," said Marty Blue, CarGurus senior vice president of business development. "Through our relationship with CDK Global, we’re able to unleash even more power to assist shoppers and drive dealers' business results."

CarGurus uses proprietary technology and innovative data analytics to help car buyers shop its more than 5 million car listings.

The company said its site currently attracts over 23 million monthly unique visitors in the U.S.

Michigan dealer set to be 2018 NADA chairman

DANA POINT, Calif. - 

NADA’s top dealer leader again is hailing from near the Motor City.

The National Automobile Dealers Association’s 63-member board of directors elected Wes Lutz as chairman for the 2018 term.

“I am honored to serve as NADA chairman as we begin the next century following NADA’s 100 years of existence,” said Lutz, who represents Michigan’s new-car dealers on NADA’s board.

Lutz is president of Extreme Dodge-Chrysler-Jeep-Ram in Jackson, Mich., about 80 miles from Detroit. Lutz added that he will continue to advocate franchised dealer concerns in the industry, legislative and regulatory affairs arenas as well as encourage dealers to adapt to the retailing challenges ahead.

“From start to finish, the nation’s franchised new-car dealership network has to benefit consumers in newer ways than ever before,” said Lutz, who has been a dealer since 1976. He is currently serving as NADA vice chairman, and previously served on NADA’s board from 2001 to 2004.

Charlie Gilchrist, who represents Northern Texas’ new-car dealers on NADA’s board, was elected vice chairman. Gilchrist is president of Southwest Ford in Weatherford, Texas, and a Buick-GMC, Nissan and Mitsubishi dealer.

Bill Willis, president of Willis Automotive Group (Chevrolet-Buick-Ford) in Smyrna, Del., was re-elected as secretary.

Bob Shuman, president of Shuman Chrysler-Dodge-Jeep-Ram in Walled Lake, Mich., was elected treasurer.

The new term officially begins at the 2018 NADA Show in Las Vegas next March.

The election took place at NADA’s board meeting in Dana Point, Calif., on Tuesday.

The NADA story began in 1917 when 30 auto dealers traveled to the nation’s capital to convince Congress not to impose a luxury tax on the automobile. They successfully argued that the automobile is a necessity of American life, not a luxury. From that experience, NADA was born.

Today, NADA represents nearly 16,500 dealerships, with both domestic and international franchises.

Costco Auto Program launches GM holiday sale

SAN DIEGO - 

The Costco Auto Program announced Wednesday that its most well-known promotion in conjunction with General Motors, the Holiday Sales Event, has launched and will run through Jan. 2.

The exclusive member offer features GM supplier pricing and most current GM incentives, according to Costco.

This year’s program includes a wide range of both 2017 and 2018 Chevrolet, Buick, GMC and Cadillac vehicles, that include Costco member best-sellers such as the Chevrolet Silverado, Buick Encore, GMC Acadia and Cadillac XT5.

“Whether members prefer horsepower, fuel efficiency or extra passenger space, our vehicle lineup has something for everyone, making this the most sought-after Costco Auto Program event of the year,” Costco Auto Program executive vice president Rick Borg said in a news release.

“Our collaboration with General Motors on the holiday sales event has resulted in high member satisfaction and an increase in vehicle sales year over year.”

After completing a Costco Auto Program survey, car buyers can also acquire a Costco Cash Card after purchasing or leasing an eligible model.

Gold Star and business members will get cards worth $300, while executive members will get $700 cards.

Additionally, to participate, car buyers must have been a Costco member since Oct. 2.

Members can register either online or by phone to get a GM authorization number and locate a dealership participating in the program this year.

For a full list of eligible vehicles and eligibility dates, visit CostcoAuto.com/GM