CBT automotive newscast: December 15, 2020

Today’s Featured Interview:

VADA’s Don Hall looks back on a tumultuous but ultimately successful year in auto retail
Despite a year filled with many unpredictable twists and turns due largely in part to the COVID-19 pandemic, the automotive industry has remained resilient and profitable. Many industry experts are predicting a strong start to the new year as well. On today’s show, we’re taking a look back at the hardships and successes of 2020 and what dealers can expect in 2021 with Don Hall, president and CEO of the Virginia Automobile Dealers Association. Watch the full segment here.

Top Headlines:

Tesla is putting a temporary halt on production at its plant in Fremont, California. Employees at the plant were notified of the closure in an email over the weekend. While Tesla hasn’t released any information regarding the reason for the shutdown, many are speculating that the factory could undergo some reforms. Currently, the factory is responsible for the production of the Tesla S and X models. The facility is expected to be shut down from December 24th through January 11th.

Michigan congressional leaders recently expressed optimism about the new presidential administration and the impact it will have on the motor city. Michigan senator Gary Peters said the Biden administration will play a huge role in making the state a center for the next generation of the auto industry. Biden is heavily focused on expanding the electric vehicle tax-credits, investing in clean energy, and increasing the development of autonomous technology. Last week during an automotive panel, senator Peters said, “we are living in probably the most exciting time in human history. We are on the verge of major technological breakthroughs that rival what we saw in previous industrial revolutions.”

Dealers are showing higher levels of concern in the fourth quarter compared to how they were feeling in Q3. According to the Cox Automotive quarterly sentiment index survey, 48% of franchised dealers are concerned about the current political climate, up from 24% in the same quarter a year ago. Political concerns topped the list, followed by limited inventory at 44% and business impact of COVID-19 at 39%. Cox Automotive uses these factors to calculate a diffusion index, in which any score above 50 indicated dealers view current conditions as positive. In Q3 dealers overall rated the conditions at a 56, however, that rating has dropped to a 49 in Q4 and dealers have rated the next three months at 48.

The vaccine company Pfizer is currently in negotiations with the U.S. to provide an additional 100 million COVID vaccine does in 2021. The two sides are currently working out the timing of distribution. Sources have said that the company could provide many of those doses in the third quarter of 2021. However, the federal government is pushing Pfizer to distribute the vaccine as early as the beginning of the second quarter. The first doses of a Pfizer vaccine with biotech began shipping across the U.S. over the weekend. The vaccine is a two-dose regimen with the doses administered three weeks apart.

News & Opinion:

Private equities are acquiring F&I administrators. Is it hurting your margins?
In the last few decades, private equity firms throughout the US have been buying up businesses across industries with the intention of turning ailing brands around that have hit hard times. They bring their deep pockets to the table under the assumption that the extra cash/credit and effort to restructure debt will give a company critical daylight to thrive for the future. Buyouts like Toys R Us shook the retail market. A beloved brand for generations and shuttered due to a bad deal with a private equity firm. Over the last three years, the automotive aftermarket has also been shaken up by not one but 10 major acquisitions of F&I administrators by private equity firms. Read More

Study shows just 24 percent of salespeople are high performers
A new study identifies that less than one in four salespeople is performing at a level considered above average. The report called the “State of Sales” by Questionmark was powered by Salesforce Research and assessed salespeople across a range of industries including automotive. They recommend that businesses identify the characteristics their top salespeople have and implement them into training for the rest of the team. Questionmark CEO Lars Pedersen said, “The factors that make a sales team successful will differ from employer to employer. But one thing is certain: the bulk of revenue will come from a minority of high-performing salespeople. Read More