CBT automotive newscast: January 21, 2022

Inside Automotive:

How to utilize your dealership’s service BDC for maximum success
How do you get more people in the service drive to utilize your BDC and increase profits? Is there a solution in today’s climate? On today’s show, we’re pleased to welcome back David Lewis, President of David Lewis and Associates and the host of CBT’s Straight Talk, to discuss the service BDC and what he’s recommending for car dealers today. Watch the complete segment here.

Headlines:

On Tuesday, General Motors said it will be launching an online marketplace that will sell parts directly to customers over the internet. GM vehicle owners will be able to purchase 45,000 auto parts, which includes windshield wipers, oil filters, and engines, and can have them shipped to their homes or a local dealership. GM also announced it is devising a plan to provide its “Hydrotec” hydrogen-powered fuel cells to commercial and military entities and said they will be sold to individual consumers at a later date. GM did not provide specifics on whether or not these will eventually be available for purchase on their new online marketplace.

President Joe Biden told reporters this week that he is supportive of Federal Reserve Chairman Jerome Powell’s suggestion that the Central Bank will raise interest rates if the U.S. continues to experience high inflation. Biden noted the “economic complications” the COVID-19 pandemic has caused and said the federal reserve has the responsibility of positively influencing “full employment and stable prices.” The Federal Reserve has been hinting at an interest rate increase for months, and analysts say the first one may be implemented as soon as March.

Investment banking firm Jeffries downgraded Ford stock to “hold” this week, citing that despite the automaker’s massive 130% stock hike last year, the transition to electric vehicles is initially a “zero-sum-game.” Ford stock was previously designated as “buy” after it soared last year thanks to the unveiling of its plans for the EV transition, but shares dropped by almost 8% on Wednesday, which was the highest decrease since last April. One Jeffries analyst told reporters that Stellantis and Tesla are better stock options at this time.

Bloomberg said last week that the extremely high car prices we are seeing are not likely to drop in the near future. Cox Automotive economist Jonathan Smoke said that low supply has greatly increased profits for automakers and given them more power when it comes to pricing. Last month, the average price of new vehicles reached over $47,000, which was partially due to a significant uptick in prices for luxury vehicles. Analysts report the high prices are also due to low incentives, ongoing supply chain disruptions, and higher spending during the holiday season.

News & Opinion:

The pros and cons of an external BDC for car dealerships
Inbound phone calls are still your best low-funnel leads, so they must be handled properly. Many dealers believe their sales team should be able to handle all those incoming calls, but the fact is up to 16% of calls are never answered. And for many shoppers, having a call go to voicemail means moving on to the next dealership. When phones aren’t getting picked up, it’s time to consider outsourcing to an external BDC. Market conditions today make an external BDC even more relevant. Labor shortages have employees spread thin. When faced between a belly-to-belly customer and one on the phone, the caller always comes second. Outbound call campaigns are often pushed off altogether. Read More

New guidance coming from IIHS for partially automated vehicles
On Thursday, the Insurance Institute for Highway Safety issued a release that new safety ratings will be created for partially automated vehicles. The new rating system will evaluate a vehicle’s capacity to ensure drivers remain focused while the car’s tech features are in use. It’s expected that IIHS will premier the ratings this year. Because of vehicle supply issues, IIHS is having difficulty getting vehicles to test, so it could impede progress establishing the criteria this calendar year. At the crux of the rating system is the question of whether partially automated vehicles are safer than putting a human driver at the wheel, or if that perspective is an illusion. Read more