Inside Automotive
Do manufacturers actually want to replace the franchise system? – Don Hall | VADA
Dealers are increasingly worried that the franchise system is under attack from major OEM brands, who may stand to gain more from a direct-sales model instead. On this episode of Inside Automotive, Don Hall, president and CEO of the Virginia Automobile Dealers Association (VADA), and one of the most recognized leaders in auto retail, joins host Jim Fitzpatrick to discuss the latest on the conflict between franchisees and franchisors. Watch full segment here.
Top Stories
Toyota’s EVs see more trade-ins than any other brand, according to a new study posted by CarMax. Researchers found that the automaker’s products accounted for 12% of all electric car trade-ins between September 2022 and February 2023, followed by Ford, BMW and Honda. Prius owners were especially likely to turn in their used hybrids, with many choosing the all-electric Nissan Leaf as a replacement. At present, Toyota only has three EVs for sale, although it plans to launch ten more by 2026. Read More
J.D. Power has discovered that high auto insurance premiums are forcing more customers to shop for cheaper providers. According to the firm’s data, insurance costs had ballooned 14.5% by February, with many customers reporting rate hikes of more than 20%. By March, more car owners were comparing policies than at any point since June 2021, even though customer satisfaction scores remained unchanged from last year. Out of the largest providers, State Farm continued to rank highest in customer satisfaction for the third year in a row, followed by Liberty Mutual. Read More
The Biden Administration is considering a delay to a new EPA rule under mounting pressure from the Republican Party. The new policy would alter the U.S. Renewable Fuel Standard to allow electric car makers to earn credits for charging vehicles with power from biofuel. While the EPA has yet to finish drafting its recommendations, GOP representatives in the House’s Energy and Commerce Committee, say the rule would undermine the intention of current laws, which focus solely on making fuel consumption more sustainable. For now, the rules are set to be introduced in June as originally planned. Read More
The Federal Reserve is poised to raise interest rates yet again in response to rising inflation. This would be the nation’s tenth rate adjustment since early 2022, and follows a series of bank closures which culminated in the government’s weekend seizure of the failing First Republic institution. Although Fed chair Jerome Powell may suggest freezing rates, analysts warn more hikes are still possible. Fed leaders are set to meet today to discuss their disinflationary options, and could announce their decisions as early as Wednesday. Read More
For Dealers
How baking-in digital protection at point-of-sale protects both dealer and buyer amid American crisis of online crime
After all the research, test drives and negotiations, when a customer chooses to purchase a car, they are putting their trust in the hands of the dealer. Beyond the large financial commitment, the customer will hand over more personal information than that customer likely shares with any other institution. Name. Address. Social Security Number. Driver’s license. Insurance policy. It is now the dealer’s responsibility to protect that information. But data security is not the primary business for auto dealers. Read More
The past is no longer prologue for valuing Blue Sky
Auto retailers have commonly averaged the last three years of earnings to estimate expected future profitability. This methodology proved to be an effective predictor of future earnings for the years leading up to the pandemic (see Chart 1). However, beginning in 2020, when earnings commenced their hockey stick progression, the calculus for projecting future earnings based on the last three years of profits started to miss the mark. Buyers and sellers have since struggled to assess future earnings given the seemingly unpredictable nature of the industry post-pandemic. Read More
