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Automotive Association News | February Update

Auto Deals Want Congress to Reconsider Tax

The American International Auto Dealers Association (AIADA) and the National Automobile Dealers Association (NADA) joined the Border Adjustability Tax Coalition in sending a letter to Congressman Kevin Brady (R-TX), chairman of the House Ways and Means committee. 

While expressing support for the pro-growth comprehensive tax reform found in the Better Way Tax Reform proposal, the letter asks Chairman Brady to reconsider the proposed inclusion of a border adjustment provision in the final legislation. A border adjustment mechanism would place a tax on any goods or services crossing into the United States, including autos and auto parts.

If imposed, the tax change would trigger a significant increase in the cost of the imported vehicles and vehicle components (whether from Korea, Japan, Mexico or Germany). This could have a wide-ranging impact because currently the highest domestic content of any vehicle sold in the U.S. is 75 percent.  There is uncertainty about how this proposal would be implemented and what the impact would be to consumers.

The potential repercussions, including radically more expensive vehicles and vehicle parts, could be devastating for international auto nameplate dealers, employees, and consumers in communities across the country. Read the entire statement from AIADA regarding its opposition to the border adjustment provision in the GOP tax package here. Find out more from the Financial Times on what the tax entails by clicking here

Atlanta International Auto Show Set for March 22-26

The Atlanta International Auto Show will celebrate its 35th anniversary when it returns to the Georgia World Congress Center on March 22-26. Produced by the Metro Atlanta Automobile Dealers Association, the show will feature more than 500 new and pre-production vehicles on display.

The first Atlanta Auto Show Committee was spearheaded by Asa G. Candler, founder of The Coca-Cola Co., and 67 automakers applied for a spot in the show.

Michigan International Auto Show set for Feb. 2-5

Sponsored by the Grand Rapids New Car Dealers Association, the Michigan International Auto Show will take place Feb. 2-5 at Devos Place, a convention center located in downtown Grand Rapids. Among the features are the Million Dollar Motorway, which features vehicles that retail for more than $100,000 and the Gilmore Car Museum that showcases a selection of vintage automobiles.

November’s Auto Sales Rebound, Keep 2016 on Record Track 

November’s sales climbed 3.7 percent on the strength of light truck demand, up 8.5 percent from a year ago, and generous holiday deals. Honda’s sales rose 7.9 percent from November 2015, Hyundai’s sales were up two percent, Toyota saw an improvement of 5.3 percent, and Volkswagen’s sales rose 24.3 percent, ending a 12-month streak of declines. Subaru continued its 60-month run of sales improvements with 51,308 units sold – a November record.

“December is historically a great month for auto sales,” said AIADA President Cody Lusk. “Thanks to a stabilized industry and promising economic conditions, international brand dealers are coming off of a tremendous November and looking to close out 2016 on a high note.”

International brands increased their share of the November U.S. auto market to 55.7 percent, up from 53.7 percent last month and an increase over November 2015 when they held 54.6 percent of the U.S. auto market. Overall sales for international brands totaled 768,754 units, an improvement over October sales of 747,879 vehicles and November 2015 when they sold 727,000 vehicles. 

Asian brands increased their share of the U.S. market to 45.7 percent, up from 44.6 percent last month and 44.6 percent in November 2015. They sold 630,961 units, up from 661,540 last month and 593,175 in November 2015. Overall sales were up 6.4 percent compared to the same month last year.

European brands also improved their share of the U.S. market, finishing the month with 10 percent. They held a 9.1 percent share last month and a 10.1 percent share in November 2015. Sales of 137,793 units were up 3 percent over November 2015 when they sold 133,825 units.

Domestics finished November with a 44.3 percent share of the U.S. auto market and sales of 611,804 units. Sales for the brands were up 1.3 percent over November 2015 when they occupied a 45.1 percent share of the market and sold 604,056 vehicles. 

Illinois Department of Revenue Offers Relief from Failure to File Penalty

The Illinois Automobile Dealers Association met with the Illinois Director of Revenue, Connie Beard, and members of her senior staff to discuss the issue of motor vehicle dealers who received large penalties for failure to file tax returns for tax-exempt motor vehicle transactions, despite the lack of an informational bulletin to dealers explaining the Department’s new statutory penalty. 

The Department of Revenue began imposing a penalty of $100 per return for motor vehicle sales tax returns that were not filed within the statutory 20-day period for filing the returns (Forms ST-556 and St-556 LSE).  When enacted, this statute imposed the $100 penalty on all late motor vehicle tax returns, regardless of whether the related transaction was subject to tax.  The statute was amended to provide that the $100 penalty applies only to tax-exempt transactions.  Common examples of tax-exempt transactions include, but are not limited to, dealer trades, auction sales, and sales to schools, governmental bodies, religious organizations, or charities, and sales to certain out of state customers.  

After meeting with IADA, the Department of Revenue has agreed to offer relief from the failure to file penalty.  Specifically, the Department of Revenue has agreed to:

  • Abate all penalties for transactions conducted on or after August 16, 2013 and before August 10, 2015.  Dealers will not be required to file returns for transactions conducted during this period.
  • Abate all penalties for transactions conducted on or after August 10, 2015 and on or before November 10, 2016, provided, that dealers must file returns for these transactions no later than January 31, 2017.
  • All tax-exempt transactions conducted on or after November 11, 2016 are subject to the $100 penalty of the corresponding returns are not filed within the statutory 20-day deadline. 
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