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CBT automotive newscast: February 10, 2021

Today’s Featured Interview:

Will the record breaking automotive M&A activity continue throughout 2021? – Ryan Kerrigan
Automotive M&A deals have been very active over the last 12 months as major retailers expand their footprint into new markets. Lithia Motors has been one of the most aggressive retailers on the market, as the company recently acquired dealerships in the Southeast and Midwest regions of the country. We recently spoke with automotive buy/sell expert, and Managing Director of Kerrigan Advisors, Ryan Kerrigan, about Lithia’s recent growth and what it could mean for the industry. Watch the full segment here.

Top Headlines:

Lithia Motors is expanding once again. The growing retailer announced yesterday that it has acquired two stores in Florida. The transaction includes a Land Rover and Chrysler Jeep Dodge Ram location. As part of the acquisition, Lithia will add $240 million in revenue, as it continues its growth in the southeast region of the U.S.The two stores were acquired from Fields Auto Group in Orlando. In a press release, Lithia CEO Bryan DeBoer said, “we are excited to welcome the high performing Fields Auto Group to the Lithia & Driveway family.”

Two of the largest automakers in Japan are starting to feel the strain of the semiconductor chip shortage. Honda and Nissan are expected to sell a combined 250,000 fewer cars in the current financial year due to the crisis. The automakers made the announcement this week as they reported better-than-expected results for Q4 of 2020. Last month, Honda cut vehicle output by 4,000 units as it managed strains on the production line. Nissan officials have also reported plans to reduce production at plants in both Japan and the U.S. until the supply of semiconductors stabilizes.

Meanwhile, American automakers are also feeling the strain as General Motors announced it will be extending its production cuts into the middle of March. The company did not disclose how much volume would be lost, however, the company did say it intends to make up lost production as much as possible. According to Autoforecast, General Motors could lose more than 111,000 vehicles.

While automakers deal with production setbacks due to the chip shortage, dealers and consumers haven’t been affected by the crisis to this point. According to research by Cox Automotive, the average days’ supply of models affected by the dilemma stood at 85 mid-January, well above the national average of 62. So far, 33 nameplates sold in the u.S. Have been impacted by the crisis, representing 27% of all available supply. Cox Automotive also found that many affected vehicles are in the lower price ranges, which have been less popular with consumers who have primarily purchased SUVs and trucks during the pandemic.

News & Opinion:

financingAre fixed operations financing options necessary?
According to AAA, the average vehicle service invoice cost is now between $500 and $600 in the US. That pricing has been exacerbated by the pandemic where, despite historically low interest rates and high manufacturer incentives, the average age of vehicles on the roads has actually increased to 11.8 years of age. The AAA survey identified that 1 in 3 American drivers can’t afford those repairs without incurring debt, either by credit card or by borrowing. Still, dealership service departments typically leave it up to the vehicle owner for how they’re going to pay. It’s that structure that can hold the ‘declined services’ rate high and lead to increased breakdowns for the car owner down the road. Read more

F&ICoaching vs. Training – How to help struggling F&I staff
When your dealership is faced with an F&I manager that is underperforming in PVR and CSI scores, what do you do? Do you just get frustrated and start cleaning house? Do you start thinking about what salespeople you can elevate from the floor to the box? Maybe there is another way to deal with the need for BIG change in F&I. Maybe hiring new managers is not the best solution for your store. Training is often the stopgap to elevate someone’s skills. F&I ‘schools’ can deploy expensive trainers to come in and work with a manager that is struggling but you have to evaluate ROI during a pandemic where profits may be slow to recover. Read more

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CBT News
CBT News
For over 11 years, CBT News has been informing and helping automotive retail professionals grow their businesses and thrive in their careers through an awarding-winning, on-demand streaming platform. With exclusive interviews featuring the biggest names in the industry, daily newscasts, up-to-date market data, and exclusive articles covering the latest trends, CBT News is your #1 source for auto industry news and content.

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