CBT automotive newscast: September 23, 2021

Featured Interview:

PA dealer David Kelleher on Stellantis establishing its own finance arm
Stellantis is expected to close a deal by year’s end, creating its own captive financing arm. Mike Koval Jr., Ram brand CEO said “until now, we were the only major OEM in the U.S. without a captive”. On today’s show, we’re pleased to welcome David Kelleher, Chairman of the Stellantis National Dealer Council and President of David Dodge Chrysler Jeep RAM, to give us his perspective on this move from Sellantis and we’ll also get into the overall state of automotive. Watch the complete segment here.

Headlines:

Sonic Automotive has made a deal to acquire, one of the largest privately-owned dealership groups in the U.S., RFJ Auto Partners Holdings. The $700 million purchase of RJF Auto’s portfolio includes 33 franchised and used-vehicle dealerships in seven states and real estate that is expected to add $3.2 billion in annual profits. Sonic said the portfolio of stores generated $2.8 billion in annual revenue. The contract is expected to close in December and will add six new states to its footprint and five new brands to its portfolio.

Ford is partnering with and investing $50 million into Redwood Materials, a battery recycling company, created by Tesla Co-founder J.B. Straubel. The automaker plans to partner with the startup to eliminate waste and in time, reuse components from its impending wave of EVs. The Redwood deal is part of the $30 billion investment of Ford’s electrification portfolio. Redwood says its recycling technology can recover on average more than 95% of the elements found in batteries and scrap. Ford’s North America COO Lisa Drake said, “That capability could help alleviate future supply concerns.”

Honda is the latest to announce production issues due to the chip crisis. According to Reuters, the automaker announced its plants in Japan operated at just 40% of capacity last month and this month. The company said, “We are doing what we can to minimize the impact on production, but the situation remains unclear.” Honda forecasts production to be at about 70% capacity in early October, which leaves an opportunity for capacity to improve.

The Alliance for Automotive Innovation and 14 other associations are asking the U.S. Department of Transportation to continue and expand efforts to support the safe deployment of automated vehicles in the U.S. The associations claim that implementing a federal framework for AVs can help the Biden Administration achieve a “Safer, more environmentally friendly and accessible transportation future.” They also urged the department to continue identifying regulatory barriers to the deployment of AVs in the U.S. The alliance released a four-year action plan to guide federal policies and advance the testing and deployment of AVs in the U.S.

Mario Murgado is considered one of the most successful auto-dealership owners in South Florida. With six dealerships in Miami, four in Stuart, three in Jacksonville, three in New Jersey, and two in Chicago, Murgado is looking to build a multi-state group of 18 automobile dealerships. With over 40 years in the industry, he attests that he loves his business and he’s always working on something for it. Currently, Murgado is looking to solidify his business, grow where he finds more opportunities, and open doors for the next generations to come into the industry.

News & Opinion:

How service departments can handle no fault found diagnosis
You want to increase profits and customer satisfaction in your service department, but a no fault found diagnosis, or NFF, is sure to derail your plans in a hurry. When a customer brings their vehicle in for repair, they expect the problem to be fixed when they drive away. Getting back in the vehicle with the same problem occurring only frustrates and aggravates the client. There are three steps to remember if you want to handle no fault found diagnosis properly. Read more

Sonic Automotive Buys 33-store RFJ Auto Partners in deal worth $700 million
North Carolina-based Sonic Automotive has confirmed a blockbuster deal, announcing the purchase of the RFJ Auto Partners group. The enormous transaction adds 33 storefronts to the Sonic Automotive group. When the deal closes, it’s expected to rocket Sonic Automotive into one of the top five US dealer groups according to total revenue. RFJ Auto currently has 16 brands under their umbrella including the highest volume Chrysler Jeep Dodge Ram store in the world, Dave Smith Motors. With dealerships located across the Pacific Northwest, Midwest, and Southwest, it introduces the Sonic Auto presence in six additional states. Read more