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Inside this issue
Car Makers Snip Pricing Now to Avoid Haircuts Later
NADA: Used Vehicle Price Index Remains Unchanged in January
Industry Trudges Toward E-contracts
Graco Recalls Car Seats Over Faulty Buckle
Moody's Downgrades Fiat Credit Rating
Canada Hikes Auto Fund By $453 Million to Lure Chrysler Investment
Ford Dealership Loses Super Bowl Bet, Pays Out $300,000 to Customers
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Car Makers Snip Pricing Now to Avoid Haircuts Later

As inventories rise, Detroit searches for a Goldilocks-like pricing

Detroit's big auto makers are trying to sweeten discounts to clear unsold vehicles from dealer lots, but not so much to start a profit-killing price war. It is a balancing act making Wall Street investors nervous. Analysts aren't sure whether the moves to counter a January slowdown in sales—particularly new discounts on large pickup trucks—will undermine the rising prices that have helped General Motors Co., Ford Motor Co. and Chrysler Group LLC rebuild profits during the past three years. But there are signs that the pain threshold has been crossed in some models. GM, the nation's largest auto maker, last week offered as much as $7,000 off some of its newest vehicles. Its Presidents Day sale, which continues through Feb. 28, offers reductions on Chevrolet, GMC and Buick vehicles with the largest on the six-cylinder versions of the newly-redesigned Chevrolet Silverado and GMC Sierra large pickups. Bill Willis, a Ford and GM dealer in Smyrna, Del., calls the moves a measured response to January's sales slowdown. GM's latest pricing, he added, is "cranking up the market. We lost a little share, we as in GM, but we're going to get it back."
Source: The Wall Street Journal (Subscription required.)
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NADA: Used Vehicle Price Index Remains Unchanged in January

Prices set to begin seasonal rise after a moderate increase

After a slight 0.1% uptick in January, NADA's used vehicle price index remained unchanged at 124.6, tied with August 2013 and December 2013 as the third highest figure ever recorded. The index measures the change in used vehicle prices up to eight-years-old. “The arctic weather that impacted large swaths of the country did little to push used vehicle prices off their expected course in January,” said Jonathan Banks, executive automotive analyst of NADA Used Car Guide, in the February edition of Guidelines, a monthly report on new and used vehicle sales trends and price movement. Price movement for the majority of vehicle segments fell between a tight range of -0.3% to 0.4%, with compact utility, large SUV and mid-size van prices dropping slightly, while compact car, large pickup and mid-size utility prices inched up; and mid-size car prices were flat over the month.
Source: NADAFrontPage.com
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Industry Trudges Toward E-contracts

While e-contracting speeds auto deals in the long run, it can slow them in the short run while auto lenders and dealerships learn to use the technology. And that has contributed to a slow rate of adoption. "E-contracting is great, as long as the lenders are up to snuff," NADA Vice Chairman Bill Fox told audience members at the American Financial Services Association Vehicle Finance Conference [in New Orleans] last month. "But we need money in the bank. If I have trouble -- whether it's my fault or the lender's fault -- I'm going to go where I'm going to get paid for the car," said Fox, a partner in Fox Dealerships Inc., which sells eight brands at five stores in and around Auburn, N.Y. Lenders on another conference panel criticized dealerships for being slow to adopt new technologies. "Dealers are slow to embrace technology; that's been their M.O. for years," said GM Financial CEO Dan Berce. Once dealers come around, he said, technologies once cutting edge become routine, such as online portals at dealerships. Berce and other auto lender CEOs were asked what one thing they would most like to see improved in lender-dealer relationships. "Just a better spirit of embracing technology -- that and [embracing] change, that would be great," Berce said.
Source: Automotive News
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Graco Recalls Car Seats Over Faulty Buckle

Graco Children's Products is recalling almost 3.8 million car seats because faulty buckles can make it hard to free the child in an emergency, the company said on Tuesday. But federal safety regulators said the recall, the largest in five years, did not go far enough, and have asked for an additional 1.8 million seats to be included because they use the same buckles. In an unusual move, the National Highway Traffic Safety Administration told Graco in a letter that unless those additional seats were fixed it would take legal action to force a recall. The seats in the recall are the 2009 to 2013 model years of the Cozy Cline, Comfort Sport, Classic Ride 50, My Ride 65, My Ride with Safety Surround, My Ride 70, Size 4 Me 70, Smartseat, Nautilus, Nautilus Elite and Argos 70. The investigation into the seats began in 2012 after some parents complained to regulators that they had to cut the straps to remove their children.
Source: The New York Times
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Moody's Downgrades Fiat Credit Rating

Moody's Investors Service has downgraded Fiat SpA's credit rating to “B1” from “Ba3,” citing the growing headwinds facing the company in key markets. Both ratings are considered highly speculative. “We have downgraded Fiat's ratings following its weaker-than-expected performance in fiscal year 2013 and our view that the company faces significant challenges in terms of achieving its outlook guidance for the current fiscal year,” said Moody's lead analyst Falk Frey in a note released Tuesday. The money the automaker spent to complete its purchase of Auburn Hills-based Chrysler Group LLC did not help matters, Frey noted.
Source: The Detroit News
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Canada Hikes Auto Fund By $453 Million to Lure Chrysler Investment

Canada is increasing its funding for automakers by $500 million ($453 million) in a bid to attract investment from Chrysler and other companies as the country's domestic auto industry reels from global competition and declining output. The government will bolster its Automotive Innovation Fund over two years, adding to the C$316 million ($284 million) invested in six projects since 2008, according to the budget released Tuesday by Finance Minister Jim Flaherty. The fund, which provides repayable contributions to automakers for large-scale research and development projects, has attracted private-sector investments of as much as C$2.3 billion ($2.1 billion), budget documents show. The fresh incentives come as Chrysler is reported to be considering at least a C$2.3 billion ($2.1 billion) investment in its Windsor, Ontario, minivan plant and has asked the federal and Ontario governments for subsidies. Canada's auto industry is shrinking, with Mexico expected to surpass Canada as the biggest exporter of cars to the United States in 2015, according to consultant IHS Automotive.
Source: Automotive News
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Ford Dealership Loses Super Bowl Bet, Pays Out $300,000 to Customers

How does that saying about casinos go again -- the house always wins? In the case of a Missouri Ford dealership, the house bet on the Super Bowl, and lost, to the tune of $300,000. Remember the Seattle Seahawks returning the opening kickoff of the second half of the Super Bowl for a touchdown? Hutcheson Ford in St. James, Mo., certainly won't forget. The dealership's first Super Weekend Sale promotion promised that if a customer bought a car between Jan. 29 and Feb. 1, and the opening kickoff of the first or second half of Super Bowl XLVIII resulted in a touchdown, Hutcheson Ford would refund the vehicle's purchase price. What was the chance of that happening? Hutcheson Ford pegged it at 2.5 percent. As a result of Seattle speedster Percy Harvin's 87-yard kickoff return for a touchdown, the 12 customers who qualified received refunds ranging from $10,000 to $55,000 on Saturday, for a combined $300,000. Fortunately for Hutcheson Ford, the dealership took out insurance on the promotion, so it won't lose the entire $300,000. The dealership declined to disclose how much money it lost, saying only "it wasn't nothing."
Source: Automotive News
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More Articles
 
Quotable
"We believe we can sell our way out. We have worked hard to stay disciplined on pricing, incentives and production."

   
-- GM spokesman Jim Cain, commenting on increased inventory on dealer lots, The Wall Street Journal, Feb. 11
NADA Market Beat
Light-vehicle Sales Drop in January
Chairman's Column
NADA Releases Fair Credit Compliance Program for Dealers
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NADA Foundation News
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NADA and Ally Donate $50,000 to Second Harvest Food Bank in New Orleans 
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