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Inside this issue
Opinion: Why Tesla Should Stop Fighting Auto Dealers
GM's Barra Says She'll Likely Testify Before Congress; Internal Inquiry Could Last Months
Toyota Said to Reach $1.2 Billion Settlement of Probe
Don't Miss Today’s Webinar on Federal Advertising Requirements!
Maximizing Your Fixed Ops
BMW Sees 'Clear Growth' in 2014 Pretax Profit
Honda Makes 10 Millionth Accord in U.S.
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Opinion: Why Tesla Should Stop Fighting Auto Dealers
By John O'Dell

Tesla Motors prides itself on promoting a disruptive technology -- electric cars -- but it was Tesla itself that was disrupted recently as New Jersey said it is illegal, effective April 1, to operate factory-direct car sales in the state. New Jersey is not alone. Arizona, Maryland, Texas and Virginia also ban direct sale of cars to consumers. Many wonder whether Tesla has been out to turn the car-marketing world on its head, do away with the franchised dealership system and change forever the way people in the U.S. buy cars. It can seem that way as Tesla fights to keep selling its cars direct to its customers, but missed in the speculative fervor is that Musk himself has said that as it grows, Tesla probably would be looking at expanding its presence -- and sales -- through franchised dealerships.
 
Today, progressive dealerships around the country representing every automaker are creating experiences that make car buying easier and deliver a high level of customer satisfaction. Musk could cherry-pick dealers who can deliver the experience he wants for his customers, just as Lexus did when it launched its brand in the U.S. in 1989. Selling and servicing cars is an entirely different business from making them. Using franchised dealerships relieves the car manufacturer of the tremendous capital burden of paying for and staffing brick-and-mortar facilities. That's one reason the auto industry went with that model in the first place. Besides, car dealerships are important corporate citizens, pumping into the national economy hundreds of millions of sales-tax dollars, tens of millions of dollars in charitable contributions and billions of dollars in paychecks. That makes them valuable economically. It also gives them clout that few politicians want to challenge. More importantly for car buyers and car owners, a national network of franchised dealerships with local sales and service facilities can make buying and caring for a new or used vehicle relatively easy. You can see why the idea might ultimately appeal to Tesla.
 
Tesla -- as innovative, different and disruptive as it may be -- is still a small player in a very large arena. It sold just under 25,000 cars last year globally. General Motors sold more than that every day. If Tesla has an eye on significant growth, the traditional dealership model, in its most progressive form, is a path the brand shouldn't ignore.
Source: CNN

Editor's note: John O'Dell is the senior green car editor at Edmunds.com.
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GM's Barra Says She'll Likely Testify Before Congress; Internal Inquiry Could Last Months

General Motors CEO Mary Barra said today that she's likely to testify personally before congressional committees looking into GM's handling of an ignition-switch problem that has been linked to 12 deaths, and said the company's own investigation could take a few months. In a meeting with journalists [Tuesday], Barra again apologized for GM's handling of the problem, which triggered a recall last month, and vowed better vigilance on safety to prevent future defects from going unfixed. GM has acknowledged that some engineers knew about the ignition problem for more than a decade before the recall, which has grown to include 1.37 million U.S. cars, spanning model years 2003 to 2007. "Our goal is to make sure that something like this never happens again," Barra said in her first public comments since the recall was announced Feb. 13. Barra said GM is putting in place new processes to strengthen its safety performance, including appointment of a new global safety czar, Jeff Boyer, 58, a career GM engineer specializing in safety. She said it would be the first in a series of steps the company takes to improve and better track vehicle safety.
Source: Automotive News

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Toyota Said to Reach $1.2 Billion Settlement of Probe

Toyota Motor Corp. has reached a $1.2 billion settlement to end a U.S. criminal probe of sudden unintended acceleration that led to the recall of more than 10 million vehicles, two people familiar with the matter said. The settlement, which isn't final, may be announced as early as today, said the people, who asked not to be named because the accord isn't public. The probe examined whether Toyota made false or incomplete disclosures to regulators about defects in its cars, and how it handled drivers' complaints, said a third person, who also asked not to be identified. The recalls blemished Toyota's reputation for quality that spurred its rise to become the world's top-selling automaker, a title the company relinquished for one year to General Motors Co.
Source: Bloomberg
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Don't Miss Today’s Webinar on Federal Advertising Requirements!

Today's "Comply with Federal Advertising Requirements" webinar will provide participants the opportunity to hear directly from a panel of FTC attorneys on key requirements and restrictions related to dealership advertising. NADA's Chief Regulatory Counsel, Paul Metrey, will moderate the discussion, which will highlight recent FTC advertising enforcement actions from dealerships around the country as examples of what to avoid. The 75-minute webinar is available to dealership employees, dealership compliance professionals and persons who provide advertising services to dealerships. It will be held at 1 p.m. ET, today, March 19. Click here to register.
Source: NADA University Online
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Maximizing Your Fixed Ops

In the 2013 Chase Auto Finance Dealer Survey released earlier this winter, dealers were asked what parts of their business were seeing growth. Out of the 262 dealer principals taking the survey, 207 of them (or an even 79 percent) said they were seeing growth in pre-owned sales. More than 56 percent of the 262 dealers said they were improving in service sales. (The survey was an online poll conducted among Chase Auto Finance's dealer base between Dec. 18 and Jan. 13.) As important as new-car sales, F&I and other areas of a store can be, strength in the service department and pre-owned ties into one of the measurements that NADA Academy considers in determining the health of a franchised dealership's business. When calculating the percent of the store's expenses that are covered by service, parts and body shop gross profits, the standard dealers should aim for is 75 percent, says management instructor Les Abrams. Taking it a step further is “total dealership absorption,” where service/parts/body shop gross profits and used-car gross profits cover the entirety of a dealership's expenses.
Source: Auto Remarketing
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BMW Sees 'Clear Growth' in 2014 Pretax Profit

CEO Reithofer warns that forecasts depend on political and economic stability

German luxury car maker BMW AG gave a bullish outlook for profit and sales this year, but warned that its forecasts depend on political and economic stability. Norbert Reithofer, chief executive officer of the Munich-based BMW automotive group, on Wednesday reaffirmed the company's target to sell more than two million cars for the first time this year. Boosted by higher car sales, Bayerische Motoren Werke's earnings before interest and tax should show "clear growth" in 2014, he said.
Source: The Wall Street Journal
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Honda Makes 10 Millionth Accord in U.S.

When Honda opened a plant in Ohio in 1982, some doubted whether American workers could make Accords as solidly as they were built in Japan. Today, Honda hits the 10-million mark on Accords in the U.S. The special 10 millionth rolled off the line Wednesday. When the Marysville plant opened, it was the first in the U.S. Today, many foreign makers -- even both major German luxury brands -- have factories in the U.S. Overall, Honda has made 20 million vehicles in the U.S. between all of its plants.
Source: USA Today
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More Articles
 
Quotable

"If Tesla has an eye on significant growth, the traditional dealership model, in its most progressive form, is a path the brand shouldn't ignore."  

    -- John O'Dell, senior green car editor at Edmunds.com, commenting on the value of the franchised dealership system, CNN, March 18
    

  

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-- March 19: Comply with Federal Advertising Requirements

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-- April 2: NADA’s Fair Credit Compliance Program

-- April 3: Tips for Submitting a Great Workshop Proposal 

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ADESA and NADA Donate $37,000 to Canine Companions

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