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Inside this issue
Detroit News Commentary: Direct Auto Sales Could Raise Car Prices
Auto Sales Beat Estimates With Korean Companies' Surprise Gains
Dealer Group Predicts Best U.S. Auto Sales In A Decade, In 2015
Buffett, Van Tuyl Bullish On Autos, Economy and Partnership
From Cadillac to Honda, New York Show Steals Detroit's Thunder
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Detroit News Commentary: Direct Auto Sales Could Raise Car Prices
By Lawrence J. Spiwak

Buying a new car is a major financial investment. Fortunately, not only do consumers have a wide choice of makes and models from which to choose (what economists call “inter-brand” competition), but once they settle on a make and model, consumers can then aggressively shop for the best price from a variety of same-brand dealers (or what economists refer to as “intra-brand” competition). Indeed, in Metro Detroit alone, consumers can shop at 12 Toyota dealers to buy a Camry.

One way state legislatures have sought to encourage intra-brand price competition is by requiring auto manufacturers to sell their cars through independently owned local dealerships. These franchise rules have been a fundamental cornerstone of automobile retailing in America for years. Yet, despite the clear benefits of this aggressive intra-brand competition for new cars, there is growing political pressure in several states — including Texas, Arizona and Connecticut — to pass legislation that could severely curtail American consumers’ ability to price shop among competing independent dealers by allowing automotive manufacturers to sell directly to the public. Click here for the full commentary.

Lawrence J. Spiwak is president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies.

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Auto Sales Beat Estimates With Korean Companies' Surprise Gains

Sales of cars and light trucks in the U.S. rose last month to the fastest pace since November, exceeding analysts’ estimates after Korean automakers reported surprising increases. Light-vehicle sales rose 0.6 percent to 1.55 million, according to researcher Autodata Corp., beating estimates for a 0.8 percent decline. The annualized rate, adjusted for seasonal trends, jumped to 17.2 million, the fastest rate in four months. The average estimate was for a 16.9 million pace. Combined sales of Seoul-based affiliates Hyundai Motor Co. and Kia Motors Corp. rose 9.9 percent, blowing away estimates for a combined decline of 4.5 percent. This helped make up for an otherwise ho-hum month in which General Motors Co. and Honda Motor Co. sales fell more than analysts had estimated and Ford Motor Co. and Nissan Motor Co.’s also declined.

The National Automobile Dealers Association predicted Monday that the Federal Reserve will hold off on raising interest rates through the summer, giving vehicle sales a boost that can offset slow economic growth in the start of the year. U.S. gross domestic product for the period ending Tuesday probably rose 2.1 percent, NADA estimated.
Source: Bloomberg

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Dealer Group Predicts Best U.S. Auto Sales In A Decade, In 2015

The National Automobile Dealers Association said it expects U.S. auto sales approaching 17 million in 2015, the highest since 2005. Steven Szakaly, chief economist for NADA, McLean, Va., said there are few negative factors on the horizon for 2015. “If there’s any worry, it’s that the growth rate on the new-vehicle side is slowing down,” he said in a March 30 conference call, part of the run-up to Press Days for the New York International Auto Show later this week. “As the growth rate slows down there is some risk manufacturers will turn to incentives if they need to keep the sales rate going,” he said.

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Buffett, Van Tuyl Bullish On Autos, Economy and Partnership

At this week’s 2015 NADA/J.D. Power Automotive Forum, marketers, dealers, media researchers, economists and social media experts talked about the car business and world economic fundamentals driving it. The highlight of the day was Warren Buffett, who is now knee-deep in the dealership lake. Berkshire Hathaway Inc. last fall signed on to buy Van Tuyl Group, the largest privately owned U.S. dealer network. Now the group, which comprises 75 stores, is wearing the name “Berkshire Hathaway Automotive.” The operation will move from Phoenix to Dallas, but otherwise it will run -- as it always has -- with CEO Larry Van Tuyl at the helm. Van Tuyl, who joined Buffett onstage for the Q&A setup moderated by CNBC's Becky Quick, said the cash deal was done essentially with a handshake, par for the course for Buffett.
Source: MediaPost

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From Cadillac to Honda, New York Show Steals Detroit's Thunder

Detroit may be where cars are made, but New York is becoming the town to show them off. Just look around at the New York International Auto Show. Honda Motor Co. chose the Big Apple to surprise the motoring press and car buffs with a sneak reveal of the all-new Civic, one of the Japanese company’s most important models. While General Motors Co. could have shown off its bread-and-butter Chevrolet Malibu and its most expensive Cadillac sedan in Detroit in January, executives instead chose New York. For this year at least, New York is home to some of the glitziet and most important cars that the industry’s big players want to show off in North America. That’s in part because Detroit is where industry insiders gather, but New York is home to more affluent shoppers and influential television personalities.
Source: Bloomberg

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More Articles

"Using recent data on new car sales and registrations in Texas for 10 of the most popular models, we found that when multiple dealers within a brand compete for business, prices drop — often substantially."

    -- Lawrence J. Spiwak, president of the Phoenix Center for Advanced Legal & Economic Public Policy Studies, The Detroit News, April 2

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