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February 18, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Volvo Sees Record Sales, Higher Earnings in 2016 After Strong 2015
A Bumpy Start for GM Used Sales Site
Toyota-Led Profit Gains at Risk as Japan's Carmakers Face Stronger Yen
BMW Defends Its U.S. Sales Crown by Paying Dealers to Buy Loaners
VW, Audi Dealers to Get Branded F&I Products
Experts Warn Against Long-Term Auto Loan Trend
Takata Considering Trimming Airbag Operations, Report Says
Utah's Craig Bickmore Elected Chairman of Automotive Trade Association Executives
Top Stories
Volvo Sees Record Sales, Higher Earnings in 2016 After Strong 2015

Volvo Car Group forecast record sales and higher profit this year, after strong demand for its cars in the U.S. and Europe tripled its operating profit in 2015. The Sweden-based company said full-year operating profit rose to 6.62 billion Swedish crowns ($776.6 million) from 2.13 billion in the previous year. Last year was the first time Volvo reached sales of more than 500,000 cars, a step toward its goal for annual sales of 800,000 by 2020.
Source: Reuters

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A Bumpy Start for GM Used Sales Site

Dealers question fairness, legality

General Motors' new Factory Pre-Owned Collection portal, which sells used vehicles directly to consumers, is off to a rocky start. GM dealers nationwide gave it a tepid welcome, with only one in four signing up, and California's dealer association has challenged the portal's legality. The online portal went live Tuesday, Feb. 9. GM says almost 1,100 dealerships have agreed to participate. As of Jan. 1, GM had 4,245 U.S. dealerships. In a Feb. 9 letter addressed to GM North America President Alan Batey, the California New Car Dealers Association said it has "strong concerns" about whether the program violates a number of California consumer protection laws and other legal requirements. "We have had our attorneys review the program and they have raised various legal issues that need to be addressed by GM," said the letter, signed by Brian Maas, the association's president. Automotive News obtained a copy. At least 169 of the association's 1,100 members are franchised GM dealers. The letter questions whether the program puts GM in unfair competition with its dealers for used-car sales.
Source: Automotive News

Editor’s note: NADA has heard from many GM dealers who have expressed significant concerns with the new program. These issues have been communicated directly to GM’s senior management through NADA’s industry relations group, and we expect GM to work with its dealers to address the many issues and concerns this program has caused. NADA is aware of several state associations that have taken similar action and any questions about those actions should be directed to the appropriate state association head.

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Toyota-Led Profit Gains at Risk as Japan's Carmakers Face Stronger Yen

Japanese automakers may have run out of the fuel that’s driven profits higher for four years: the weaker yen. Toyota Motor Corp. and Japan’s six other automakers may combine to earn 4.55 trillion yen ($40 billion) in the fiscal year through March 2017, according to analysts estimates compiled by Bloomberg. That’s a 5.5 percent increase from what analysts are projecting for the period ending next month, and would be the slowest pace of growth in five years.
Source: Bloomberg

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BMW Defends Its U.S. Sales Crown by Paying Dealers to Buy Loaners

BMW wielded an unlikely tool to hold onto its crown in the U.S. luxury-car market last year: the loaner. The German automaker narrowly outsold Mercedes-Benz and Lexus, and its success hinged partly on some deal-making in the showroom. Its strategy: Pay dealers to buy BMWs for their fleets of loaner vehicles, showing off the latest models to service customers and boosting sales. Other carmakers have used similar tactics. But BMW has been unusually assertive, according to people familiar with the matter -- so much so, in fact, that it might have lost No. 1 bragging rights to Toyota Motor Corp.’s Lexus without the strategy.
Source: Bloomberg

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VW, Audi Dealers to Get Branded F&I Products

Volkswagen Credit Inc., in an effort to build customer satisfaction and loyalty, plans to launch branded vehicle protection products for the Volkswagen and Audi automobile lines and Ducati motorcycle line early next year. The product suite will be developed, marketed and distributed in collaboration with Safe-Guard Products International of Atlanta. Volkswagen Credit Inc. does business as VW Credit, Audi Financial Services and Ducati Financial Services. It will roll out the branded F&I products to U.S. dealers beginning Jan. 1, 2017.
Source: Automotive News

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Experts Warn Against Long-Term Auto Loan Trend

After a year of record new-vehicle sales, automakers, dealers and the banks and finance companies that issue car loans are jubilantly exchanging high-fives. Analysts list several reasons for record sales of 17.5 million vehicles in 2015, including an improving economy and job market, low interest rates, cheap gas and growth in leasing. New-car sales also are being driven by easy credit: Consumers, many with marginal credit ratings, are borrowing higher amounts and for longer loan terms than ever before. Experian, one of the three major credit bureaus, says the average loan for a new vehicle in the third quarter was $28,936, up more than $1,100 from a year earlier, and the average loan was for 67 months.

What’s more, consumers are trying to keep monthly payments affordable by stretching out the payments. Potentially millions of consumers will owe more than their vehicle is worth for years and will still be making payments after the warranties expire. When they get the new-car itch again, they might have little or no equity in the vehicle they want to trade in.
Source: The Detroit News

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Takata Considering Trimming Airbag Operations, Report Says

Takata Corp., the troubled Japanese supplier at the center of a global airbag recall crisis, is considering trimming its global airbag operations, including consolidating production plants in Europe and shedding overseas jobs, Kyodo News reported. The move would be part of a restructuring plan by the Japanese firm which is struggling with a global recall of potentially faulty airbag inflators, the report said. Takata could also sell some non-core businesses as part of a plan to raise money to pay for the cost of recalling about 50 million vehicles due to exploding airbags, which has caused at least 10 deaths so far, it said.
Source: Reuters

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Utah's Craig Bickmore Elected Chairman of Automotive Trade Association Executives


The Automotive Trade Association Executives (ATAE) elected Craig Bickmore as chairman for 2016. The ATAE represent the executives of 115 state and metropolitan new-car and -truck dealer associations in the United States and Canada.

“It’s a great opportunity and a blessing to work with some of the finest business leaders and entrepreneurs in the country,” said Bickmore, executive director of the New Car Dealers of Utah. “Those leaders and entrepreneurs are the nation’s new-car and -truck dealers and others that make the auto industry and economy thrive. You can’t find a better group of people anywhere on the planet than those working in the car business.” 

Bickmore joined Utah’s dealer association in 1987 shortly after completing the MBA program at Utah State University. He worked as the association’s field representative and later became operations director. He was named executive director in 1997.

The ATAE respond to the challenges that dealers face on legislative, regulatory, business and consumer-related issues at the state and local levels.
Source: NADA

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Quotable
"Our decision to take a direct role in underwriting most vehicle protection products, while also enhancing the offering with other products specifically developed for our brands, is part of a multi-pronged strategy that aims to increase overall customer satisfaction and to build loyalty by which our customers return to the dealer network for any future service needs."

   --- Richard Howse, VW Credit Inc.’s vice president of marketing and business development, on the automaker's new products to encourage customers to return to the dealership for service, Automotive News, Feb. 17


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