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February 29, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Recall of the Century
Volkswagen World's Largest Automaker -- In January, At Least
Mercedes Receives Request for Information on Emission Levels From U.S. Authorities
FCA Dealers are Warned of 'Bubble' in Service Work
Automotive News: Virtual Store Plan a Big Deal to Small Cadillac Dealers
2 Cleveland Nissan Dealers Cry Foul Over Rival's Extras
Mac's Chevrolet Donates CPR Training Unit to Mapleton Fire Department
Top Stories
Recall of the Century

As many as 1 in 10 U.S. vehicles may be affected

One of the largest and most complex recall efforts in auto industry history is growing larger and more complex. After starting small, the Takata airbag inflator recalls have spread like a virus to infect 12 automakers and as many as 25 million U.S. vehicles. U.S. regulators have stepped in to help speed up repairs and funnel a finite supply of replacement parts to the vehicles considered most at risk of an inflator rupture. Even though the recalls have been proceeding in earnest for more than a year, millions of inflators remain unfixed. According to the National Highway Traffic Safety Administration, about 31 percent of all recalled Takata inflators had been repaired as of Feb. 12, up from 18 percent in mid-August. The challenges, and human costs, continue to mount.
Source: Automotive News

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Volkswagen World's Largest Automaker -- In January, At Least

Volkswagen AG reached a goal it held dear since 2009 – to become the world’s largest automaker. In January, the German automaker delivered 847,000 units worldwide, bypassing number one Toyota Motor Corp, which produced 801,614 in the same month. The triumph, however, is likely to be fleeting. Traditionally, January is not a strong month at Toyota, the company usually picks up steam as the year progresses, whereas at Volkswagen, this January was uncharacteristically stout. Like all top three global automakers, VW closed out 1015 on a down note. In January, however, the company’s deliveries were up a surprising 3.7%, confusing (and apparently silencing) observers who expected a downturn in the wake of dieselgate. On a global basis, the diesel shenanigans left customers unfazed.

Something even more surprising happened: The Chinese market, seen as a liability for Volkswagen through most of last year, suddenly turned into a high-torque growth engine in January. Does Volkswagen’s new CEO Matthias Müller stand a chance to finally bring VW to the top in 2016? Some time in March, or April, we shall know a little more.
Source: Forbes

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Mercedes Receives Request for Information on Emission Levels From U.S. Authorities

Daimler says the U.S. Environmental Protection Agency has requested information from its luxury car brand Mercedes-Benz to explain diesel emissions levels in some of its cars. A spokesman for Daimler said it was fully cooperating with the request for information on Sunday, and that Mercedes cars conformed with all rules and norms. Daimler said the EPA request for information came in response to a class-action lawsuit filed by law firm Hagens Berman on Feb. 18, 2016, in U.S. District Court for the District of New Jersey. The suit accuses Mercedes of deceiving consumers with false representations of its BlueTEC vehicles, which it marketed as "the world's cleanest and most advanced diesel." A Daimler spokesman said the suit was wholly unfounded and without merit.
Source: Reuters

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FCA Dealers are Warned of 'Bubble' in Service Work

Council chair cautions restraint on expansion

An onslaught of recall-driven warranty work at Fiat Chrysler dealerships is a "bubble" that dealers should keep in mind when considering whether to expand their service operations, says the chairman of FCA's National Dealer Council. "You don't want to build a church for Easter Sunday," said Tom Leonard, 49, co-owner of Fury Motors in South St. Paul, Minn. "You don't want to add 40 percent service capacity into your service departments if what we're seeing is a bubble of service work because of recalls." About 11.6 million FCA vehicles were recalled in 2015. Many dealers are swamped by recall work and are forced to ask customers to schedule even routine service appointments as much as a month ahead.
Source: Automotive News

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Automotive News: Virtual Store Plan a Big Deal to Small Cadillac Dealers

Cadillac's ambitious plan to convert its smallest stores into virtual dealerships reverses the brand's emphasis on helping low-volume dealers maintain adequate inventories. Cadillac President Johan de Nysschen sees a future in which more than 400 small Cadillac dealerships in the U.S. would not stock vehicles on their lots. Instead, salespeople at those outlets would reach out to potential customers in their homes or offices using touch-screen vehicle configurators or virtual-reality units supplied by the factory. Specific details of how it would work for individual stores still are being explained to affected dealers, but Cadillac at least deserves credit for addressing an urgent problem rather than letting it fester.

It's another look at the existential question of what the brand is. Cadillac was the runaway U.S. luxury leader for decades. But it hasn't been the best-selling U.S. luxury brand since 1997 and last year dropped below Audi and Acura into sixth place. Every luxury automaker struggles to balance critical mass for dealers against maintaining an adequate service area in a market as vast as the U.S. But more than a third of Cadillac's 925 dealers, mostly dualed with Chevrolet or Buick-GMC franchises, sell 50 or fewer Cadillacs a year. These dealers have been in a strategic squeeze for years, raising concerns for both the brand and themselves about long-term sustainability.

Cadillac's new plan clearly favors enhancing the customer experience over continuing to financially help dealers maintain vehicle stocks. Executives must recognize that what they are asking of smaller dealers is difficult, and they will no doubt have more explaining to do. The cautious reaction from dealers thus far suggests they are giving the proposal a thorough vetting. Dealers know Cadillac is addressing the very real issue of balancing low sales rates while carrying large inventories. The retailers must assess their situations and make tough decisions about the kind of business they will have to run.
Source: Automotive News

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2 Cleveland Nissan Dealers Cry Foul Over Rival's Extras

Suit challenges factory's "preferred' relationships

Two owners of Nissan stores in the Cleveland area have filed a federal lawsuit against Nissan North America, alleging a confidential agreement by the automaker to provide a competing dealer with millions of dollars in financial support amounts to a discriminatory incentive program that violates both U.S. and Ohio law. The suit, filed in U.S. District Court for Northern Ohio on Feb. 23, takes aim at Nissan's relationship with Bernie Moreno, owner of two Cleveland-area stores who has a deal to receive payments of up to $6.6 million over five years from the manufacturer to fuel his stores' sales growth and to cover the cost of relocating and building new facilities.

News of the aid was revealed in a court case related to an open Infiniti point Moreno was awarded in Coral Gables, Fla., and was highlighted in a Feb. 8 story in Automotive News. The owners of Nissan stores neighboring Moreno's in Ohio argue that Nissan's subsidies allow Moreno to sell vehicles at a loss and take business from them. Their complaint contends Nissan's payments to Moreno violate Ohio franchise law because they give him an advantage not available to all dealers. Ohio franchise law requires that "incentives have to be available to all dealers on the same terms," said Robert Poklar, an attorney at Weston Hurd representing the plaintiffs. "It has to be a level playing field for every dealer."
Source: Automotive News

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Mac's Chevrolet Donates CPR Training Unit to Mapleton Fire Department

Mac’s Chevrolet [in Mapleton, Iowa] donated a CPR training unit to the Mapleton Fire Department as part of a National Automobile Dealers Charitable Foundation Program. A Resusci Anne full body CPR training unit was given to representatives of the fire department during a presentation at the dealership on Feb. 12.
Source: The Mapleton Press (Mapleton, Iowa)

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    Quotable
    "The majority of our dealers already have the proper capacity to handle this volume increase, since most of our network has shown a great attitude and customer-centric approach." 

       --- Pietro Gorlier, head of Mopar, on the increase of service work at Fiat Chrysler dealerships due to recalls, Automotive News, Feb. 29


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