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April 17, 2017 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Dealers Relying More on Fixed Ops
Automakers Voice Opposition to Republican Border Adjustment Tax Plan
Itís Time to Refocus Incentives
The Coolest Cars at the 2017 New York International Auto Show
Selling above Sticker Price?
Top Stories
Dealers Relying More on Fixed Ops

As a percentage of a dealership's total gross, profits fell in the new- and used-vehicle departments, but rose in service and parts, an annual study by the National Automobile Dealers Association shows.

The profit gains come after about a third of all U.S. light-vehicle dealerships expanded their service departments by at least one bay in the past 18 months to capture more service revenue, said NADA Chief Economist Steven Szakaly. And with new- and used-vehicle price competition remaining intense, Szakaly predicted, "Going into a [sales] plateauing year, customer loyalty is going to be very key for dealers." That loyalty will come from expanding fixed operations' revenues, he said. 

Some other trends that the study revealed: continued dealership consolidation, increased hiring and dealers paying more for talent even as vehicle sales plateau and pretax profit margins remain flat. 
Source: Automotive News

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Automakers Voice Opposition to Republican Border Adjustment Tax Plan

The automotive industry made it clear last week that it is strongly opposed to any proposal to adopt a border adjustment tax, saying it would raise the cost of cars and hurt both the industry and customers.

The industry', which has been careful to mostly praise the "pro-business" policies favored by the Trump administration, wants to make sure the administration and Congress knows it is strongly opposed to a tax on imports.

"Tax reform should not be financed by an increase in border taxes and goods, taxes that will drive up the prices of trucks and cars sold in the USA," Mark Scarpelli, chairman of the National Automobile Dealers Association, said at the 2017 Automotive Forum, a day-long industry symposium for dealers on Tuesday. "That is not a good equation."

Scarpelli wasn't alone. The leaders of two lobbying groups, a highly-ranking Wall Street analyst and a top industry executive also warned that a border adjustment tax would cause the cost of new cars and trucks to increase by as much as $3,000 and could cause U.S. auto sales to drop by as much as 2 million units per year.
Source: Detroit Free Press

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Itís Time to Refocus Incentives

Dealer-factory relations have always been uneasy in the auto industry, but a relentless fixation on new-vehicle volumes is creating fresh tensions. Manufacturers keep refining stairstep incentives to expand and prolong the flow of vehicles from assembly lines to consumers' garages. But the factory programs are a double-edged sword for both factory and dealer.

There's a better way. In times like these, manufacturers should be using their dealer-incentive budgets not to seal deals but to build bonds with consumers by supporting technology and other upgrades that make buying easier, service appointments faster and customers more comfortable.

Unlike the stairstep drug, these measures would enhance the dealer's profits in a sustainable way, while safeguarding the manufacturer's brand value.
Source: Automotive News

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The Coolest Cars at the 2017 New York International Auto Show

This year, size and power are en vogue. Dodge rolled out the Challenger SRT Demon, a car so powerful it does wheelies. Ford trotted out its latest cop car, Mercedes bulked up with a new AMG offering, Lincoln’s refreshed Navigator dominates anyone standing in its shadow.

If you’re headed to the show or watching from afar, here’s the best metal to drool over.
Source: Wired

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Selling above Sticker Price?
Slick sales tactics can put dealers in hot water.

Have you heard the new one? A sales trainer is suggesting a new sales tactic that leads to salespeople regularly selling vehicles for more than the advertised price. The practice essentially invites customers to pay an additional amount above the advertised price as a tip for excellent service or for getting an exceptional deal. Sounds too good to be true? That’s because it probably is. Most states have laws that explicitly require that dealerships sell vehicles at or below the advertised price, often referred to as the “ad price rule."
Source: The Scali Law Firm

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Quotable
"Tax reform should not be financed by an increase in border taxes and goods, taxes that will drive up the prices of trucks and cars sold in the USA."
    -- NADA Chairman, Mark Scarpelli, remarks at the NADA/J.D. Power Automotive Forum in NYC on April 11

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