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November 2, 2017 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Republicans Stick With Big Corporate Tax Cuts in House Bill
October Sales of Trucks, SUVs Soar as Car Slump Continues
Ford Leads Truck Boom as US Auto Sales Seen Beating Estimates
Ram Takes Aim at the Number Two Spot
LUXURY: Scrambling to Avoid a Blue Christmas
Car Buyers Get Bigger Discounts in October Despite Strong Auto Sales
Waymo Enlists AutoNation to Service Some of Its Robovans
Top Stories
Republicans Stick With Big Corporate Tax Cuts in House Bill

WASHINGTON — House Republicans, seeking the biggest transformation of the U.S. tax code in more than 30 years, aim to permanently chop the corporate tax rate from 35% to 20%, compress the number of individual income tax brackets, and repeal the taxes paid by large estates starting in 2024, according to a detailed summary of the plan reviewed by The Wall Street Journal.

To partly offset that lost revenue, Republicans plan to curtail the deductions individuals take for state and local tax payments and the ones businesses get for the interest they pay on debt.

One of the most closely watched areas is the taxation of pass-through businesses such as S corporations and partnerships. Republicans promised them a 25% rate, but also said they would create guardrails to prevent people from turning what would otherwise be wage income taxed at up to 39.6% into business income taxed at a lower rate.

The estate tax provisions also contain wrinkles. The estate-tax exemption, set for $5.6 million per person and $11.2 million per married couple, would double immediately. The tax would get repealed starting in 2024.
Source: The Wall Street Journal

Editor’s note: At 11:35 ET, the House Republican tax reform bill was publicly released along with a section-by-section description. NADA is analyzing this 429-page bill and will keep dealers informed with further details. A vote on this bill is expected as early as next week in the House Ways and Means Committee.

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October Sales of Trucks, SUVs Soar as Car Slump Continues

Major automakers posted mixed U.S. new vehicle sales in October on Wednesday, though America's love affair with high-margin pickup trucks and SUVs remained in full bloom as larger, pricier vehicles fared better than passenger cars. Industry experts believe consumer discounts over 10 percent of the average transaction price are unhealthy as they erode resale values and are unsustainable in the long term.
Source: Reuters

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Ford Leads Truck Boom as US Auto Sales Seen Beating Estimates

U.S. automakers saw booming demand for their big-ticket pickup models last month, led by Ford Motor Co.’s F-Series truck line, as General Motors Co. predicted a surprise uptick in total industry sales. The strong showing for trucks is a positive indicator both for carmaker profits and the U.S. economy. Companies added more workers than forecast to U.S. payrolls last month as employment in the construction industry -- a sector closely tied to pickup sales -- climbed to the highest in more than a decade. Automakers also are benefiting from consumers in Texas, the nation’s top truck market, continuing to replace vehicles damaged by Hurricane Harvey.
Source: Bloomberg

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Ram Takes Aim at the Number Two Spot

Ram has a plan, it seems, to knock the Silverado out of the No. 2 spot in the full-size pickup segment in 2018 and cut into sales of the midsize Colorado at the same time. How? By continuing to build the current-generation Ram 1500 — likely backed by attractive discounts — while ramping up production of the redesigned Ram 1500. The new Ram, code-named DT, debuts in January at the Detroit auto show. "I think this is a brilliant plan," said Ralph Mahalak Jr., who owns six FCA dealerships in Michigan, Ohio and Florida. "We can certainly use more trucks."
Source: Autoweek

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LUXURY: Scrambling to Avoid a Blue Christmas

When financial markets surge to new records, sales of luxury cars usually rise, too. Instead, October U.S. auto sales reports on Wednesday showed that a collapse in sales of luxury sedans is accelerating. Consumers have gradually shifted over to luxury SUVs and crossovers from sedans in the last decade, but the trend -- which has occurred in both the non-luxury and luxury segments of the auto market -- was particularly pronounced in October.
Source: Reuters

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Car Buyers Get Bigger Discounts in October Despite Strong Auto Sales

Shoppers may finally get a break in the dealership showroom. Although U.S. auto sales remained strong in October from historical standards, prices are flattening out and discounts are adding up after years of consumers forking over more cash for new vehicles. Average discounts per vehicle jumped 16.5% in October, compared with a year earlier, to $3,472 per vehicle, according to Edmunds.
Source: USA Today

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Waymo Enlists AutoNation to Service Some of Its Robovans

Autonomous cars may not need a driver, but they still need a good mechanic. Waymo LLC, the driverless-car unit of Google parent Alphabet Inc., has signed up AutoNation Inc. to service robovans that are being tested in Arizona and California. The agreement, announced Thursday, shows the Silicon Valley tech giant is closer to deploying vehicles on public roadways without humans behind the wheel.
Source: The Wall Street Journal

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Quotable
"We did see continued hurricane replacement at the beginning of the month. The economic factors are also in trucks' favor. People are back to work and construction activity is up, which is good for truck sales."

    -- Michelle Krebs, an analyst at car-shopping website Autotrader, commenting on light-truck sales, Bloomberg, Nov. 1

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