NADA Headlines - 12/02/2013 (Plain Text Version)
The Obama administration is delaying until November 2014 the launch of the federal government's online health exchange where smaller new-vehicle dealers and other mom-and-pop businesses can shop for coverage. Small businesses with fewer than 50 employees will still have the option to purchase health insurance coverage for workers through the new marketplace but will not be able to do so online. The exchanges are of great interest among auto dealers because the average U.S. car dealership had 55 employees in 2012, the National Automobile Dealers Association says. Until next fall, employers with fewer than 50 workers will need to use a broker or agent to buy health care plans for employees, the government said.
The latest delay affects employers located in the 36 states where the U.S. government is running health insurance exchanges. It does not cover the small business options in the 14 states and the District of Columbia that operate their own exchanges. "Auto dealerships, like many other small, family-owned businesses across the country, are struggling to understand and implement the new health care requirements, especially with the ever-changing rules coming from Washington," NADA said [Wednesday]. "We hope that the many technical and procedural issues under the ACA will be resolved soon, and that dealer employees will not suffer any ill-effects with respect to their health care coverage."
Consumers spent an average of $1 billion per day on new cars and trucks in November, a record for the month. Through the first half of November, the average transaction price for new vehicles was $30,079. That was an increase of $461 from November 2012, according to J.D. Power and LMC Automotive. Between higher unit sales and higher transaction prices per unit, consumers were expected to spend about $30 billion on new vehicles in November, 10 percent more than they did in November 2012 — and nearly double the level of November 2008 as the recession took hold, analysts said. With one month to go in 2013, forecasters reported U.S. auto sales this year should beat 2012 by more than 1 million units or about 8 percent, to a total of around 15.6 million cars and trucks.
Automakers entered their year-end sales push last month with the most cars and trucks on U.S. dealer lots in eight years, a buildup that's poised to test the industry's newfound pricing discipline. Inventory climbed to almost 3.4 million cars and light trucks entering November, according to industry data provider WardsAuto. At 76 days' supply, that was the highest for the month since 2005. Carmakers have boosted production to meet demand that has left the industry on pace for the best sales year since 2007. Swelling supply raises the stakes for sales in November after deliveries missed estimates in October and slipped in September for the first time in 27 months. If buyers don't absorb enough inventory, more automakers, including Toyota and Honda, may need to follow Ford's lead by trimming production to avoid margin-slicing discounts.
As 'tsunami' of turn-ins nears, brands plan conquest strategies
Automakers are crafting strategies to keep existing customers -- and perhaps poach some new ones -- when the number of vehicle owners coming off lease shoots up next year. The jump in off-lease customers is a byproduct of the credit freeze and leasing lull that began during the recession. People who leased vehicles after the market recovered in 2010 and beyond are returning to showrooms in growing numbers as three-year leases expire. Auto executives are eager to fight for their share of the influx, which could provide a tail wind for continued U.S. sales growth in 2014 amid signs that the recovery is losing steam. An increase in U.S. sales next year would be the fifth in a row and only the second time that has happened since the 1930s.
Toyota Motor Corp. and Honda Motor Co. ramped up domestic output in October amid robust vehicle demand in the U.S. and a comeback in domestic sales. The data released by Japan's car makers also showed big increases in production in China, as output there recovers following year-earlier plunges amid a consumer backlash related to a territorial dispute. Toyota—the world's biggest car maker by sales volume—said Thursday that its domestic output rose 9.4% from a year earlier to 289,961 vehicles. Honda Motor Co., Japan's third largest auto maker, built a total of 90,707 vehicles in the latest reporting month, up 13% year-over-year. The data came after the Ministry of Finance said earlier in November that solid U.S. demand for autos helped Japan's merchandise exports jump 19% from a year earlier in October, the biggest rise in more than three years.
In an effort to enhance performance within its North American operations, Nissan announced last week a series of leadership shifts. Commenting on the news, Jose Munoz, who becomes chairman of Nissan North America effective Jan. 1, said, "These moves will help us achieve the objectives of Nissan's Power 88 mid-term business plan in the newly announced North America region. The Nissan team is continuing to strengthen its focus on ensuring high product quality and customer satisfaction while improving both brand and franchise value with our dealer network." Click here to see the changes.
Employees exchange tokens for gift cards, sports tickets, trips
Lots of dealers walk their stores with coins in their pocket. But when Keith Kocourek does so, at least one of his 250 employees is about to be rewarded for reaching a goal or taking special care of a customer. Kocourek is the owner of Kocourek Automotive Group, a group of five dealerships in Wausau, Wis., that combined sell about 200 new and 350 used vehicles per month. The coins in his pockets are not nickels and dimes; instead, they are custom-minted reward coins for his employees in denominations of $20, $50 and $100. Each month -- or more often if the mood strikes -- Kocourek recognizes outstanding achievements in service or sales by his employees with the casino chip-sized coins. But there's a catch: The coins can't be turned in for cash. They must be traded for an item of the employee's choice, such as a gift card, sports tickets or even a trip. Once the employee chooses a reward, the company buys the item on the employee's behalf.