Car Dealers Cheesed Over FTC's Proposed Rule Changes

Federal Trade Commission (FTC) has proposed comprehensive rules changes regarding dealership advertising and how finance and insurance offices are handled. However, dealers, specifically the National Automobile Dealers Association (NADA), aren’t happy with these new ideas and have issued formal challenges to the regulatory scheme.

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Light Vehicle Sales Drop in Second Quarter of 2022

Americans continue to buy vehicles nearly as fast as they arrive on dealer lots, as the nation is rife with stories chronicling perpetually empty lots and some establishments making bank with obscene markups.

We’ll leave those latter two topics for another day. Meanwhile, despite a consumer hunger for new cars, the market is down sharply compared to this time last year – double-digit percentages, in fact.

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Jeep Trick: Top Brass Advocate for Separate Jeep Showrooms

With the house of Stellantis constantly exploring the upper echelons of what customers will pay for a rig with a Jeep badge on its nose, it seems that placing six-figure Grand Wagoneer L models next to entry-level Ram work trucks has become passé. If some corner-office dwellers have their way, Jeeps – or at least the snazzy ones – could earn a place in their own showroom.

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Genesis Leaves the Nest With First Solo Store

Genesis is an interesting brand. Decades after Japanese automakers launched premium nameplates of their own, South Korea’s Hyundai decided to spin off one of its sedans into an entire luxury sub-brand in 2015. The resulting vehicles have been solid performers, representing excellent value for individuals in the market for something fancier. Genesis is building real luxury cars and working to differentiate those models from Hyundai Motor Groups’ mainstream products.

But it’s had to overcome plenty of obstacles. While Genesis’ product might be dunking on some of the other Asian luxury brands, achieving the same notoriety has been difficult for the fresh nameplate. The company also isn’t targeting Acura, Infiniti, and Lexus. Its sights are set on the Germans, with many vehicles already comparing favorably. But if Genesis is to become a serious rival, it needs to distance itself from the Hyundai and Kia models it traditionally shares a lot with — resulting in its very first standalone retail store in the United States.

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Hyundai, Genesis Warning Dealers About Markups

With dealers having spent the last 12 months placing egregious markups on automobiles, it has become a seller’s market, to say the least. New vehicle transactions are currently averaging $6,000 more than they would have been in the previous annum. But prices had already climbed by $3,000 (year-over-year) in 2020 due to production shortfalls, encouraging fleet managers to scoop up every used vehicle they could find until secondhand cars became likewise overpriced.

It’s an abysmal situation for consumers and automakers have begun to realize they’ll be getting blamed if something isn’t done. As a result, we’ve started to see manufacturers publicly chiding showrooms for placing lofty “market adjustments” on new automobiles. Ford Motor Co. and General Motors have both made formal declarations that they’ll be penalizing dealers who issue ludicrous markups on products wearing their emblems, with Hyundai Motor Group issuing similar threats to greedy retailers this week.

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IIHS Study Suggests Buyers of Used Vehicles Learn Less About Their Car

The Insurance Institute for Highway Safety (IIHS) is claiming that individuals shopping for a secondhand automobile end up learning less about the modern features lurking within their automobiles. Considering salespeople have meetings about how best to hype the advanced driving aids in new models, this one really shouldn’t have required a survey for the IIHS to piece it together. But the outlet appears to be attempting to link this alleged lack of knowledge to make claims that it’ll somehow contribute to the probably of used vehicles being involved in a crash.

“Used car buyers were substantially less likely than new car buyers to know about the advanced driver assistance features present on their vehicles,” stated IIHS Senior Research Scientist Ian Reagan, the author of the study. “They were also less likely to be able to describe how those features work, and they had less trust in them. That could translate into less frequent use, causing crash reductions from these systems to wane.”

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Industry Braces for Increased Volumes, Lower-Margin Vehicles

It’s a little early in the year to say anything definitive about 2022 vehicle volumes, however, the automotive industry has been signaling that production numbers should begin to rise in the coming months. While that sentence should be cause for a sigh of relief, there are parts of the industry that might not feel as good about it as you probably do.

With supply chain problems having drastically limited vehicle production during the pandemic, many dealers opted to price their goods well above anything that could be considered normal. This worked out poorly for many of the smaller outfits as larger retailers enjoyed record-breaking profits in 2021. Some manufacturers also benefited financially, as the chip shortage allowed them to prioritize their highest-margin products. Unfortunately for them, 2022 is likely to bring affordable vehicles back into play and gradually pull pricing closer to something approaching normality.

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Reading the Riot Act: GM Pens Memo to Dealers About Markups

It has been a seller’s market over the last few months (more than that, if we’re honest) in the car industry, with demand far outstripping supply for most vehicles. Images of dealer lots bereft of vehicles to sell have become familiar. This has led to some stores slapping so-called market adjustments on hot-selling inventory, sure in the knowledge that someone will pay the inflated asking price.

Manufacturers are noticing. Ford chirped about the practice earlier this year, and now GM has seen fit to send its dealers a sternly worded letter as well.

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Blue's Clues: Ford Introduces Money-Back Used Car Program

The used car market may be red hot, but Ford seems to be intent on pouring a bunch of blue all over the place. Starting next month, certain second-hand vehicles hawked by Ford stores will qualify for a 14-day/1,000-mile money-back guarantee.

Or perhaps some dealers are feeling the heat from places like Carvana. That’s up for debate.

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Second-Hand News: GM Investigates the Used Car Biz

Seeking to capitalize on a red-hot used vehicle market, General Motors has said it will launch an online service called CarBravo. Intended to challenge the likes of Carvana and CarMax by offering customers access to a large inventory of machines in stock at GM dealers across the country.

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Auto Dealers Report 2021 Profits Will Break Previous Record

With so many articles discussing how poor automotive sales have been through 2021, one could be forgiven for thinking this was going to be a hard year for anybody owning a dealership. However, the reality of the matter is that it’s a seller’s market and those who can sell are making a killing off everyone else’s misery.

The National Automobile Dealers Association (NADA) has reported that the ongoing deficit of product has helped the average store rake in more money than they did in 2020, breaking the previous twelve-month profitability record. Today’s average dealership is reporting a net pretax profit of about $3.38 million through October for 2021. That’s more than twice what was tallied within the same timeframe last year and really goes to show how much money can be made when the customer’s needs are the only items being discounted.

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Pay Up: Average Price of a Used Car in America Shockingly Close to $30,000

It will surprise exactly zero of our readers that prices of second-hand vehicles are through the roof. A constricted new car supply which leads to a dearth of trade-ins has contributed to customers facing the prospect of paying exorbitant sums for previously loved vehicles. Now, a new stat from Edmunds.com puts a precise number on the issue.

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Used Vehicle Prices Are Still Totally Insane

If you’re in the market for a new vehicle, you’ve likely noticed that some of the models you were interested in aren’t available in your preferred format and happen to be accompanied by sizable dealer markups. Well the used market, formerly a refuge for those seeking a bargain and a shrewd way of dodging the steepest period of deprecation, isn’t doing much better.

According to Black Book, the typical transaction price for used vehicles has gone up by over $500 in less than a month. Pegged at $27,000 in November, the average secondhand car now trades for over $27,500. As we’ve recently covered just how wild secondhand vehicle prices have become in 2021, we’ll keep this one relatively brief. But it must be said that automotive values are starting to seem totally disconnected from anything that could be considered rational as cars now have MSRPs a third higher than they were at the start of 2021.

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Study Shows Auto Dealer Sentiment Still Ridiculously Positive

Car dealers have been polled for the fourth-quarter Cox Automotive Dealer Sentiment Index (CADSI) and they’re still incredibly optimistic, despite losing some of their earlier confidence that new-vehicle sales would be relatively healthy.

The dealer optimism – especially among franchised entities – seems to be wholly tied to profitability here. New vehicle sales dropped in 2019 and absolutely cratered in 2020 due to the nation’s response to the pandemic. In spite of there being plenty of talking heads in the news media telling you not to stress about the economy, inflation has created pricing increases across the board and automobiles are at the tippy top of that list. With inventories remaining relatively lean due to production slowdowns, staggering dealer markups have become the norm. Basically, stores just seem happy that they can charge more per car while they’re in short supply. But they’re also starting to have concerns about the long-term viability of the market and are are feeling the pinch of rising operating costs.

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Used Vehicle Pricing Sets Another Record High

Used-vehicle prices set another record last month thanks to elevated demand and suppressed production of new cars. Depending on who you ask, the typical transaction fee for a secondhand automobile rose nearly 50 percent in November vs the same period in 2020. While the pandemic had meaningfully suppressed demand during that time, that’s still a staggering increase over any 12-month period.

Sharing Cox Automotive’s Manheim Used Vehicle Value Index, Automotive News nailed down the annual difference to a 44-percent increase. This also represents the November pricing index swelling by 3.9 percent against October, which is noteworthy in itself. But what does that look like in dollars?

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  • FreedMike I just don’t see the market here - I think about 1.2% of Jeep drivers are going to be sold on the fuel cost savings here. And the fuel cost savings are pretty minimal, per the EPA: https://www.fueleconomy.gov/feg/PowerSearch.do?action=noform&path=1&year1=2022&year2=2022&make=Jeep&baseModel=Wrangler&srchtyp=ymm&pageno=1&rowLimit=50Annual fuel costs for this vehicle are $2200 and $2750 for the equivalent base turbo-four model. I don’t get it.
  • FreedMike How about the “Aztek” package? Wait, this car already has that…Said it before and I’ll say it again: they need to restyle the hind end on this car, stat.
  • Johnster "Vale" is the [s]cheap[/s] lower-priced performance version with black trim and stiff suspension."Mist" is the "DeLuxe" version with a bit more chrome and trim. (Sort of like the "Decor Package" option.)"Magentic" is the full-on Brougham treatment (in its current state) with more chrome trim than the "Mist" and all sorts of gimmicky electronic features inside. (Sadly, it will not include simulated landau irons or a vinyl covered roof, even as an option.)"Aurora" is the Oldsmobile of Cadillacs (sort of like the old Cadillac Calais). No, that's not right. It's the top-of-the-line model, sort of a "Grand Touring" version, with not as much chrome as the "Magentic" but all of the gimmicky electronic features and a stiffer suspension.
  • Drew8MR Why can't CARB leave hobbyists alone? Maybe lay off the low hanging fruit and go after the gross polluters. Bring back the rolling exemption.
  • ToolGuy According to Americans, the very lovely and quite powerful Ford Fairmont (1978-1983) was Way Better.Source: Sales figures.