Old Man Lutz Gives Dealerships 20 Years to Live, Doubles Down on Driving Dystopia

Longtime auto executive Bob Lutz has always been an incredibly outspoken individual. His years of hard work have given him an insight into the industry that few possess, and he’s only become more willing to share that information as he ages. Like the industrious caterpillar, his ceaseless labor has allowed him to metamorphose into what is arguably his perfect form near the end of his lifecycle — a candid automotive butterfly.

We love hearing anything has to say, as his insight borders on the surreal, but with more than enough truth to come to pass. Last year, he divined a future where the car as we know it is destroyed by governmental regulation and advanced technologies. The dystopian plot seemed impossible upon a cursory glance, but the deeper you drive, the more plausible it begins to seem.

Lutz refocused this week at the SAE International WCX World Congress Experience in Detroit, saying the traditional dealer model will be among the first things to go in the brave new world of mobility. He called car dealerships an “endangered species,” suggesting to the crowd that it had “another 20 to 25 years before it’s all over.”

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Shifting Up: Auto Sales Rise in March 2018

Spring is springing in most parts of the country and, as if on cue, more customers are beating their way to a dealership’s door. The market is up, in both monthly and year-to-date measures.

Mazda, Toyota, and Volkswagen are all up on their own merits both from a monthly and year-to-date perspective. In fact, compared to the same month last year, just about all the major automakers moved more metal in March.

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Vanishing Act? Fewer Subprime Customers Shopping for Cars

It’ll be another 24 hours before the nation’s automakers release March sales figures, all thanks to the Easter long weekend. Shaking off the effects of a chocolate bunny induced sugar high takes a day or two, after all.

This means, at most dealers, last month’s subvented rates still apply — so, if you’re looking at snagging a 2017 model, it might not be a bad idea to lock the deal down today. Shoppers of MY2018 machines can relax, as the deals on those rides will likely be better tomorrow morning … especially if it’s a vehicle that was majorly reworked for 2019.

Until then, we have time to peruse a story from Bloomberg, one which pontificates on the sudden evaporation of subprime new car buyers from showrooms in the month of March.

Evaporation? I thought there was a glut of them! Let’s dig into the report.

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Auto Executives Secretly Believe Battery-electric Cars Aren't the Future

While fuel-cell technology is progressing in places like California and Japan, the rest of the world shrugged it off after the initial hype subsided. Since then, practically every automaker in existence has invested in battery technology and electrification. However, according to a recent survey, most auto executives secretly do not believe batteries will be the real breakthrough in electric mobility. Dealers feel the same way, but they’ve been less cagey on the matter.

Uh, what? Then why is everyone and their mother talking up plug-in cars and sweeping the fuel cell under the carpet?

Well, in addition to hydrogen having an abysmal fueling infrastructure almost everywhere, governments simply aren’t pushing it like battery power. Incentivizing plug-in cars has gone a long way to bolster the segment’s popularity and, with China mandating that a growing portion of all auto sales be battery-related, companies have to lean into what they already have. That said, many executives still seem to feel that hydrogen-powered cars have more to give the industry.

Let’s not get ahead of ourselves. Its time to talk about why auto dealers are so unhappy about the electric revolution.

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Mini Dealers Want to Know What the Hell Is Going on With the Brand

Sales of the Mini brand have been in a downward spiral since 2013 and U.S. dealerships want to know what expect in the future. Any prospects for the nameplate to grow into a volume brand appears to have been thrown out the window by BMW Group, and it’s now looking like it could shift into electrification.

Dealers, however, don’t know this for sure, and hope to gain clarity on the matter as the domestic market dives deeper into its appreciation for trucks, SUVs, and crossovers.

“I don’t think the dealers have a very clear vision of where the car line is going long term,” explained Jason Willis, member of the Mini National Dealer Council. “There is a lot of pride on being a small-car performance company, so my guess is we will continue to be a small-car company. But as far as electric and how we fit in, we’re still waiting to hear that plan.”

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Dealerships Looking at Loaner Car Alternatives

You’ve just taken your vehicle to the dealership for servicing and find yourself in need of a loaner car. Fortunately, the vehicle is still under warranty and you should be able to get into something without too much trouble. This does not mean loaner vehicles aren’t a major stressor for the dealerships providing them, and it doesn’t guarantee you a car.

Small dealers likely won’t have a surplus of such vehicles and may attempt to bar you from access, especially if you didn’t originally purchase your automobile from that particular store. Luxury brands are more likely to fork over a loaner to keep customers happy. Of course, they want something representative of the brand, not some random hunk of junk sitting idle on the lot. Maintaining a loaner fleet is tedious and opens dealers to all manner of additional expenses they’d rather not have to deal with. It’s expensive and people tend to bring back the vehicles on their own time, not when the dealer needs it for someone else.

So what’s a high-end automaker to do when a customer needs a replacement vehicle while theirs is in the shop? Think laterally. It turns out there’s a multitude of loaner alternatives currently being vetted by dealers, some of which don’t involve providing a replacement vehicle at all.

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Bark's Bites: The Day the Dealers Died

Over the years, every single time I’ve written about dealers and questionable business practices, the feedback from readers is invariably the same — kill the dealer model. Nuke it from orbit. We would all rather deal directly with the manufacturer than some slimeball franchisee. We want to order cars exactly the way we want them, down to the color and trim, and we want them delivered directly to us without the hassle of spending the day at the dealer saying “NO” to Tru-Coat.

Well, I should clarify — not all readers feel this way. Any reader who works for (or has previously worked for) a dealer will tell us all that we need the protection from OEMs that franchise agreements provide the customer. They tell us that competition in the marketplace is good for the consumer, and that it helps the local economy to have franchises around America.

But what would really happen if OEMs got their way and were able to sell directly to the consumer? What if all the dealers disappeared tomorrow? Would you be happy with the result? Or would it damage the customer? Who would benefit, and who would suffer under such a model? Let’s look at it objectively.

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'World's Greatest' Car Salesman Refuses to Relinquish Title Without Proof

For over four decades, Joe Girard has held the Guinness World Record for the most automotive sales in a single year. The 89-year-old retiree is so proud of his achievement that his own website proclaims him as the greatest retail salesman in history while simultaneously urging you to purchase his sales training books, DVDs, and audio CDs. However, he appears to have been trumped by a Cadillac and Chevrolet salesman from Dearborn, Michigan.

Girard is having none of that and has decided to challenge the validity of the new record. “This guy claims he beat my record of 1,425 new cars that I sold in 1973,” he stated. “What I did immediately, I called my attorney.”

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Lincoln's Latest Gambit: Stores for Selling the Brand, Not Cars

If affluent people like one thing, it’s large stores offering heaps of customer service and absolutely nothing to sell. You know the sort of shops I’m referencing. There’s a doorman, a leather couch, and someone who brings you coffee while you browse an inventory consisting of half-a-dozen ludicrously overpriced designer jackets.

A number of premium automotive brands have recently seized on this concept. There are already a handful of luxury brands with physical locations in cities harboring a wealth-intensive populace that offer an ambiance-intensive experience. Not to be outdone, Lincoln has taken that theory the full mile in Newport Beach, California.

While technically a dealership, the Lincoln Experience Center doesn’t sell anything. Instead, it provides patrons with a place to relax and muse about future ownership. There’s a cafe offering complementary coffee, tea, and infused water. Not thirsty? The site also has a “story wall” that provides a rotating collection of artifacts, art, and fashion that somehow relates to the brand. I even found out that they’ll wrap your holiday gifts on December 23rd if you’re in the area. But if you want to buy a car, you’ll have to look elsewhere.

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Deadly Sins: Range Rover Velar Sales Dampened by Hubris

Arrogance (noun): the quality of being over-confident; synonyms: conceit, egotism, attitude of Range Rover Velar sales team.

That’s not trademark TTAC snark, either. Take it from Andy Goss, the company’s global sales operations director, who said its UK dealers were “probably a bit complacent” about the Velar and its chance for success.

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Buying an EV? Expect a Crapshoot of an Experience at the Dealer, Study Finds

You’ve decided to take the plunge. To lay down significant cash for a personal vehicle that burns no gasoline and isn’t a bicycle. Unlike the plethora of dino juice-sipping models competing for your attention, your choice of electric vehicles is still modest, albeit growing, and comes with a list of ownership concerns never mentioned around traditional cars.

Range, charging times, home connections, and the impact of temperature on the battery pack (and its longevity) are just some of the questions a salesman might be asked about. Pricing is easy.

This past fall, research firm Ipsos RDA Automotive sent secret shoppers into 141 EV-selling dealerships in the U.S., where the spies feigned interest in purchasing one of 11 fully electric models. The experience was a wildly mixed bag. It’s not entirely surprising, but in many showrooms dominated by gas-powered cars and SUVs, the sale the dealer employee attempted to close was not for the EV the secret shopper came in to buy.

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Playing the Long Game: Cadillac Softens on Project Pinnacle After Sales Shortfall

Project Pinnacle hasn’t been incredibly popular with dealerships. Low approval ratings required multiple revisions of the plan, and dealers still found themselves irritated with the final version. There was a lengthy delay, refusal of noncompliant stores to accept General Motors’ buyout plan, and difficulties ensuring eligible shops adhered to the plan’s high standards of service.

Cadillac now says it will weigh customer satisfaction scores and compliance with brand standards more than actual sales volumes when determining U.S. dealer bonuses for 2018. The reason for this comes down to so many dealerships not meeting this year’s sales targets. That’s good news for those smaller outlets that were upset with Pinnacle to begin with.

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Genesis of a Dealer Dispute With Hyundai Motor America

You would think you’d be happy when a peer succeeds and goes on to greater things, but the reality is often a little grimier and less magnanimous. Genesis has been a sore subject around Hyundai Motor Company ever since the automaker spun it off into its own brand. However, this has less to do with its role as an elite nameplate and more about how to manage it as part of the greater whole.

Earlier this month, dealers expressed their dismay by walking out of a meeting with Hyundai Motor America’s executives — which included CEO Kenny Lee and COO Brian Smith. The incident didn’t last particularly long and the conference eventually got back on track, but it proves there’s unresolved issues as to how the Genesis brand should be handled.

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Dealerships to Receive $335 Million In Payments Over Supplier Price-fixing Scheme

Roughly 8,000 U.S. dealers will share in a $335 million payday resulting from a colossal 2010 antitrust investigation. The issue? Suppliers were involved in a widespread price-fixing scheme that lasted decades, and nobody noticed until the FBI raided the offices of Yazaki North America Inc., Denso International America Inc. and Tokai Rika Group North America.

In the end, 65 individuals and 47 companies were charged by the Justice Department — resulting in over $2.9 billion in fines and jail time for a swath of fresh white-collar criminals.

However, none of that money made it to manufacturers, dealers, parts retailers, or consumers. Those players had to resort to filing civil suits in federal court against the companies. In 2012, the multitude of claims were consolidated and transferred to Judge Marianne Battani and the U.S. District Court in Detroit. Over $1 billion has been set aside for affected parties, with around $335 million of the sum going to dealerships.

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Dealers Being Targeted by Used-car Fraud Ring

A new type of sales fraud is taking advantage of lenders’ and dealerships’ automated payoff systems. Basically, criminals have begun selling high-end used vehicles that have been obtained illegally and vanish before anyone is the wiser.

Mark Maida, the CEO of AutoBuy, has said his Florida-based company was on the receiving end of the scam in 2016 and wants to warn other prospective buyers before the same thing happens to them. He doesn’t believe it was an isolated incident and claims there have been other dealers and lenders across the state that have been affected by the swindle.

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  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?