Categories
Industry Trends

Finding Value In The Electrified Infrastructure

According to analyst firm BloombergNEF,  just over half of the passenger cars sold in the US will be electric vehicles by 2030. This growth is spurred by actions taken by the White House and Congress through the newly enacted infrastructure law. Legislative steps in California to adopt clean air standards will likely be supported by several additional states within the next five years. And finally, every major automotive manufacturer in the US have announced plans to accelerate production of battery electric vehicles (BEV), with many planning to eliminate the sale of internal combustion engine vehicles by 2050.

Clearly, BEVs are coming and more quickly than anticipated. Many dealers already have a smattering of these vehicles on their lots or are taking orders through their digital platforms. But, preparing to broadly support these new vehicles requires more than simply installing a charging station and creating some sales tools. Understanding the complete BEV infrastructure, means taking a deep dive into its impact on the physical lot, the service department and overhead expense.

Rather than being overwhelmed by the breadth and depth of these changes, savvy dealers will find the opportunities to derive more value – and revenue – by taking a strategic approach to implementing a BEV infrastructure. Upgrading the dealership in a planned, deliberate manner will deliver a competitive edge and a satisfied customer. Let’s break down the opportunities to generate revenue through purposeful infrastructure improvements.

Categories
Compliance

Take Action Now!

The retail automotive industry is buzzing about the Federal Trade Commission’s recent proposed changes to regulations impacting federal advertising laws and prohibitions on unfair and deceptive dealership practices. The 37-page document outlines six key areas the agency would like to address:

  • Full up-front pricing, costs and finance disclosures
  • Sales process disclosures
  • Add-on product benefits
  • Bait & switch
  • Surprise junk fees
  • Record retention

The public commentary period closes on September 12, at which time the agency will evaluate the responses and make a final ruling. Industry associations – including NADA – requested an extension to the 60-day review period proposal, which the FTC declined.

Categories
Economy Industry Trends

Successful Second Half Requires Flexibility

Do you have a strategic plan for the second half of this year? Granted, the retail automotive industry has been on a roller coaster lately. But now is the time to assess your dealership’s performance over the past two quarters and set some milestones to achieve your end-of-year profit metrics. A successful second half of 2022 will require some flexibility and willingness to change behavior.

Looking ahead, there are several factors which spell opportunity for dealers to capture notable revenue in the second half of the year. Strong consumer financial positions, credit terms which remain largely favorable, and continued pent-up demand bode well for savvy dealers. While the Federal Reserve has raised interest rates and recession rumblings linger, consumer financing is still discounted when compared to rates during the Great Recession. According to the Federal Deposit Insurance Corporation (FDIC) quarterly report, aggregate monthly personal income has rebounded to pre-pandemic averages and auto loan volume has recovered faster than in previous down-turns.

For dealers, these favorable credit terms also spell revenue opportunities for those who strategically manage their inventory purchasing and pipeline sales. While inventory and supply chains remain an issue, the wheels are beginning to turn and factories are cranking out more units, albeit maybe ones without heated seats or auto-folding mirrors. Used car inventory is also improving, with bulk-sellers like CarMax reporting sufficient inventory to meet 30 days’ worth of demand. Rising interest rates may also be working in the industry’s favor for once, prompting a bit of a cooling effect on demand and allowing OEMs to catch up.