Trade News

WASHINGTON --  President Joe Biden told companies vying with each other for a sharply constrained global supply of semiconductors that he has bipartisan support for government funding to address a shortage that has idled automakers worldwide.

During a White House meeting with CEOs on Monday, Biden read from a letter from 23 senators and 42 House members backing his proposal for $50 billion for semiconductor manufacturing and research.

“Both sides of the aisle are strongly supportive of what we’re proposing and where I think we can really get things done for the American people,” Biden said. “Now let me quote from the letter. It says, ‘The Chinese Communist Party is aggressively -- plans to reorient and dominate the semiconductor supply chain,’ and it goes into how much money will be they’re pouring into being able to do that.”

More than a dozen CEOs, including General Motors CEO Mary Barra, Ford Motor Co. CEO Jim Farley and Stellantis CEO Carlos Ta…

JM Family Enterprises CEO Brent Burns discusses business opportunities outside the auto industry and the company's large-scale renovation of its Florida headquarters amid the pandemic.

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As dealerships accelerated digital retailing during the pandemic, giving customers the ability to conduct entire transactions electronically, David O'Brien saw a critical element of the sales process rapidly slipping away: the human interaction that builds relationships.

O'Brien, who has worked in various roles in dealership training for more than 20 years, saw another flaw in a system he helped perpetuate. People like him fly into a city, spend two or three days giving intensive training to service advisers, and then they leave. Soon after, the training often comes to a halt, and what was learned may soon be forgotten.

Those observations led O'Brien to co-found Quantum5, a training company based in Scottsdale, Ariz. It uses artificial intelligence and other technology — as well as person-to-person training — to help teach traditional sales skills, such as recognizing the needs and desires of customers to find what motivates them to buy product…

An oft-told story of 2020 was how the pandemic brought back into focus the importance of fixed operations at franchised dealerships. The pandemic forced states to temporarily close businesses, including auto sales departments across the country. But service departments were considered essential and remained open, bringing in money to keep dealerships afloat until restrictions eased later in the year.

Ian Grace, senior director of partner performance at automotiveMastermind, thinks the crisis that hits the industry in 2021 will be a lack of vehicle inventory.

Blame microchip shortages and other supply chain issues that are pinching production. And that could result in a sort of dealership déjà vu.

"It's causing many [dealers] to kind of go back to that 2020 view of the importance of the service drive," Grace says.

Yes, fixed ops might be called upon again to help carry the front of the store as they did during the pand…

One factor stands out when it comes to customers choosing replacement parts at franchised dealerships. About half of consumers polled by DealerRater on behalf of Fixed Ops Journal in February said the recommendation of the service adviser or technician outweighs all other factors.

The automaker's brand was the next-biggest impetus, followed closely by price. Owners of luxury cars were more likely to be swayed by automaker parts than owners of mass-market brands. Not surprisingly, mass-market customers were more influenced by price than their luxury counterparts.

The performance claims surrounding a part and in-dealership marketing displays made little dent in consumer considerations.

We know tire and wheel services are convenience offerings that help keep dealership service customers from drifting away to independent shops. But balancing and rotating tires, fixing flats and selling replacement tires traditionally yield little to no fixed ops profit.

It doesn't have to be that way.

Tire and wheel services can — and should — be profit centers at most stores. But, as with most revenue-boosting fixed ops strategies, increasing profits from these services takes investment in modern, automated equipment and a commitment to establish processes that service advisers and techs follow 100 percent of the time.

Here's one reason why fixed ops directors should give investing in a state-of-the-art tire shop serious consideration: In the electric vehicle era, selling a customer a set of new tires and a four-wheel alignment may consistently be the highest-dollar repair ticket a shop writes other than body work.

Wit…

One element of the Quantum5 training program is to make service advisers advocates for their customers, a term likely to raise eyebrows at some dealerships because it sounds like giving money away.

But to Joel Tanner, the fixed operations director at Donley Automotive Group, it means building a customer relationship based on trust. As a result, when customers call a dealership for service, they will ask for someone by name.

"Everybody wants a car guy or car girl they can call and say, 'Hey, I need brakes,' or 'It's time for a new [vehicle],' and they want one point of contact," Tanner says. "We want our advisers and our sales team members to be that [person] and build a long-term relationship. Not only do they know my name, but they find value in me."

The Donley group, which has four Ford stores in central Ohio, put service advisers through the Quantum5 in-person training in early March.

Tanner spoke with Fixed Ops Journa…

A class-action lawsuit accusing Sonic Automotive Inc. and a number of its Houston-area stores of violating labor laws will proceed, a Texas federal judge has ruled.

The decision rejected Sonic's bid to dismiss the case filed on behalf of porters, valets, car washers, detailers and shuttle drivers. The suit accuses the dealership group and the stores of failing to pay minimum wage and overtime and failing to pay for all the hours the employees worked. Sonic has disputed the allegations in court filings, arguing it wasn't the workers' employer for purposes of the wage and hours law.

The plaintiffs were employed through now-defunct Rascoa, which had a supply and service agreement with Sonic, the Feb. 25 decision said. They claim they were assigned to individual stores and received uniforms or badges with the dealerships' individual logos, and that Sonic and Rascoa "had joint authority to hire and fire them," jointly controlled their pay rates and …

Dealership parts managers face a daily challenge akin to a double-edged sword: Make sure technicians have the right part for the right vehicle at the right time to achieve same-day service, but without accumulating excess parts inventory, which can drain working capital.

A technology known as remote inventory management can help dealers find a balance between the two competing priorities — and in the process boost off-the-shelf fill rates, reduce lost sales, minimize parts obsolescence and ratchet up revenue. It also gives parts managers more time to focus on things easily neglected amid the day-to-day grind, such as training staff and touching base with wholesale customers.

Remote inventory management also can plug the knowledge gap left by a chronic lack of training for less-experienced parts managers, says Brian Crossin, an instructor at the NADA Academy.

"Parts managers generally receive little training on how to properly inve…

Of the 12 costliest hailstorms in Colorado history, nine have taken place since 2008. Caught directly in the crosshairs of No. 8 on the list — a June 2018 storm that resulted in $276.4 million in damages — was Denver-based Schomp Automotive Group.

"That month we purchased three new dealerships on the east side of Denver, and within a 10-day period they were hit with hail three times," says Michael Dunlap, vice president of business development at Schomp, which operates nine dealerships in the Denver area. "We had cars that were damaged, repaired, put back onto the front line and then damaged again."

The group's 2018 hail losses totaled nearly $200,000, prompting Schomp to start looking at protective solutions.

That same year, insurers began backing away from offering Dealer Open Lot coverage because of the increasing severity of hail damage. Zurich NA also decided not to renew hundreds of policies in hail-prone areas in 2018 citing…

Traffic at dealership body shops should slowly return to pre-pandemic levels in 2021, though it may not be until the following year before the numbers are back to normal.

That's the view of Susanna Gotsch, director at CCC Information Services, a collision software provider. She says most shops reported a 15 to 20 percent decline in business last year — recovering from the first few months of the pandemic when some saw business drop by half.

"Our expectation is that we will continue to see people start to get out more, we'll continue to see improvement" in collision repair numbers, she says. "The second half of the year could be pretty healthy from a volume perspective. Well above where we were in 2020 and maybe only slightly down from where we were in 2019."

Traffic levels — as well as accidents — plummeted during the pandemic as many people worked from home and rarely ventured out. Gotsch says CCC research indicates typical bone-shaped driving routes …