News – Page 268

2 publics going captive route, but 2 others hold off for now

AutoNation announced along with its second-quarter earnings it had struck a deal to buy captive finance company CIG Financial, and Lithia hailed the progress of its captive Driveway Finance Co. in its quarterly discussion of results.

However, the earnings season also saw major publicly traded rivals Penske and Group 1 refusing to follow suit.

AutoNation announced in July it will buy indirect lender CIG Financial for $85 million and convert it into a captive finance company. The deal was expected to close in 90 days, AutoNation said.

CFO Joe Lower called CIG "complementary to an already strong piece of business." It originated $195 million across 12,000 loans last year.

CEO Mike Manley said he sees the acquisition providing "significant upside" over time to the group's strong finance-and-insurance revenue.

AutoNation, of Fort Lauderdale, Fla., ranks No. 1 on Automotive News' list of the top 150 dealership gr…

Unchecked box a lesson in diligence

Incomplete finance and insurance paperwork almost cost a Stellantis dealership and an auto lender the ability to have a customer's complaint arbitrated instead of going to court, according to a consumer finance attorney.

"As a recent Kentucky case proved, sloppy execution endangers even the best forms," David Hicks, a partner at Hudson Cook, wrote in May.

Plaintiff Chris Randall sued Louisville Chrysler-Dodge-Jeep-Ram in 2021 alleging the dealership failed to disclose credit terms in violation of the Truth in Lending Act and forged his signature in violation of the Kentucky Consumer Protection Act. He also sued American Credit Acceptance, the indirect lender that received the note from the Kentucky dealership.

According to Randall's lawsuit, he had agreed to put $1,000 down on a 2007 Chevrolet Suburban priced at $8,819. He alleged being told he had to buy GAP coverage and a one-year vehicle service contract, which added $3,799 to th…

F&I providers weigh in on potential FTC changes

Following the Federal Trade Commission's sweeping proposal to crack down on dealership advertising and add-on disclosures, the National Automobile Dealers Association and the National Independent Automobile Dealers Association have both said the proposed regulations were unjustified and will hurt consumers.

The regulations, which were approved in a 4-1 vote by the FTC on June 27, included stipulations dealers disclose an "add-on" list prior to a sale and cannot charge add-ons "that provide no benefit" to the consumer as well as a requirement dealers keep a detailed record of all complaints and add-ons for a period of time. The proposed regulations would be the agency's first rules against dealers since the Dodd-Frank Act of 2010.

Regulation 463.4 (b) stipulates if a dealership charges for an add-on, either directly or indirectly, it must disclose it. The proposed guideline says this add-on list must be "on each website, online service, or mobile application op…

Digital contracting on steep rise in 2nd quarter

Dealerships and other auto finance companies continued to handle more deal paperwork digitally during the second quarter, according to information and software provider Wolters Kluwer.

Wolters Kluwer said July 20 its Auto Finance Digital Transformation Index found a 78 percent increase in electronic documentation between the first and second quarters of this year. Year-over-year, the use of e-contracting over paper-based processes increased 144 percent in the second quarter compared with a year earlier.

In fact, the volume of digital content so far this year has surpassed the amount for all 12 months of 2021 — by 13 percent, Wolters Kluwer said.

Wolters Kluwer's head of auto strategy, Tim Yalich, said the index counts digitally executed auto finance contracts, such as a lease or a retail installment sales agreement. The metric would include digital transactions conducted remotely, such as an online car sale, and in-person, such as…

Clicklane yields strong F&I profits

A year after its widespread rollout, Asbury Automotive Group's Clicklane platform for fully online car sales is producing nearly $2,200 in finance-and-insurance gross profit on each vehicle.

, Asbury CEO David Hult said the average vehicle produced front-end gross profit of $3,765 plus finance-and-insurance gross profit of $2,162 through Clicklane. The platform is on track to generate $1 billion in revenue by the end of the year and $2.2 billion by the end of 2023.

The human F&I managers at Asbury are still beating the machines. The company saw overall same-store F&I gross profit of $2,409 for the second quarter.

Dan Clara, Asbury senior vice president of operations, told analysts the company is quite pleased with the results. Enabling customers to manage their own F&I experience is producing gross profit above $2,000. "We think those numbers are pretty strong," he said.

At least one competitor, Group 1 Automotive Inc., already is pr…

National Auto Care offers streamlined EV coverage

When National Auto Care developed its portfolio of finance-and-insurance products for electric vehicles, it made sense to build simplicity into the new coverage offerings.

National Auto Care CEO Tony Wanderon told Automotive News his company's recently announced EV coverage line is designed to address the sophistication gap between internal combustion engine vehicles and EVs.

The electronics on a Tesla or Ford F-150 Lightning are more complex than a gasoline-powered Honda Civic, requiring services that address that sophistication.

"An EV in my mind is a driving computer," Wanderon said. "In covering more electronics and replacement-type items and repair, we are bringing real value propositions that are a little outside what others offer."

The component complexity raises questions about the value-based classes offered in the new line.

Repair costs on current electric vehicles can reach heights rarely seen i…

Market Scan: Some incentives not promoted

Franchise dealerships are not telling buyers about automakers' special financing programs that restrict retailers from adding margins, according to industry payment calculator and analytics provider Market Scan.

Market Scan President Rusty West told Automotive News his company noticed the issue while working for a Japanese automaker whose incentive program lacked usage. Its adoption rate was less than 20 percent, West said — far below what he called the normal industry penetration of 90 percent.

Market Scan realized while the program was aggressive in giving customers a deal, "the rates can't be marked up," West said. "So they're never even being presented to the consumer."

For example, a customer who would qualify for promotional 0.9 percent financing might instead be given an 8.9 percent loan at the dealership, with 3 points of the interest rate encompassing dealership reserve, West said. Market Scan's technology calculates roughly 2…

How one dealership group uses buying centers to soothe inventory pains

Opening and operating centers dedicated solely to buying used vehicles is helping Germain Motor Co. branch into new markets and acquire more cars and trucks during the inventory pinch that has beset dealers for more than a year.

Prior to the coronavirus pandemic, the Columbus, Ohio-based dealership group revisited its strategy for acquiring used vehicles. Company leaders saw potential in carving out a separate operation — one with employees dedicated to used-vehicle buying, not retail sales. The company's goal: attract consumers interested only in selling their vehicle for an instant cash offer, not going through a full trade-in process.

Germain opened its first buying centers in Ann Arbor, Mich., and Columbus in 2019. Amid the pandemic and the industry's ensuing supply constraints, it opened more. Used vehicles sourced from that growing channel are now a staple in Germain's retail inventory, company leaders say.

"It's turned out to be an unbelievable …

Highlights from the latest Daily Drive podcasts, Aug. 29-31

Here are highlights from the latest episodes of 'Daily Drive', Automotive News' weekday podcast, Aug. 29-31, hosted by Jamie Butters with Kellen Walker.

“This is an opportunity for Ford to showcase the best of what Mustang has been. And it comes at a time when the company is really trying to reinvent itself.” -- Michael Martinez, Automotive News reporter, on what is likely to be the last gasoline-powered Mustang and what that means for Ford’s future

“Continuing to limit the number of vehicles innovative companies need to put on the road to conduct pilots and test beds so they can build safety into their autonomous offerings will hobble and cripple this industry. It’s preposterous.” -- Selika Josiah Talbott, CEO of Autonomous Vehicle Consulting, on federal regulations she says are slowing the adoption of driverless trucking

“There’s a huge battleground for this data — or huge potential — billions of dollars at stake. And I think the big que…

U.S. sales up 1st time in a year, reports say

U.S. light-vehicle sales rose for the first time in more than a year last month, an indication that market conditions are improving — though not for every brand.

Industrywide, Ford said light-vehicle deliveries rose 4.8 percent in August, which would mark the first monthly year-over-year gain since summer 2021. LMC reported total light-vehicle sales rose 4 percent to 1.13 million.

The seven automakers that report monthly figures tallied 617,363 sales in August, down 1.8 percent from the same period a year earlier, according to the Automotive News Research & Data Center. Sales slipped at Toyota Motor North America and American Honda, but Ford Motor Co. and Hyundai Motor Group each posted double-digit gains.

The overall industry was aided by an additional selling day compared with August 2021, and companies that fared well also pointed to higher inventory levels resulting from production being less hampered by ongoing supply chai…

Ford Bronco customers spend big on accessories

When customers buy a Bronco from Steve Olliges' Team Ford dealership in Las Vegas, they normally spend an additional $4,000 to $5,000 outfitting their off-roaders with light kits, tube doors and other accessories.

Olliges, who has sold about 700 Broncos since the SUV went on sale a little more than a year ago, said he can't recall another Ford vehicle that has given dealers such an opportunity to increase their profits — and he plans to take full advantage. In a few months, he'll open a 9,000-square-foot accessory shop called the Bronco Barn, which sits about a mile from his showroom and cost roughly $10 million to build.

"I definitely have Bronco fever," Olliges, who also plans to build a standalone Bronco showroom next to the barn, told Automotive News. "I feel I could make a living just being a Bronco dealership; it's that successful."

Other Ford dealers say their experience has been similarly lucrative. The Bronco has been on sale just over a year, …

Biden, chief ‘car guy,’ to attend Detroit auto show

President Joe Biden is planning to attend the Detroit auto show, his first visit to the the Motor City’s annual car spectacle since his days as vice president.

“I’ll be there,” he said Friday during a White House event after being invited by members of the Detroit Regional Partnership. “I’m a car guy, as you kind of noticed.”

Biden is the proud owner of a classic 1967 C2 Corvette Stingray.

The invitation came from Maureen Donohue Krauss, CEO of the Detroit Regional Partnership, who also asked Commerce Secretary Gina Raimondo.

The North American International Detroit Auto Show is scheduled to kick off on Sept. 14. Barack Obama was the last sitting president to attend.

“As my grandfather used to say, with the grace of God and the goodwill of my neighbors, I’ll see you at the auto show,” Biden said.