The Intersection 12-4-22

This year started with the Fed’s benchmark interest rate at 0.1 percent and a new car’s APR at 4.3 percent. New-vehicle inventories were down and used vehicle prices were up year-over-year.

Nearly 12 months later, 2022 is ending with the Fed’s rate likely to reach or exceed that 4.3 percent itself as the central bank seeks to attack persistent inflation. New-vehicle interest rates sit at about 6.4 percent. Inventories are rebounding — at least for some automakers. And used-vehicle prices are down compared with last year.

Such conditions are bound to shake things up for finance-and-insurance offices, which have enjoyed record profits per vehicle this year.

So where do things go from here?

That’s what we’re exploring with this quarter’s F&I special section.

In it, you’ll find analysts concluding F&I profits per vehicle are due for a fall in 2023, but dealerships shouldn’t necessarily hit the panic button.

You’ll also see predictions for residual values, lease equity and automaker incentives next year — a possible glimpse into how dealerships will be structuring deals in 2023.

Expecting to sell more electric cars or receive more electric trade-ins in 2023? Read how EVs are expected to do a better job holding their value. Hear from the JM&A Group about used EV warranties and the value of branding EV F&I products, and read a guest column from Assurant Dealer Services about preparing for EV buyers.

And finally, let’s not forget dealerships have a looming hard deadline in 2023.

They got a reprieve with the Federal Trade Commission’s decision to extend what was going to be this week’s deadline for complying with the revised Safeguards Rule. Hear from experts about the compliance process as dealerships gear up to protect customer data the way the FTC wants by the June 9 deadline.

— John Huetter   

In Monday’s Automotive News:

Perfecting the EV motor: When it comes to electric vehicles, efficiency is money. Even a 2 or 3 percent efficiency gain could save automakers hundreds of dollars per EV — edging them closer to cost parity with internal combustion vehicles and improved profitability. When the auto industry focuses its research and development muscles on an specific component, that item can get smaller, lighter, simpler, more powerful and more efficient. Sometimes it even can get less expensive to produce as engineers find ways to reduce precious metal and other raw material content and improve manufacturing. Automotive News explores how this is happening to the electric motor, which is just starting what will likely be a very long journey to becoming more efficient and cheaper to build.

Easing its way to EVs: Stellantis is working to ease dealerships into its ambitious EV rollout — more than 25 EVs in the U.S. by 2030 — but it hasn’t yet specified how much dealers will need to invest. Automotive News looks at how the automaker has partnered with Future Energy, a company advising dealerships on how to set up charging infrastructure and training employees on operational changes related to EVs and sales strategies. The advisor says nearly 70 percent of dealers are in various phases of assessing their individual readiness. Stellantis is aiming for dealers to have their charging infrastructure installed by the first quarter of 2024, and the company says it wants all of its dealerships to sell EVs.

Weekend headlines

UAW members send presidential race to runoff, oust 4 incumbent leaders: UAW members have voted out at least four high-ranking leaders in the wake of the union’s corruption scandal and sent the race for president to a runoff next month. None of the five candidates for president, including incumbent Ray Curry, received a majority of votes in the union’s historic first direct election of officers.

VW, Foxconn partnership?: Volkswagen Group may partner with Foxconn to revive the Scout brand in the U.S. VW said in May it plans to revive the long-dormant Scout off-road nameplate that it acquired last year when its heavy-truck brand merged with Navistar. Foxconn, best known as the manufacturer of the Apple iPhone, started producing Lordstown’s Endurance pickups in September.

Toyota, Honda owners defecting to EV rivals: Toyota and Honda are losing loyal owners to rival brands that are further ahead in the electric vehicle transition, including Tesla, Ford, Hyundai and Chevrolet, according to a new report from S&P Global Mobility.

New Buick for U.S.: Buick’s crossover lineup will expand when the GM division brings the compact Envista to the U.S. in 2023. Now in production in China, the internal combustion Envista draws on the brand’s Wildcat electric concept in styling. The Wildcat concept features a more sculptural appearance and roomier interior. 

Dec. 8, 1861: Date of birth of William Crapo Durant, entrepreneur extraordinaire. He put together General Motors in 1908 but was ousted in 1920. What names did he consider for the company? On Sept. 10, 1908, Durant received a letter from his attorneys regarding names he had listed as possibilities. The lawyers wrote: “We find it impractical to use the ‘International Motor Company.’ … We might use the ‘United Motors Company’ were it not for the fact that there is already a ‘United Motor Car Company” in [New Jersey]. We suggest the name, ‘General Motors Company,’ which we have ascertained can be used.”