Tag Archive | "franchised dealerships"

Tesla-Friendly Bill Resurrected in Connecticut


HARTFORD, Conn. — The Connecticut Automotive Retailers Association, along with General Motors and Alliance Auto Manufacturers, held a joint press conference on Tuesday to speak out against proposed legislation that would allow electric carmakers to circumvent state franchise laws and sell directly to consumers.

A public hearing was scheduled for today to discuss Senate Bill 3, which was introduced by state Senate Majority Leader Bob Duff last month. The measure, which is currently being considered by the state’s Transportation Committee, mirrors legislation passed late last year by the state’s House of Representatives. However, the proposal was passed too late in the legislative session and died because of Senate inaction.

If the current measure is approved by the Connecticut General Assembly, it would allow electric vehicle makers to sell directly to consumers at up to three locations as long as they don’t have a franchise agreement with any existing dealer. Currently, the only manufacturer that qualifies is Tesla Motors.

“What we want to make sure we have is one set of regulations for everybody who’s going to compete in this marketplace,” said Landon Fulmer, vice president of state affairs for the Alliance of Auto Manufacturers in an op-ed piece published in The Connecticut Mirror. “We don’t need carve-outs, we don’t need loopholes. We need to make sure everybody plays by the same rules.”

Dealerships in the state are required to apply for a dealer’s licenses in order to sell vehicles in the state; manufacturers are barred from unfairly competing with a dealer and selling directly to a consumer.

“The franchise system works,” Fleming said. “It’s efficient. It’s competitive. It understands the local market.”

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NADA Launches Initiative to Promote Benefits of Franchised Dealers


McLEAN, VA — This week, the National Automobile Dealers Association (NADA) rolled out an initiative called “Get the Facts.” It is designed to demonstrate the benefits of the franchised new-car dealer network. As part of the initiative, the association has released an in-depth report on the consumer benefits of the franchise system.

The report, “Consumer Benefits of the Dealer Franchise System,” shows that factory-direct sales of new cars either sold online or through factory-owned and operated retail outlets have not resulted in lower prices for car buyers or increased market share for manufacturers.

“The franchised dealer network benefits consumers and manufacturers alike by providing fierce price competition among dealers and an extremely efficient distribution network that is acutely sensitive to local markets,” said auto industry consultant Maryann Keller, author of the report. “The new-car dealer franchise network is the most efficient way to distribute and sell new cars as well as provide convenient access to service over the life of every vehicle.”

Keller also found that as long as cars are retailed, there will inevitably be costs of retailing, and that local competitive dealers are the best way to lower those costs. Additionally, she noted that dealerships can make the complex process of a vehicle transaction as simple as possible.

The NADA’s “Get the Facts” initiative also includes a two and a half-minute animated video detailing the benefits of the franchised dealer system. Other resources include a 30-second video, a fact sheet on the consumer benefits of dealers, a longer informative FAQ, a document explaining the reasons for state franchise laws, an infographic and other materials.

“Franchised new-car dealers provide the best, most efficient and most cost-effective way to sell and distribute new cars in America, and we’re proud of our businesses and business model,” said NADA President Peter Welch. “The NADA’s efforts will set the record straight about the benefits of the dealer franchise network for consumers, manufacturers and local communities everywhere.

The NADA has presented the materials to state and metro dealer associations as well as individual dealers across the country. It is encouraging them to co-brand the materials and present them on their own websites.

“Franchised new-car dealers benefit consumers through price competition, accountability on warranty and safety recall issues, and provide enormous economic benefits to local communities across the country,” Welch said. “The dealer franchise network is supported by automakers as the best and most efficient way to buy, sell and service cars in the marketplace.”

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Franchised Dealers Realize Big Gains in Used Sales, CNW Reports


BANDON, Ore. — While used-car sales were up nearly 11 percent in May vs. April, they were barely 100 units higher than the same month a year ago, CNW Research reported yesterday.

Franchised dealers realized a 4.3% gain vs. last year, accounting for 1.610 million units of the estimated 4.391 million used vehicles sold last month. Sales at independent operations were up 3.4% from a year ago, with sales totaling 1.418 million units. Private party sales fell nearly 8% from a year ago to 1.363 million units.

“With the mix of inventory increasingly leaning toward newer and more expensive models, franchised dealers saw their average transaction price jump 25.5% vs. a year ago to $15,467,” noted CNW’s Art Spinella. “Independent dealers, on the other hand, took a major hit, with average transaction prices slipping more than 4.6% [to $6,883].

The average transaction price for private party sales was $7,519, an 8.3% increase from a year ago.

The total value of all used-car sales in May reached nearly $45 billion, up about 15 percent vs. a year ago and last month.

Buy-here, pay-here dealers realized a 20.9% increase in sales, according to Spinella. He also noted that sales to sub-550 FICO score customers increased more than 9% vs. one year ago to 734,165 units.

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Tesla: New Wording in Missouri Bill is ‘Sneak Attack’ by Dealers


PALO ALTO, Calif. — In a statement posted on its website last week, Tesla Motors admonished Missouri lawmakers for adding new language to an existing bill that would require consumers to purchase vehicles through franchised dealerships, making the company’s sales model illegal. The bill passed the Senate on May 7 and could move to the House for a final vote.

“We have just become aware of a last-minute attempt by the auto dealers lobby, via pressure on legislators, to bar Tesla from selling its vehicles direct to consumers in the state,” the statement read, in part. “This extraordinary maneuver amounts to a sneak attack to thwart due process and hurt consumer freedom in Missouri.”

House Bill 1124 was passed by the House on April 17 minus the language banning direct-to-consumer vehicle sales. Dealers have since thrown their weight behind the new wording. Tesla faces similar hurdles in states like New Jersey, Arizona and Texas, where the direct sale of vehicles to consumers has been banned.

“This change is not an innocent, minor amendment. It is completely unrelated to the original bill, which was about laws regarding all-terrain vehicles, recreational off-highway vehicles, and utility vehicles,” read Tesla’s statement. “It is also a complete 180 from current law. The current statute only bars franchisors from competing against their franchisees (for example, Ford cannot compete against Ford dealerships).”

The automaker currently operates a service center in Missouri and plans to open another in Kansas City later this year.

“This debate should be held in the full light of day with all sides being given an opportunity to make their case. Instead, the dealers are again trying to ram through a provision under the cover of darkness and without public debate,” Tesla said in its statement. “The people of Missouri deserve better from their elected officials.”

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Report: Used Operations Increasingly Important for Dealers


FT. LAUDERDALE, Fla. — According to a report from Haig Partners, used-vehicle sales are becoming increasingly important for dealers.

The share of total retail unit sales for franchised dealers that used vehicles accounted for in 2013 was more than 7 percentage points higher in 2013 than it was in 2007, according to the firm’s Blue Sky Report. And there were 152,342 more used-unit retail sales in 2013 for public retailers than there were in 2007, the report indicated, citing filings with the Securities and Exchange Commission.

“More dealers are focused on their used-vehicle business because of the sometimes stronger profits for used cars, and the reconditioning that also boosts fixed operations,” the report stated, in part. “And F&I on used cars can be higher than with new-car sales.

“Dealers are doing a better job gaining trade-ins and many have accepted the tenets of the vAuto approach, where rather than hoping for above market grosses, they sell the car for market value and try to increase the number of unit sales per month for a given amount of working capital to maximize profits.”

Dealership buy-sell transactions rose by double-digit rates in 2013, and analysts are predicting this year’s rates will continue to rise. What’s more, the report shows that in 2013, public retailers committed more than $1 billion to acquisitions for the first time since 2006.

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NADA Chairman: Franchised Dealers Provide Price Competition, Safety and Local Economic Benefits


NEW YORK – Franchised new-car dealers in the U.S. helped pave the way for startup brands, such as Honda and Toyota, said Forrest McConnell, chairman of the National Automobile Dealers Association.

“All these manufacturers—even back in 1968—leveraged the franchised dealer system to get their products to the public because franchised dealers shouldered the cost of stores, service, employees and inventory,” McConnell said today in remarks at the 2014 Automotive Forum presented by NADA and J.D. Power in New York City. “Dealers gave those franchises a partner on the road to success.”

McConnell, a Honda and Acura dealer in Montgomery, Ala., highlighted the consumer benefits of the current franchise dealer network for sales, service and handling vehicle recalls. He said the franchise dealer system drives competition up and keeps costs down, and “cutting out dealers would not lower car prices because a factory-owned retail network would have to put in the same investment in physical assets and the same operating expenses that dealers now shoulder.”

“If manufacturers sold directly to customers, there would be zero competition in pricing vehicles, parts and service. Dealerships compete fiercely for the opportunity to sell people cars and to service those cars for the long-term. That kind of competition benefits customers,” he added. “Customers would be stuck paying the full sticker price—because there would be no ‘same brand dealership’ to shop and compare prices. The biggest competition for a Ford dealer is the other Ford dealer down the street.”

McConnell added that 2013 was a record year for product safety recalls, and this year with millions of General Motors vehicles recalled, more than 4,000 GM dealers nationwide are gearing up to take care of their customers.

“When something goes wrong on the assembly line, our service departments are there to make things right,” he said. “GM dealers are getting ready to support their customers from New York City to Yuma, Arizona, at no cost to them.” Car and truck owners know they have a dealership in their community that they can turn to.”

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