May 5, 2015
Average New Car Price Zips 2.6% to $33,560
The estimated average transaction price of a new car or truck sold in the U.S. in April was $33,560—2.6 percent higher than in the month a year ago, according to data from auto researcher Kelley Blue Book. According to CNBC, one factor fueling the rise was a flood of redesigned or refreshed models from automakers—such as the aluminum-body Ford F-150 pickup, Kia Sedona minivan, Chrysler 300 big sedan, and others fresh in showrooms. Those tend to sell at full price, and early buyers of a new model also tend to be people who check all the options boxes. The transaction price boost also came partly from the shift in sales mix in the month in favor of pricier trucks and SUVs. In addition to market factors, prices are moving generally up to cover the additional costs of more fuel-efficient drivetrains required by tightening federal fuel economy standards, and the costs of sophisticated safety gear, such as automatic braking to prevent a collision, both required for top safety ratings and becoming expected by many buyers. Click here to read more and see which brands experienced the biggest average price changes for new vehicles.
California Dealers Attract Buyers Despite Business Climate
Dealers are eager to buy dealerships in California again, reports Automotive News. While there are still those who don't want to buy in California following the recession, "I'm amazed at how many people are starting to tell me, 'I'm interested in California again,'" said Erin Kerrigan, managing director of Kerrigan Advisors in Irvine, Calif. Buyers willing to sing the state song, "I Love You, California," largely are either from outside the state or large groups that want to expand their existing California footprint. At the same time, some dealers already in California still would rather buy stores elsewhere because of what they describe as a climate unfriendly to business—including high income taxes, complex regulations and a high propensity for lawsuits. Dave Conant, an AIADA board member and dealer in California for 30 years, wants to concentrate his future acquisitions in other states, particularly Texas, Florida, and Arizona. California is "hyper competitive, and that has to do with the fact that it's a robust, really huge, opportune market. But because of the population density, the dealers really sit on top of each other," said Conant, CEO of Conant Auto Retail Group in Newport Beach. For more on California’s dealership market, click here.
GM Ignition Fund Approves 7 New Claims to 97 Deaths
General Motors Co.’s ignition switch compensation fund on Monday said it has approved seven additional death claims linked to its delayed recall of 2.6 million cars, raising the latest total to 97 deaths. According to The Detroit News, the fund approved 16 new injury claims. Of the 179 injury claims approved, 12 are for serious injuries and 167 are for less severe injuries. This is the biggest number of approvals in a single week since the program began announcing weekly updates. GM initially said last year that 13 deaths were related to Chevrolet Cobalts, Saturn Ions, and other cars with ignition switches that can inadvertently shut off the engine and disable power steering and air bags. GM delayed recalling the cars for nearly a decade after some within the company became aware there was a problem. The fund is using a much broader definition to determine if deaths are related to the defect—including pedestrians who may have been killed as a result of a defective GM car. In total, 4,342 claims were submitted by the Jan. 31 deadline, including 474 death claims. A total of 669 claims are still under review, including 45 death claims. For the latest on GM’s ignition claims, click here.
The Battle Over Sunday Sales
Car dealers hate government regulations, right? Not on Sunday, reports Automotive News. In Illinois, Texas, and New Jersey, lawmakers who want to allow Sunday sales face vehement opposition from dealers. Sunday sales, dealers argue, are too hard to conduct with banks closed, make hiring and keeping quality workers difficult and are disliked by most consumers. "The hours we work now are long enough that consumers have plenty of time to buy a car during the week," said Bob Muller, general manager of Muller Honda of Gurnee in Gurnee, Ill. "A lot like to come here on Sundays to look and not be bothered by somebody. And it gives salespeople and managers time to spend with their families." Currently, 18 states ban or restrict Sunday car sales. In those states that allow them, many dealers say they are open that day only because competition demands it. "We'd like to be closed, for the employees," said Loy Todd, president of the Nebraska New Car & Truck Dealers Association in Lincoln. Nebraska allows Sunday sales. About 10 years ago, Nebraska dealers tried to get a law to prohibit them, but "it was controversial," so dealers remain open on Sunday, he said. Read more about the dispute over Sunday sales here.
Lux-Mobiles Doing Well Because of Cheaper Models
So-called bottom-feeder lux models—$31,000 to $35,000 or so to start—are drawing new buyers to luxury nameplates they now can afford, reports USA Today. That's even though similarly priced mainstream-brand models are bigger, generally have lower fuel bills, and, in many cases, are every bit as luxurious. They just don't have the right badge on the hood. "Luxury sales have increased as products have become affordable to a wider audience. Of late, luxury car brands have focused on the lower end of the price spectrum, introducing models such as the Lexus NX, Mercedes-Benz GLA, BMW X1, and Porsche Macan, which are slotted below existing popular SUVs on the price spectrum," says Edmunds.com's senior analyst Jessica Caldwell. Those who buy instead of lease currently have access to loans with longer terms and lower interest rates than haven't been available in a long time. "People feel better about the economy, and wealth continues to be created," says Akshay Anand, analyst at Kelley Blue Book. Simultaneously, luxury brands "have done a good job moving downstream without damaging their brands," Arnand says. Read more about how luxury brands are succeeding by clicking here.
CNA National Distributes Over $38M for Dealer Participation Plans in 2014
CNA National returned over $38 million to automobile dealers across the nation through its various participation plans for 2014, bringing its inception-to-date total to more than $329 million. “2014 was a stellar year for our participation programs,” says Joe Becker, president and chief executive officer. “The distribution amount significantly exceeds our highest return since the beginning of these plans. This level of growth demonstrates the dependability our dealers expect and deserve from our reinsurance options.” CNAN reinsures warranties, GAP, and tire-and-wheel protection in addition to vehicle service contracts. The company has earned multiple awards as “Best Reinsurance Provider” in the Dealers’ Choice Awards, including top honors in 2011, 2012, and 2013. To learn more about how CNA National can help you maximize your income potential and long-term success, contact us at (800) 345-0191 x450. You can also find more information at www.cnanational.com.
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