November 28, 2016
Buy-Sell Market: Deep Pockets Fuel Bulk Deals
Look for deep-pocketed buyers to snatch up more dealership groups over the next 12 months and for foreign investors and outsiders to scope out the U.S. auto retailer landscape, reports Automotive News. Those are two trends buy-sell experts noted in quarterly reports released last week. In the first nine months of the year, there were 172 transactions compared with 184 in the year-earlier period, Erin Kerrigan, managing director of buy-sell advisory firm Kerrigan Advisors in Irvine, Calif., wrote in her company's third-quarter Blue Sky Report, citing data from The Banks Report. The publicly held auto retailers reduced their acquisition spending by 18 percent to $572 million in the first nine months, opting to shift money instead to stock buybacks, Kerrigan said. Private dealerships acquired 274 franchises compared with the publics' 52 in the first nine months, her report said. Read more about the dealership buy-sell market here.
Volkswagen Teases With Sketch of New Upper Midsize Car
Volkswagen is coming out with a new model that will add to its offerings of larger cars in the United States, where its market share has lagged the competition. According to The Detroit News, the German company released a sketch Monday of the Arteon, a four-door with a sloping roofline. It is to be unveiled at the Geneva auto show in March, and to go on sale in the summer of 2017. It should appear in the U.S. in 2018. The upper midsize car occupies a position just above the slightly smaller Passat sedan made in Chattanooga, Tennessee. Volkswagen brand head Herbert Diess said last week that the company will focus on bigger cars and SUVs in the U.S. as it tries to overcome a scandal over cars it had equipped to cheat on diesel emissions tests. A new large SUV, the Atlas, is also on the way. The company says the Arteon will combine expressive design with practicality, in the form of a large trunk with plenty of carrying space. For more on Volkswagen’s new upper midsize car, click here.
Record Number of Car Buyers 'Upside Down' on Trade-Ins
The wave of easy credit and longer auto loans has left a record percentage of consumers trading in vehicles that are worth less than what they owe on their loans, reports USA Today. In auto finance parlance, these folks are underwater, or upside down. They already are affecting the market as automakers boost incentives and subprime lenders monitor their delinquency rates more closely. So far this year, a record 32 percent, or nearly one-third, of all vehicles offered for trade-ins at U.S. dealerships are in this category, according to research by Edmunds.com. For perspective, the lowest the underwater percentage has been was 13.9 percent in 2009, the depths of the Great Recession when credit was tight. The previous high was 29.2 percent in 2006, about when the housing market was near its frothiest point. For more on upside down car buyers, click here.
13 Cars With the Best Resale Value
When considering which car to buy, resale value may affect one’s decision. The average small car loses about $7,400 in its first year on the road, according to the automotive research site Edmunds.com — and cars tend to lose more of their original value than do SUVs or trucks. So what kinds of cars retain their value the best? To find out, MONEY took a look at Edmunds.com’s Best Retained Value Awards, which highlight which auto brands and specific models can be resold for the highest percentage of their original cost. Instead of simply glancing at the latest awards, the publication examined each year’s winners dating back to 2011, the earliest available year, to find the brands and cars that tend to retain their value best over time. Writers also included two vehicles from each given category — for example, there are two SUV winners — to cover various price ranges. Find out which cars have the best resale value by clicking here.
Auto Dealers Sound Alarm as Tesla Pushes for Second Virginia Store
Tesla, which sells its cars directly to consumers rather than through franchise dealers, is trying to open a second store in Virginia. According to The Washington Post, car dealers in Virginia and across the country have been fighting Tesla, seeing the company’s direct-to-consumer sales model as a threat to the franchise system that they say protects consumers as well as their own business interests. In Virginia, as in most states, it is generally illegal for manufacturers to sell cars directly to consumers, partly to prevent carmakers from undercutting their franchisees. State law allows manufacturers to sell directly to customers if no one is available to serve as a dealer in a certain area. No dealers expressed interest when Tesla sought its first Virginia store. This time around, 11 auto dealers sent the company letters expressing interest, which were dismissed by the company. Read more about the fight by Virginia dealers against Tesla here.
Working for America: Join AIADA's Annual Meeting in New Orleans This January
International nameplate dealers are working for America. In 2015, they created 570,000 jobs generating a payroll of $32 billion by selling some of the safest, most innovative, and popular vehicles on U.S. roads. Please join AIADA in New Orleans on January 29, 2017, during NADA's annual convention, for the 47th Annual Meeting and Luncheon. Keynote remarks will be provided by American Honda Motor Co. Vice President John Mendel, who is driving Acura and Honda's success in the U.S. AIADA will also welcome its 2017 Chairman, Paul Ritchie from Maryland. Finally, the recipient of the 2017 David F. Mungenast Lifetime Achievement Award will be honored. If you'd like to nominate an outstanding member of the industry for this honor, please click here. Register today for AIADA's 47th Annual Meeting and Luncheon in New Orleans here.
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