April 27, 2016
Why Public Dealership Groups Are Buying Their Own Stock
According to Automotive News, several publicly traded dealership groups have reported strong, sometimes record, first-quarter earnings per share. It’s not that their net income soared. Rather, they’ve been buying back their shares like crazy. Why does that matter? If they’re buying their own shares, that’s money they’re not spending on other dealerships – or investing in their own operations. As Asbury Automotive Group Inc. CEO Craig Monaghan told analysts and media in a conference call, “We’re not seeing a lot of activity on the M&A side. There’s always a conversation happening somewhere.” But with stock prices where they are today, “We think we’re far better off buying our own stores via share repurchase than we are going out and paying a significant premium for somebody else. We’re buying our stock at seven times [adjusted pretax earnings] multiples. We hear about car stores coming to market with blue-sky numbers that are bigger than that. We’re happy to buy our own stock when that situation happens.” And the buybacks may be just in time for an upward correction in dealer group stocks overall. Asbury shares on Tuesday rose 8.4 percent to $62.25. Find out why public dealership groups are buying their own stock here.
Mitsubishi Motors CEO, COO Likely to Resign Over Mileage Scandal
According to Reuters, Mitsubishi Motors Corp's top two executives are likely to resign over the Japanese automaker's manipulation of fuel economy data, Japanese media reported today, in a scandal that has halved the company's market value in a week. Chairman and Chief Executive Officer Osamu Masuko has already told some affiliated dealers and parts makers of his intention to resign, the Yomiuri daily said. Separately, the Mainichi daily reported President and Chief Operating Officer Tetsuro Aikawa has decided to step down. Japan's sixth-biggest automaker said on Tuesday it used fuel economy testing methods that did not comply with Japanese regulations for 25 years. It said it would set up an external committee to investigate the matter and report the results in three months. It first flagged the manipulation on four models last Wednesday. For the latest on reports that Mitsubishi executives will resign, click here.
SUVs Dominate the 2016 Beijing Auto Show
According to CNBC, all eyes are on sports utility vehicles (SUVs) at this year's Beijing Auto Show, where industry stalwarts are racing against local rivals to indulge the mainland's growing thirst for larger vehicles. "The SUV market [in China] seems to be insatiable . . . You're only going to see it accelerate," Mark Reuss, General Motors' (GM) executive vice president of global product development, told CNBC. On Monday—when the 10-day event opened to the media— leading international players, including Mercedes, Honda Motor, Ford, Volkswagen, and GM, displayed new SUVs, many of which were "concept cars," or models showcasing new styling and technology not yet being mass-produced for the public. Volkswagen's T-Prime Concept GTE, for example, is a plug-in hybrid with a high-tech dashboard. "There is an increase in demand for large cars in China, with automakers now talking about increasing space and the number of people that can fit into an SUV," Namrita Chow, principal analyst at research house IHS Automotive, said. SUV sales on the mainland soared an annual 52 percent in 2015, one of the few auto segments continuing to grow, according to IHS. Read more about China’s growing interest in larger cars here.
ADESA Spots 6% Sequential Wholesale Price Lift
Auto Remarketing reports that according to ADESA Analytical Services’ monthly analysis of wholesale vehicle prices by vehicle model class, used-car prices in March averaged $10,815. The figure represented a 6.0-perent increase compared to February and a 1.7-percent uptick relative to March of last year. Continuing a now-familiar pattern, ADESA chief economist Tom Kontos pointed out car prices on a year-over-year basis were down, while truck prices were up, particularly for full-size SUVs, CUVs, and pickups. “Signs of the traditional spring tax-season market appeared in March as average wholesale prices rose both on a sequential and annual basis,” Kontos said in his monthly Kontos Kommentary that accompanied the latest data. “Yet price softening driven by supply growth remains a visible undercurrent as totals and averages are broken down into model class, sale type, and age buckets,” he added. Looking deeper into the March data, ADESA reported that average wholesale prices for used vehicles remarketed by manufacturers were up 1.9 percent month-over-month but down 1.0 percent year-over-year. Read more about ADESA’s analysis of March wholesale used vehicle sales here.
Subaru Updates 2017 Forester for Quieter Cabin
According to Automotive News, the 2017 Subaru Forester receives a revamped front fascia to resemble other Subaru nameplates. Subaru is revamping the Forester crossover for the 2017 model year with subtle exterior changes, such as a new grille, headlights, and front bumper cover, and additional cabin refinement designed to reduce the road noise that was a common complaint on previous versions. The Forester was Subaru's top-selling model in the U.S. last year and 2016 deliveries have advanced 2.1 percent through March. For 2017, the Forester's base 2.5-liter boxer four-cylinder engine ekes out 2 more mpg in city driving, bringing the total to 26. Highway efficiency remains at 32 mpg, but the more efficient city figure raises the combined EPA rating to 28 mpg from 27. Aside from the slight bump in fuel economy, the naturally aspirated engine remains at 170 hp. The turbocharged 2.0-liter H4 in the Forester XT offers the same 250 hp and fuel efficiency. Subaru has enhanced the Forester's interior, adding more weatherstripping and thicker glass to alleviate high levels of noise that plagued previous versions. More sound deadening and an acoustic windshield further attempt to quiet the cabin. For more on the 2017 Subaru Forester, click here.
Prepare for AIADA's DC Summit with the FREE AIADA App
Download the newly-refreshed AIADA app in the App Store and on Google Play for access to everything you need to know during AIADA’s 10th Annual Auto Summit next month. Featuring the full Summit schedule of events, speaker bios, social media updates, as well as an upcoming event calendar, talking points, a directory of your congressional members and their votes on AIADA’s key issues, the AIADA app will connect you with everything you need to stay updated during AIADA’s Summit and throughout the year. If you haven’t already registered, space is still available at AIADA’s Summit, held May 10-11 in Washington, D.C. Click here to learn more and to register.
To download the app, search for “AIADA Connect” in the App Store and on Google Play or click below.
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