With upset consumers on either side of the mask debate, dealers are grappling with whether to put their own mandates in place and how to handle any resulting customer protest.
Cars.com reported that its operating expenses were 19 percent below the same quarter in 2019. The company took a series of cost-cutting steps as the pandemic spread across the U.S. this spring. Cars.com shares surged higher despite a down day on Wall Street.
Aided by lower expenses and strong used-vehicle demand, Sonic Automotive's net income rose 16 percent in the second quarter despite the pandemic. The retailer is expanding a rollout of standalone EchoPark stores with new delivery and buy centers.
About 1,100 of the 1,500 positions eliminated in the U.S are part of Cox's Manheim wholesale auction unit. Another 130 posts were cut in Canada.
Flattening forbearance figures could be a subtle sign of improvement, but it likely represents a shuffling of impacted consumers.
Dealerships should work particularly hard in this environment to ensure customers are being treated fairly inside their dealerships and that discriminatory behavior is not tolerated in the finance and insurance office.
Compliance experts believe the Federal Trade Commission's handling of a New York dealership case, in which the store agreed to pay $1.5 million for a slew of illegal and unethical practices in the finance and insurance office, may have far-reaching implications. Federal regulators in particular cited dealership-arranged financing, also called indirect financing, as a business practice considered deceptive by nature.
In May, Bronx Honda settled FTC charges that it discriminated against African American and Hispanic car buyers. The store was accused of charging well above the legal cap on document fees and adding fees and markups. The FTC also alleged Bronx Honda management instructed employees to target these groups "due to their limited education" but not attempt the same practices with white customers.
FTC Commissioners Rebecca Kelly Slaughter and Rohit Chopra argued that the commission should exercise its rule-making authority to crack down on dealerships for what they considered discriminatory algorithms and practices.
The commissioners say the difference between the amount lenders offer to dealerships to buy auto loan contracts and the rate negotiated between the dealer and car buyers exposes the customer to pricing disparities, which could lead to higher markups for Black or Hispanic customers.
"Although this matter involves extreme conduct that may make it seem like an outlier, the tricks and traps that Bronx Honda used against consumers are all too prevalent at auto dealerships across the country," Slaughter wrote in a statement. "In my view, far-reaching structural reform to the automobile-financing and -salesmarkets is long overdue and urgently needed: First and foremost, the Commission can start by initiating a rulemaking, under the Dodd-Frank Act, to regulate dealer markup."
Disparate impact — referred to as a business practice resulting in unintentional discrimination — was among the concerns addressed in the case. Regulators postulate that lending algorithms can be calibrated against consumers, charging customers more based on their skin color.
Hudson Cook lawyer Jean Noonan argued in a blog post that the discrimination outlined in the complaint appeared intentional and not the result of accidental overcharges involved in cases of disparate impact.
"The allegation was that the dealership charged some consumers more specifically because of their race or ethnicity. This is discriminatory treatment, pure and simple, not disparate impact," Noonan said.
Dave Robertson, executive director of the Association of Finance & Insurance Professionals, said no matter where a consumer acquires financing, there are three expenses associated with an auto loan: loan origination expense, or the cost of soliciting qualified buyers and arranging terms; loan servicing expense, the cost of collecting monthly payments and providing customer service; and finally, lending expense. When banks shoulder all three expenses, cost is passed onto the customer in the form of a less desirable finance rate. If the dealership arranges the financing, the dealership incurs that expense and has to be reimbursed by whomever buys the contract.
"There's no logic to the argument that there's some kind of extra expense," Robertson said. "We've got to remember regulators deal in worst-case scenarios."
New-vehicle unit sales plummeted 44 percent to 30,687. Used-vehicle sales dove 41 percent to 42,606 units. But the dealership group said June results in both the U.S. and abroad strongly improved from March and April.
After adjustments for special items, net income rose 6.1 percent to $48.7 million. Asbury also said it has reinstated executive compensation to pre-virus levels.
Steve Rowley, executive vice president of the Cox Business commercial unit, will succeed Sandy Schwartz as president of the dealership services giant starting Monday. Rowley and Schwartz will work together on the leadership transition at Cox Automotive.
IHS Markit said the number of light vehicles in operation in the U.S. exceeded 280 million this year. That's an increase of 2 million, or roughly 1 percent, from last year.
The dealership group's strategy underscores emerging consumer trends expedited by the pandemic.
Dealers are seeing average grosses dramatically higher than year-earlier levels, and they are trending up since the height of coronavirus-related shutdown period. But it's temporary.
Pent-up consumer demand and shrunken inventories have given franchised auto dealers pricing power that they haven't felt in more than a dozen years. But it shouldn't take a pandemic for dealers to make money selling new vehicles.
Ford dealers say parts they need for a common repair are taking weeks to arrive as vehicles pile up in their service centers. One service manager called the situation a "nightmare."
As Canadians began to socially distance and businesses shut down to prevent the spread of COVID-19, Tony Del Gobbo, dealer principal at Newmarket Hyundai in Ontario, had an idea.
As medical workers at two Illinois hospitals served on the front lines during the onset of the pandemic this spring, Taylor Chrysler-Dodge-Jeep-Ram decided to serve them.
Amid the coronavirus pandemic, Jay Richards didn't want his 80-year-old mother out shopping for groceries. And that led the Kinsel Toyota general manager to start a free service for seniors in Beaumont, Texas.
Schaller Auto Group in Connecticut used furloughed employees and its vehicles to deploy mobile Internet hot spots to help students complete online school this spring.
When COVID-19 dramatically curtailed activity at Volkswagen dealerships across much of the nation, it also curtailed the use of thousands of service loaner Atlas crossovers. Dealers nationwide repurposed those vehicles to help out in their local communities.
Dealership groups say stores must have plans for how to handle situations in which an employee tests positive for the coronavirus, among a slew of safety protocols for staff and customers.
An Arizona state data law can be enforced after a federal judge denied a request for a preliminary injunction from the DMS giants.
The reason for the delay was the shutdown of much of Michigan during the COVID-19 outbreak, including EPA offices and laboratories that certify vehicle emissions, a Genesis spokesman said.
The retail giant is resuming growth of its AutoNation USA outlets as second-quarter net income soared on expense reduction, broader use of digital tools and an investment in Vroom, which went public.
A new consumer survey found that fewer customers plan to delay a vehicle purchase than did earlier this year, but affordability is a concern.
New legislation has the potential to update an older law regarding digital signatures in financial transactions and bring the statute into the 21st century.
Identity theft is the leading cause of concern for auto lenders today, fraud experts say, after a wave of successful phishing attempts masquerading as important information about COVID-19 potentially lured thousands of consumers into giving up personal information.
As forbearance and federal stimulus programs come to an end, TransUnion warns that credit washing attempts, where consumers try to remove legitimate loans and credit products from their credit portfolios, and synthetic identity theft, where scam artists cobble together a new identity by blending real and false information they use to steal vehicles, could make a comeback.
"It's clear that fraudsters have the data and increasing opportunities to create synthetic identities and utilize stolen identities," Shai Cohen, senior vice president of Global Fraud & Identity Solutions at TransUnion, said in a statement. "It can have long-term impacts for consumers such as the compromise of multiple online accounts and bringing down credit scores, which we anticipate will increase during pandemic reconstruction."
Thirty-one percent of 2,059 U.S. adults surveyed online by TransUnion on June 30 admitted to being targeted by phishing scams. Another 8.5 percent admitted they fell for it. The representative sample could reflect that even more people have fallen for the schemes.
Loan payments could be a challenge for consumers in coming months as lenders phase out forbearance programs even as unemployment levels remain high.
Kimberly White, director of fraud and identity at LexisNexis Risk Solutions, said synthetic and manipulated identity fraud risk rose about 50 percent mid-March through May compared with the same period in 2019.
"We have had more conversations about fraud risk than we've ever had before with auto lending," White said.
The retailer managed a decline in new-vehicle sales by boosting its profit per vehicle and increasing sales of used vehicles. Lithia also rolled out plans for a new digital retail and service strategy under a national brand, Driveway.
A perfect storm of rising unemployment, uncertainty over consumer credit metrics and spiking infection rates in many areas of the country point to rougher waters ahead for lenders.
A perfect storm of rising unemployment, uncertainty over consumer credit metrics and spiking infection rates in many areas of the country point to rougher waters ahead for lenders.
When the coronavirus hit in March and dealer Jeff Elhart had to temporarily lay off 72 staffers, he made it his mission to try to alleviate any anxiety or mental distress those employees — or any community members — might be feeling.
As the economy works through the process of returning to a semblance of normalcy, strategic planners in the automotive industry will be expected to better target vehicle content to meet specific consumer demands more efficiently to addressing affordability and industry profitability.
Dealerships learned and evolved rapidly amid the challenges brought by the coronavirus pandemic, panelists said during Automotive News' first Retail Forum: Dealer Discussions event.
AutoNation Inc. is for the third time in two years looking for a new CEO, though the next leader will be working without Mike Jackson who will retire by April 12, 2022.
AutoNation confirmed last week to that Scott Arnold, a nearly 20-year company veteran, retired May 31 to focus on his health after stepping back from some responsibilities this year.
One Charlotte, N.C., Subaru dealership turned an unused inventory of promotional dog bandanas into much-needed face masks for its community.
Joe Agresti, CEO of Dream Motor Group in Spring, Texas, took to selling personal protective equipment to help keep the 480 employees at his six-location dealership group paid.
GM, which already had the most minority-owned dealerships in the U.S., added nine more in 2019, while Toyota added seven and FCA added four. Minority ownership declined among Ford and Hyundai retailers.
Creating efficiency in staffing, technology, processes and the customer experience will be critical for dealerships going forward, panelists said during Automotive News' first Retail Forum: Dealer Discussions event.
Honda is committed to its core car models but says it can no longer make an economic case, amid falling demand across the market, for the Fit subcompact, Civic coupe and six-speed manual version of the Accord sedan.
Honda is committed to its core car models but says it can no longer make an economic case, amid falling demand across the market, for the Fit subcompact, Civic coupe and six-speed manual version of the Accord sedan.
The second-largest U.S.new-vehicle retailer said improved June franchise business in the U.S. and the United Kingdom, expense management and robust sales upon reopening used-vehicle supercenters last month aided results.
In J.D. Power's brand loyalty study, Subaru and Toyota ran neck and neck with Subaru retaining 60.5 percent of its owners and Toyota following close behind at 60.3 percent.
The suit claims the two salesmen -- one Black and one Hispanic -- had greater seniority and more experience than many of the white employees brought back to the Honda store after the coronavirus shutdown.
Volvo will replace a controversial subscription service in California, following dealer protest. The automaker will introduce a revised program that is running in 15 states.
Following a medical leave, Cheryl Miller has resigned after leading the largest U.S. dealership group for less than a year. Mike Jackson's contract as CEO and chairman has been extended through April 12, 2022.
Inventory levels industrywide have dropped to an estimated 2.55 million, with the steepest declines among pickups and other light trucks.
Paycheck Protection Program records show a massive cash infusion into U.S. dealerships retained at least 761,000 jobs.
Paycheck Protection Program records show a massive cash infusion into U.S. dealerships retained at least 761,000 jobs.
