Dealerships Lost $1.02B in Business After CDK Cyberattack, Updated AEG Study Says
Anderson Economic Group estimated dealerships lost 56,200 new-vehicle sales and more than $1 billion between June 19 and July 15 because of the CDK Global cyberattacks and subsequent software outages. The consulting firm had projected July 1 dealerships would lose $944 million between June 19 and July 6, reports Automotive News.”The small increase is due to a somewhat larger sales loss revealed by now-available June sales data, the actual duration of the outage, and a slight downward adjustment in the estimated lost service and used car business,” AEG wrote in a news release July 15.The same day, AutoNation estimated the CDK situation had stripped $1.50 out of its second-quarter earnings per share. CDK suffered at least two cyberattacks June 19 in what it called a “cyber ransom event.” It took its software offline as a precaution, forcing dealerships to find alternative ways to do business. On June 26, CDK said it had restored service to a test group of retailers and began bringing others online; by July 2, CDK announced “substantially all dealer connections” to the DMS had been restored as of that morning. Click here for the full story.
Tesla’s Share of U.S. Electric Car Market Falls Below 50%
Tesla’s once-commanding share of the market for electric vehicles in the United States slipped below 50 percent in the second quarter of the year even as sales of battery-powered cars surged to a record, according to new estimates published Tuesday by a research firm. According to The New York Times, Tesla accounted for 49.7 percent of electric vehicles sales from April through June, down from 59.3 percent a year earlier as the company led by Elon Musk lost ground to General Motors, Ford Motor, Hyundai and Kia, the research firm, Cox Automotive said. It was the first time the company’s market share fell below 50 percent in a quarter, according to Cox. The firm, a leading auto industry researcher, estimates market share based on registrations, company reports and other data.The numbers are the latest sign that Tesla is losing its dominance in a market it in effect created in 2012 when it introduced the Model S sedan. Before that car, very few electric vehicles were sold in the United States.Click here for the full story.
Service Departments Weigh Benefits, Drawbacks of Recouping Credit Card Fees from Customers
As dealer profits fall from pandemic highs, a growing number of retailers are considering a controversial tactic to help offset one of their top monthly costs: surcharges on credit card transactions in the service lane. Credit card companies charge dealerships thousands of dollars in processing fees per month, making it one of a dealer’s top 10 expenses, retailers said. Recouping those costs by passing them on to the consumer can risk relationships and customer satisfaction index scores, reports Automotive News.Though it is becoming more widespread across industries, surcharging is still a contentious topic in the dealership world, with some retailers unwilling to risk adding another fee for customers. Yet rising operational costs and falling profits have dealerships across the country considering whether credit card fees should always be a cost of doing business. In 2017, the Supreme Court case Expressions Hair Design v. Schneiderman determined businesses may inform customers there can be discounts for paying with cash, bringing more clarity on how dealerships can compliantly pass processing costs on to consumers. But even so, some dealers aren’t willing to implement such programs into their own stores. Click here for the full story.
Dealers Can Expect More Affordable Used Car Availability
Dealers may soon find more affordable vehicles to acquire, according to the latest forecast from wholesale used-vehicle auction firm Manheim, a Cox Automotive company. That’s good news for dealers who have struggled to rein in costs as incentives chew away at their new-car profits.“We definitely see pressure from incentives and growing discounts in the used market,” Cox Automotive’s chief economist, Jonathan Smoke, says during a discussion of the recent report.Smoke means “incentives and growing discounts” on new vehicles because new vehicle incentives tend to reduce used vehicle values by similar amounts. For the market, Cox Automotive says in a separate report that the average new-vehicle incentive as a percent of suggested retail was about 7 percent in April, up from about 2 percent in April 2022. However, that’s down vs. more than 10 percent for the majority of 2019 and 2020. Higher new-vehicle discounts cutting used-vehicle values applies to EVs, too, Smoke says. New EVs have been the subject of manufacturers’ price cuts — most notably Tesla, but others, including Ford, have followed suit, reports Wards. “The electric vehicle segment, that’s where we’ve seen the highest depreciation” in used vehicles, Smoke says. Click here for the full story.
Elevating F&I Performance Through Consistent Training and Servant Leadership – Adam Marburger
Welcome to Training Camp with Adam Marburger, exclusively on CBT News. In an industry where margin compression is a constant challenge, consistent training and mentorship are vital to enhancing the customer buying experience and boosting dealership profitability. Join Marburger, a seasoned F&I professional and martial arts expert, as he shares strategies and insights to transform your F&I operations. Prepare to dive into the four pillars of F&I success and learn from the industry’s top thought leaders. Marburger emphasizes that training should be an ongoing process, not a one-time event. Continuous learning and mentorship are crucial for staying ahead in the competitive automotive industry. Additionally, Marburger breaks down the core components of successful F&I operations into four pillars: transactional, sales, relational, and compliance. Mastering each pillar is essential for achieving excellence in F&I. Building strong relationships within the dealership, from sales teams to service departments, is key. Servant leadership and fostering a supportive environment can significantly enhance overall dealership performance. Click here for the full interview.
Federated Insurance’s Claim of the Month – Checking Tires Before Selling Vehicles
An insured sold a used vehicle to a customer. Several weeks later, the customer had to replace one of the tires due to damage it sustained, and swapped the full-size spare in its place. The next day, the spare suffered a catastrophic tire failure, causing the customer to lose control of the vehicle, roll into a ditch, and be ejected from the vehicle. After a post-accident inspection, it was determined that the spare tire was over 13 years old and failed due to age and deterioration.
CLAIM AMOUNT: $3,500,000
Risk management advice:
When selling either new or used vehicles, be sure to take the time to carefully inspect all tires, including the spare. A full inspection of a vehicle should include notes on the wear and tread of the tires, along with the date of manufacture to determine when they should be replaced. It is up to the business to properly disclose accurate statements about necessary repairs that will be needed to help ensure that clients are aware of any outstanding fixes to be made following the sale, especially for used vehicles. Click here to learn more.
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