Page 12 - GIADA-April-2018

DEALER TRENDS

What's Ahead for Auto Dealers in 2018?

By Vic Lance, Founder and President of Lance Surety Bond Associates

With another year of record sales having sedans toward light trucks, SUVs and
passed, auto dealers now are looking ahead crossovers, all of which offer more utility, Along with this, the Commission may
to the rest of 2018. Early forecasts from the dealership profits will remain high. Light begin targeting instances of nondisclosure
National Automobile Dealers Assn., Cox trucks are likely to top 65% of the market of applicable safety recalls for vehicles at
and Edmunds predict that even though a in 2018. dealerships.
decrease in new-vehicle sales is expected, a
robust and stable year lies ahead. On the regulatory end, dealers Specific regulatory changes targeting auto
will need to pay attention to dealers this year are increases in at least two
On the regulatory end, dealers will need to states in the amounts of auto-dealer surety
pay attention to the actions of the Consumer the actions of the Consumer bonds. As of Jan. 1, dealers in Oregon and
Financial Protection Bureau (CFPB) as well Financial Protection Bureau Illinois have been required to post bonds in
as the Federal Trade Commission (FTC) and the Federal Trade higher amounts to remain licensed.
throughout the year as they enforce stricter
oversight. Commission as they enforce Oregon auto dealers now must post a
stricter oversight. $50,000 dealer bond, up from the $40,000
Read on for an overview of the trends bond required previously. Dealers of
and challenges facing auto dealers this What about regulations? Will auto dealers motorcycles, mopeds, all-terrain vehicles
year. According to NADA’s 2018 U.S. face any regulatory constraints this year? and snowmobiles in the state also have seen
sales forecast, new car and truck sales will an increase – the new requirement being a
slightly decline from last year’s total of 17.2 Regulatory and Compliance Trends $10,000 bond.
million to about 16.7 million. In terms of compliance, auto dealers can
expect a number of new developments over In Illinois, motor-vehicle dealers now must
As NADA senior economist Patrick Manzi the course of the coming year. According to also post a $50,000 bond when applying
explains, the slight drop is partly due to Dealertrack’s new edition of its Compliance for a license or renewing their current
increases in interest rates, which the Federal Guide, this year the CFPB is expected to license, whereas remittance agents must
Reserve will raise this year, increasing loan amp up its examination of auto-dealer post a bond of at least $20,000 (which may
terms and higher transaction prices. A jump transactions under the Larger Participant increase further, based on remittances for
in late-model used cars coming off leases Rule, which it adopted in 2015. the fiscal year).
also is a factor in falling new-vehicle sales.
With auto loans being the third-largest type While bond increases in other states do not
et, backed by steady economic and labor- of household debt in the U.S., the CFPB’s seem to be planned currently, the above
market growth, consumer spending aim is to ensure all deals involving nonbank two instances follow a general trend of state
power is up. Drops in deliveries of new auto financing will be up to standards. jurisdictions imposing stricter licensing
vehicles thus are expected to be matched This includes clear auto-financing terms, requirements on auto dealers.
by increases in used-car sales. The total providing accurate information to credit
used-vehicle market is expected to exceed bureaus, fair lending practices and more. What are your thoughts on the sales and
40 million sales this year, with 15.3 million An additional effort in that direction by regulatory trends for auto dealers in 2018?
used vehicles being sold by new-vehicle the Bureau likely will be to safeguard auto- Would you add anything to the above? Let
dealerships. dealer compliance with federal consumer us know in the comments! n
credit protection laws.
Greater entry of plug-in and hybrid vehicles
is also on the map. According to Edmunds, The FTC’s scrutiny of “yo-yo” financing REGISTER TODAY!
the latter could grow from 3% in 2017 to schemes, which made headlines over the DEALERS & EXHIBITORS
about 4.4% in 2018. past year, also is expected to continue this 2018 Convention & Expo
year, according to Dealertrack. In yo-yo
financing, a customer takes possession of a July 12-14, 2018
The Trump Admin.’s tax-reform bill, signed vehicle before a loan is formally approved, Hyatt Regency Savannah
into law Dec. 22, also is expected to give the but is then contacted by a dealer who says 2 W Bay Street, Savannah, Ga 31401
industry a boost, further helping dealers the loan rate went up. Sometimes it’s legit, SEE PAGE 30 FOR MORE
adjust. Moreover, as consumers shift from other times not.

10 | GIADA Independent Auto Dealer APRIL 2018