Page 12 - GIADA-April-2018
P. 12

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.

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