A cyberattack on CDK Global, a software provider for auto dealers, has disrupted car sales and services across thousands of dealerships in the U.S. and Canada. The breach forced CDK Global to shut down its systems to protect customer data, causing delays in sales processes and forcing dealers to use alternative methods for paperwork. The disruption comes at a critical sales period, but many dealers are managing to continue operations despite the challenges.
The US government has paid out $135 million to auto dealers for on-the-spot tax rebates on electric vehicles, with over 25,000 time-of-sale reports received and more than 11,000 auto dealers registered for the program. However, the number of vehicles eligible for rebates has decreased, and new restrictions on electric vehicles and battery sourcing have been implemented. Consumers must meet income limits to qualify for the tax credit, and vehicles must adhere to specific guidelines on sourcing battery materials to receive federal tax credits.
The US Treasury Department's point-of-sale electric vehicle tax credit initiative, which allows car dealers to offer immediate rebates to customers, has seen an increase in participation from auto dealers. Over 8,700 dealers have joined the initiative, and the IRS has extended the deadline for time-of-sale reports to help dealers adjust to the new system. Despite concerns expressed in a letter to President Biden about stalled enthusiasm for electric vehicles, the direct tax credit payments plan appears to have influenced some dealerships to continue selling electric cars, addressing consumer concerns about affordability.
Retail sales in November increased by 0.3% from October, with a 4.1% rise compared to the previous year. The big three categories of retail sales, including ecommerce operations, bars and restaurants, and auto dealers, accounted for 50% of total retail sales. However, other brick-and-mortar retailers such as department stores and electronics and appliance stores continue to decline as sales shift to ecommerce. The increase in spending is fueled by a rise in per-capita disposable income, which has outpaced inflation by 3.9% year-over-year.
Nearly 4,000 US auto dealers have written an open letter to the Biden administration, urging them to slow down their push for electric vehicles (EVs) due to low consumer demand and slow sales. The dealers argue that current and forecasted customer demand does not support the proposed regulations mandating EV production and distribution. They believe that EV prices are too high, charging infrastructure is inadequate, and range anxiety persists. However, data shows that EV sales have been rising, accounting for nearly 18% of new vehicle purchases in Q3 of this year. The dealers' concerns may also be influenced by the fact that EVs require less maintenance, cutting into their profits from service and repairs.
A coalition of over 3,000 auto dealers across the United States has sent an open letter to President Biden, urging him to reconsider the aggressive electric vehicle (EV) push and tap the brakes on his administration's EV mandate. The dealers argue that current regulations are unrealistic and not aligned with customer demand, as EVs are stacking up on their lots due to slow sales. They highlight issues such as inadequate charging infrastructure, energy grid instability, and a lack of reliable mineral supplies for EV batteries. The dealers call for more time for battery technology to advance, affordability to improve, and consumer comfort with the technology to grow. They emphasize the need for a market-driven approach rather than government mandates. Gas-powered cars still dominate new car sales, and experts warn of national security risks associated with China's dominance in the global EV industry.
Retail sales in the U.S. rose by 0.7% in September, surpassing expectations, driven by strong demand at auto dealers and online stores. Higher gasoline prices also contributed to the increase. When excluding car dealers and gas stations, retail sales still grew by 0.6%, indicating solid consumer demand. However, sales declined at big-box electronics stores, clothing stores, and home centers. Overall, the report suggests that the U.S. economy is still expanding at a healthy pace, supported by rising wages and low unemployment, although higher interest rates may pose a future challenge.
Wholesale used vehicle prices in the US fell by 2.7% from April to May, marking the second consecutive monthly decline and the index's lowest level since December. The decline in sales and wholesale prices signal the used vehicle market is weakening, according to Cox Automotive. Used retail sales are estimated to have been down 11% YoY in May, as many Americans are being priced out of the market and repairing their vehicles instead of replacing them. The decline in used car prices is a win for the Federal Reserve's battle to taper inflation by ratcheting up interest rates.
Auto dealers are essential to the mass adoption of battery-powered electric vehicles, and companies like GM and Ford are working closely with them. However, the transition to EVs is a daunting moment for both sides of the car business. While EV sales are increasing rapidly, dealers remain cautious about the timelines outlined by the auto companies. The charging element of EVs, more than any other factor, influences how an individual's day unfolds in a state like California where two million new cars are sold annually.
