As the 2017 NADA Convention and Exposition begins in New Orleans, financial software specialists Sword Apak, which has a major presence in Europe and a growing footprint in the US will once again be providing feedback on what it sees as the major themes emerging from an event that this year celebrates 100 years of NADA.
From the outset, there are a number of key topics in play. Inevitably, one of those is the political change in the US; another is the plateauing new car market and the use of manufacturer incentive mechanisms, designed to support sales but risking a distortion of the market.
James Powell, Executive Vice President at Sword Apak observes; “At Sword Apak we pride ourselves on our engagement with the markets in which we operate globally. Right now, there are certain similarities between the US and UK markets for different reasons. The UK is facing a fall in new car registrations this year and has its own political changes courtesy of Brexit and a new Prime Minister mid-term. Different change stimulus in the US, but potentially similar outcomes; over the next few days it will be fascinating to hear first-hand the views of US dealers and suppliers and compare and contrast these with the UK market.”
The recent inauguration of President Trump seems set to be a significant driver of change in the US. Already, Ford has cancelled the planned development of a new production base in Mexico and GM has been the subject of criticism for importing cars from its Mexican plant into the US. In a changing political landscape that champions ‘home-grown’ the US motor industry will be lobbying for the changes it wants. In NADA, the dealer body has a strong voice that has already made it clear that it will be lobbying on easing fuel-economy standards and reducing what it sees as needless regulatory paperwork.
It seems likely that the Trump administration will be positive for dealers in terms of tax and regulatory reform. However, there may be concerns centred upon the North American Free Trade Agreement, which has a key role in what is a global supply chain automotive industry for both cars, parts and technology. Manufacturers stand to be potentially impacted by any change and consequently, so will dealers and consumers. It bears strong comparison with the single market matter facing the UK and EU.
Volume related bonuses linked to new car sales is another issue that seems set to surface at the Convention with the NADA reporting that many dealers believe some dealer incentive programs are unjust and unfair. They are particularly concerned by so-called ‘stair-step’ programs. This is seeing some dealers almost giving away cars for less than they pay for them, hoping they’ll hit the high stair-step at the end of the month, while other dealers are opting not to risk going for gold. As a result, the same car is being retailed at very different prices. It is creating consternation for consumers and potential issues for residual values.
“We stand to see one of the most interesting NADA Conventions for many years and these issues haven’t even touched the increasing use of technology and the evolving online retailing model – it should be fascinating,” concludes Powell.
By Natalie Sweet at 27 Jan 2017, 15:35 PM