Volume 117, No. 16 August 24, 2020 DriveChicago.com AG sues area dealer over advertising practices enhancement means more The Illinois attorney general’s of- “(The dealership) knowingly and traffic to dealer sites fice is suing a north suburban Chicago repeatedly took advantage of people dealership for unfair and deceptive ad- through deceptive advertising — even A recent update to DriveChicago. vertising and business practices, the of- after entering into an agreement with com is resulting in a massive increase fice announced Aug. 12. the attorney general’s office to stop us- in the number of visitors that the web The dealership, which six years ago ing unlawful practices,” Raoul said. “I portal is sending directly to CATA entered into an Assurance of Volun- am committed to seeking enforcement member dealer websites. With this re- tary Compliance with the AG’s office against businesses and individuals who cent change, DriveChicago.com visi- over another matter, faces extensive violate the law to take advantage of Il- tors who are searching for a vehicle are civil penalties over the recent alleged linois consumers.” sent directly to a dealer website when practices. Raoul alleges the dealership further clicking on a vehicle listing. This is re- Attorney General Kwame Raoul violated the Illinois Consumer Fraud sulting in 6,000-10,000 dealer website said the dealership violated its AVC by and Deceptive Business Practices Act referrals from DriveChicago.com per continuing to engage in acts or practic- by deceptively using fake checks and month. es that violate the law, and the lawsuit coupons in its advertisements, fail- Until a few months ago, DriveChi- seeks to rescind all contracts entered ing to disclose a consumer’s potential cago.com relied on traditional email into with consumers when unlawful responsibility for negative equity on a leads, phone ups, and website clicks to methods were used. The dealership trade-in, failing to promptly pay off a send visitors to CATA member dealer also would have to pay full restitution loan on a traded-in vehicle, and adver- websites. With this change, DriveChi- to the customers. See Lawsuit, Page 3 cago.com gets out of the way and sends that visitor to a dealer’s website, directly to the vehicle details pages. Most auto brands to sell in US since WW II “This is probably the most effective With its Lucid The startup Future, Bollinger, the door in the enhancement ever made on DriveChi- Air set to go on is just one of a Vantas, BYD, past half century, cago.com,” said Richard Wickstrom, sale in the com- long list of new Great Wall and far more have ei- DriveChicago.com committee chair- ing model year, brands hoping others. ther shut down or man. “By sidestepping the traditional Lucid Motors, a to crack the U.S. The U.S. auto- walked away. But if vehicle details page and tired old email California-based market during the motive market has even a fraction of lead format, DriveChicago.com sends EV maker, plans next several years, long been a rela- these new entrants thousands of customers directly to to unveil its first a list that also in- tively closed club. actually makes it CATA dealers. Many dealers are see- production model cludes the likes of While a handful into showrooms, ing more than 100 digital visitors per during a web event Fisker, Lordstown of new brands American buyers See Traffic, Page 3 in September. Motors, Faraday have pried open See Brands, Page 4 2 CATA Bulletin August 24, 2020

Auto safety standards facing Office of Inspector General’s audit After more than 36,000 a review of NHTSA’s FM- of manually-operated driv- any significant life-saving people were killed in U.S. VSS process,” the inspector ing controls.” regulations. traffic accidents in 2019, general’s office wrote. The NHTSA proposed “That is a clear failure to the Transportation Depart- The NHTSA said in a revising rules for occupant fulfill (the) NHTSA’s mission ment’s Office of Inspector statement it would “work protection, steering controls, to save lives and prevent in- General said Aug. 11 that it with the Office of Inspec- glazing materials, door locks, juries, especially when you would audit oversight of U.S. tor General to provide any seating systems, side impact consider that there are tech- vehicle safety standards. pertinent information re- protection, roof crush resis- nologies out there now that The inspector general’s quested.” tance and child restraint an- could cut the annual death office said it was launching In March, NHTSA pro- chorage systems. toll in half,” Friedman said. a review of the National posed sweeping changes to Companies such as Gen- It often takes NHTSA Highway Traffic Safety Ad- U.S. safety requirements to eral Motors, Alphabet Inc’s years to finalize changes or ministration’s efforts to set speed the deployment of Waymo, Uber Technologies adopt new motor vehicle and enforce Federal Motor self-driving vehicles with- and Ford are aggressively safety standards. Vehicle Safety Standards out human controls. It pro- testing automated vehicles. After Congress demanded (FMVSS). posed rewriting 11 vehicle David Friedman, who was rules in 2010, the NHTSA in “Given the importance safety standards that require an NHTSA deputy adminis- February 2018 finalized rules to the traveling public that traditional manual controls trator during the Obama ad- requiring “quiet ” such as all new vehicles and com- “by revising the require- ministration, said the agency electric vehicles to emit alert ponents meet federal safety ments and test procedures under President Donald sounds to warn pedestrians standards, we are initiating to account for the removal Trump has failed to adopt of their approach. Auto sales forecasts for 2020 differ between J.D. Power, Cox analysts Two forecasters offered contrasting instance, by offering long loans to sub- Dealers Association, Chesbrough said takes on U.S. auto sales for the rest of prime customers with large amounts business shutdowns and job losses this 2020 vary, one more optimistic and one of negative equity. year have damaged the U.S. economy more pessimistic, in separate webinar Provided automakers can ramp up and consumer confidence so badly that presentations this month. production to meet demand in the it could be three or four years before The optimist is Tyson Jominy, J.D. fourth quarter, Jominy said sales have auto sales recover to pre-pandemic lev- Power vice president of data & analyt- “a shot to get back to zero.” That is, 0% els. ics. During a webinar hosted by The change by the end of 2020 in monthly “The key takeaway is, we’re still in Wall Street Journal, Jominy said a lack sales from a year ago. a very, very difficult position economi- of new-vehicle inventory is the biggest The pessimist is Charlie Ches- cally,” Chesbrough said. “Even though factor holding back sales. brough, senior economist for Cox tens of millions of people were los- He acknowledges an increase in sub- Automotive. He’s more worried about ing their jobs, the hope was that once prime delinquencies but said auto lend- consumer willingness and ability to everything opened back up again, all ers are not “stacking” risk as they had in buy. During a webinar hosted by the these jobs would be reopened, too, and the run-up to the Great Recession, for American International Automobile everybody would get back to work.”

The CATA Bulletin is produced by the Congratulations! Chicago Automobile Trade Association 18W200 Butterfield Rd. Oakbrook Terrace, IL 60181-4810 Al Piemonte in Melrose Park is a winner of Nissan’s 2020 Award of Excellence and the Nissan The CATA Bulletin is distributed via blast email every other Friday Global Award. Nissan (Niles) and Zeigler Nissan except during the , when it is not produced. Listings of items for sale are subject to the approval of the CATA. of Orland Park won the 2020 Award of Excellence. Candidates for employment must submit a full resume to the Editor. Mike Anderson of Merrillville (In- Review past editions dating to 1998 or search by subject at diana), Phillips Chevrolet of Frankfort, and Ray www.cata.info/publication/bulletins. Chevrolet in Fox Lake are winners of the 2019 General David E. Sloan President, Publisher Motors Dealer of the Year award. Erik K. Higgins Editor, Director of Dealer Affairs August 24, 2020 CATA Bulletin 3

Virus taking financial toll on legacy OEMs; startups mostly OK Established automakers and sup- search, both say capital is flowing to- companies are going to eat the legacy pliers are reeling from the COVID-19 ward new technologies while legacy automakers’ lunch.” pandemic, looking ahead to years of de- OEMs struggle with their bottom lines, Kristin Dzieczek, vice president of pressed sales and are burning through both now and in the future. research at and the panel’s mod- cash in pursuit of electrification, two Current light-vehicle sales have been erator, asked, “Why does Wall Street industry analysts said. crippled by COVID-19 and likely won’t view the legacy manufacturers so neg- Startup companies in the sector, exceed 15 million units annually over atively?” Meanwhile, financial backing meanwhile, mostly are committed to the next five years, compared with 17 is available for “companies that haven’t battery-electric and hybrid vehicles, million in the prosperous 2016-2017 built a car,” she said. have ready access to capital and don’t period, Lache said. The pandemic’s ef- The legacy OEMs’ outlook isn’t to- need to shore up their finances by sell- fects on consumer demand aren’t fully tally bleak, the analysts said. ing internal-combustion-engine vehi- known, he said. “There’s much more pent-up de- cles, John Casesa and Rod Lache said Demand for ICE-powered vehicles mand than we realize,” said Casesa. during a presentation this month at the has matured, but well-capitalized legacy Lache noted that GM almost broke Center for Automotive Research’s on- OEMs “will find great values in consol- even in the second quarter despite line management briefing seminars. idation,” said Casesa, citing the pending its manufacturing plants being shut “Technology is making the auto- merger of Fiat Automobiles down by COVID-19 for almost two mobile into something different” from and French automaker PSA. months. what is on the road today, said Casesa, Lache mentions cooperative research GM also is pressing ahead with a partner in Guggenheim Investments agreements that fall short of mergers, electrification, spending $2.3 billion on and a former executive for General Mo- such as those between Ford and Volk- a joint venture with LG Chem to man- tors and Ford. “(EV maker) Tesla is the swagen, and GM and Honda. ufacture EV batteries in Lordstown, closest thing to a preview of the auto- For startups, meanwhile, there is “a Ohio, and $2.2 billion to convert its motive industry.” ton of money sitting on the sidelines Detroit-Hamtramck Assembly Plant Casesa and Lache, of Wolfe Re- in private equity,” Lache said. “These for production of EVs. Traffic Lawsuit Continued from Page 1 Continued from Page 1 month as a result of this change.” tising loan opportunities to those fac- For dealers, there was no setup nec- ing bankruptcy. essary. DriveChicago.com’s technical The dealership advertises through partner, Automotive Internet Media, various media including its own web- completed a setup for each dealer- site, third-party websites, newspa- ship that deep linked directly from the pers, and direct mailers. The attorney DriveChicgo.com search results into general’s office opened an investiga- each dealer’s vehicle details pages. its dealers and is a sign of the CATA’s tion into the dealership in 2014 after “Knowing that dealers spend tens of continued commitment to provide its receiving complaints from consumers thousands of dollars optimizing their members exceptional value.” who were unable to purchase vehicles websites to generate sales, DriveChica- To date, more than 90% of CATA advertised by the dealership. go.com decided to cut out the middle dealers have been transitioned to this Consumers alleged that upon vis- man and drive customers right into new process. To see how many visitors iting the dealership to buy a vehicle dealers’ virtual showrooms,” said Mark DriveChicago.com is sending to your seen in advertisements, sales repre- Bilek, DriveChicago.com general man- website, simply view the referring sites sentatives would say the advertised ger. “This one change instantly raised within the Google Analytics report for vehicle was already sold, then try to the relevance of DriveChicago.com to your dealership website. sell customers a different vehicle in- stead. In addition, consumers alleged . . . to “Drive Chicago,” the CATA’s that they continued to see the same automotive radio show, 8-9 a.m. Saturdays and vehicle in advertisements for weeks Tune in ... 6-7 p.m. Sundays on WLS-AM 890. afterwards. 4 CATA Bulletin August 24, 2020

Brands the short-lived Merkur, while After starting with a small lished automakers which are Continued from Page 1 Chrysler — in its various roadster with limited range, investing tens of billions each soon will have more brands incarnations — abandoned the company now offers four year in new electric models. to choose from than at any names such as models, with a next-edition Not all the new brand time since World War II. and . And, following roadster in the works as well entrants are going electric. Automakers “have always its bankruptcy a decade ago, as a pickup truck and a semi- Vantas is sticking with con- wanted to get into the U.S. pulled the truck on the horizon. Its ventional automotive tech- It’s a coveted market,” said plug on , , growth has been rocket-like nology but hoping to follow Stephanie Brinley, princi- Saturn and Saab. in recent months, prompting the low-ball pricing strategy pal automotive analyst with It’s not that there haven’t the company to announce a first used by the Japanese, IHS Markit. “It’s a difficult been plenty of wannabes. five-for-one stock split in an and then the Koreans who market to get into, but not After World War II, industrial attempt to make the shares followed to the U.S. in the impossible (though) it takes magnate Henry Kaiser hoped “more affordable for em- late 1980s. If it sticks to its a lot of volume to be profit- to launch his own brand, an- ployees and investors.” timetable, Vantas could be- able.” nouncing at an industry con- Not including Tesla, the come the first new marque During the past 120 years, fab that he was ready to back list of EV startups is a long dealing in Chinese-made the U.S. has seen more than it up with a $100 million in- one, with some of the most vehicles — though it likely 800 brands come and — vestment. “Give that man promising thought to be won’t be the last. There are mostly — go, according to one white chip,” responded Lucid, Detroit’s and plenty of carmakers which the archives of the Henry GM’s then president. Kaiser Nikola. The latter firm took hope to make that leap, in- Ford museum in Dearborn, didn’t last long, nor did Mal- advantage of the latest means cluding Great Wall and BYD, Michigan. The vast major- colm Bricklin, who tried to of raising lots of money fast, the latter already setting up a ity of them popped up dur- launch his own brand in the a “special purpose acquisi- U.S. headquarters in Los An- ing the industry’s pioneering 1970s. tion company,” also known geles. days, with names such as But some things have as a “blank-check company,” this month con- Chalmers, Maxwell and Due- changed and the door ap- allowing it to quickly list on firmed its own plans to set senberg. The Great Depres- pears to be opened wider a stock exchange. Fisker and up U.S. distribution though, sion wiped out hundreds of than it has been in years. The Lordstown plan to use that in this case, it is looking to them. Others, such as Stude- nascent shift from internal strategy, too, later this year. return after a nearly 30-year baker and , struggled combustion to electric power How many of these EV absence. It was one of nu- on through World War II but is offering significant oppor- entrepreneurs will make it merous European brands to couldn’t generate the econo- tunity, especially for compa- is far from certain, and the pull out of the States in the mies of scale needed in an nies hoping to ride the coat- road to market is already lit- 1990s due to declining sales increasingly costly business tails of Tesla. tered with fallen brands such — and regretting that deci- and were gone by the 1960s. Up-and-coming EV mak- as AMP and Bright Automo- sion ever since. The brand The post-War period did ers can only hope to enjoy tive, while others, such as hopes to get a boost as it re- see the arrival of a new wave a fraction of the recent suc- , are barely turns, since it is one of the of import brands, including cess of the California-based holding on. flagship marques for Groupe European marques such as automaker — currently the “The jury is still out on PSA, which is finalizing a Renault, Volkswagen, BMW most valued car company, the new electrics,” said Brin- merger with Fiat Chrysler and Mercedes-Benz, as well measured by market capital- ley. “They’ve got a long way Automobiles. as Japanese players such as ization — in the world. Ig- to go before we know if they Whether it can pull off Toyota, Honda and Nissan. noring a slew of naysayers really will be a presence.” a revival is far from certain, Even among them, many — indeed, mocking a great Part of the challenge is however. FCA had little luck struggled. The 1990s kicked many of them — the com- that EVs currently account reviving the Fiat brand in the off a new exodus, with names pany has broken from the for barely 1% of the U.S. U.S. And it hasn’t done much including Renault, Peugeot, pack. Notably, Fisker, which market. While many experts better with the other Italian Fiat, Daihatsu and debuted at the same time and are forecasting a big surge brand it relaunched, Alfa Ro- falling by the wayside. was largely seen as a rival, be- this decade, that remains to meo. Detroit’s Big Three, came the biggest seller of be proven out and the start- There’s another group of meanwhile, have pared back. electric vehicles in the U.S. ups will have to face down new-marques headed for U.S. Ford dropped and and the world. not only Tesla but the estab- showrooms.