COVID-19 TO IMPACT NEW-VEHICLE SELECTION, PRICE, FINANCING, SAY EXPERTS
Motorists are advised to fasten their seatbelts for a very different spring car-buying season.
In addition to complicating the shopping experience, the COVID-19 pandemic could have an impact on selection, price and financing, say experts. "We do see that customers will probably be able to get better deals, but by making cash deals or finance deals rather than lease deals at this point," said Robert Karwel, senior manager of automotive practice in Canada for J.D. Power. The reason is that calculating residuals, or how much a vehicle is worth at the end of its lease, will be difficult because no one's got a good grip on what the used car market is going to look like. "Right now you could probably safely assume that residuals are going to go down just because of people's fears of committing to buying a new vehicle right now," he said in an interview. That means car owners will receive a little less for their trade-ins and therefore have less of a downpayment for another vehicle.
With about 41,000 cars each month projected to come off lease in April and May, companies are extending customer commitments as much as they can. That means a lot of used cars will be coming back in the third and fourth quarter of the year, he said. Spring is typically the key period for vehicle purchases or leases, but this year will be down. Retail sales plunged almost 50 per cent in March, and April is expected to be even worse because of lockdown initiatives across the country, although light trucks have been less affected.
Canadian auto sales are expected to average 1.5 million this year, down nearly 23 per cent from the prior year before surging 37 per cent in 2021, says Thomas Feltmare, senior economist for TD Economics. "Given both the magnitude of the shock and the current level of uncertainty, consumers are likely to forego near-term purchases and wait until better economic conditions prevail," he wrote in a report.
While economic activity will begin to return next month, it will be gradual and could take awhile to return to the normal 1.9 million to two million level of annual sales in Canada. Sales could be slowest to recover in Quebec, which has had the country's most cases of COVID-19. Low oil prices could also hamper activity in Alberta, Saskatchewan and Newfoundland and Labrador as they did during the last oil shock several years ago. The decrease in equity markets may also help to slow interest in luxury vehicles, whose sales were hurt the most in March. Karwel said the best deals to be had will be cash purchases for 2019 models or less popular 2020 models.
Deals on the most popular cars will be hard to come by because car manufacturers shuttered production. "The customer is going to have to be satiated with kind of taking what they can find on a dealer's lot as we don't have a lot of inventory in the pipeline," he said.
Chris Murray of Alta Corp Capital said buyers should shop around for good opportunities, particularly for 2019 vehicles, less popular brands and smaller vehicles. "I don't know if I would want to come out and broad brush say everybody's going to fire sale everything," said the analyst covering Auto Canada Inc. "I think what we're going to see is there'll be opportunities in certain types of vehicles. And given what we've seen so far, the dealerships that survive this downturn, they're going to be pretty eager to try to get some transactions done." They'll offer incentives while car manufacturers will also step up with their own discounts. So far, Ford of Canada is providing up to six months of payment relief on new purchases of 2019 and 2020 Ford and Lincoln models financed through Ford Credit. Existing customers can get up to 90 days of financing or lease payment extensions.
FCA says it is waiving payments for 120 days on all 2019 and 2020 models for all of its brands.
The luxury business could face increased pressure, as Karwel said the shift away from leasing could produce better purchase incentives than were available last year. "So I think for sure, there will be better opportunities for customers that wish to finance a luxury car at this point."
Fears of a recession could be a bigger threat to the industry than the virus. Demand would wane with potential customers less likely to commit to a purchase if they don't have jobs.
Manufacturers will then be less inclined to put big incentives on cars because their ability to attract customers will be limited, he said. "When the market is contracting, you're not looking at car manufacturers to try to gain share by increasing incentives, they will pull incentives back to a certain extent to preserve profitability."
Source: The Canadian Press
EPA CRACKDOWN COMING
The U.S. Environmental Protection Agency (EPA) has identified numerous companies and individuals who have manufactured and sold both hardware and software specifically designed to defeat required emissions controls on vehicles and engines used on public roads as well as on nonroad vehicles and engines. Cars and trucks manufactured today emit far less pollution than older vehicles. This occurs through careful engine calibrations and emissions controls in exhaust systems such as catalytic converters and diesel oxidation catalysts. Aftermarket defeat devices bypass these controls and cause higher emissions.
Source: EPA
FINANCING TRENDS
Those "well-qualified buyers" certainly appeared to take advantage of the generous financing terms captives offered in April based on the information shared by Edmunds on Friday morning. Edmunds reported that zero-percent finance deals surged to a record level in April as automakers "pulled out all the stops" to encourage new vehicle purchases during the coronavirus crisis. Meanwhile, Edmunds noticed that the average rate for used-vehicle financing actually edged a tick higher year-over-year.
Source: Auto Remarketing
TESLA HAS BEEN GETTING RID OF COMPUTERS WITHOUT WIPING THEM
Compromising customer accounts
Tesla has been throwing away computers without wiping them, leaving some customer accounts compromised. Be aware if Tesla ever had to replace your onboard computer.
With Tesla Autopilot computer upgrade and a recently announced MCU2 upgrade on top of regular replacements for performance issues, Tesla is changing a lot of computers in its vehicles today. Now the fact that a lot of used Tesla computers are showing up on eBay raises some questions about Tesla's process to get rid of those computers, which can often contain sensitive information, like Google or Spotify usernames and passwords. Even more troubling, these passwords don't seem to be encrypted. That's the kind of information that can be used to hack someone and can be described as compromising customer accounts.
Hacker Green acquired several of these computers and managed to find a lot of that kind of information about previous owners. Fortunately, the first thing he did is reach out to Tesla and let them know about the vulnerability. The automaker told him that they were launching an investigation into the issue, but the investigation didn't seem to be taken too seriously.
Green told Electrek that when he shared the VINs of the units he had with Tesla, they told him that those units were "stolen" from them. However, it appears that Tesla might be stretching the meaning of the word "stolen." Green shared proof with Electrek that these computers can be found in Tesla's service center dumpsters.
He wrote on Twitter:
I got in contact with Tesla security via proper channels and they are looking into it. But considering units are thrown into trash as per the procedure — not even sure this can be pinned on anybody. At most, 'Why did not you whack it with a hammer at least?'
Tesla claims that the computers are supposed to be wiped before being thrown away, but he is only aware of a reset procedure that can be done at the factory but not at service centers.
Either people dumpster dive to grab them and sell them to resellers and they end up on eBay, which is hardly "stealing," or Tesla employees themselves sell the computers. Tesla told Green that they would contact people who are affected by this leak of information, but they haven't given a clear timeline on that.
Electrek's Take - Well, that's dumb.
First off, these computers shouldn't end up in dumpsters in the first place, they should be recycled, and they should obviously first be wiped. And even if these things are found, this information should be encrypted so it is at least extremely difficult to ascertain the important information, should one of them fall into the wrong hands.
There are going to be thousands of Tesla computers in that situation in the coming months, and likely hundreds of thousands over the next year. Kind of a waste of equipment, if you ask me.
Tesla needs to have a much better procedure in place before that can happen, and they need to make it right for people who have already got a computer upgrade, and let them know they must change their passwords. If you have linked accounts on your Tesla and have had your computer upgraded, you should definitely do that.
Source: Electrek
PICKUPS OUTSELL PASSENGER CARS IN U.S. FOR THE FIRST TIME EVER
In all the years Chevy has sold Silverados and Ford trafficked in F-150s, few in Detroit ever dreamed the day would come that pickups would outsell passenger cars. But the highly lucrative truck segment dominated by Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV did just that last month. Pickups beat cars by more than 17,000 units in April, according to market researcher Autodata Corp.
Source: Bloomberg
HERTZ GETS FORBEARANCE FROM LENDERS IN BID TO AVERT BANKRUPTCY
Hertz Global Holdings Inc. reached an eleventh-hour pact with lenders to give the struggling rental-car company more time to rework its debt and extend a grace period on payments it has missed related to leasing vehicles. The forbearances and waivers give the company until May 22 to "develop a financing strategy and structure that better reflects the economic impact of the Covid-19 global pandemic," Hertz said in a regulatory filing.
Source: Bloomberg
RENTAL CAR COMPANIES REACT
Rental-car companies struggling to survive the coronavirus pandemic's catastrophic blow to their business have been working with automakers to call off purchases, in some cases even redirecting vehicles in transit to their now largely neglected parking lots. General Motors Co. is taking back cars it agreed to sell that were on their way to Hertz Global Holdings Inc., Avis Budget Group Inc. and closely held Enterprise Holdings Inc., a spokesman said. Hyundai Motor Co. also confirmed it has redirected some vehicles to its retailers that it was planning to produce for fleet customers.
Source: Bloomberg
CAR DEALERSHIPS VULNERABLE TO CYBERTHEFT DURING COVID
Dealers using digital retailing as a necessary substitute for in-store selling during the COVID-19 crisis face a heightened chance of getting bilked by con artists. "Identity theft is a huge issue," says Brad Miller, the National Automobile Dealers Assn.'s senior counsel-digital affairs. "It's an area where the 1% can play a lot of games." ID thieves can ply their tricks of the trade in person at dealerships, where employees are trained – and required by "Red Flags" federal regulations – to spot suspicious behavior and bogus-looking customer information.
Source: WardsAuto
CAR DEALERS PLAY COVID-19 INVENTORY ROULETTE
There's an interesting game of roulette being played in the new-car business right now, with about half of the dealers betting on red and the other half on black. The wagered is whether dealers should continue taking additional new-vehicle inventory into stock. Many dealers have understandably been unnerved by this pandemic and have voluntarily placed themselves on finance hold to halt any additional vehicles from being delivered. Most OEMs have tried to combat this fear by offering additional wholesale incentives or by providing deferred floor plan terms.
Source: WardsAuto
MUSK TWEETS, AND NOW ZOOM IS COMING TO OUR CARS
Tesla CEO tweets about stock, the market moves. He tweets about the Model 3, get ready for teleconferencing.
It's a crazy world we live in, and not just because of a global pandemic. We now live on a planet where a tweet can alter the economy (in the president's case) or in the case of Tesla's Elon Musk, can alter the stock market, along with our teleconferencing future in a socially distant world.
First, a week ago, Tesla impresario Musk rained down a tweetstorm that will surely go down in history—next to his last one—as a boneheaded move that took billions off his company's market share. On April 30, Tesla stock was about $850 a share. By May 4 after Musk tweeted "Tesla stock price is too high, imo," it had dropped to about $700, wiping out 18% of its value. To be fair, Musk was also tweeting about #freedom and that his girlfriend was mad at him. It's now back to about $780.
Which brings us to this week, when a Tesla owners Twitter account asked Musk if "we could get video conferencing within a Tesla." Musk responded, "yeah, definitely a future feature," so enjoy extra Zoom meetings in your car. Thanks, Elon!
And don't get us started on Musk's new baby's name.
Since the Model 3 came out a few years ago, it has included a standard cabin-facing camera in the rearview mirror—but it (allegedly) hasn't been turned on yet, but will be via an over-the-air update. According to Electrek, "Tesla has yet to implement a feature using this camera, but a software update once referred to the camera being linked to Autopilot and 'Tesla Network,' which is supposed to be an upcoming fleet of robotaxis operated by Tesla." It could be used to monitor drivers using Autopilot, and last month Musk said the camera will prevent people from vandalizing these cars when driven as a robotaxi. But now we're Zooming every day, despite my attempts to start a rumor that coronavirus is spread by using it (we don't know how it mutates!).
So, there are two schools of thought on how this might work. One, we can now work 12 hours a day instead of eight. Why should you waste your commute not working when you could BE working!? Or two, you have a video conference at EOD on Friday, but you're heading off to your cottage for the weekend. You could kill that last hour of your meeting in the car, and that's not so bad, if you aren't driving. I hope for the latter but suspect the former.
Source: Autoweek
Originally published 7 May, 2020
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