Vol. 36 № 1 A Publication of the Illinois Automobile Dealers Association Automobile Dealer News Rick Curia 2025 TIME Dealer of the Year Nominee With wife, Barb, Archie Manning and Cooper Manning
Memberships in: • AUTOCPA Group • The American Institute of Certified Public Accountants • The Illinois CPA Society CERTIFIED PUBLIC ACCOUNTANTS Located in Central Illinois, we serve the entire state. Contact us today to learn how we can help your dealership thrive. Drive Your Dealership Toward Financial Success We specialize in automobile dealers in the following areas: • Dealership valuations • Automobile dealer legal support • Buy-Sells for dealerships • LIFO inventory computations • Financial statement analysis • Corporation Income Tax returns • Personal Income Tax returns • CPA prepared financial statements • Dealer estate planning • Employee theft consulting • Internal control studies and audits • Profit consulting • Training office managers/CFO’s • 401K Audits Serving more than 250 Automobile Dealers throughout the United States (309) 662-8797 Email: woodwardassoc@cpaauto.com Website: www.cpaauto.com 1707 Clearwater Avenue P.O. Box 1584 ·Bloomington, IL 61702
CONCENTRATIONS Dealership Mergers & Acquisitions Dealership Franchise Law Business Litigation/Motor Vehicle Review Board Disputes Manufacturer/Franchisor Relations Business & Commercial Law Advertising Compliance Review Consumer Complaints Dealership Succession Add Points Real Estate Law Employment & Labor Law Federal & State Regulatory Compliance BACKGROUND Principal, Private Law Firm Former, IADA Legal Counsel Former, Illinois Assistant Attorney General, Deputy Chief, Consumer Protection Division Drafted Illinois Motor Vehicle Franchise Act Amendments Creating Motor Vehicle Review Board Drafted Illinois Motor Vehicle Advertising Regulations Julie A. Cardosi, Esq. 3040 Spring Mill Drive, Suite B Springfield, IL 62704 (217) 787-9782 jcardosi@autocounsel.com www.autocounsel.com Exclusive. Strategic. Results. Exclusively representing the unique business interests of automobile dealers for over 35 years.
CONTENTS Vol. 36 No. 1 Chairman Jamie Auffenberg/(618) 624-2277 St. Clair Auto Mall Auffenberg Auto Mall 1130 Auffenberg Ave., Shiloh, IL 62269 Vice Chairman Rick Curia/(815) 288-4455 Ken Nelson Auto Group 1100 N. Galena Ave., Dixon, IL 61021 Secretary/Treasurer Ryan Gremore/(309) 664-1222 O’Brien Auto Group 1601 Fort Jesse Rd., Normal, IL 61761 Executive Director Joe McMahon/(217) 753-0220 Illinois Automobile Dealers Association 300 W. Edwards St., Springfield, IL 62704 2025 OFFICERS ©2025 The Illinois Automobile Dealers Association (IADA) | The newsLINK Group LLC. All rights reserved. Illinois Automobile Dealer News is published four times per year by The newsLINK Group LLC for IADA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of IADA, its board of directors or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. Illinois Automobile Dealer News is a collective work, and as such, some articles are submitted by authors who are independent of IADA. While a first-print policy is encouraged, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at (855) 747-4003. Illinois Automobile Dealers Association 300 W. Edwards St. Springfield, IL 62704 T (217) 753-0220 / F (217) 753-3424 IllinoisDealers.com 6 Scan here to check out our interactive website at illinoisdealers.com! 6 CHAIRMAN’S MESSAGE IADA: Fighting For Franchise Dealers By Jamie Auffenberg Jr., Chairman, IADA 8 Rick Curia 2025 TIME Dealer of the Year Nominee 10 COUNSELOR’S CORNER Legal Insights for 2025 Buy-Sell Landscape and How Dealerships Can Ready Themselves By Julie Cardosi, Esq., Law Office of Julie A. Cardosi, P.C. 12 Post-Election Tax Outlook By Sam Brandt, Tax Senior Manager, Forvis Mazars 14 Economic Conditions Point to Another Promising Year for Auto Retailers Learn 6 Strategies To Stay Prosperous in a Dynamic Auto Retail Environment By Mike Skordeles, Head of U.S. Economics, Truist Advisory Services Inc., and Jonathan Smoke, Chief Economist, Cox Automotive 18 Thinking Inside the Box By John Tabar, Executive Director of Training, Brown & Brown Dealer Services 21 Navigating the Dealership Buy-Sell Process How a Broker Can Guide You to a Successful Sale By Jamie Farley, Partner, Emily Bourne, Partner, and Matt Willis, Partner, Performance Brokerage Services 12 4 Illinois Automobile Dealer News
Anticipate every turn In an industry that’s always evolving, your dealership can rely on our Dealer Financial Services team’s 90 years of experience to see what’s around the corner, forward-thinking insights to prepare you, and technology to keep you ahead of the curve. What would you like the power to do?® Bradley Bartsch, bradley.w.bartsch@bofa.com business.bofa.com/dealer ©2024 Bank of America Corporation. All rights reserved. DFS-699-AD 6942528 Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value “Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, derivatives, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc., which is a registered broker-dealer and Member of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. is a registered futures commission merchant with the CFTC and a member of the NFA.
JAMIE AUFFENBERG JR. CHAIRMAN, IADA It is my great pleasure to serve this year as your 2025 IADA chairman. On behalf of your IADA officers and board members, you can be assured the Illinois Automobile Dealers Association (IADA) continues to lead the charge in protecting and advocating for franchised auto dealers across Illinois. This spring, our unwavering commitment to preserving the integrity of Illinois’ franchise system remains front and center as we focus on three critical legislative priorities: 1. Updating the Illinois Motor Vehicle Franchise Act — Senate Bill 1939 IADA is advancing targeted amendments to strengthen the franchise system and protect dealers from manufacturer overreach. Key Proposals: • Direct Sales (Scout Issue): Explicitly prohibit legacy manufacturers from bypassing franchisees through direct sales or new “affiliate” or “common entity” and prevent OEMs from spinning off affiliates to sell directly, protecting established dealer networks. • Right of First Refusal (ROFR): IADA proposes to ban the ROFR unless the manufacturer can show (1) that the buyer is not qualified or (2) that it is exercising ROFR to direct the sale to a minority purchaser as part of a bona fide affirmative action program. • Warranty Reimbursement Protections: Strengthen protections to ensure dealers are fairly compensated for labor, parts and costly repairs like EV batteries. Clarify claims processes and ban arbitrary caps or delays imposed by manufacturers. These updates are essential to preserving consumer access to competitive, locally operated dealerships and reinforcing the franchise model as a cornerstone of Illinois’ economy. Dealer advocacy is vital — use our IADA “Action Center” on our website at illinoisdealers.com/action-center for the easiest way to send our prepared message to your respective legislator IADA: Fighting For Franchise Dealers Chairman’s Message 6 Illinois Automobile Dealer News
Your participation is key to our success. Together, we can preserve and strengthen Illinois’ vital franchise dealer network. 2. Increasing the Documentary Service Fee (DOC Fee) To address rising operational and compliance costs, IADA is proposing an increase in the statutory DOC fee from $367.70 to $470. Why This Matters: • Dealers have already been struck by the new $1,000 cap on the Retailers’ Collection Allowance, costing the industry an estimated $45-50 million annually. This increase would help offset these losses and rising regulatory costs. • In 2023, Illinois dealers collected $2.9 billion in sales tax, representing a vital revenue source for the state. Adjusting the DOC fee ensures dealerships can sustain these contributions while remaining compliant with state and federal mandates. 3. Fighting Harmful Legislation IADA remains vigilant in opposing legislation that could negatively impact Illinois franchise dealers. Key Concerns: • California EV Mandates: Blocking efforts to impose California-style EV policies that could undermine dealer operations. • OEM Encroachments: Preventing overreach from manufacturers that threaten the franchise system. • Increased Business Overregulation: Stopping excessive or redundant regulations that could burden dealership operations, increase costs and divert resources from serving customers and supporting employees. IADA’s commitment is to protect dealers from policies that could harm their ability to operate efficiently, compete effectively and contribute to Illinois’ economy. Looking Ahead As the spring session progresses, IADA will continue to advocate for the interests of Illinois franchised auto dealers, ensuring their voices are heard and their rights protected. Watch for updates on these initiatives and more. Your participation is key to our success. Together, we can preserve and strengthen Illinois’ vital franchise dealer network. 7 Illinois Automobile Dealer News
Rick Curia 2025 TIME Dealer of the Year Nominee Curia started in the automotive industry in 1981 as a young man with an interest in people and fast cars. TIME has announced the nomination of Rick Curia, Ken Nelson Auto Group, Dixon, for its 2025 Dealer of the Year award. Curia is the vice chairman for IADA and one of 49 outstanding dealers who have been nominated from across the country. He was honored at NADA in New Orleans on Jan. 25, 2025. Curia was chosen to represent IADA for this 56th annual award. The TIME Dealer of the Year award is one of the automotive industry’s most prestigious honors which recognizes our country’s auto dealers, demonstrating a long-standing commitment to community service alongside exceptional business practices and performance. Dealers are nominated by the executives of state and metro dealer associations around the country. A panel of faculty members from the Tauber Institute for Global Operations at the University of Michigan selected one finalist from each of the four NADA regions and one national Dealer of the Year. During the opening business session of the NADA show, finalists received $5,000 for their favorite charities and the winner received $10,000 for his or her charity, donated by Ally. “I’m grateful for this nomination because I fell in love with the business and what I saw as just taking care of people’s needs,” Curia explains. “Seeing the growth of our organization and advancement of employees over 30 years has been incredibly rewarding.” Curia started in the automotive industry in 1981 as a young man with an interest in people and fast cars. Recognizing his passions, friend Chuck Stephenitch at Ken Nelson Buick Pontiac, Dixon, offered him a job as a salesperson and the use of a vehicle. Although he wasn’t sure at first about being in the auto business, he quickly rose to sales manager, eventually becoming a partner in the business with Nelson. As the company grew and evolved under Curia’s leadership, he became convinced that Stephenitch had led him down the right road. When Nelson purchased his first Buick dealership in 1964, he believed that the company — and the people who worked for it — had to be held to the highest standards of integrity, especially in a small community. Curia, who eventually bought out his partner in 2010, remained committed to maintaining these high standards, too. “It all comes down to treating people well and hiring excellent people,” he says. “We need really good ones because in a small town, great customer service and being a good neighbor is key.” Since 1965, more than 60 new and pre-owned dealerships have come and gone in the Sauk Valley area. “I knew that if we wanted to stay successful, we had to add more brands to our stable of dealerships,” Curia explains. “I saw that we had a window of Rick and his wife, Barb 8 Illinois Automobile Dealer News
opportunity, and we worked seven days a week to achieve our vision.” Today, the company represents 10 brands, including Buick, GMC, Nissan, Chevrolet, Cadillac, Toyota, Chrysler, Dodge, Jeep and Ram. The stores are all in one location in Dixon. Curia also credits his success to the commitment that he and the company have consistently made to local nonprofit organizations. He is proud of his partnership with Sauk Valley Community College (SVCC) Auto Technician Program for which he provides internships and scholarships to students who complete 100 hours of community service before their high school graduation. “We have gained so much from being a part of Dixon’s strong community that we find it is imperative to give back,” he says. Together with his sister Sherri Cooper, Curia has partnered with the Dixon Family YMCA to honor their father by sponsoring the Joe Curia Memorial Golf Outing for nearly 30 years. This annual event raises funds for the group’s Strong Kids Campaign, which helps low-income families afford YMCA programs. Other organizations he is involved with are the Dixon Petunia Festival, Katherine Shaw Bethea Hospital, where he’s a current board member, Dixon Police Department K-9 Patrol Unit, Kreider Services, which offers support programs for people with disabilities, Saint Patrick Catholic Church, United Way of Lee County and many others. Curia looks forward to the future of the company since his children have become involved. His son, Jamie, is currently overseeing the purchase of inventory and internal operations, and his daughter, Mandy, manages employees, marketing and customer service. Both successfully completed the NADA Academy and are ready to help their dad take the dealership into the next generation. “I’m confident that they are very capable of running the business one day,” Curia explains. “But I still feel like I have some gas in my tank.” Rick with IADA Executive Director Joe McMahon and TIME Quality Representatives The Curia family
Legal Insights for 2025 Buy-Sell Landscape and How Dealerships Can Ready Themselves Counselor’s Corner With the start of 2025, industry analysts and experts alike have espoused the view, backed by policy assessments and data analysis, that with the Trump administration, dealers can expect “policy changes [that] could create a boom in buy-sell action.”1 Profitably forecasts along with dealership valuations, depending on the OEM brand, are predicted to rise in 2025 above post-pandemic levels with dealers looking to acquire the “most trusted brands” and “to divest of those [brands] they find more challenging.”2 So, what does an uptick in buy-sell activity mean for dealers considering the sale of their businesses? It means that now is the time to prepare to achieve your goals, whether those include ensuring the highest purchase offer, or preserving the dealership’s goodwill legacy in the community and with customers, or locking in job security and benefits for employees, or a combination of all of these. In fact, the following guidance incorporates certain best practices for long-term planning regardless of the sale date of the dealership. First, evaluate and manage the dealership’s expenses with an eye towards streamlining revenue sources and maximizing dealership profitability. Dealership financial statements, among other financial documents, will be reviewed by prospective buyers and it is fundamentally imperative that all financial information be current, truthful, accurate and transparent. Second, maintain and enhance the positive nature of the dealership’s goodwill and reputation within the community, with customers and employees, as well as with its OEM(s). Such preparation contributes to the overall market value of the business. These goals should be prioritized and ongoing. And before starting the buy-sell process, gather and organize all pertinent information and required documents. This includes (i) dealership financial operating statements, accounting reports and statements prepared by the dealership’s accountant, and any income adjustments; (ii) current OEM performance reports and requirements and sales and service agreements, including market area addenda; (iii) lists of dealership inventories, including fixed assets or depreciation schedule for fixed assets; (iv) copies of vendor contracts and leases, along with long-term or executory obligations, including the dealership’s dealer management JULIE CARDOSI, ESQ. LAW OFFICE OF JULIE A. CARDOSI, P.C. 10 Illinois Automobile Dealer News
systems (DMS) contracts, and any obligations to dealership customers, such as, “we-owes,” service contracts, etc.; (v) list of any claims, pending litigation and other pertinent documentation; (vi) list of dealership employees, including job descriptions, pay plans and benefits, as well as and any union agreements; (vii) if the dealership real estate is also proposed for sale, existing environmental reports, property appraisals, surveys and other reports relating to the real estate. This information should be accessible in the early stages of negotiations, ideally before negotiations occur. Relegating this important aspect to some time afterward could cause undue delay and misunderstanding between the parties or jeopardize a successful closing. Before definitive purchase agreements are prepared and signed, negotiations with prospective buyers might be documented in some form in writing, such as through a letter of intent (LOI). While a letter of intent is not a substitute for the formal definitive purchase agreements required by the parties and the OEMs to start the approval process, it serves to provide a general outline of the parties’ understanding and proposed terms and conditions of the forthcoming definitive agreements. The parties should consult with experienced buy-sell counsel well before signing the letter of intent, as the LOI itself might give rise to an argument that it is a binding contract, creating legal obligations of the parties. Throughout the process of the dealership’s preparation for a prospective dealership sale or acquisition, the dealer should work with legal, financial and accounting professionals and consult with them as the buy-sell transaction proceeds from inception to OEM approval and successful closing. The buy-sell attorney should be experienced in buy-sell transactions in the automotive space, along with automotive franchise law, OEM franchise agreements and interactions, and state licensure and regulatory laws impacting the transactions. Similarly, the accountants should be experienced in dealership operations and automotive industry transactions and be postured to maximize sale proceeds and minimize tax consequences in the transactions. A financial advisor or planner can also assist the dealership with managing post-sale proceeds to achieve expressed financial goals. Dealership brokerage firms can provide valuations and relevant market conditions information, as well as manage the transactional process along to a successful closing. Each member of the selling or acquiring dealerships’ teams plays an important role in assisting their dealer clients to mutually achieve their goals. In 2025, the automotive industry will rapidly evolve, with technological advancements, changing customer preferences and a new regulatory framework reshaping the market horizon. For automotive dealers looking to sell or buy dealerships, a strategic approach to planning and preparation ensures that they navigate these complexities effectively, mitigate risks and seize opportunities for growth or divesture consistent with their goals. 1. Automotive News, December 2, 2024. 2. The Kerrigan Dealer Survey, 2024. Julie A. Cardosi is Principal of the private firm, Law Office of Julie A. Cardosi, P.C., of Springfield, Illinois. She has practiced law for nearly 40 years and represents the business interests of franchised motor vehicle dealers throughout Illinois. She has represented dealers in hundreds of buy-sell acquisitions and related transactions. Formerly in-house legal counsel for the Illinois Automobile Dealers Association, she concentrates her private practice in the areas of dealership operations and compliance matters, transfers of ownership, mergers and acquisitions, franchise law, commercial real estate transfers, dealership employment and other areas impacting day-to-day dealership operations. She has also served as former Illinois Assistant Attorney General and Deputy Chief of the Consumer Fraud Bureau of the Attorney General’s Office. The material discussed in this article is for general information only and is not intended as legal advice and should not be acted upon as such. Dealers should consult their own private legal counsel for application to their specific circumstances. For more information, Julie can be reached at jcardosi@autocounsel.com, or at (217) 787-9782, ext. 1. 11 Illinois Automobile Dealer News
Post-Election Tax Outlook By Sam Brandt, Tax Senior Manager, Forvis Mazars With Republicans winning control of the White House and Congress, we now have a clearer picture of the tax policies that will be pursued in 2025 and beyond. Priorities under consideration include the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) provisions, proposals made by President Trump during the campaign, and bipartisan legislation that passed in the House earlier in 2024 but did not pass in the Senate. Although achieving these aims will likely be easier under a Republican trifecta, there remains uncertainty about how such legislation will be enacted, given the party’s slim majorities, constraints of using budget reconciliation, choice of funding mechanisms and concerns regarding the impact of tax cuts on the national debt. Without congressional action, many of the TCJA provisions will expire at the end of 2025. Republicans have expressed interest in extending or making many of these provisions permanent. While banks organized as C corporations benefited from having the tax rate permanently lowered to 21%, a majority of the expiring TCJA provisions would impact individuals and shareholders of banks organized as S corporations. For example, without action by Congress, individual tax rates would increase to pre-TCJA levels with a top rate of 39.6%. The individual Alternative Minimum Tax (AMT) exemption and threshold would be greatly reduced, with the Congressional Budget Office (CBO) estimating 7.22 million taxpayers being subject to AMT from a current level of around 200,000. The standard deduction and child tax credit would be reduced, but the personal exemption would return. The 199A Qualified Business Income deduction, which provides up to a 20% deduction for qualified income, is also set to sunset after 2025, significantly impacting shareholders of banks organized as S corporations. The estate and gift tax exemption threshold would be approximately halved from the current level of $13.6 million per individual. The sunsetting of the SALT cap, which limits an individual’s itemized state and local tax deductions to $10,000, would provide relief to some individual taxpayers. However, this benefit is likely to be reduced without simultaneous increases to the AMT threshold and because the Pease limitation is currently set to be reinstated in 2026. The original passage of the TCJA included several revenue raisers that Congress has subsequently sought to modify. These proposals include a more favorable calculation to the Section 163(j) business interest expense limitation, allowing full expensing again of domestic §174 research and development and restoring 100% bonus depreciation. These changes were packaged into the 2024 Tax Relief for American Families and Workers Act, which passed in the House with bipartisan support but failed to advance in the Senate. Given the support many of these items garnered, they will likely be considered in future legislation. While much of the energy in Washington is expected to be directed at the expiring TCJA provisions, a variety of other proposals were 12 Illinois Automobile Dealer News
made by President Trump during the campaign. For individuals, this includes the elimination of taxes on Social Security benefits, tip income and overtime wages, as well as a deduction for interest on car loans. Business tax proposals included a further reduction in the corporate tax rate to 15% for corporations with domestic production activities. A large part of the tax legislation is expected to be enacted using the budget reconciliation process. Under reconciliation, legislation can be passed with a simple majority in the Senate, but the process comes with restrictions. Deficit creation is allowed during the initial 10-year window but must be neutral afterward, which may reduce the ability to make some of the proposed legislation permanent without the inclusion of offsetting revenue-raising measures. The CBO estimates that extending the TCJA provisions alone will increase the federal deficit by $4.6 trillion over the next 10 years. With Republicans holding slim majorities in the House and Senate, there may be challenges in reaching a consensus among members on the extent to which the deficit should be increased. To lessen the deficit impact, Republicans have suggested increasing tariffs and rolling back Inflation Reduction Act (IRA) credits. These will likely face some resistance in Congress as many members will be unwilling to substantially increase tariffs and many of the projects supported by the IRA are located within Republican districts. Next year is poised for significant tax legislation, with Republicans aiming to extend key TCJA provisions and introduce new tax cuts. The overall tax environment is expected to favor continued low taxes. As new tax bills are crafted and introduced, 2025 will be a time of heightened tax planning as taxpayers navigate these changes. Sam Brandt is tax senior manager with Forvis Mazars in Kansas City. As new tax bills are crafted and introduced, 2025 will be a time of heightened tax planning as taxpayers navigate these changes.
Economic Conditions Point to Another Promising Year for Auto Retailers Learn 6 Strategies To Stay Prosperous in a Dynamic Auto Retail Environment By Mike Skordeles, Head of U.S. Economics, Truist Advisory Services Inc., and Jonathan Smoke, Chief Economist, Cox Automotive Continued economic growth, moderating inflation and evolving global trade policies — all of which will shape automotive demand — set the tone for what promises to be a solid year for U.S. auto dealers. While conditions should drive sustained profitability in the new and used vehicle markets, dealers will need to navigate a tight labor market for staff, keep an eye on affordability challenges for new car buyers and find adequate used car supply. Continued Economic Growth Bolsters Dealer Confidence 2024 GDP growth is projected at 2.7%, surpassing most economists’ predictions by a full percentage point.1 Mike Skordeles adds, “Growth is forecasted to remain above 2% in 2025 — promising economic conditions for auto sales.” The effects of the post-election policy changes on the auto retailers are unlikely to materialize immediately. Jonathan Smoke says, “The biggest issues at play will likely revolve around debt ceiling decisions and the impending expiration of the Tax Cuts and Jobs Act. These issues may take much of the year to resolve.” Barring any unexpected events (acceleration of global conflicts, natural disasters, etc.), consumer demand, wage growth and a strong labor market should provide the ongoing fuel needed for a growing economy. Consumers Continue as the Bedrock of the Economy “There’s a promising economic story taking shape across the board for U.S. households,” says Skordeles. “While inflation lingers as a drag on consumer sentiment, it has moderated as rents flatten out, food price levels stabilize and gas prices fall. While labor participation rates are suppressed, low unemployment has kept cash flowing for households.” Smoke adds, “Credit card balances and rates are at all-time highs, but credit card debt should begin coming down by spring when tax refunds begin, and credit card bills are lower.” The downward trajectory of interest rates should provide a lift for consumers, particularly for financed purchases. Smoke notes that the prospect of auto loan rate reductions — especially in the used car market with its larger yield spreads — could offset the recent increases in auto insurance costs. A Robust Market for New Vehicles “The fundamentals that drive dealer demand look good. I’m optimistic about 2025,” says Smoke. “There’s pent-up demand that will be moving back into the market because rates will be lower, and consumers will be able to get monthly payments that we haven’t seen for a couple of years.” Consumers should be ready to buy. Skordeles says, “A long-term trend shows that customers are more attuned to the monthly outlay than the absolute price of a car — lower financing costs can help shrink monthly payments. Also, expect to see patient buyers who’ve been educated over the past few years to be willing to wait days — up to a week — to get the specific car they want.” New Vehicles The new vehicle market increasingly looks like the providence of wealthier consumers. These buyers have the resources to weather price increases and qualify for financing. Buoyed by a rise in the stock market asset value and home appreciation along with a strong labor market, wealthier customers are expected to maintain their new car purchasing activity. From a volume standpoint, Smoke says, “The market shift towards larger, more expensive SUVs and trucks reduced the buying pool by about 10% from 2019 levels. In 2024, the market recovered 2.5% of that loss Continued on page 16 14 Illinois Automobile Dealer News
© 2024 Truist Financial Corporation, TRUIST, Truist purple and the Truist logo are service marks of Truist Financial Corporation. All rights reserved. Truist Securities is the trade name for the corporate and investment banking services of Truist Financial Corporation and its subsidiaries. Securities and strategic advisory services are provided by Truist Securities, Inc., member FINRA and SIPC. | Lending, financial risk management, and treasury and payment solutions are offered by Truist Bank. | Deposit products are offered by Truist Bank, Member FDIC. We’re more than a financial partner. We’re an invested one. True relationships matter. We don’t take this lightly. The best are built on a deep understanding of your short- and long-term goals and always backed by thoughtful, strategic advice in support of your vision. With full-service financial solutions and a deep bench of industry expertise, we’ll build a team around your organization to focus on your success. So, let’s drive further—together. To learn more, visit us at Truist.com/DealerServices.
potential vulnerabilities for EVs, such as long waits at charging stations, limited access to power during emergencies and the danger of fire from batteries exposed to flood waters. While these incidents may be isolated, they have raised consumer awareness of EV limitations in extreme weather scenarios. While EV concerns may keep ICE vehicles around for quite a while, dealers are promoting hybrid vehicles as a bridge to broader EV adoption. For many two-vehicle households, today’s EVs may serve as a shorter-range city car backed up with a hybrid or ICE vehicle for long-range trips. Global Events and Policies Given the potential for political shifts and international trade disputes, global trade and sourcing risks remain. “The auto industry is better positioned than in previous years, with a more resilient supply chain that points to North American production increases and diversified sourcing strategies,” says Skordeles. But geopolitical events — such as tensions with China — pose risks, especially concerning semiconductor supply from Taiwan. The industry’s steps to mitigate these risks through reshoring efforts and enhanced supply chain management are still a work in progress. It’s unclear how exactly the new administration’s proposed trade policies, which include China-specific and across-the-board tariffs, will affect auto retailers. Smoke says, “The last time the tariffs were advanced, we had a lot of threats with Europe, Japan, Canada and Mexico, but everyone backed down and made rational decisions. The last NAFTA renegotiation that led to the United States-Mexico-Canada Agreement (USMCA) ultimately caused minimal disruption to the industry.” It’s too early to tell whether auto retailers may benefit with additional protection, experience pricing or supply disruptions, or avoid significant impact. “The good news is that after the pandemic and supply disruptions, the industry is better prepared with more resilient sourcing,” adds Smoke. “Another benefit could be urgency in near term demand by consumers worried about higher prices in the future.” Labor Constraints and Service Opportunities With a tight labor market, hiring and retaining skilled staff remains challenging. Skordeles says, “Labor market constraints, driven by an aging population, reduced labor participation rates and slower workforce growth are expected to persist for decades. That’s going to push wages higher and present ongoing expense challenges for businesses.” Rising wages are driving businesses to seek greater productivity through automation and investments in technology. “AI-driven customer service tools, automated marketing platforms and scheduling software offer the promise of productivity gains that drive margins and reduce dependence on scarce labor,” says Smoke. Vehicles on the road today are more complex than ever, with advanced safety features and electronic systems that drive up the cost and frequency of repairs. Consumers are keeping vehicles longer, and as vehicle age increases, so does the demand for maintenance and repair, along with the cost. Dealers have an opportunity to grow their service departments and increase profits. A tight labor market stands between dealers and those service revenues. Dealers who can attract Continued from page 14 but with the days of sub $20,000 new cars long gone, don’t expect to see it much higher.” Even with the pressure on affordability that’s kept annual new vehicle sales under 16 million, the auto retail industry has enjoyed its highest profits ever. “We should see a year where OEMs are in balance with market demand,” says Smoke. “Inventory levels for most brands — Stellantis and Nissan excepted — are 15-20% below pre-pandemic levels. Those inventory levels should put a floor under pricing while curbing floorplan carrying costs.” Used Cars Besides its sensitivity to financing rates and vehicle prices, the used car market faces distinct challenges. Inventory remains tight, a consequence of reduced production since COVID and a decrease in lease maturities, which normally supply much of the certified pre-owned market. Sourcing used vehicles will require more effort along with higher costs to acquire used inventory. In the end, the supply constraints should benefit dealers with price stability and larger margins, especially for high-demand brands and models. Electric Vehicles Present Opportunities and Challenges “Demand for electrified vehicles (EV) continues to grow, with EVs reaching 8% of new vehicle sales,” says Smoke. “Hybrids look to hit 12% of sales this year, providing customers access to greater fuel efficiency and lower emissions without the range and infrastructure limitations of EVs.” Toyota, for example, has gone fully hybrid on certain models, responding to consumer demand for fuel efficiency with practicality. Skordeles points out that recent hurricanes in southern states revealed 16 Illinois Automobile Dealer News
and retain skilled technicians hold a distinct advantage. Investments in recruiting, training and pay for productivity systems — not to mention the basics of coaching and worker engagement — set dealers up to access growing service revenues. Key Takeaways for Dealers Smoke and Skordeles recommend several strategies to stay competitive: 1. Remain optimistic for sales growth: The coming year is expected to be the strongest market for new vehicles since 2019 and the best for used vehicles since 2021. Dealers should prepare for increased retail activity. 2. Prepare to work harder to find used inventory: With fewer lease returns entering the market, prepare to adopt proactive sourcing strategies. It’s going to take more work to find used cars, but that will also put a floor under prices, benefiting dealers and helping maintain predictable margins. 3. Invest in technology: Rising labor costs and shortages will drive investments in productivity. Dealers should explore technology — with AI at the top of the list — that enhances productivity while supporting their teams in delivering high-quality service. 4. Leverage parts and service: Service and parts revenue will remain a critical profit center as consumers keep older vehicles longer. Increased demand for maintenance and repair, coupled with parts scarcity, should increase revenue from service departments. 5. Pursue F&I opportunities: As buyers of used vehicles seek protection against repair costs, warranties, extended service plans and other F&I products are likely to see increased consumer interest. 6. Focus on efficiency and scale: To offset operational costs, larger dealer groups will continue to add scale through acquisitions, seeking benefits from shared services and resource efficiency across multiple locations. Truist Bank, Member FDIC. ©2025 Truist Financial Corporation. Truist, the Truist logo and Truist Purple are service marks of Truist Financial Corporation. Equal Housing Lender. 1. Bloomberg. We invite you to join us today. Contact us at ElectrifyIL@Ameren.com to get started. Learn more about our ChargeSmart program at AmerenIllinois.com/ChargeSmart. Engage. Learn. Share. 1. Engage: Join our webinars and boost your EV sales expertise 2. Learn: You and your customers can use our EV calculator to compare gas versus kWh cost savings and more 3. Share: Our ChargeSmart Program can help Ameren customers earn a bill credit and charge for less— sign up is FREE Dealer Partner Network Benefits: • We help you get noticed by listing you on our AmerenIllinois.com/EV web pages • As a Dealer Partner, you get access to a special portal offering resources to help you educate EV customers. Enrollees earn a bill credit and charge for less costs— sign up is FREE An Exclusive Offer to Dealers Join our network of Auto Dealers and let’s transform the EV journey for customers together. The Ameren Illinois Dealer Partner Network is FREE to join and provides resources to help ease the minds of potential EV drivers. 17 Illinois Automobile Dealer News
We have all heard the phrase, “Think outside the box.” This is usually a call to be innovative in approaching a problem that needs a solution or perhaps in creating a new process to replace one that isn’t working. In just about every dealership in the country, there are technologies, resources and processes to address problems and provide innovative solutions to those problems: digital or electronic menus, CRMs, Dealer Management Systems, lender approval tools, hiring practices and so on. When a problem arises, we have grown accustomed to seeking a solution that is the new or the latest thing. We do the same thing with personnel. If someone isn’t performing as expected, we want to make a change and move in a different direction. Sound familiar? I want to suggest a different approach. Instead of thinking outside the box, I challenge you to think inside the box before you add another resource or add another employee. What I am suggesting is that you take some time to determine if what you already have might be the solution to what you think you need. Technology is a great example. Are you utilizing the full capability of the technology resources at your dealership? Here’s a funny thing about technology companies and how we look at them: When presented with a new system, software or platform, we agree to pay the monthly fees because, in the demo, we see the technology’s potential to improve our business and believe it provides everything we need to do so. Take your CRM for example. I would assume that when most dealers signed the contract with the CRM provider, they were excited about all the capabilities of the system and what it could do for their business. Unfortunately, after a year or so working with the new CRM, it isn’t uncommon to realize that the dealership is only using about 30% of the capability of the CRM while paying for 100%. THINKING Inside the Box By John Tabar, Executive Director of Training, Brown & Brown Dealer Services 18 Illinois Automobile Dealer News
Instead of focusing on where you are under-resourced and thinking outside the box for a solution, think inside the box and focus on how to effectively utilize the valuable resources you already have. The solution? You could think outside the box and look for a more innovative CRM, but before you do, why not see if the innovation you are looking for might be in the 70% of the program you aren’t using? The same principle applies to people. When business is good, many dealerships add employees, both part-time and full-time. Thinking inside the box might result in combining two part-time positions into one full-time position, offering benefits and stability, which could lead to lower turnover. Or, adding responsibilities to that full-time employee who, like your CRM, might not be at full capacity. This means looking for efficiency and ingenuity before looking for innovation. How can we apply the “inside the box” mentality to F&I and sales? First, look at your processes and determine if they could be more time-efficient and customer- or dealership-centered. Do you have an implied sales and F&I process or a real one? If your processes aren’t working, inside-the-box thinking encourages an examination of the level of accountability brought to the processes you currently have before you think about changing to a new one. Next, look at your key resources, your people and your technology. Is the technology being used as designed and to its fullest capability? Ask yourself, “If not, why not? What are the possibilities if it were?” When associates from various dealerships interact in training environments, processes and systems inevitably come up in conversation; ask, “What menu do you use?” “What DMS?” “What do you like about it?” “What don’t you like about it?” As often as these conversations arise, revelations about system capabilities also happen. “Really?” “I didn’t know it could do that!” “Can you show me how?” Find the salesperson or F&I manager who has embraced and is using the technology to the fullest and convince them to help you increase the adoption throughout the dealership. Consider all the associates in sales and F&I at your dealership. Are they at full capacity? For those not reaching their fullest potential, invest time in training and development before you replace them. Lastly, thinking inside the box is good business. Instead of focusing on where you are under-resourced and thinking outside the box for a solution, think inside the box and focus on how to effectively utilize the valuable resources you already have. For more information, please contact Francis Fagan with Brown & Brown Dealer Services at (312) 608-4979 or francis.fagan@bbrown.com. Francis is the regional training director for Illinois and Indiana. At Brown & Brown Dealer Services we put the emphasis on training. Visit our website at www.bbdealerservices.com for our training calendar and to meet our nationally renowned trainers. 19 Illinois Automobile Dealer News
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Understanding the buy-sell process is important for dealership owners considering their future — whether planning to sell or grow through acquisitions. A professional broker, often called a buy-sell advisor, can help dealers navigate this process, offering expert guidance at every stage. Their expertise can simplify the transaction and help ensure a smooth, successful closing. The Role of a Broker in the Dealership Market Selling a dealership involves much more than finding a buyer. It’s a complex, multi-step process requiring preparation, negotiation and careful management to protect confidentiality while maximizing value. A broker’s engagement can make all the difference in guiding you through this journey, ensuring your interests are protected from start to finish. Clients should expect a hands-on, personalized approach focusing on each dealership owner’s specific needs. Steps in the Buy-Sell Process Here’s an overview of the key stages involved in selling a dealership and how a broker can support dealers through each one: 1. Preparation and Valuation: A smooth sale starts with a well-prepared business. Buy-sell advisors work closely with dealership owners to gather financial data, clean up operational issues and determine a market-driven valuation. This ensures the dealership is presented to potential buyers in the best possible light. 2. Confidentially Marketing the Dealership: Brokers craft a tailored marketing strategy to present the dealership confidentially to a select group of qualified buyers. Their outreach ensures that only serious parties gain access to your sensitive information. 3. Negotiations and Letter of Intent (LOI): Once offers are generated, the negotiations begin. A broker helps navigate these negotiations to ensure both parties agree on key terms, such as purchase price, long-term contracts and real estate considerations. The goal is to create a win-win situation for the seller and the buyer. 4. Due Diligence: After signing the LOI, the buyer conducts a thorough review of the dealership’s financials, contracts and operations. This phase requires careful management, but with experienced oversight from a buy-sell advisor, potential issues can be addressed promptly, keeping the deal on track. 5. Definitive Agreements and OEM Approval: The Definitive Purchase Agreements outline the deal’s final terms. Brokers play a proactive role in expediting this phase, interfacing with both attorneys, assisting with obtaining Original Equipment Manufacturer (OEM) approval — a critical step for all dealerships — and keeping the transaction moving toward closing. 6. Closing: During the final stage, brokers remain fully engaged to ensure all documents are in place and that any post-closing requirements are met. This hands-on approach keeps the momentum going, guiding the deal to a successful conclusion. Navigating the Dealership Buy-Sell Process How a Broker Can Guide You to a Successful Sale By Jamie Farley, Partner, Emily Bourne, Partner, and Matt Willis, Partner, Performance Brokerage Services 21 Illinois Automobile Dealer News
Understanding Your Concerns: Confidentiality, Employees and Customers Selling a dealership often brings concerns about confidentiality, employee well-being and maintaining customer relationships. These priorities are addressed with the utmost care throughout the process: • Confidentiality: Selling a dealership requires high discretion to protect business interests and avoid disruptions. Strict confidentiality is maintained throughout the process, and the flow of information is carefully managed so that staff, competitors, customers and manufacturers are unaware of the sale until the appropriate time. • Employees: Owners often worry about what will happen to their employees after the sale. The focus is finding buyers who share a similar culture and value the existing team. Negotiation terms prioritize employee stability and retention, ensuring team members are treated fairly and have opportunities for continued growth. • Customers: Maintaining customer satisfaction and loyalty during a transition is another key concern. Buyers who are committed to delivering excellent service to existing customers are prioritized, preserving the relationships that have been built. The goal is to ensure a seamless transition with minimal disruption for customers. A Long-Term Partner in the Process The value of a broker goes beyond simply brokering transactions. Experienced buy-sell advisors build lasting relationships with clients, supporting them through significant business decisions. With a focus on tailored advice and confidentiality, they help dealership owners successfully navigate the buy-sell process. Whether you are considering selling or expanding through acquisitions, partnering with the right broker makes all the difference. Jamie Farley, Partner, leads business development for the Texas and Midwest regions at Performance Brokerage Services. Emily Bourne, Partner, and Matt Willis, Partner, handle all buy-sell advisory services for dealers across Illinois, Wisconsin, Iowa, Minnesota and Nebraska. With decades of experience, Emily and Matt provide invaluable insights and guidance to help dealership owners navigate successful transactions. Learn how our experienced team can help you navigate your next move with confidence by contacting Emily at (585) 957-1593 or emily@performancebrokerageservices.com, or Matt at (515) 360-6755 or mattw@performancebrokerageservices.com. Whether you are considering selling or expanding through acquisitions, partnering with the right broker makes all the difference. 22 Illinois Automobile Dealer News
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