CBT automotive newscast: September 3, 2021

Featured Interview:

From despair to determination: One steadfast car dealer’s journey through the auto industry
After being ousted from his family’s store surrounding the 2008 recession, car dealer John Allen was determined to come back to the building that bore his family name. With his incredible story of determination and doubling store sales and profits along the way, it’s easy to see why he was named to Automotive News’ 40 under 40 list. On today’s show, we’re pleased to welcome John Allen, General Manager at Allen of Monroe. Watch the complete segment here.

Headlines:

Stellantis has plans to buy the parent company of the First Investors Financial Services Group, F1-Holdings Corporation for almost $285 million and set up an American captive finance company. Carlos Tavares, Stellantis CEO said in a statement, “Direct ownership of a finance company in the U.S. ‘is a white-space opportunity’, which will allow Stellantis to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floorplan financing in the near-to-medium term.” The company expects F1 Holdings cash transactions to be completed by the end of the year. Stellantis is the only major OEM currently operating in the U.S. without a captive auto finance company. The transaction is expected to close by the end of 2021.

The Alliance for Automotive Innovation announced principles on EV charging infrastructure that state industry groups are needed to promote consumer acceptance and the adoption of EVs in the U.S. CEO of the Alliance, John Bozzella explained, “Charging infrastructure is a key element to any comprehensive national vision and strategy for EVs. Consumers will not buy vehicles they cannot conveniently charge or refuel.” The alliance principles come as the U.S House of Representatives prepares to push the $1 trillion infrastructure bill passed by the Senate this month. The bill includes $7.5 billion for EV chargers. The Alliance’s principles focus on areas to support widespread EV charging infrastructure, including public and utility investments to increase access to chargers and hydrogen fuel stations. They also want affordable utility rates, reliable grid technology, and building codes that require EV chargers for all new residential parking spaces in multi-unit and single-family homes.

Due to the ongoing chip crunch, Daimler expects significantly lower Q3 sales of Mercedes cars through the end of the month. In recent months, Mercedes plants sat idle due to a lack of parts. The plant that builds the automaker’s flagship sedan, the S-class, and EQs electric car is also faced with disruption. Ceo, Ola Kallenius said, “What is important is that demand for cars is there. At some point the chip problem will also be solved.” The company has extended contracts on its leasing services to ease the concern of customers waiting for their orders of new cars to arrive. Daimler is due to report third-quarter earnings on October 29.

Volkswagen has agreed to a $42 million settlement targeting 1.35 million vehicles equipped with potentially dangerous vehicles Takata airbag inflators. Most of the money goes to improving recall completion rates. Currently, seven other major automakers have agreed to a settlement worth about $1.5 billion, covering tens of millions of vehicles. To date, at least 19 American deaths and more than 400 injuries have been attributed to Takata’s airbag inflator failure. The settlement covers rental cars, out-of-pocket costs, lost wages, and childcare costs. Volkswagen has not responded to a request for comment.

BMW has set a target to reduce carbon emissions throughout all of its internal combustion engines, including the production process. The German automaker has a new goal of at least a 40% reduction of 2019 CO2 levels by 2030, up from its previous goal of 33.3%. The automaker intends to increase the proportion of recycled and reusable materials in the manufacturing of its vehicles from 30% to 50%. BMW has reported stronger than expected profits in its latest quarterly results. However, the automaker, has warned its revenues in the coming months could be affected the chip crisis and raw material prices.

News & Opinion:

Stellantis to buy First Investors Financial Services to create lending arm
On Wednesday, Stellantis announced that it would be purchasing First Investors Financial Services Group for $285 million. The deal, expected to close by the end of 2021, will establish a captive lender for the global brand and was financed by an investor group led by Gallatin Point Capital LLC. The deal allows Stellantis’ North American brands including Chrysler, Dodge, Jeep, Ram, Fiat, and Alfa Romeo to offer financing that stays in-house. It’s a particularly important tool to have in the bag for customer retention as well as back-end earnings. It also gives Stellantis better control of dealership operations with the ability to finance floor planning within the organization. Read more

Infotainment issues are top problems in newest J.D. Power Initial Quality Study
Stellantis brands received accolades with their Ram and Dodge brands taking first and second spots in the 2021 US Initial Quality Study by J.D. Power, although the Chrysler brand pulled up at the back of the pack. The Nissan Maxima received top honors for the model with the best initial quality. Overall, the brand rankings are extremely tight, showing the auto industry has dialed in on manufacturing practices. Read more