F&I and Showroom, October 2019

www fi magazine com 8 F I and Showroom October 2019 DEVELOPMENTS Mazdas North American division has notified All Star Imports Inc parent company of the five rooftop San Antonio based World Car Auto Group that World Car Mazda Norths franchise agreement has been canceled according to the San Antonio Express News At issue are allegedly unfulfilled repair orders generated by the ongoing recall of vehicles with Takata brand airbags which has affected tens of millions of units built by 19 automakers worldwide In a letter sent to the auto groups owner Ahmad Zabihian and obtained by the Express News a regional general manager for the factory Lawrence Chou claimed at least half of the ROs in question had some issue at some time triggering three cure letters since August 2018 World Car North reported vehicles subject to the Takata recall as repaired when in fact no work had been done on the vehicle Chou wrote We have had multiple instances of failed performances and Mazda is in many instances left to guess whether these vehicles have been properly repaired The letter was sent in December and set a franchise termination date for late February Zabihian filed a protest with the Texas Department of Motor Vehicles setting the stage for a hearing in the spring of 2020 In a statement World Car executives told the paper the threat of termination is without merit that the dealership boasts the highest recall completion rate in its district and that a single rogue technician was to blame for the unfulfilled orders Mazda Dealer Faces Termination Over Warranty Work COX FRANCHISE INDEPENDENT DEALERS SEE TWO DIFFERENT MARKETS According to the Q3 2019 Cox Automotive Dealer Sentiment Index U S automobile dealers view the current market as negative with an index score of 48 Analysts noted the slight decrease from Q2 s score of 49 was not statistically significant The index reading of 48 indicates that slightly more dealers feel that the current market is weak compared to the number who feel the current market is strong In many measures however the assessment of the U S auto market depends on what type of automobile dealer you ask Franchised auto dealers expressed a mostly positive view of the market Independent dealers offered a different perspective Franchised dealers for example feel the current market is strong with an index score of 56 a two point increase from Q2 Independent dealers on the other hand feel the current market is weak with an index score in Q3 of 46 a two point decrease from Q2 For both groups expectations for the future market are down from Q2 but still positive The overall index score fell to 51 in Q3 below last year and last quarter The decline in expectations was statistically significant from last quarters score of 55 Dealers are becoming less optimistic as they consider the future said Cox Automotive Chief Economist Jonathan Smoke We also continue to see a big difference in outlook by type of dealer as sentiment consistently skews more positive for franchises compared to independents When asked about factors holding back their businesses dealers in aggregate reported no change from Q2 to Q3 Market conditions remained in the top spot as the most cited negative factor for both groups Competition held in second place Limited inventory remained No 3 followed by credit availability for consumers and expenses Both groups said costs continue to rise but agreed the threat of tariffs on imported vehicles and parts impacting their profitability is their most negative concern Overall only 8 of automobile dealers in the U S believe tariffs will have a positive impact on business profitability Conversely nearly six in 10 franchised dealers believe the impact will be negative PHOTO COURTESY MAZDA USA PHOTO COURTESY COX AUTOMOTIVE Mazda has formally attempted to cancel the franchise agreement for World Car Mazda North in San Antonio triggering a protest filed with the Texas DMV that will delay the decision for several months Cox Automotives Dealer Sentiment Index ticked up two points for franchised dealers and down two points for independent dealers heading into the third quarter