Pub. 15 2016-2017 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 31 new jersey auto retailer W W W . N J C A R . O R G Comments or Content ideas? for New Jersey Auto Retailer We are working hard to make New Jersey Auto Retailer relevant to your business needs. You’ll find NJ CAR-affiliated contributors offering their take on issues of concern to the retail automotive industry. If there is something you’d like to learn more about in the pages of New Jersey Auto Retailer, please contact: Recipient of Hermes Publication Award ISSUENO.3,2015 F&I Impacts the Bottom Line NEW JERSEY COALITION OF AUTOMOTIVE RETAILERS NEW JERSEY COALITION OF AUTOMOTIVE RETAILERS Insurance Provides Protection From Economic Ruin ISSUENO.2,2015 Recipient of Hermes Publication Award IssueNo.1,2015 NEW JERSEY COALITION OF AUTOMOTIVE RETAILERS LOOKING FORWARD Brian Hughes, Director of Communications at (609) 883-5056, ext. 315 or at bhughes@njcar.org . ECONOMIC Q&A  continued from page 29 earliest. Car-sharing vehicles will be a wash because the ve- hicles will still need to be purchased and serviced. The increase in vehicle usage may also lead to more frequent turnover of the vehicle f leet. As far as direct sales are concerned, there is only one company trying it and they are a low volume manufacturer. I am certain others will try the model and they will fail miserably. The eco- nomics greatly favor the dealer franchise model, rather than a direct sales model. NJAR: What do you expect to happen to interest rates in the near and long- term? Szakaly: The most we are looking at are 50 basis points but, in all likelihood, I think we’ll see an increase of 35 basis points. As far as dealers are concerned, a rise in interest rates is going to increase the cost to f loor plan products. It’s also going to mean having to be more aggressive in discounting rates to consumers because dealers won’t be able to pass the increase on to consumers. Consumers can expect a year with slightly higher interest rates on auto loans, but those increases will likely be offset by rising automaker incentives. Rising interest rates could also increase pressure on leasing, which for many car segments is already suffering from declin- ing residuals and used-car values. Leasing is still expected to rise in 2017, but not at the same pace we have seen over the past few years. NJAR: What are some of the legal or regulatory changes that could have an impact on the auto retail industry? Szakaly: Clearly, the incoming administration has a view that regulation diminishes economic growth and has been a burden on U.S. business. I think there will be a new look at the past regulatory structure, particularly when it comes to regulation that clearly does not have wider economic benefits, but DOES limit business opportunities. Similarly, efforts to boost fuel economy will likely be viewed as less of a priority under the new administration, which would be beneficial. NJAR: What impact do you think new technology or business model s wi l l have on the auto retailing market? Car Sharing? Autonomous vehicles? Direct factory sales? Szakaly: I don’t believe autonomous vehicles will have any impact on the auto retailing market until 2025 at the