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Welcome to Daily Drive for Friday, August 22nd, 2025. I'm Kellan Walker in Las Vegas.
00:23
Today on the show, industry groups react to the U.S. trade framework with the EU.
00:29
Audi hikes 2026 model year prices amid tariffs. And the Jeep Cherokee is coming back with a hybrid
00:36
powertrain. Plus, protective asset protections Rick Kurtz joins the show to talk about how F&I
00:43
offices can leverage the new tax deduction on auto loan interest. With all of these bigger
00:49
picture issues, political, global, macroeconomic, it still comes down to understanding your
00:56
customer and understanding the transaction. Let's run through all the news you need to know to keep up
01:02
in the auto industry. This just in as of recording time, Canada will announce today
01:08
that it's removing many retaliatory tariffs on U.S. goods. That's according to a source
01:13
familiar with the matter who spoke with Canadian press. The person says Canadian tariffs on U.S.
01:20
steel and aluminum will remain for now. Bloomberg News was first to report the move earlier
01:27
Friday. Sources have also confirmed the broad details to CBC News. While the new U.S. trade
01:34
framework and European Union is promising, automakers and suppliers are still waiting for
01:39
critical details. Jennifer Sevevian is CEO of Auto's Drive America, a group that advocates
01:46
for international automakers in the U.S. She says it's encouraging that the U.S. will reduce tariffs
01:52
to 15 percent once the EU introduces legislation to enact lower tariffs. That's going to be very
01:59
helpful when it comes to imported vehicles and parts. But I would say, you know, as far as
02:04
the standards, there's a lot we still don't know, right? There's a lot that wasn't, you know,
02:08
was only a couple page framework that we saw today. Sevevian was speaking on Thursday's
02:13
Automotive News Congress Conversation livestream. You can watch the full conversation on our
02:19
Automotive News LinkedIn, Facebook and YouTube pages. Audi of America imports each vehicle it sells in
02:27
the U.S. The German luxury brand is applying some hefty price increases across its portfolio
02:33
for the 2026 model year as it grapples with tariffs. The price increases for 2026
02:41
range from $800 to $4700, depending on model and trim. And the Jeep Cherokee will be back this fall
02:49
as a hybrid. Jeep dropped the nameplate two years ago. Now it's back with a boxy aesthetic
02:56
with sharp edges similar to earlier models. The brand says it achieves an estimated 37
03:02
miles per gallon combined. Jeep said it can travel 500 miles on a full tank of gas.
03:09
Jeep hopes it can be a volume player in the mid-sized utility segment,
03:13
like its predecessor, which peaked at about 240,000 sales in 2018.
03:20
And those are today's headlines. You can find more details on all those stories at autonews.com.
03:26
Joining me now to talk about the return of the Cherokee is Vince Bond Jr.,
03:30
who covers Stellantis for us at Automotive News. Vince, welcome back to Daily Drive.
03:36
Thank you. So Vince, why bring the Cherokee back now after two years out of the market?
03:42
Well, the truth is, they had a major gap they needed to fill. So they had to bring it back as
03:47
soon as possible. Looking back, the previous Cherokee was discontinued in 2023. And one of the
03:54
main complaints from dealers over the years was that Stellantis did not have a vehicle ready
03:59
to replace it. And so they've been without a well-known nameplate that generated some
04:04
major sales for the last couple of years. And then looking all the way back to 2018,
04:10
the previous generation Cherokee had its best year. And they sold nearly 240,000 units.
04:17
And so the brand is hoping that the next generation Cherokee can be a mainstream
04:21
vehicle that can really do some serious volume. And so they have to do it right now because
04:27
that mid-sized crossover space is really hot. And this is part of a bigger product makeover
04:33
for Jeep. What is the brand hoping to achieve and how are dealers reacting to the plan so far?
04:39
Yes. So the big thing is that Jeep is going to offer a freedom of choice.
04:44
That's really been their mission. They've been kind of sharing that the last year or so,
04:48
where they're going to have plug-in hybrids. They're going to have conventional hybrids
04:52
with no plugs. They're going to have some full EVs, as we've seen already with the
04:57
Wagoner S that came out this year. And then later this year, we have the Off-Road Recon EV that's
05:04
on the way as well. And so they're really trying to balance out their lineup and just add options
05:08
to everybody. And as we talked about last week, they'll even have some more V8s across the lineup.
05:14
And so you'll have electrified models all the way up to big-time performance. And so that's
05:20
a huge thing that dealers have wanted too. They just want as much product as possible.
05:25
And just getting that freedom of choice with different powertrains, especially now as EV sales
05:30
start to taper off a little bit. They can still have a lot of other models to offer consumers.
05:36
Perfect. Vince, thank you so much for joining me.
05:39
Yeah, you're welcome.
05:40
Coming up, the new budget bill out of Washington could have some significant impacts on dealership
05:45
FNI offices. Protective Asset Protections Rick Kurtz joins the show to talk about it
05:51
next on Daily Drive.
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Kellan Walker. The passage last month of HR1, also known as the Big Beautiful Bill, presents
08:28
a mixed bag for dealership FNI offices. Rick Kurtz is Senior Vice President and FNI Product
08:34
Provider Protective Asset Protection. He spoke with automotive news Senior Retail Editor Dan Shine
08:40
about how the budget law could affect dealer profits. Rick, great to have you back once again
08:46
for the FNI Friday edition of Daily Drive. Hey, Dan, thanks. I always appreciate the opportunity
08:51
to chat with you. So back in July, the big massive HR1, known by some as the Big Beautiful
08:58
Bill, beauty and the eye of the beholder obviously, but passed through the Senate and the House and
09:05
has some impacts on auto dealerships. You know, there's bonus depreciation for floor plan financing
09:12
and S-Corp pass-throughs and state tax exemptions. It would sound more like a
09:17
accounting podcast, an automotive podcast. We'll skip all those things. But for FNI folks,
09:23
there's a couple of takeaways there that could have some impact on their business. Give me
09:28
overall what your view on HR1 is and what the FNI folks should be paying attention to.
09:35
Yeah. Well, first of all, Dan, kudos for you for digging into the bill because some of those
09:38
benefits that you just rattled off are incredibly important to the U.S. auto dealer
09:43
in terms of facilities, investments, tax planning, estate planning. But that's a
09:48
different discussion, that one probably. But I think the most glaring inclusion in the bill
09:53
in terms of consumer impact is the interest deduction, the deduction of up to $10,000 in
10:00
interest on auto loans. Obviously, it's not applicable to everyone. There's some income
10:05
phase outs and things like that. It's not applicable to use vehicles to the best of
10:09
everyone's interpretation. It's not applicable to leases, but on new purchases. And obviously,
10:14
it's focused on vehicles assembled within the U.S. Dan, you know this, but it's really tricky to
10:20
figure out necessarily what will qualify, whether you have a Silverado or a Toyota RAV4, they may be
10:27
or likely are assembled in multiple plants. And so something that's completely within,
10:32
you're really going to have to run a VIN search and say, does this qualify? And so
10:37
into that end, I think it's still, it's going to stimulate and promote
10:41
the sale of vehicles assembled in the U.S. And I think that's in keeping with the president's
10:46
overall strategy of promoting the U.S. economy. I think there's some discussion on really,
10:55
who does this benefit? Certainly doesn't benefit the most affluent because they're
11:00
going to phase out. And there's some concern over the lower income brackets who more
11:08
typically rely on a used vehicle or an imported vehicle in terms of affordability. And they're
11:14
not really going to be bolstered by this, at least at this point with the mortgage interest
11:19
deduction. So concern there, but certainly for the middle class and certainly the middle class
11:24
who may have been considering, hey, do I buy a used Toyota RAV4 assembled elsewhere or do I
11:31
stretch my budget to buy a Ford that's made in Chicago? I think it's going to certainly,
11:36
create some incentive for them and stimulate the manufacturing. So big impact there with the $10,000
11:43
interest deduction. I think there's a couple other things, Dan, too, sort of tangentially
11:48
related to FNI. One is the way the treatment of the CAFE standards, right? By sort of
11:54
governmental protocol, they could not eliminate or change the CAFE standards. But the penalties
12:01
for non-compliance to CAFE standards was reduced to zero. So you can, they're there and they're
12:09
posted and they're still, but if we catch you kind of falling short, we're going to find you zero
12:15
dollars. And so I think that's going to say, hey, what does that do? I think the intent was to
12:20
really increase affordability for consumers because theoretically you take the OEMs and you
12:27
say, okay, I don't need to invest as much in R&D to comply with CAFE standards. But I believe
12:33
in my estimation, that might be a bit of a false foundation because CAFE standards
12:38
are still in place everywhere else in the world. So manufacturers would have a difficult time
12:44
by saying, well, we're going to reduce our R&D expense and pass that along to consumers in the
12:48
US. But at the same time, because it's auto manufacturing is a global proposition,
12:53
we do have to conform globally as well. So I don't know that that'll have all the impact,
12:58
perhaps that maybe it's anticipated too. You're assuming that automakers will pass those savings
13:03
on to the consumer and that sticker price, which may not happen. But yeah, I understand the
13:10
intent there that R&D expense may be reduced for manufacturers. Yeah. And we're not even in the
13:19
scope of this discussion, Dan, we're leaving tariffs on the sideline. That sort of plays in
13:24
here as well in terms of costs and things. We only got five to eight minutes. We don't have
13:29
tariffs. We might be here all day. But I think if you look at these in the aggregate,
13:36
it's very, very interesting. And I think the other significant impact that I would say is really
13:42
EVs, right? Elimination of the EV credits on a new and used basis and what's the impact
13:48
there? I think for auto retailers that have invested heavily in EV platforms, EV inventory,
13:56
manufacturers that are heavy into EVs, certainly it's going to require a pivot. But then at the
14:01
same time, I think whether it's CAFE or whether it's EV, the manufacturers and even retailers,
14:08
the retailers to a much lesser extent, they need to be looking down the road and saying,
14:13
with the next president, will these be reestablished or reinstituted? And then if I
14:19
choose right now to sort of let these drift away, will I be in a less advantageous position
14:26
should these requirements or the benefits be reinstituted upon the next election? So
14:33
really interesting versus the near term, midterm and long term strategy.
14:37
And it just goes back to the FNI folks in the FNI office probably need to do their homework
14:43
and kind of study up a little bit on what all these things mean. And then, and they do a great
14:49
job of this, of just kind of adjusting to the market and to the consumer and still be able to
14:55
offer them these kind of voluntary protection products and other things, add-ons,
14:59
that will kind of maybe help them finance a vehicle and protect it for however long they
15:06
own it. Yeah, because we still have the, I think the overriding pressures are those macro economic
15:11
trends Dan, that I'm sure you're well aware of inflation, higher interest rates. In couple,
15:17
they create affordability issues, right? Those don't go away. This may in some sort of segments
15:23
soften that blow, but I think those are still going to remain the dominant features for the
15:28
consumer. And as it goes to FNI specifically, I think you're absolutely right. We might see
15:34
in some stores a de-emphasis on products tailored to electric vehicles and that's by necessity. But
15:42
by the same token, if you look at, if you're a Tesla dealership, well Tesla is manufactured in
15:47
the U.S. and there's certain benefits that'll be applicable to them that would not be
15:52
applicable to EVs manufactured outside the U.S. So I think the awareness piece that you
15:59
brought up for FNI and doing your homework, it's not a time to phone it in. It's not a time to say,
16:04
this is the way I've always done it. It's truly looking at your buyers, understanding the impacts
16:09
and saying, you know, how do I wrap the most comprehensive protection package around this
16:15
transaction? You and I have talked on previous podcast about consumer kind of preparation
16:20
for unforeseen financial events. It's amongst an all time low. So the products that we're
16:26
talking about are more important than they've ever been for us. And as, you know, FNI managers
16:32
specifically finding the products that meet the needs of that consumer on the consumer's
16:37
platform is just paramount these days, more important than ever. Yeah, a lot of headwinds still
16:42
that FNI and retail dealerships are facing this with high interest rates and inflation. And
16:48
people are just, you know, a little stretched too thin. And so they're, they're looking
16:51
for ways to save here and there. And that can, you know, impact the bottom line at an FNI office.
16:56
But again, the homework preparation, I think, should be able to kind of surmount some of these
17:02
challenges. I think it's more important right now that with all of these bigger picture issues,
17:08
political, global, macroeconomic, it still comes down to understanding your customer
17:14
and understanding the transaction and what the needs are going to differ, the values are
17:20
going to differ. So regardless of all the other things going around in FNI practitioners,
17:25
we need to understand those. We have to connect with our consumers and really understand their
17:30
needs and present the products that best meet their needs to protect them against unexpected
17:35
loss. Perfect way to end this segment. Rick, always great chatting with you. Thanks so much for
17:40
your time. Thanks for your time, Dan. Always appreciate it. Rick Kurtz is Senior Vice
17:45
President at FNI Product Provider Protective Asset Protection. He spoke with our own Dan Shine.
17:51
That's daily dry for today. I'm Kellan Walker. Thanks to automotive news executive producer
17:57
Jake Nier, as well as our own Hannah Lutz, Riley Hodder, Jack Wallsworth, and Vince
18:02
Bond Jr. for their reporting for today's podcast. You can get the latest news on
18:07
dealership FNI, trade negotiations, and everything happening in the auto industry
18:12
at AutoNews.com. Come back over the weekend for a deeper look at the week's biggest auto
18:18
industry news stories with our own Michael Martinez and Hannah Lutz. The EU is still
18:23
subject to 27.5 percent tariffs on vehicles and in auto parts that 15 percent hasn't taken effect
18:29
yet. So it just like adds a little bit more clarity to this waiting game. We'd love to
18:34
hear from you. Let us know what you think of the show and the topics we covered today.
18:38
Send us an email at dailydrive at autonews.com or leave us a voicemail at 313-444-2774.
18:47
And if you enjoy the podcast, remember to like, leave a review,
18:51
and subscribe so you never miss an episode.
