Aug. 22, 2025 | How budget bill will affect F&I profits; Jeep revives the Cherokee

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Welcome to Daily Drive for Friday, August 22nd, 2025. I'm Kellan Walker in Las Vegas.

Today on the show, industry groups react to the U.S. trade framework with the EU.

Audi hikes 2026 model year prices amid tariffs. And the Jeep Cherokee is coming back with a hybrid

powertrain. Plus, protective asset protections Rick Kurtz joins the show to talk about how F&I

offices can leverage the new tax deduction on auto loan interest. With all of these bigger

picture issues, political, global, macroeconomic, it still comes down to understanding your

customer and understanding the transaction. Let's run through all the news you need to know to keep up

in the auto industry. This just in as of recording time, Canada will announce today

that it's removing many retaliatory tariffs on U.S. goods. That's according to a source

familiar with the matter who spoke with Canadian press. The person says Canadian tariffs on U.S.

steel and aluminum will remain for now. Bloomberg News was first to report the move earlier

Friday. Sources have also confirmed the broad details to CBC News. While the new U.S. trade

framework and European Union is promising, automakers and suppliers are still waiting for

critical details. Jennifer Sevevian is CEO of Auto's Drive America, a group that advocates

for international automakers in the U.S. She says it's encouraging that the U.S. will reduce tariffs

to 15 percent once the EU introduces legislation to enact lower tariffs. That's going to be very

helpful when it comes to imported vehicles and parts. But I would say, you know, as far as

the standards, there's a lot we still don't know, right? There's a lot that wasn't, you know,

was only a couple page framework that we saw today. Sevevian was speaking on Thursday's

Automotive News Congress Conversation livestream. You can watch the full conversation on our

Automotive News LinkedIn, Facebook and YouTube pages. Audi of America imports each vehicle it sells in

the U.S. The German luxury brand is applying some hefty price increases across its portfolio

for the 2026 model year as it grapples with tariffs. The price increases for 2026

range from $800 to $4700, depending on model and trim. And the Jeep Cherokee will be back this fall

as a hybrid. Jeep dropped the nameplate two years ago. Now it's back with a boxy aesthetic

with sharp edges similar to earlier models. The brand says it achieves an estimated 37

miles per gallon combined. Jeep said it can travel 500 miles on a full tank of gas.

Jeep hopes it can be a volume player in the mid-sized utility segment,

like its predecessor, which peaked at about 240,000 sales in 2018.

And those are today's headlines. You can find more details on all those stories at autonews.com.

Joining me now to talk about the return of the Cherokee is Vince Bond Jr.,

who covers Stellantis for us at Automotive News. Vince, welcome back to Daily Drive.

Thank you. So Vince, why bring the Cherokee back now after two years out of the market?

Well, the truth is, they had a major gap they needed to fill. So they had to bring it back as

soon as possible. Looking back, the previous Cherokee was discontinued in 2023. And one of the

main complaints from dealers over the years was that Stellantis did not have a vehicle ready

to replace it. And so they've been without a well-known nameplate that generated some

major sales for the last couple of years. And then looking all the way back to 2018,

the previous generation Cherokee had its best year. And they sold nearly 240,000 units.

And so the brand is hoping that the next generation Cherokee can be a mainstream

vehicle that can really do some serious volume. And so they have to do it right now because

that mid-sized crossover space is really hot. And this is part of a bigger product makeover

for Jeep. What is the brand hoping to achieve and how are dealers reacting to the plan so far?

Yes. So the big thing is that Jeep is going to offer a freedom of choice.

That's really been their mission. They've been kind of sharing that the last year or so,

where they're going to have plug-in hybrids. They're going to have conventional hybrids

with no plugs. They're going to have some full EVs, as we've seen already with the

Wagoner S that came out this year. And then later this year, we have the Off-Road Recon EV that's

on the way as well. And so they're really trying to balance out their lineup and just add options

to everybody. And as we talked about last week, they'll even have some more V8s across the lineup.

And so you'll have electrified models all the way up to big-time performance. And so that's

a huge thing that dealers have wanted too. They just want as much product as possible.

And just getting that freedom of choice with different powertrains, especially now as EV sales

start to taper off a little bit. They can still have a lot of other models to offer consumers.

Perfect. Vince, thank you so much for joining me.

Yeah, you're welcome.

Coming up, the new budget bill out of Washington could have some significant impacts on dealership

FNI offices. Protective Asset Protections Rick Kurtz joins the show to talk about it

next on Daily Drive.

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Kellan Walker. The passage last month of HR1, also known as the Big Beautiful Bill, presents

a mixed bag for dealership FNI offices. Rick Kurtz is Senior Vice President and FNI Product

Provider Protective Asset Protection. He spoke with automotive news Senior Retail Editor Dan Shine

about how the budget law could affect dealer profits. Rick, great to have you back once again

for the FNI Friday edition of Daily Drive. Hey, Dan, thanks. I always appreciate the opportunity

to chat with you. So back in July, the big massive HR1, known by some as the Big Beautiful

Bill, beauty and the eye of the beholder obviously, but passed through the Senate and the House and

has some impacts on auto dealerships. You know, there's bonus depreciation for floor plan financing

and S-Corp pass-throughs and state tax exemptions. It would sound more like a

accounting podcast, an automotive podcast. We'll skip all those things. But for FNI folks,

there's a couple of takeaways there that could have some impact on their business. Give me

overall what your view on HR1 is and what the FNI folks should be paying attention to.

Yeah. Well, first of all, Dan, kudos for you for digging into the bill because some of those

benefits that you just rattled off are incredibly important to the U.S. auto dealer

in terms of facilities, investments, tax planning, estate planning. But that's a

different discussion, that one probably. But I think the most glaring inclusion in the bill

in terms of consumer impact is the interest deduction, the deduction of up to $10,000 in

interest on auto loans. Obviously, it's not applicable to everyone. There's some income

phase outs and things like that. It's not applicable to use vehicles to the best of

everyone's interpretation. It's not applicable to leases, but on new purchases. And obviously,

it's focused on vehicles assembled within the U.S. Dan, you know this, but it's really tricky to

figure out necessarily what will qualify, whether you have a Silverado or a Toyota RAV4, they may be

or likely are assembled in multiple plants. And so something that's completely within,

you're really going to have to run a VIN search and say, does this qualify? And so

into that end, I think it's still, it's going to stimulate and promote

the sale of vehicles assembled in the U.S. And I think that's in keeping with the president's

overall strategy of promoting the U.S. economy. I think there's some discussion on really,

who does this benefit? Certainly doesn't benefit the most affluent because they're

going to phase out. And there's some concern over the lower income brackets who more

typically rely on a used vehicle or an imported vehicle in terms of affordability. And they're

not really going to be bolstered by this, at least at this point with the mortgage interest

deduction. So concern there, but certainly for the middle class and certainly the middle class

who may have been considering, hey, do I buy a used Toyota RAV4 assembled elsewhere or do I

stretch my budget to buy a Ford that's made in Chicago? I think it's going to certainly,

create some incentive for them and stimulate the manufacturing. So big impact there with the $10,000

interest deduction. I think there's a couple other things, Dan, too, sort of tangentially

related to FNI. One is the way the treatment of the CAFE standards, right? By sort of

governmental protocol, they could not eliminate or change the CAFE standards. But the penalties

for non-compliance to CAFE standards was reduced to zero. So you can, they're there and they're

posted and they're still, but if we catch you kind of falling short, we're going to find you zero

dollars. And so I think that's going to say, hey, what does that do? I think the intent was to

really increase affordability for consumers because theoretically you take the OEMs and you

say, okay, I don't need to invest as much in R&D to comply with CAFE standards. But I believe

in my estimation, that might be a bit of a false foundation because CAFE standards

are still in place everywhere else in the world. So manufacturers would have a difficult time

by saying, well, we're going to reduce our R&D expense and pass that along to consumers in the

US. But at the same time, because it's auto manufacturing is a global proposition,

we do have to conform globally as well. So I don't know that that'll have all the impact,

perhaps that maybe it's anticipated too. You're assuming that automakers will pass those savings

on to the consumer and that sticker price, which may not happen. But yeah, I understand the

intent there that R&D expense may be reduced for manufacturers. Yeah. And we're not even in the

scope of this discussion, Dan, we're leaving tariffs on the sideline. That sort of plays in

here as well in terms of costs and things. We only got five to eight minutes. We don't have

tariffs. We might be here all day. But I think if you look at these in the aggregate,

it's very, very interesting. And I think the other significant impact that I would say is really

EVs, right? Elimination of the EV credits on a new and used basis and what's the impact

there? I think for auto retailers that have invested heavily in EV platforms, EV inventory,

manufacturers that are heavy into EVs, certainly it's going to require a pivot. But then at the

same time, I think whether it's CAFE or whether it's EV, the manufacturers and even retailers,

the retailers to a much lesser extent, they need to be looking down the road and saying,

with the next president, will these be reestablished or reinstituted? And then if I

choose right now to sort of let these drift away, will I be in a less advantageous position

should these requirements or the benefits be reinstituted upon the next election? So

really interesting versus the near term, midterm and long term strategy.

And it just goes back to the FNI folks in the FNI office probably need to do their homework

and kind of study up a little bit on what all these things mean. And then, and they do a great

job of this, of just kind of adjusting to the market and to the consumer and still be able to

offer them these kind of voluntary protection products and other things, add-ons,

that will kind of maybe help them finance a vehicle and protect it for however long they

own it. Yeah, because we still have the, I think the overriding pressures are those macro economic

trends Dan, that I'm sure you're well aware of inflation, higher interest rates. In couple,

they create affordability issues, right? Those don't go away. This may in some sort of segments

soften that blow, but I think those are still going to remain the dominant features for the

consumer. And as it goes to FNI specifically, I think you're absolutely right. We might see

in some stores a de-emphasis on products tailored to electric vehicles and that's by necessity. But

by the same token, if you look at, if you're a Tesla dealership, well Tesla is manufactured in

the U.S. and there's certain benefits that'll be applicable to them that would not be

applicable to EVs manufactured outside the U.S. So I think the awareness piece that you

brought up for FNI and doing your homework, it's not a time to phone it in. It's not a time to say,

this is the way I've always done it. It's truly looking at your buyers, understanding the impacts

and saying, you know, how do I wrap the most comprehensive protection package around this

transaction? You and I have talked on previous podcast about consumer kind of preparation

for unforeseen financial events. It's amongst an all time low. So the products that we're

talking about are more important than they've ever been for us. And as, you know, FNI managers

specifically finding the products that meet the needs of that consumer on the consumer's

platform is just paramount these days, more important than ever. Yeah, a lot of headwinds still

that FNI and retail dealerships are facing this with high interest rates and inflation. And

people are just, you know, a little stretched too thin. And so they're, they're looking

for ways to save here and there. And that can, you know, impact the bottom line at an FNI office.

But again, the homework preparation, I think, should be able to kind of surmount some of these

challenges. I think it's more important right now that with all of these bigger picture issues,

political, global, macroeconomic, it still comes down to understanding your customer

and understanding the transaction and what the needs are going to differ, the values are

going to differ. So regardless of all the other things going around in FNI practitioners,

we need to understand those. We have to connect with our consumers and really understand their

needs and present the products that best meet their needs to protect them against unexpected

loss. Perfect way to end this segment. Rick, always great chatting with you. Thanks so much for

your time. Thanks for your time, Dan. Always appreciate it. Rick Kurtz is Senior Vice

President at FNI Product Provider Protective Asset Protection. He spoke with our own Dan Shine.

That's daily dry for today. I'm Kellan Walker. Thanks to automotive news executive producer

Jake Nier, as well as our own Hannah Lutz, Riley Hodder, Jack Wallsworth, and Vince

Bond Jr. for their reporting for today's podcast. You can get the latest news on

dealership FNI, trade negotiations, and everything happening in the auto industry

at AutoNews.com. Come back over the weekend for a deeper look at the week's biggest auto

industry news stories with our own Michael Martinez and Hannah Lutz. The EU is still

subject to 27.5 percent tariffs on vehicles and in auto parts that 15 percent hasn't taken effect

yet. So it just like adds a little bit more clarity to this waiting game. We'd love to

hear from you. Let us know what you think of the show and the topics we covered today.

Send us an email at dailydrive at autonews.com or leave us a voicemail at 313-444-2774.

And if you enjoy the podcast, remember to like, leave a review,

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Jeep Cherokee

Chevrolet Silverado

Toyota RAV4

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