Bulletin | February 2023

ADVENTUREAWAITS

TheDenverAutoShowisthe perfectopportunitytodiscover newwaystostayactiveandenjoy thebeautyofourgreatstate. Fromcampinginaconversion vantocruisingmountainroadson anelectricbike,thiseventhas somethingforeverylifestyle.Find theperfecttransportationforyour nextgreatescape,allatthe DenverAutoShow!

ABOUT OUR ASSOCIATION

Representing the franchised new car dealers of Colorado

The Colorado Automobile Dealers Association (CADA) is the voice of the automotive retail industry throughout the state. As the automobile dealer trade association, CADA advocates issues of importance to the auto industry, Colorado auto dealers and Colorado's driving public.

The Denver Automobile Dealers Association started in 1914 to operate the annual Denver Auto Show which dates to 1902. Colorado Automobile Dealers Association soon followed and both associations operated together with shared staff and a headquarters building. In 2010, after almost eight decades together the two associations became one. The history now dates over 108 years of high level automotive and mobility impact.

Today, our dealers range from small family-owned dealerships, to nationally operated, multiple franchise corporations. CADA represents a united front for over 300 new car, truck, motorcycle and RV dealers. From local, state and federal policymakers, to the public and the media, CADA is the voice for Colorado's auto industry.

CONTACTUS

Colorado Automobile Dealers Association

290 East Speer Blvd Denver, CO 80203

303 831 1722

info@colorado.auto

www colorado auto

OURSTAFF

Tim Jackson, CAE, CMP President & CEO

tim jackson@colorado auto

303 282 1448

Marsha Temple Chief Operating Officer

marsha temple@colorado auto 303 457 5123

Matthew Groves

Vice President of Legal, Regulatory & Compliance

matthew groves@colorado auto 303 282 1449

Beth Weir Controller beth weir@colorado auto 303 457 5120

Mark Zeigler

Clear The Air Foundation Director mark zeigler@colorado auto 303.457.5105

Khorrie Luther Business Manager

khorrie.luther@colorado.auto 303 457 5122

Dan Allison Member Services Coordinator dan allison@colorado auto 303 831 1722

Carol Spradley 2023 CADA Chair

LOOKINGAHEADTO AFEWBUSYMONTHS FORCOLORADONEW CARDEALERS

We saw a fast start to 2023 at CADA.

Planning is in full swing for what I consider the full return –post-pandemic – of the Denver Auto Show at the Colorado Convention Center Details are in Tim Jackson’s Bulletin column

The Colorado General Assembly is also engaged at the State Capitol, and among the issues they are considering this session are a couple of bills that will affect our businesses.

Colorado Dealer Breakfast at NADA

CADA had its first big get-together of 2023 during the National Automobile Dealers Association convention in Dallas I was sorry I had to miss the Colorado Dealers Breakfast at NADA on January 28th It was an entertaining and enlightening gathering with almost 90 attending – the most ever – including dealers, sponsors and state legislators

Charlie Vogelheim (The Flying Car radio show, former executive editor at Kelley Blue Book and former VP at J.D. Power) was among the speakers He always has interesting and compelling insights into where the industry is headed Former Automotive News editor Jason Stein, now host of Sirius XM’s “Cars and Culture,” also weighed in on the state of the industry, while our Colorado NADA Director Don Hicks provided the national legislative perspective

Two members of the Colorado General Assembly. Rep. Marc Snyder (D-Manitou Springs) and Sen. Kyle Mullica (DNorthglenn) talked about their efforts to be centrists in an increasingly polarized legislature that leans toward “Progressive ” They clearly understand the value of dealers and the people we employ to Colorado’s economy

Our Issues at the State Capitol

We’ll be watching how the legislature deals with a couple of bills this session that concern auto dealers:

SB23-078 – Manufacturer Pay Dealer Motor Vehicle Warranty (aka Warranty Reimbursement at Retail) Concerning warranty reimbursements made by a motor vehicle manufacturer to motor vehicle dealers Sponsors are Sen. Rhonda Fields (D-Aurora), Kevin VanWinkle (RHighlands Ranch), Rep. Iman Jodeh (D-Aurora), Rep. Mike Lynch (R-Wellington).

HB23-1181 – Guaranteed Asset Protection Agreements (GAP) Concerning the regulation of guaranteed asset protection agreements Sponsors are Rep Tisha Mauro (D-Pueblo), Sen Nick Hinrichsen (D-Pueblo) and Sen Kyle Mullica (D-Northglenn)

CADA’s outstanding lobbying team has won many past legislative battles. We also have an engaged Legislative Policy Committee (LPC), chaired by Michael Dunlap.

Dealers Play Pivotal Roles

While we ’ re anticipating success on these two bills, we ’ re counting on CADA members to:

1 Answer the call to attend the committee hearings, especially on Warranty Reimbursement Manufacturers are working hard against this bill It’s no wonder, since it will have an impact on their profits – they estimate as much as $50 million, although we think the figure would be much higher Dealers and our technicians have for too long been shorted on warranty reimbursement We contend that manufacturers should pay us the same rate for warranty work as we make on consumer jobs Our negotiations with the manufacturers have not yielded any results, so we ’ ve asked the legislature to help us right this wrong

2. Talk to your hometown legislators. You are an important contributor to your community and it helps them to know about our industry, your business and the contributions we make to our communities and the overall economy

3 Attend Legislative Grassroots Meetings (LGMs) I know you ’ ve heard this before, but it is an effective way for dealers to get our message heard

Regulators Are Circling

There is still a possibility that the Environmental Protection Agency (EPA) may seek to implement some version of the Employee Traffic Reduction Program (ETRP) that dealers and the business community has beat back The Denver Metro area has been rated as an ozone non-attainment area but any regulatory action to restrict employee commuting could take in more of the Front Range and even go into other areas like the Vail Valley, Gunnison, Telluride Montrose and Durango

Dealers are striving to do their part CADA supports the Clear the Air Foundation, which is our effort to get older, high-emitting vehicles off the road The pandemic cut into dealer donations: only 390 vehicles last year, due mostly to inventory shortages We have a 2023 goal of 504 donated vehicles January – usually a slow month –brought in 42 and the pace should accelerate

Donated vehicles will be sold for scrap with profits used for scholarships to automotive tech students, although a few vehicles will go to auto tech schools for student education. Even one donation per dealer rooftop would be a huge boost toward the Clear the Air Foundation’s goal.

More information will be available soon about the Denver Auto Show, the Preview Gala and Colorado Automotive Hall of Fame Induction Dinner

Thank You!

to the top level sponsors of the 2022 Hall of Fame TitleSponsor

Mark Zeigler Director, Clear

the Air Foundation

The highly anticipated Denver Auto Show is returning to the Denver Convention Center this year and I’m happy to announce that AmFund will have a presence AmFund is a nonprofit that I’ve worked with over the past few years to provide you with the opportunity to bid on exotic trips around the

world. This year they will provide silent auction trips during the Preview Gala on April 11th and the Denver Auto Show from April 12th – 16th In addition, we will hold a live auction for two fantastic trips at the beginning of the Hall of Fame program on April 11th Last year we raised $37,000, and I plan on setting a record this year

Are you interested in helping the foundation but don’t have any vehicles to donate? I have a solution A few weeks ago, I met with Todd Maul with John Elway Chevrolet. Todd has donated 310 vehicles from this store alone over the years plus another 50 from the former store in Greeley. That places him in rare company with over 400 donations since the foundation was formed The new reality is that he just doesn’t see the $1 cars very often Instead, Todd has generously offered to contribute $500 a month towards the Clear the Air Foundation moving forward That $6,000 a year will make up for the lack of vehicles If you are interested in participating in this program, please reach out to me today I will have our Controller, Beth Weir, send you a monthly invoice And thank you for your generous support Todd, it is life changing!

Diesel Engines Remade Trucking

Heavy-duty trucks run on heavy-duty fuel: diesel. These days, more than 95 percent of the big trucks on the road run on diesel fuel. But it took a while for diesel engines to take hold.

Rudolf Diesel went from being a student of thermodynamics to inventing a new kind of engine based on the premise that higher compression created more power and efficiency. His first prototype was built in 1893 and the first successful model in 1897. It was 16.2 percent more efficient than the steam engines that were available at the time

Other inventors’ improvements only increased the diesel engine’s benefits and utilities Swiss inventor Alfre Büchi added a turbocharger to the diesel engine in 1925, boosting efficiency more than 40 percent In 1927 Robert Bosch made diesel engines even more economical and efficient with a fuel-injection pump.

Cummins

Clessie Cummins, a mechanic in Columbus, Indiana, formed a partnership in 1919 with industrialist and banker William Irwin, for whom he was a part-time chauffeur. Their first endeavor – a three-horsepower farm diesel built for Sears, Roebuck – was a bust but with Irwin’s backing Cummins kept working to build better, more powerful diesel engines He hit on a successful solution in 1930 that worked well in automobiles

Truck manufacturers remained unconvinced, continuing to rely on gasoline engines Irwin came to the rescue again, placing Cummins diesel engines in the delivery trucks in use by his California-based grocery chain of Purity Stores. The drivers liked them and word spread.

The company prospered as America’s roads and highways led to more truck traffic Cummins continued to focus on engines it sold to truck manufacturers Cummins developed a turbodiesel in the early ‘50s which increased engine horsepower by half without increasing fuel consumption Cummins dominated the heavy-duty U S diesel market throughout the ‘50s, but the ‘60s brought increased competition Cummins kept to diesels, but its attempts to scale down to the light-duty market were not particularly successful, nor were the company ’ s efforts to diversify.

On a roller coaster driven by a fluctuating economy, Cummins increasingly turned toward non-highway engines and a growing European market In the ‘80s, it faced more competition from Japan, and met it with better manufacturing procedures and cost-cutting In the late ‘80s the pressure was on to meet government emission control regulations Its offering had problems and business migrated to its more successful competitors, causing Cummins’ market share to fall dramatically.

Cummins bounced back under a new partnership with Ford, Tenneco and Kubota, and its 75th year, 1993, was its most profitable ever It went on to form a number of joint ventures and invested heavily in research and development. Nevertheless, Cummins and other heavy diesel engine manufacturers paid a large fine to the EPA to settle a suit that claimed computerized timing devices were used to evade emissions tests Cummins’ financial fortunes dropped with its heavy-duty truck engine sales declining precipitously The slide continued However, in 2001 Cummins agreed to build engines for Paccar, the parent company for Kenworth and Peterbilt

Cummins diversification into other sectors beyond heavyduty diesel engines ultimately saved it. One notable development was its alliance with Chrysler and the introduction of the first Cummins-powered RAM truck It is a partnership that has thrived

The Cat – Caterpillar

Caterpillar was founded by competitors Benjamin Holt and C.L. Best. Holt invented the steam tractor in the 1890s while Best worked to perfect gasoline technology The two tractor companies combined after World War I, to form Caterpillar Tractor They introduced the Caterpillar Diesel Sixty Tractor in 1931 and quickly became the world’s-largest producer of diesel engines They widely powered construction, mining and agricultural vehicles

Caterpillar introduced its first truck-specific engine in 1939, but stopped building truck engines during World War II and didn’t start again until the 1960s Caterpillar introduced its first off-highway truck in 1962 By the mid-2000s, Caterpillar led the market in Class 8 engines, with almost 30 percent of the market; Cummins was nipping at its wheels Market lead flipped in 2007, with Cummins selling more than Caterpillar

Caterpillar ran afoul of the EPA’s emission standards with its 2002-03 engines, and paid a hefty fine By 2008, Caterpillar decided that the market for truck engines was plateauing and the costs of keeping up with ever-increasing emissions standards were just too great. It made the decision to bow out as an independent engine manufacturer in North America by 2010. It formed an alliance with Navistar to continue selling trucks and engines in Asia and Europe, focusing on severe-duty trucks for construction, petroleum production and logging There is still a fairly robust market for “remanufactured” Caterpillar engines

Made in Detroit

The history of Detroit Diesel goes back to 1938 and General Motors, which founded the GM Diesel Division Heavy-duty war equipment needed lighter-weight, compact engines and GM delivered The Series 71 performed well and gained a reputation By the ‘50s GM was developing new designs and shifted their focus to over-the-road trucks In 1957, the Series 53 engine, including two-, three- and four-cylinder models They were versatile enough to be used for many different industries

GM rebranded its diesel division to Detroit Engine Division in 1965 It combined efforts with the Allison Division and officially merged the two in 1970 to become the Detroit Allison Division, which competed successfully with Cummins throughout the ‘70s and ‘80s

The Series 60 line, introduced in 1987, included standard integrated electronics and boosted fuel efficiency. It was a huge hit and quickly became the best-selling Class 8 truck diesel engine

It attracted the attention of Roger Penske and his Penske Corp took a majority ownership in a new endeavor, Detroit Diesel The new company flourished and by 1993, when it was listed on the New York Stock Exchange, controlled about a third of the on-highway engine market Its success attracted a new buyer, DaimlerChrysler As a division of Daimler Trucks of North America, Detroit Diesel retooled and upgraded and released a new engine line, the “DD,” while continuing to sell its Series 60 It sold its one-millionth Series 60 engine in 2009

Detroit Diesel – now known simply as “Detroit” – continues to stay on the leading edge of diesel engine development with concepts such as the BlueTEC® emissions technology and Remote Diagnostics System It also is a leading supplier of products to other industries.

The Future of Diesel Engines

Considering the durability of diesel engines and their ability to haul huge loads, it’s hard to envision that they will be replaced soon Many diesel truck engines are able to rack up more than a million miles and still run Advanced technology has boosted fuel efficiency and reduced emissions without sacrificing power

Electric, battery electric, as well as hydrogen fuel cellpowered heavy trucks are beginning to surface that future watchers say will make diesel engines obsolete, but it’s hard to tell if they are a real threat or just the newest shiny thing. In any event, with diesel engines powering truck fleets worldwide, not to mention all other heavy machinery across multiple industries, it will take a long time before they go the way of the dodo, even though government regulators around the globe are working hard to make diesel as well as gasoline engines, obsolete

While engaging Colorado’s automotive elite, your sponsorship also supports the Clear the Air Foundation, a 501(c)(3) foundation. The goal of the Clear the Air Foundation is to help improve the quality of air we breathe while providing scholarships to students who want to further their education in automotive or technology fields. Through your sponsorship of the Colorado Automotive Hall of Fame and the Denver Auto Show Preview Gala, your company or organization will be seen as a key benefactor to this highly regarded charitable organization. Thus, enhancing your corporate leadership position and corporate social responsibility outreach.

PREMIER SPONSOR | $20,000

Below the name brand logo position on entrance signage, Logo on one (1) red carpet “step-n-repeat”, Two premium Hall of Fame tables for (10) guests for a total of twenty (20) tickets, Recognition in CADA Bulletin e-newsletter mailed to 2,500 automotive professionals 12x annually, Sponsor may provide ongoing relevant editorial content, and Sponsor recognition in CADA Open Road e-newsletter distributed to 2,000.

Logo on entrance signage, Logo on one (1) red carpet “step-n-repeat”, One premium Hall of Fame table for (10) guests, and Logo placement in CADA Bulletin e-newsletter sent to 2,500 automotive professionals 12x annually.

Logo recognition in CADA Bulletin enewsletter sent to 2,500 automotive professionals 12x annually and One table of ten (10) to Hall of Fame.

Six (6) tickets to Hall of Fame dinner & Denver Auto Show Preview Gala.

Matthew Groves Vice President of Legal, Regulatory and Compliance

UPDATESTOEVTAX CREDITS–STATEANDFEDERAL

As the Internal Revenue Service continues to determine a path towards implementation of the electric vehicle tax credit for years 2023 and beyond, several changes have been made as of Friday, February 3rd. The IRS released an updated Notice 2023-16 and Fact Sheet this weekend. Additionally, the state of Colorado is proposing a legislative overhaul of its state-level EV tax credit – the Innovative Motor Vehicle Tax Credit. Proposed changes to both will be discussed here

I. Federal Incentive

On January 31, 2023, Governor Jared Polis petitioned the Assistant Secretary for Tax Policy to revise their classification of smaller SUV’s, crossover vehicles, and pick-up trucks Under the initial groupings, both fell in the ‘other’ category and were therefore subjected to a lower cost threshold of $55,000 in order to qualify for the EV tax credit

The IRS subsequently revised its categorical definitions of vehicles For any vehicle whose fuel economy label (in the window of the vehicle) includes “[small or standard] sport utility vehicle,” “[small or standard] pickup truck,” or “[mini]van”, they now fit in those respective categories, which moves the tax credit qualification threshold up to $80,000 MSRP Any vehicle whose sticker reads otherwise continues to fall into the ‘other’ category, whose qualification threshold remains $55,000.

Any purchaser between January 1, 2023 and February 3, 2023, whose vehicle did not qualify for the tax credit at purchase, but does now qualify after reclassification, will still be eligible to declare this credit in the 2023 tax year This impacts Cadillac Lyriq, Ford Mustang Mach-E, Volkswagen ID 4, and Ford Escape Plug-In Hybrid

II. Federal Incentive – Paperwork Requirement

A dealer is still required to provide paperwork at purchase in order for a taxpayer to claim their credit The only exception to the ‘at purchase’ requirement is for those vehicles above who did not qualify by MSRP at purchase but do qualify after reclassification Their paperwork may be sent after the purchase These requirements are spelled out in Revenue Procedure 2022-42 Not only must the information be provided to the taxpayer, the Dealer must file these reports with the IRS (manner to be determined) by 15 days after the tax year when the purchase is made

Name and Taxpayer Identification Number (TIN) of both taxpayer and seller;

VIN of the new clean vehicle

Battery capacity of the vehicle

Verification that taxpayer is an ‘original user ’

Date of Sale and Sales Price

Maximum credit allowable for vehicle

Any transfer credit applied to purchase (trade in)

Declaration under penalty of perjury from the Buyer

The following information is required: This report reflects modifications as of February 3, 2023. Previous requirements still apply!

III. Colorado Innovative Motor Vehicle Tax Credit

Unlike the federal requirements, that have been posted by the regulating agency, the information surrounding the state EV tax credit is still conditional It will require approval by the legislature, which is never a guarantee

With that said, conversations dictate that the legislature will seek to lengthen and increase the state EV tax credit through 2028. It was originally to sunset after 2025. For calendar years 2023, 2024, and 2025, it is likely to revert to its initial level of $5,000 per motor vehicle It will phase out in the years 2026-2028

Whereas the federal credit has qualification restrictions around gross income of the purchaser and MSRP of the vehicle, the original Innovative Motor Vehicle Tax Credit (IMVTC) had no such restrictions, and none are expected in this extension bill. IMTVC has always been a refundable tax credit. Thus, if your tax liability is less than the amount of the credit, the state will simply refund you the excess Since it is applicable to all Coloradans, dealers are free to include it in print or electronic advertisements This is not so for the federal tax credit

There will additionally be incentives for medium- and heavyduty vehicles The goal is to help shorten the timeframe of turning over the fleet. The state recognizes that there are multiple layers of obstacle to this goal baked into the tax code. Proposed incentives will likely climb back towards $12,000 per vehicle Discussions also exist around an equalization credit towards the specific ownership tax of these vehicles, which can reach tens of thousands of dollars per vehicle

Overall, these changes will likely amount to a $35-50 million benefit to EV consumers The state seeks to create a system that parallels the federal where the credit can be assigned to the dealer, with the cost taken off the hood at purchase, and then can be remitted to the Colorado Department of Revenue for payment on a quarterly basis

IV. Conclusion

CADA will keep you updated as federal policy evolves and the state proposal works its way through the legislative process In each of these issues, CADA/NADA look to be partners in the process that should be a huge augmentation to EV sales If you have any questions, please contact Matthew Groves at matthew groves@colorado auto

Tim Jackson CADA President & CEO

APRILDRIVESINWITH BIGGER,BETTERAUTO SHOWATCOLORADO CONVENTIONCENTER

The 2023 Denver Auto Show will be unlike any we've ever done. It builds on a storied history to reimagine itself as a showcase for new cars while embracing other mobility options

We're returning to the Colorado Convention Center April 1216 with the front halls dedicated to the show (and much more when we need it) filled with glittering new cars - ICE, hybrid and electrics - plus e-bikes, scooters, one-wheels, campervans and trucks of all descriptions If it can be driven or ridden, you'll likely find it at the 2023 Denver Auto Show

The Denver Auto Show is the third-oldest exhibition of its type in the U S , with New York City starting in 1900, Chicago in 1901, and Denver beginning in 1902 There have only been a handful of years that there hasn't been a show Among them, of course, were those we lost to the global COVID-19 pandemic

Ch-ch-ch-changes Keep Us Current

One significant change for 2023 is that our longtime producer, Paragon Expo Services is returning Garry Edgar brings a wealth of exhibition experience to the Denver Auto Show while promising a fresh, new approach that will ramp up the excitement factor. This year, in the words of CADA's Denver Auto Show Chair Eric Beutz, "Our goal is to come back bigger and better than ever " Eric observes that "The auto industry has changed drastically since 2019," and accordingly, the 2023 Denver Auto Show will reflect many of those changes

As goes the industry, so goes the 2023 Denver Auto Show. Electrification is a major focus Xcel Energy's EV Garage will be located on the show floor; show attendees can learn about bringing renewable energy into their lives, through both transportation and home electrification options Xcel will have one of its new electric bucket trucks on display

We've planned an indoor electric vehicle ride experience so attendees can experience how an electric vehicle might be the right choice for their next ride.

Thinking of all-avenues mobility options, show-goers will be able to see (and in some cases, try out) electric bikes, which have become wildly popular in urban areas, especially since rebates are often available Electric scooters and one-wheels will also have displays

Campervans, already gaining in popularity before the pandemic, exploded as a way to vacation safely, or even live frugally while seeing the USA. The pandemic has eased but the desire to fill the wanderlust persists. A display of campervans from some of the more than 20 outfitters located in Colorado should pique attendees' interest

Experience It or Dream About It

We're negotiating to bring more Ride-and-Drives for the popular Denver Auto Show attraction We're planning as many as five or six of them for this year's show Plus, attendees can expect to see an indoor All-Electric ride and experience on the floor of the show Exotic cars will be back for people who dream of the ultimate in speed and/or luxury "The Colorado Lifestyle Rodeo" will be an assortment of aftermarket add-ons and accessories

Celebrate at the Denver Auto Show!

The Preview Gala and the Colorado Automotive Hall of Fame Induction on the evening of April 11 will give Colorado new car dealers and their guests an exclusive opportunity to enjoy the show in advance of the public opening

The Preview Gala is an anticipated springtime social event

This year you can opt to attend just the Preview Gala beginning at 5:30 p.m. on April 11, or purchase a combination ticket that ensures admission to the 2023 Colorado Automotive Hall of Fame induction dinner and ceremony from 6:30-7:30 p.m. Seven new inductees will join the industry stars from the previous two classes.

Media Day is Wednesday, April 11 The Rocky Mountain Automotive Press (RMAP) will announce their picks for Car of the Year, Truck of the Year and SUV of the Year either on Media Day or during the Preview Gala In addition, Seniors' Day (half-price admission for 65+) will be April 12 and Active Military & Veterans' Day (half-price with ID) will be April 13

There’s a lot to look forward to at this year ’ s Denver Auto Show As many of you know, being part of it usually translates into orders and sales. And joining the social events – the Preview Gala and Colorado Automotive Hall of Fame induction dinner – is a great chance to socialize with your colleagues and have some fun!