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Top 5 Stories
As Japan Shutdowns Drag On, Auto Crisis Worsens
Mazda Halts Orders From U.S. Dealers
Truth in Lending and Consumer Leasing Acts Amended to Apply to Consumer Loans and Leases up to $50,000
Securitizers, Lenders Said to Get Risk-Retention Options in Plan
Calif. Dealer Group: Chrysler Store is Illegal
Top 5 Stories
As Japan Shutdowns Drag On, Auto Crisis Worsens

TOKYO — The auto industry disruptions triggered by Japan's earthquake and tsunami are about to get worse. In the weeks ahead, car buyers will have difficulty finding the model they want in certain colors, thousands of auto plant workers will likely be told to stay home, and companies such as Toyota, Honda and others will lose billions of dollars in revenue. As a result, Ford is telling dealers to stop ordering "tuxedo black" models of its F-150 pickup and Expedition and Navigator SUVs. That worries some dealers, especially when popular colors like black could be in short supply. "It's hard enough to sell a $60,000 Navigator in this economy," says Fortunes O'Neal, general manager at Park Cities Ford in Dallas. "We don't want to have to tell customers, 'You've got to pick another color.'"
Source: The Associated Press

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Mazda Halts Orders From U.S. Dealers

In a move that could foreshadow an industry trend, Mazda Motor Corp. [on Friday] said it suspended orders of Japan-built vehicles for its dealers in the U.S. The suspension will affect the May allocation of vehicles for dealers here, and the car maker said it is unclear when it will begin taking orders again. Mazda spokesman Jay Amestoy says the company’s supply of vehicles in the U.S. is in “decent” shape because dealers happen to be carrying larger-than-average inventories. He also said the shortages of everything from steel to electronics are affecting every car maker.
Source: The Wall Street Journal

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Truth in Lending and Consumer Leasing Acts Amended to Apply to Consumer Loans and Leases up to $50,000

Following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Reserve Board has adopted two rules that will expand the coverage of Regulation Z (Truth in Lending Act ("TILA")) and Regulation M (Consumer Leasing Act ("CLA")) to credit transactions and leases of up to $50,000.

TILA requires creditors to disclose key terms of consumer loans and prohibits creditors from engaging in certain practices with respect to those loans. Currently, consumer loans of more than $25,000 are generally exempt from TILA. The CLA requires lessors to provide consumers with disclosures regarding the cost and other terms of personal property leases. An automobile lease is the most common type of consumer lease covered by the CLA. Currently, a lease is exempt from the CLA if the consumer's total obligation exceeds $25,000.

Effective July 21, 2011, the Dodd-Frank Act requires that the protections of TILA and the CLA apply to consumer credit transactions and consumer leases at the higher $50,000 limits.  This amount will be adjusted annually to reflect any increase in the consumer price index.
Source: NADA Regulatory Affairs

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Securitizers, Lenders Said to Get Risk-Retention Options in Plan

U.S. regulators will give banks and bond issuers four ways to comply with new rules that force firms to retain some risk in loans they securitize, according to two people involved in the process. The draft plan calls for companies to keep a 5 percent stake in the loans, as mandated by the Dodd-Frank Act, the people said, speaking on condition of anonymity because the rule isn’t public. The added risk is designed to give banks a reason to keep lending standards high and head off defaults like the ones that triggered the 2008 financial crisis. “We believe the agencies, in preparing the draft regulation, should analyze the situation asset class by asset class and provide tailored flexibility,” said Andrew D. Koblenz, vice president of legal and regulatory affairs at the National Automobile Dealers Association in McLean, Virginia.
Source: Bloomberg

Editor's note: In response to these mandates, NADA met with officials at the Securities and Exchange Commission, Federal Deposit Insurance Corporation and the Treasury Department to argue that the imposition of risk retention requirements on auto dealers would not further public policy and would only increase the cost of lending for borrowers. NADA also submitted formal comments to the Federal Reserve Board, which was tasked with studying risk retention after the Dodd-Frank Act was enacted.

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Calif. Dealer Group: Chrysler Store is Illegal

The California New Car Dealers Association says Chrysler is operating an illegal factory-owned dealership in Los Angeles. The store is Motor Village L.A., which Chrysler established as a prototype to showcase its brands and test new retail concepts. The dealer association filed a petition March 21 with the California New Motor Vehicle Board calling for an investigation and asking the board to discipline Chrysler, possibly suspending or revoking the store's business license. The petition alleges the dealer operator, Howard Drake, has no significant investment in the store.
Source: Automotive News

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For more auto industry news, visit NADAFrontPage.com

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Quotable
"This is the biggest impact ever in the history of the automobile industry."

    -- Koji Endo, managing director at Advanced Research Japan in Tokyo, on disruptions to Japan's auto industry triggered by the earthquake and tsunami, The Associated Press, March 27

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