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Inside this issue
GOP Seeks Data on What Prompted CFPB Auto Guidance
Autos Probably Led Consumer Spending Gain: U.S. Economy Preview
Chrysler Refinances $2.9 Billion Loan
Fiat is Getting its Own Factory Reps for Dealers
Colo. Dealers Near Fire Say Recovery Will Take Time
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
GOP Seeks Data on What Prompted CFPB Auto Guidance

Republican lawmakers are calling on the Consumer Financial Protection Bureau to explain its rationale behind new fair lending guidelines for auto lenders. The House Republicans, including 27 members of the Financial Services Committee, sent a letter dated Thursday to the bureau expressing concern about the intent and methodology of the guidelines. In March, the CFPB told indirect auto lenders to improve oversight of dealers they work with, warning them of reported interest rate disparities in car loans given to minority borrowers. The letter asked the bureau to provide details of how the CFPB determined both the background of certain borrowers and the pricing discrepancies, among other things. Thirteen House Democrats issued a similar letter late last month asking for more information about the agency's policies related to auto lending discrimination.

"In sum, it appears to us that a loss to consumers would occur if the CFPB uses its supervisory and/or enforcement authority to weaken the intense competition that results from the ability to negotiate with the dealer to obtain financing terms that are more competitive than the best terms the consumer can secure from any other source," said the GOP members, which totaled 35. "It is troubling that the agency has initiated this process without a public hearing, without public comment, and without releasing the data, methodology, or analysis it relied upon to support such an important change in policy." The lawmakers asked the consumer bureau to respond within 30 days.
Source: American Banker
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Autos Probably Led Consumer Spending Gain: U.S. Economy Preview

Consumer spending in the U.S. probably climbed in May by the most in three months, led by growing demand for automobiles, economists said before a report this week. The projected 0.3 percent gain in purchases would follow a 0.2 percent fall in April, the first drop in a year, according to the median forecast of 63 economists surveyed by Bloomberg ahead of Commerce Department data on June 27. Other reports may show household confidence held near multiyear highs, housing continued to strengthen and orders for durable goods grew. Car dealers, restaurants and furnishing retailers such as Pier 1 Imports Inc. reporting improved sales as the housing rebound and gain in stocks boost shoppers' spirits and finances. Federal Reserve policy makers last week said they are betting the economy will pick up and unemployment will fall, opening the way for central bankers to trim bond purchases later this year. “The economy continues to get better, the housing market is getting better and that's spilling over into consumer confidence,” said Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania. “They're spending more and that's keeping growth at a modest to moderate pace.” The Commerce Department's spending report will also show incomes grew 0.2 percent last month after being unchanged in April, according to the Bloomberg survey.
Source: Bloomberg

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Chrysler Refinances $2.9 Billion Loan

Chrysler Group LLC reached a key refinancing agreement with lenders on Friday that lowers interest costs and loosens restrictions on its cash as the auto maker moves toward further integration with majority owner Fiat SpA. Chrysler said it had refinanced a $2.9 billion loan and a $1.3 billion credit line, moves that would save it about $50 million a year in interest payments. Chrysler is majority owned by Italy's Fiat SpA, which also said Friday it had obtained a €2 billion ($2.68 billion), three-year credit line, replacing one it had secured in 2011. Fiat and Chrysler made the move on the heels of the announcement that the U.S. Federal Reserve might slow its bond-buying program, which could cause interest rates to rise. Chrysler, in a statement, said it refinanced to "take advantage of market conditions and its improved credit profile." In addition to reducing interest payments, the new loan also loosens the restriction how much money Chrysler can pay to its owners, the largest of which is Fiat. The loan's covenants now better match those in its bond agreements.
Source: The Wall Street Journal

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Fiat is Getting its Own Factory Reps for Dealers

Fiat is hiring its own field staff to work with its 205 U.S. dealerships as the brand starts selling its first four-door hatchback, the 500L. Fiat dealerships had been handled by factory reps that also visited Chrysler stores. Most Fiat dealerships are owned by Chrysler dealers. Fiat has already begun to hire about 50 people nationwide to work with Fiat dealerships on marketing and customer satisfaction issues, said Jason Stoicevich, the new North American head of the Fiat brand. Stoicevich, who is also head of Chrysler Group's California business center, piloted a separate team for Fiat dealerships there last year and expanded it to Chrysler's eight other business centers this month. Under the new plan, each regional business center will have one senior manager, as many as five managers for sales issues and at least one service manager who will work only with Fiat dealerships. The result is that most Fiat factory representatives will be responsible for about seven dealerships, compared with a Chrysler representative in the same region that might have responsibility for twice that number of dealerships, a Chrysler spokesman said.
Source: Automotive News
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Colo. Dealers Near Fire Say Recovery Will Take Time

Stores weren't harmed; the community was devastated

Freedom Honda in Colorado Springs, Colo. has rarely known normal. Since it opened in October 2011, the dealership has experienced two massive wildfires. While the dealership itself wasn't harmed, the community it serves was devastated. The Waldo Canyon fire hit Colorado Springs on June 23, 2012. This year, it has been the Black Forest fire, which started on June 11. Floor traffic "is still way down, but the good news is they are starting to let people back into their neighborhoods," Bret Petersen, general manager of Freedom Honda, said a week after the fire started. "I anticipate it will still be a few days before we start to get back to some sense of normalcy." The Colorado Springs Automobile Dealers Association and many dealers there estimate it will take four to six weeks before vehicle sales and service business return to what they were before the Black Forest fire raged.
Source: Automotive News
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Quotable
"It is troubling that the agency has initiated this process without a public hearing, without public comment, and without releasing the data, methodology, or analysis it relied upon to support such an important change in policy." 

     --- U.S. House Republican lawmakers in a letter to the Consumer Financial Protection Bureau expressing concern about the intent and methodology of new fair lending guidelines for auto lenders, American Banker, June 21


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