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Inside this issue
Dealer Mood Is Full Speed Ahead For '14
Auto Sales for January Held Down by Harsh Winter Weather
Ally Won't Be a 'Trojan Horse'
As Dealership Profits Rise, Buyers are Shopping But Sellers are Hard to Find
Union Vote At VW Factory In Tennessee Will Send Tremors Through U.S. Auto Industry
Car-Sharing, Social Trends Portend Challenge for Auto Sales
GM Touts Dealer Diversity Gains
Schaller Honda Hosts U.S. Rep. Elizabeth Esty
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Dealer Mood Is Full Speed Ahead For '14

Judging from the comments of auto dealers emerging from make meetings at the National Automobile Dealers Association convention last week, the focus this year will be on more, bigger, better, richer and faster. Not to say that retailers have entirely forgotten the pain they went through after the industry crashed five years ago. But the new era of 15 million-plus sales years has made dealers flat-out bullish. "They've asked me to make store upgrades, and I don't mind," dealer Dan Fields said of BMW's facilities program. His Fields Auto Group in Winter Park, Fla., has four BMW stores. "This is the perfect time to do it. They've got great products and more coming, and I'm bullish."
Source: Automotive News
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Auto Sales for January Held Down by Harsh Winter Weather

Automakers reported on Monday sharp declines in United States sales in January as a harsh freeze and winter storms thwarted purchases across much of the country. Sales fell 3.1 percent to just over one million vehicles for the month, according to Autodata, halting a steady gain in industrywide monthly performance. General Motors, the country's largest carmaker, said that sales fell 12 percent last month, to 171,486 vehicles, while its crosstown Detroit rival, Ford Motor, reported a 7 percent decline, selling 154,644 vehicles. The Chrysler Group, the smallest of Detroit's automakers, fared better, reporting growth of 8 percent to 127,183 vehicles for its best January sales performance in six years. It was the 46th month of consecutive sales gains for the automaker, whose acquisition by Fiat was completed last month. Sales fell by double-digit percentages for many brands and models, but automakers and analysts described the drop more as a blip that was unlikely to dampen the automotive recovery.
Source: The New York Times

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Ally Won't Be a 'Trojan Horse'

The Consumer Financial Protection Bureau wants Ally Financial and other auto lenders to switch from dealer reserve to flat fees or some other new compensation plan for dealers. But Ally will stick with dealer reserve. "We are not going to be the Trojan horse for driving industry change," Ally CEO Michael Carpenter told Automotive News at the National Automobile Dealers Association convention [in New Orleans]. Dealer reserve is at the heart of allegations of discriminatory auto lending that led to the $98 million consent order Ally signed Dec. 20 with the CFPB and the U.S. Department of Justice. "We are not going to go to flats," Carpenter said. "That is obviously not what the CFPB wanted to hear. They thought we were going to cave" and set an example for other auto lenders that would reverberate through the industry. Chicago lawyer Ken Rojc, a specialist in auto finance law, said: "This sends a huge signal to the industry." Ally was the largest auto lender in the United States in 2011 and 2012. Its share slipped in 2013, but Ally remains among the top five, according to Experian Automotive. Carpenter acknowledged that profits are at stake: Dealers would simply take their business elsewhere if Ally dropped dealer reserve and other lenders didn't. But he insists that Ally's stand is partly the result of what Carpenter called "nonnegotiable principle."

Ally agreed to the consent order even though it said at the time it didn't agree with the CFPB's conclusions. In a statement last month, the company said: "Ally does not engage in or condone violations of law or discriminatory practices, and based on the company's analysis of its business, it does not believe that there is measurable discrimination by auto dealers."

So why did Ally go along with the consent order? Carpenter said Ally was motivated in part by a desire to get the consent order behind it so it could move forward on other urgent business. At the time, Ally had a request pending before the Federal Reserve to move up to financial holding company status from bank holding company status, Carpenter said. The CFPB was one of a number of regulators that had input on the Federal Reserve's decision on financial holding company status. Ally needed the change in status to retain its insurance, including automotive finance-and-insurance products, and used-car remarketing operations -- businesses that are important to Ally's future as an independent auto lender. The change also makes it easier for Ally to make acquisitions and to pay dividends, Carpenter said.
Source: Automotive News

Editor's note: To bolster compliance with fair credit laws and protect the affordability and accessibility of auto credit, NADA has created a new program for dealers entitled the NADA Fair Credit Compliance Policy and Program. NADA members can download the information by clicking here. (Dealership username and password required. To recover your username and password or to join NADA, call Membership at 800-252-6232.)

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As Dealership Profits Rise, Buyers are Shopping But Sellers are Hard to Find

Plenty of dealers were checking in with buy/sell brokers at the National Automobile Dealers Association convention in New Orleans, most of them on the acquisition trail. "We have more buyers than sellers," said Bob Morris, a top broker at Tim Lamb Group. As deal maker George Chaconas of Performance Brokerage Services sat at the Starbucks outside the convention hall, he watched dealers streaming out of a meeting. A couple of them seemed eager to talk to him. "It's unbelievable how much activity there is," said Chaconas. "I've got more buyers than I know what to do with. I've got more bankers chasing me for deals than ever. The difficulty is finding realistically motivated sellers." He said many dealers want to ride out what's left of the booming market before calling a broker about selling their stores.
Source: Automotive News
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Union Vote At VW Factory In Tennessee Will Send Tremors Through U.S. Auto Industry

No matter the outcome, next week's vote by Volkswagen's 1,500 U.S. workers on whether to join the UAW will have far-reaching implications for the entire American auto industry. The secret-ballot election, conducted by the National Labor Relations Board, is scheduled for Feb. 12-14 at VW's three-year old assembly plant in Chattanooga, Tenn. It is the first time in 13 years that the UAW has sought the right to represent workers at a foreign-owned assembly plant. In 2001, the UAW lost a bid to organize Nissan workers in Smyrna, Tenn., by a 2-1 margin. A UAW win this time around could bolster the union's efforts to organize other foreign-owned factories, and reverse a decades-long decline in membership. It would also likely lead to higher wages at VW and potentially other non-union plants, narrowing the earnings gap between foreign and domestic auto workers in the U.S. A loss, however, would likely suppress wages across the industry, even at unionized plants owned by General Motors, Ford Motor and Chrysler Group, a unit of Fiat Chrysler Automobiles, which in recent years have introduced lower wage scales for new hires in order to remain competitive with their foreign-owned rivals.
Source: Forbes
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Car-Sharing, Social Trends Portend Challenge for Auto Sales

Car-sharing services such as Zipcar Inc. and Cars2Go are eating into demand for new and used cars adding to social changes, such as smaller households and mass-transit improvements, that pose long-term challenges for new-car sales, according to two recent studies. AlixPartners LLP, a consulting firm with a large automotive practice, says Americans would have purchased about 500,000 new or used cars between 2006 and the end of 2013, if they didn't have car sharing services as an alternative. "It is a huge difference," said Mark Wakefield, a managing director at AlixPartners. The firm's study is based on surveys of car-sharing customers in 10 major cities where car sharing has taken root. They include Boston, Washington, D.C., New York, San Francisco, Seattle, San Diego, Miami, Chicago, Austin, Texas, and Portland, Ore. Based on the data it accumulated, AlixPartners concluded about 48% of the people who use car sharing regularly eventually end up not purchasing a car or selling a car. Such services generally offer 24-hour access to short-term and short-distance rentals for registered members. Over time, as car sharing expands beyond these major markets, the firm expects the impact on auto sales to increase.
Source: The Wall Street Journal
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GM Touts Dealer Diversity Gains

General Motors awarded dealerships to 21 minorities in 2013 and is aiming for 25 more this year, said Eric Peterson, GM's U.S. vice president of diversity dealer relations. GM had 208 minority-owned dealerships at year end, a net gain of 10 in 2013, he said, and the minority-owned stores are more profitable than GM's dealer network as a whole. "We're very proud of that," Peterson said on the sidelines of the National Automobile Dealers Association convention [in New Orleans]. "It goes to the quality of dealers and candidates we're putting in."
Source: Automotive News
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Schaller Honda Hosts U.S. Rep. Elizabeth Esty


Art Schaller, Jr., owner of Schaller Honda in New Britain, Conn. (left), U.S. Rep. Elizabeth Esty (center) and Ken Crowley, state legislative chairman for the Connecticut Automotive Retailers Association and dealer principal of Crowley Auto Group (right), take a tour of the dealership.

U.S. Rep. Elizabeth Esty (D-Conn.) recently toured Schaller Honda in New Britain, Conn., which was hosted by Art Schaller, Jr., a third generation dealer. Schaller highlighted the employment and investment made by the dealership in New Britain. He thanked Rep. Esty for co-sponsoring and voting to pass H.R. 724, a bill that repeals a paperwork burden on dealerships. They also discussed the impact of possible changes to the federal tax code including LIFO and other changes to tax entities such as S-Corporations and C-Corporations. The growing interest in alternative fuel vehicles, including plug-in hybrids and dedicated electric vehicles produced by Honda, was also discussed. Rep. Esty is a freshman member of Congress who serves on the Transportation and Infrastructure Committee.

If you are interested in hosting your member of Congress at your dealership, contact NADA Director of Grassroots Advocacy, Patrick Calpin, at (202) 547-5500 or pcalpin@nada.org.
Source: NADA Legislative Affairs
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Quotable
"This is the perfect time to [make store upgrades]. They've got great products and more coming, and I'm bullish."

   
-- Dan Fields, a BMW dealer with four stores in Florida, commenting on the automaker's facilities program, Automotive News, Feb. 3
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