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Inside this issue
Commentary: What the Indirect Auto Finance Agreement Between CFPB and Ally Means to Your Dealership
Detroit 3 Shrug Off Rising Output, Stockpiles After January Chill
Toyota on Cusp of Record Profits After Years of Crisis
GM Names New Head of Chevrolet Sales in U.S.
New Orleans' High Schools Receive CPR Training Manikins from NADA Foundation
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Commentary: What the Indirect Auto Finance Agreement Between CFPB and Ally Means to Your Dealership
By Randy Henrick, associate general counsel for DealerTrack, Inc.

The news hit media outlets last month: On Dec. 20, 2013, the federal Consumer Financial Protection Bureau (CFPB) entered into a three-year Consent Order with Ally Financial Inc. and Ally Bank (Ally). According to the Order, Ally must pay $80 million to rectify what the CFPB found to be indirect auto finance credit discrimination against members of protected classes, and create a Compliance Committee to safeguard against future discrimination. But just as quickly, the collective cry of ‘what exactly does that mean?’ resounded through dealerships and popped up on social media....

Under Regulation B, a “legitimate non-discriminatory reason for its action” is not disparate treatment credit discrimination. As the report states, “The CFPB and the Department of Justice (DOJ) considered potential explanatory variables offered by Ally, and determined that Ally failed to provide adequate evidence that additional variables appropriately reflected legitimate business needs.” Huh? What kind of analysis did they do? No dealer lowered a mark-up to match a competing offer? No dealer offered a promotional rate available to all that qualified? No dealer lowered a mark-up because of declining inventory reasons? Apparently that never happened. Not even one time. In my opinion, the CFPB loses all credibility with this conclusion.

Whether you're currently sending contracts to Ally or not, this ruling affects your dealership. While I believe few if any other lenders will agree to such onerous terms, all of the large lenders will take note of the Ally settlement and try to follow it to some degree. After all, they don't want to be the next target of the CFPB. Ultimately, you can bet that the majority of lenders will be monitoring for rate mark-up discrepancies. As a result, it is absolutely critical that your dealership implement a Fair Lending/ECOA Policy now. This policy should require documentation in the deal jacket of the legitimate and significant non-discriminatory business reasons why you provided a non-protected person a lower rate than a protected person. Your best defense is to have a uniform mark-up amount that you vary downwards only if specifically identified and documented legitimate reasons are present. These reasons may include: to meet or beat a competitor's rate, a lender that prohibits a mark-up as high as your standard mark-up, inventory reduction considerations that need to be spelled out in detail, etc....
Source: Dealer Communications

Editor's note: To strengthen compliance with fair credit laws and protect the affordability and accessibility of auto credit, NADA has created a new optional 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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Detroit 3 Shrug Off Rising Output, Stockpiles After January Chill

Pricing discipline to be tested, analysts warn

The polar vortex that blasted through much of the United States last month made selling cars as difficult as moving the snow mounds that rose up around David Martin's dealership near New Hampshire's Mt. Washington. "We literally have vehicles frozen to the ground," said Martin, general sales manager of Berlin City Auto Group in Gorham, which sells Ford, Dodge, Chrysler, Honda and Toyota models. "We needed five guys to cut a Corolla out of the ice so that a customer could buy it." Car buyers stayed home last month, causing an unexpected drop in sales of 3 percent. That has left dealers with higher-than-normal piles of unsold vehicles just as factories are cranking up production. Automakers run the risk of resorting to discounts to move cars off lots to meet 2014 forecasts, which remained unchanged even after the January slump.
Source: Bloomberg
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Toyota on Cusp of Record Profits After Years of Crisis

Toyota Motor Corp. President Akio Toyoda has put the company his grandfather founded on the road to record earnings after years of battling one crisis after another. The shares gained the most in almost eight months. The carmaker climbed 6 percent, the most since June 10, adding 1.14 trillion yen ($11 billion) in market value as of the close in Tokyo trading. Toyota yesterday reported profit quintupled last quarter and raised its forecast for the year ending March 31 to an unprecedented 1.9 trillion yen. The scion, who has steered the company back from vehicle recalls and natural disasters, has now positioned Toyota to invest in new technologies and expand production after amassing a cash pile exceeding $35 billion. In 2013, the world's largest automaker earned about as much as what analysts estimate to be the combined profits at the next two biggest automakers, Volkswagen AG and General Motors Co.
Source: Bloomberg

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GM Names New Head of Chevrolet Sales in U.S.

General Motors Co. on Tuesday named a new head of Chevrolet sales, service and marketing in the United States to replace a longtime GM executive who has opted to retire. The Detroit automaker said Brian Sweeney, U.S. vice president of Buick and GMC sales and service since 2010, will become U.S. vice president of the Chevrolet brand effective March 1. He will replace Don Johnson who is retiring from the company after 33 years.
Source: The Detroit News

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New Orleans' High Schools Receive CPR Training Manikins from NADA Foundation


NADA Foundation Chairman Bob Mallon speaks to high school students about the importance of CPR training at the NADA Convention & Expo in New Orleans on Jan. 27, 2014.

The National Automobile Dealers Charitable Foundation presented 10 CPR training manikins last week in New Orleans to six local high schools and a group representing 14 volunteer fire departments. “New Orleans has hosted our convention 10 times since 1973, so as one of our longtime convention cities we wanted come up with a way to support the New Orleans' community through our Medical Grants program,” said Bob Mallon, chairman of the NADA Foundation. The CPR training units were presented during the NADA Convention & Expo, which ran Jan. 24-27 in New Orleans. “We also thank the staff of the New Orleans Conventions & Visitors Bureau who helped with the selection of the recipients,” added Mallon, who presented the CPR units on Jan. 27 along with Louisiana new-car dealer and NADA board member Joel Oustalet and Bob Israel, president of the Louisiana Automobile Dealers Association. To date, the NADA Foundation's Medical Grants program has donated more than 4,700 CPR training manikins valued at $3 million to organizations across the country.
Source: NADAFrontPage.com
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