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Inside this issue
Commentary: Regulators Forced Ally's Hand on Unlawful Auto Lending Settlement
Hensarling Probes CFPB on Employee Complaints, Evaluations
Upcoming NADA Webinar: Comply with Federal Advertising Requirements
Ford Ratchets Up Plants' Efficiency
GM to Build $162M Stamping Plant in Lansing
Fisker Cleared to Borrow $4.98 Million From Wanxiang
Germain Infiniti Gives Gift of Life
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Commentary: Regulators Forced Ally's Hand on Unlawful Auto Lending Settlement
By Richard Riese

Ally Financial's recent settlement with the government over auto dealer markups on indirect auto loans is an enforcement case based on leverage, not law. The Justice Department and the Consumer Financial Protection Bureau isolated a large bank creditor to make an example of dealer compensation practices the CFPB condemned last March. Prosecutors alleged discriminatory loan charges based on a portfolio analysis of hundreds of thousands of loans made by car dealers nationwide, without any allegation of discriminatory pricing by the people who actually set the loan rates—the dealers themselves, who the Dodd-Frank Act largely shields from CFPB enforcement. Whether the indirect lender who settled intended to discriminate was also a moot point to the government based on a theory of disparate impact built around statistical analysis measuring the difference of average markups among borrower groupings using flawed proxies. "Whether or not Ally consciously intended to discriminate makes no practical difference to consumers," said CFPB Director Richard Cordray. "In fact, we do not allege that Ally did so. Yet the outcome, and the harm to consumers, is the very same here." But it does make a difference. The challenge of demonstrating illegal discrimination using disparate impact is to observe the Equal Credit Opportunity Act's goal of not stereotyping individuals while conducting analyses that rely on statistical differences ascribed to groups labeled by their prohibited basis characteristics. This challenge is compounded by using proxies as substitutes for true characteristic information. The CFPB and Justice Department assert proxy analysis for enforcement, but the examination procedures the CFPB cites as its authority applies proxy analysis for the purpose of examination scoping for disparate treatment. CFPB's allegations amount to little more than non-random samples resulting in non-random differences.
Source: American Banker
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Hensarling Probes CFPB on Employee Complaints, Evaluations

House Financial Services Committee Chairman Jeb Hensarling and two other GOP lawmakers are probing the Consumer Financial Protection Bureau over how it treats its employees. The lawmakers seized on an article by American Banker that revealed data showing that the agency's white employees had a greater likelihood of receiving the highest rating in performance evaluations — which determine salary increases and bonuses — than minorities. In a letter sent late Thursday to CFPB Director Richard Cordray, the three lawmakers said the article "raises significant concerns" about the agency's "internal management practices. Reps. Shelley Moore Capito, R-W.Va., and Patrick McHenry, R-N.C., also signed the letter. The letter asks the CFPB to respond to the number of formal discrimination claims filed by employees, based on the agency's most recent No Fear Act disclosure, as well as its recent annual employee survey.

The 2013 survey "revealed that fewer than half of Bureau employees are satisfied with the policies and practices of senior leaders, that fewer than half of bureau employees agree that promotions and pay raises at the bureau are based on merit, and that fewer than 3-in-5 bureau employees agree that in their most recent performance appraisals, they understood what they had to do to be rated at different performance levels," the letter states. The letter requests that the CFPB provide data on the demographic breakdown of employee performance reviews including by office, division, employee count and those that have been raised or lowered as part of the performance review. The lawmakers are also asking for information on the formal and informal Equal Employment Opportunity cases filed by employees as well as grievances filed by members of the union.
Source: American Banker

Editor's note: To view the letter, click here.
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Upcoming NADA Webinar: Comply with Federal Advertising Requirements

The upcoming "Comply with Federal Advertising Requirements" webinar will provide participants the opportunity to hear directly from a panel of FTC attorneys on key requirements and restrictions related to dealership advertising. NADA's Chief Regulatory Counsel, Paul Metrey, will moderate the discussion, which will highlight recent FTC advertising enforcement actions from dealerships around the country as examples of what to avoid. The 75-minute webinar is available to dealership employees, dealership compliance professionals, and persons who provide advertising services to dealerships. It will be held at 1 p.m. ET, Wednesday, March 19. Click here to register.
Source: NADA University Online
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Ford Ratchets Up Plants' Efficiency

Ford Motor Co.'s 11 North American assembly plants are humming at 135 percent efficiency, which could grow as the automaker continues to fine-tune manufacturing processes. Joe Hinrichs, Ford's president of North and South America operations, says the company continues to look for ways to eke out extra production of cars, crossovers and trucks. “We're very comfortable with where we are in North America,” Hinrichs said in a telephone interview Friday before an event at Ohio Assembly Plant in Avon Lake, where Ford is moving production of some medium-duty commercial trucks later this year. “We have some room to go up further, but at the same time we're already getting a lot of leverage out of our plants.” Ford's 135 percent capacity utilization rate is based on an industry-standard definition: 100 percent capacity is two eight-hour shifts working five days a week, excluding holidays. Six of Ford's 11 North American assembly plants — including eight in the U.S., two in Mexico and one in Canada — are running three-shift operations. Two others run three shifts in their paint and body shops.
Source: The Detroit News

Editor's note: Joe Hinrichs is scheduled to provide keynote remarks during the 2014 NADA/J.D. Power Automotive Forum in New York City on April 15. For more information or to register, click here.

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GM to Build $162M Stamping Plant in Lansing

General Motors Co. plans to invest $162 million to build a stamping plant at its Lansing Grand River facility, a plan expected to create 65 jobs, officials said. Local economic development officials said the Detroit automaker plans to build the 225,000-square-foot facility near GM's Lansing Grand River Assembly Plant, which makes the Cadillac ATS and CTS luxury cars. The exact location of the stamping plant was not immediately clear.
Source: Detroit Free Press
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Fisker Cleared to Borrow $4.98 Million From Wanxiang

Fisker Automotive Holdings Inc. received court approval to borrow $4.98 million from Wanxiang Group, the Chinese auto-parts maker that won an auction for the bankrupt maker of luxury plug-in cars. U.S. Bankruptcy Judge Brendan Linehan Shannon approved the interim financing at a hearing Thursday in Wilmington, Del. Fisker will return to court March 21 to seek approval of the rest of a $10.5 million debtor-in-possession loan. The new financing replaces an $8.1 million loan from Hybrid Technology LLC. Hybrid, which also bid for Anaheim, Calif.-based Fisker, terminated the financing agreement and declared all principal and accrued interest due after Wanxiang won court approval to buy the automaker's assets. Fisker filed for court protection on Nov. 22 with a plan to sell its assets to Hybrid for about $25 million.
Source: Bloomberg
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Germain Infiniti Gives Gift of Life

Last month, the Columbus Division of Fire accepted a gift of life from Germain Infiniti of Easton. The dealership donated a Little Annie CPR manikin to the Division of Fire for their CPR training programs. "This is a wonderful and generous gift from the community we serve," said Fire Chief Gregory Paxton. "We will use it in the training of our residents." The Columbus Division of Fire offers several community courses, including the Heartsaver CPR/AED course, which utilizes the manikins. The manikins retail for around $1,000. This is the first new CPR manikin the Fire Department has received in at least eight years. Last week alone, the group did 800 hours worth of CPR training for community groups and their staff.

"The roots of community involvement do not stop at the entrance of the dealership," said Zach Germain, general manager of Germain Infiniti. "We'd like to think that we are part of the fabric of this community and we are pleased to be able to pay it forward." The Ohio Automobile Dealers Association, through the National Automobile Dealers Charitable Foundation, has been partnering with dealerships for over 10 years to donate CPR equipment to deserving community organizations.
Source: The Columbus Dispatch
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Quotable

"The level of hypocrisy at this agency is shocking. If it was a lender and had similar statistics, it would be written up, immediately referred to the Justice Department, sued and publicly shamed."

   --- A current CFPB employee, who spoke on condition of anonymity, commenting on agency staff evaluations showing sharp racial disparities, American Banker, March 6

 

  

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-- March 19: Comply with Federal Advertising Requirements

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-- April 2: NADA’s Fair Credit Compliance Program

-- April 3: Tips for Submitting a Great Workshop Proposal 

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

ADESA and NADA Donate $37,000 to Canine Companions

NADA and Ally Donate $50,000 to Second Harvest Food Bank in New Orleans 

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