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Inside this issue
The Argument for Banning Tesla's Stores in New Jersey
GM Offering $500 Rebates on New Cars to Replace Recalled Models
VW Sees 10 Million Deliveries in 2014 on 100-Model Push
Company Responsible for Telemarketing Violations; List Purchased From Lead Generator
NADA: Used Vehicle Values to Peak in March
Detroit's Big Three Say South Korea Needs to Further Open Market
Europe's Mini Cars Could Sell Big in U.S.
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
The Argument for Banning Tesla's Stores in New Jersey

Jim Appleton, who leads NJ CAR, New Jersey's state car dealer association, knows he and other dealers are unpopular right now because of their protest against Tesla Motors Inc. distribution model. “I recognize that the other side has a very easy, simple argument to make and our argument takes a little bit more time to reflect upon. I am actually kind of shocked by the anger,” said Mr. Appleton, a lawyer who has represented New Jersey dealers for 16 years. “While I applaud the early adopters, I think they think that Tesla is so special, so innovative that any government regulation that seems to stand in their way is wrongheaded.” The state's Motor Vehicle Commission altered its dealer license language Tuesday to conform to an existing state law that required business people selling new cars to have a franchise agreement, a move that closed the loophole that had allowed Tesla to operate two stores in the state for a year.
 
Many consumers are furious that an American company that has momentum appears to be dogged by a thicket of well-connected and wealthy, entrenched, business people. The issue has been hashed out again and again, state by state, as dealership groups try to get Tesla to turn its company-run outlets into franchised dealerships. Mr. Appleton, however, says that people need to look no further than to the recall scandal that is now enveloping General Motors Co. to why independent franchises are important to protect consumers. “Manufactures are congenitally incapable of fully and fairly honoring their obligations with respect to warranty and recall services because they see that as an expense, whereas the franchisee sees that as a revenue opportunity,” he said. “If you have any question about that dynamic, it is the GM situation now. Dealers reported it to the manufacturer. If there was no independent dealer in the mix, you'd have to wonder how long, if ever, GM would have taken to step up to the situation.”
 
The commonly held belief is that dealers function as a middleman that increases the cost of the vehicle, he said. “The Tesla factory-controlled model is a vertically integrated model in which whatever the manufacturer wants them to pay for the vehicle is what they pay. When it's a monopoly it is never better for the consumer. They eliminate competition at the retail level.”

Franchise laws were enacted originally to protect dealers who had invested their own money to build showrooms from manufacturers. The protections gave businessmen incentives to invest, knowing they had protected territories and protection from revocations. And finally, the Tesla direct sales model is a concern to Mr. Appleton because if states allow it to go forward, it opens the door to other new manufacturers doing the same — particularly low-cost international car makers looking to break into the richest market in the world. “I am worried about the $8,000 car that comes to the U.S. and the company says if Tesla can sell direct to the public, then I can sell direct to the public, and doesn't live up to customer expectations.”
Source: The Wall Street Journal

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GM Offering $500 Rebates on New Cars to Replace Recalled Models

General Motors dealers are offering $500 through April 30 to owners of the 1.37 million small cars subject to a recall over a faulty ignition switch. “In keeping with our commitment to help customers involved in this recall, a special $500 cash allowance is available to purchase or lease a new GM vehicle,” GM spokesman Alan Adler said in a statement. “We have been very clear in our message to dealers that this allowance is not a sales tool and it is only to be used to help customers in need of assistance. Neither GM nor its dealers will market or solicit owners using this allowance.” Dealers were told through a March 5 letter from GM that provides guidance on how to answer customers' questions and concerns. It is now posted on the National Highway Traffic Safety Administration website. GM is not suggesting repurchase is a remedy for the 1.6 million vehicles involved in the recall worldwide. But in the spirit of customer service, the $500 allowance can be used toward the purchase of a new 2013, 2014 or 2015 model Chevrolet, Buick, GMC or Cadillac.
Source: Detroit Free Press

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VW Sees 10 Million Deliveries in 2014 on 100-Model Push

Volkswagen AG may sell more than 10 million vehicles in 2014, four years earlier than planned, as Europe's largest carmaker accelerates model introductions in a strategy to overtake Toyota Motor Corp. as the industry leader. “With rising volume and new models, we will increasingly see positive earnings effects as well,” Chief Executive Officer Martin Winterkorn said at a press conference in Berlin. “The chances are good that we'll even exceed the mark of 10 million deliveries this year.” Volkswagen posted 9.73 million deliveries in 2013 as a boost in Chinese demand helped the Wolfsburg, Germany-based company surpass sales at General Motors Co. to become the world's second-biggest carmaker. Volkswagen, whose businesses include the Audi and Porsche premium marques and Seat and Skoda mass-market nameplates, said today that it will introduce more than 100 models through 2015.
Source: Bloomberg

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Company Responsible for Telemarketing Violations; List Purchased From Lead Generator

The Federal Trade Commission on March 12 reached a $3.4 million settlement with a company for violations of the Do-Not-Call (DNC) restrictions under the FTC’s Telemarketing Sales Rule based on phone calls the company made to consumers on lists purchased from “lead generators” who had represented they had consent from the consumers for those calls. However, they did not have consent, and many of the phone numbers were on the national and company-specific DNC lists. This is a valuable reminder that dealers—not the vendor—is likely to be held liable for any DNC or similar violations related to leads purchased from a third party vendor. “Companies that use lead generators must exercise due diligence when they buy lists of phone numbers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, “or else they can be on the hook for illegal telemarketing.”  
Source: FTC

Editor’s note: NADA encourages dealers to not only conduct due diligence with all their vendors based on the services that vendor is providing, but to also clarify compliance obligations via contract and ensure that the dealership is protected in the event that the vendor has misrepresented its compliance efforts. For one example of this type of contractual protection, visit www.nada.org/dealerdata.
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NADA: Used Vehicle Values to Peak in March

February's weather a primary obstacle for vehicle demand, prices increase by 2.2%

Extremely cold weather during the first two weeks of February and more moderate temperatures over the second half of the month correlated exactly with used price movement, according to the National Automobile Dealers Association (NADA) Used Car Guide in the March edition of Guidelines, a monthly report on new and used vehicle sales trends and price movement. “Used prices grew by 0.7% over the first half of the month, but more favorable weather over the second half of the month allowed prices to grow 2.2% by month's end, which is in line with NADA's forecast of 2.1%,” said Jonathan Banks, executive automotive analyst of NADA Used Car Guide. NADA expects the seasonal uptick in used auto demand to continue for another month before dissipating in the second quarter of the year. NADA's forecast has prices rising by an additional 1% in March and then falling by an average range of 2.5% to 3% per month from April through June. Prices are forecast to be 0.5% to 1% lower than 2013 levels by the end of year. 
Source: NADAFrontPage.com
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Detroit's Big Three Say South Korea Needs to Further Open Market

Detroit's Big Three automakers say the two-year-old Korea Free Trade agreement hasn't done enough to open the market to U.S. exports — and cited the treaty as a reason to include currency provisions in a proposed broad pacific free trade deal. Ford Motor Co. said this week it opposes an announced Canada-South Korea free trade agreement. “We believe that South Korea will remain one of the most closed automotive markets in the world under the deal negotiated by the Canadian government,” Ford of Canada said in a statement. The trade deal — originally negotiated by President George W. Bush — was renegotiated by the Obama administration to include more auto provisions. The deal took effect two years ago Saturday. Ford said that Korean free trade deals with the U.S. and European Union have not done much to boost exports to Korea.
Source: The Detroit News
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Europe's Mini Cars Could Sell Big in U.S.

Really small is cool. That much is evident if you are lucky enough to take a stroll through the ranks of mini cars at the Geneva auto show. The problem is that we American consumers do not get the newest and neatest small and mini cars that are hitting European showrooms. Admittedly, a few of the world's automakers have already brought some of their smaller offerings to the U.S. Over the past few years we have seen BMW introduce the Mini, Mercedes launch the Smart and Fiat bring in the 500. But that's about it and each of these models falls into the expensive, boutique small car category. By contrast the little cars on display in Geneva are more affordable, but still designed to be fairly practical to own and fun to drive. Traditionally, top automakers have been loath to bring city cars to the U.S., arguing that American buyers lose interest when fuel prices moderate and seek better value in larger models. These observations may be valid but one could argue that the latest wave of Euro mini cars could act as cool halo models to attract new and younger buyers to existing brands in the U.S.
Source: The Detroit News
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Quotable

Allowing Tesla to play by different rules "will lead to price controls or inflexible pricing. Dealers compete every day for price. What is it about Tesla that makes them immune from the concerns of zero price competition and a monopoly market, or not fully and fairly administering safety and recall services?" 

   
--- Jim Appleton, president of the New Jersey Coalition of Automotive Retailers, commenting on the state passing a new rule against direct-to-consumer sales on Tuesday, The Washington Post, March 12  

 

  

NADA Market Beat
Cold February Weather Dampens Light Vehicle Sales
Chairman's Column
NADA Releases Fair Credit Compliance Program for Dealers
Videos

 Meet NADA Chairman Forrest McConnell (NADA-TV)


NADA Used Car Guide's Jon Banks Highlights Feb.'s Guidelines (NADA-TV)

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NADA University Webinars
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-- March 19: Comply with Federal Advertising Requirements

-- March 26: Participate in the NADA Dealership Workforce Study

-- 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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