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Inside this issue
NADA Chairman: Dealer System 'Good for Everyone'
Marchionne Says He's 'Done' After 2018 Fiat Chrysler Plan
GM Issues 76th Recall of 2014
GM to Expand Chevy's Green-Model Lineup
U.S. Planning First Auto Retooling Loans Since 2011
Can Move to Trendy SoHo Save Cadillac? Hipsters Tell All
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Top Stories
NADA Chairman: Dealer System 'Good for Everyone'

It’s not a dealer-eat-dealer world out there. Things aren’t that vicious. But the competition is fierce, with both customers and automakers benefitting from the rivalry, says Forrest McConnell III, chairman of the National Automobile Dealers Assn. “What do you think is the one thing that makes the auto industry run like a Shelby Cobra?” he asks a gathering of the Automotive Press Assn. [in Detroit]. “One word: competition.” Dealers battling each other for business drive down retail prices for vehicles, financing and service, says McConnell, a Honda and Acura dealer in Montgomery, AL. “Our manufacturers benefit from a high return on capital in making vehicles as opposed to the low margin of selling them, because dealers bear the costs and risks of these investments.”

NADA’s defense of the dealership-franchise system comes amid flak from some quarters. For instance, the Consumer Financial Protection Bureau advocates ending so-called dealer reserve, in which auto retailers typically add a point or two to an auto lender’s wholesale interest rate as compensation for facilitating an indirect car loan. The federal bureau wants flat fees to replace that. “We work with multiple lenders who compete for the dealers’ business by offering us low financing rates,” McConnell says, noting 80% of car loans involve dealers. “The bottom line is this: dealer-assisted financing provides car buyers with the ability to get a discounted auto rate from the dealer. And low rates mean lower car payments. But the government is trying to take away a customer’s right to get that discount.”

NADA’s dispute with the CFPB dates to last year. Congress created the bureau as part of the Dodd-Frank financial reform act. An original proposal called for the CFPB to directly regulate dealers. “The CFPB started pressuring our lenders to switch to a flat-fee compensation issue,” McConnell says. “They’re wrong.” He describes what might happen if flat fees were to elbow out the dealer-reserve system: “Lenders will want to pay higher flats to get business. Not lower interest rates. That would give dealers the incentive to select the lender that offers the highest flat fee. How does that help customers or save them money? It doesn’t.”

NADA is garnering Congressional support for its cause. McConnell says 69 Republicans and 40 Democrats side with the association on the issue and a related one involving the CFPB's allegation that the dealer rate add-ons have led to unintended lending discrimination.
Source: WardsAuto
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Marchionne Says He's 'Done' After 2018 Fiat Chrysler Plan

Sergio Marchionne, Fiat SpA's chief executive officer and the architect of its merger with Chrysler, plans to step down after completing a five-year strategic plan to expand the combined carmakers. “I'll undoubtedly do something else” after the end of 2018, Marchionne, 62, said last week in an interview with Bloomberg Businessweek at the Balocco test track in northern Italy. “I am not going to do any more turnarounds. I'm done; let some of the young punks do it.” Since taking charge of Fiat in June 2004, Marchionne has tripled the Italian company's revenue and operating profit. Now, with the merger into London-based Fiat Chrysler Automobiles NV, his goal is to boost net income fivefold to about 5 billion euros ($6.3 billion) in 2018.
Source: Bloomberg
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GM Issues 76th Recall of 2014

General Motors Co. announced its 76th recall of 2014 on Tuesday, calling back 7,600 police vehicles because they could roll away when drivers thought they were in park. It's GM's seventh recall in the last nine days.
Source: The Detroit News
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GM to Expand Chevy's Green-Model Lineup

General Motors plans to broaden Chevrolet's green-vehicle offerings by adding an electric model to a lineup that includes the Volt plug-in hybrid and the Spark EV minicar. GM global product chief Mark Reuss confirmed plans for the electric vehicle last week during a presentation to investors. He didn't identify the nameplate or disclose a timeline for its debut.
Source: Automotive News
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U.S. Planning First Auto Retooling Loans Since 2011

The head of the U.S. Energy Department's $25 billion program to make loans for fuel-saving technologies says it expects to make its first loans in more than three years. “We are very happy with the whole relaunch,” Peter W. Davidson, executive director of the Energy Department's Loan Programs Office, said Tuesday. “We've been very encouraged since then about what's going on, so we expect to make a couple announcements ... certainly this year.” He declined to name what companies might be getting loans. But he said the program has been focusing on suppliers, and there's been interest in making vehicles lighter in weight. “That's one of the easiest ways to comply with CAFE standards,” he said.
Source: The Detroit News
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Can Move to Trendy SoHo Save Cadillac? Hipsters Tell All

Can a change of scenery turn things around for Cadillac? That's what the storied General Motors brand hopes will happen by moving its headquarters from struggling Detroit to the super-trendy streets of New York City's SoHo neighborhood. Cadillac's range of cars have garnered positive reviews from auto writers, but sales are down and foreign markets, such as fast-growing China, are proving hard to crack. And with buyers with an average age of 59½, according to a report from IHS Automotive cited by 24/7 Wall St., Cadillac's core base is fading fast, resulting in declining sales, an older demographic and less market share than other luxury brands such as Mercedes, BMW and Lexus.
Source: USA Today
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Quotable

"Dealer-assisted financing provides car buyers with the ability to get a discounted auto rate from the dealer."

   
-- NADA Chairman Forrest McConnell, in remarks to the Automotive Press Association in Detroit on Tuesday, WardsAuto, Oct. 7

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