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Inside this issue
Washington Post Debunks Gerald Bodisch/DOJ Report on Franchise System
IRS Provides Relief for Small-Business Taxpayers Adopting the Tangible Property Regulations
ALERT: NADA Does Not Endorse Convention Exhibitors
Study: High Level of Auto Recalls Likely to Continue
Carmakers to Enlist Help in Air Bag Probe
Vehicle Technology Bill to Improve Safety Gains Backers
Small, Midsize Trucks in High Demand & Low Supply
Buick Cracks Top 10 on Consumer Reports Report Card; Acura, Mercedes, Infiniti Drop
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Washington Post Debunks Gerald Bodisch/DOJ Report on Franchise System
By Glenn Kessler

Key report in battle over car dealer sales is bizarrely outdated

“Since 2000, customers in Brazil can order the Celta over the Internet from a site that links them with GM’s assembly plant and 470 dealers nationwide.”

– Gerald R. Bodisch, “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers,” May 2009
 
This may seem like an old quote but it’s one that continues to resonate, as this paper (written by a one-time economist at the Justice Department) is frequently cited by advocates of direct sales of automobiles to consumers. In recent months, the Justice Department paper has been cited in a news story about the state bans, in a Cato Institute report and in an open letter by a coalition of groups that include the Consumer Federation of America, Americans for Prosperity and the Sierra Club.
 
The paper was issued in 2009 as part of a Justice Department series known as the Economic Analysis Group Consumer Advocacy Papers, which are infrequently published. They are intended to stimulate discussion but do not really have a Justice Department imprimatur. “The analysis and conclusions expressed in the papers are solely those of the authors and do not represent the views of the Department of Justice,” the Justice Department Web site notes.
 
Bodisch, an economist who stopped working at Justice in 2011 and is now a consultant, notes on his Linked-In page that the paper “is a primary reference in the debate in state legislatures on Tesla Motors’ attempt to sell electric cars directly to consumers.”

The centerpiece of the report is the example of General Motors selling the Chevrolet Celta directly to consumers, who purportedly order the car on Web and then have it delivered to them. By 2006, “700,000 Celtas had been produced and the car continues to be one of Brazil’s best sellers,” Bodisch wrote in the report, which as we noted was published in 2009. A full paragraph of the Bodisch report was reprinted in the Cato Institute report, which was published in 2014.
 
But there’s one big problem: GM discontinued the Web experiment in 2006—three years before Bodisch published his findings. “I guess I was not aware of that at the time,” Bodisch said in an interview. He said he based his information on the news reports when the Celta was first launched on the Internet in 2000, but had not researched further.
 
This is yet another good example of why people need to check their facts. It’s a bit astonishing that a paper published by the Justice Department cited as a success story a product launch that had already failed three years earlier—and that six years after the paper was written, the same tired story of the supposedly successful Celta Web program continues to be touted. There may be many reasons why direct cars sales are preferable, but GM’s experience in Brazil is not one of them.
Source: The Washington Post

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IRS Provides Relief for Small-Business Taxpayers Adopting the Tangible Property Regulations

Most dealers must change their accounting method to comply with the IRS's tangible property regulations (which generally govern whether expenditures on tangible property may be expensed or must be depreciated). These rules are generally effective with the filing of 2014 tax returns.  The IRS has released Revenue Procedure 2015-20, which provides relief for small-business taxpayers who adopt these new rules.  The relief applies to any separate trade or business of a taxpayer that has total assets of less than $10 million or average annual gross receipts of $10 million or less for the three prior years.   This may apply to some dealerships and many related entities such as real estate companies.  The revenue procedure allows small-business taxpayers to make changes in methods of accounting associated with the tangible property regulations without filing Form 3115.  A fact sheet on the IRS guidance has been prepared for NADA by the dealer accounting firm Crowe Horwath LLP.  Dealers currently working with their tax preparers to adopt the regulations are encouraged to discuss the applicability of this new simplification provision.
Source: NADA Regulatory Affairs

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ALERT: NADA Does Not Endorse Convention Exhibitors

A company that exhibited at the past NADA Convention and Expo has distributed an email solicitation suggesting that it is an “NADA-approved” marketer for specific services. NADA does not “approve” or “endorse” the products or services of convention exhibitors. If you have any questions about this matter, contact NADA at publicaffairs@nada.org.
Source: NADA Legal Affairs

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Study: High Level of Auto Recalls Likely to Continue

Automotive recalls should continue at a high rate in 2015, a year after manufacturers called back a record 63.9 million cars and trucks, a new study says. The second annual automotive industry warranty and recall study — released Tuesday by advisory firm Stout, Risius and Ross — said we’re unlikely to see major recalls like last year’s Takata air bags or General Motors Co. ignition switch issues. But aggressive oversight by the National Highway Traffic Safety Administration should lead to a high number of callbacks.
Source: The Detroit News
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Carmakers to Enlist Help in Air Bag Probe

A group of 10 major automakers are expected to announce as soon as this week the selection of a major firm with significant experience in aerospace and rocket propellants in the investigation into faulty Takata air bags, according to two people briefed on the matter. The announcement is expected as air bag manufacturer Takata Corp. has briefed government investigators on its testing done in connection with a German engineering firm Takata hired to try to understand the root cause of a string of air bag explosions linked to six deaths and at least 64 injuries.
Source: The Detroit News
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Vehicle Technology Bill to Improve Safety Gains Backers

Support is growing for legislation sponsored by a pair of Michigan congresswomen that would allow road funding to be used to pay for technology that could improve highway safety. U.S. Rep. Candice Miller, R-Harrison Township, is the prime sponsor of the bill, which would authorize the use of existing surface transportation funds for vehicle-to-infrastructure technology.
Source: Detroit Free Press
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Small, Midsize Trucks in High Demand & Low Supply

Even before the major winter weather hit much of the country in February, it seems shoppers were already in the market for more snow-efficient models. Last month, demand for small and midsize trucks rose, making these desirable units hard to find on dealer lots. That’s according to January’s scarcity data for CPO and used vehicles provided to Auto Remarketing monthly by AutoTrader.com. The big story line this past month was a dwindling supply of small trucks, especially for the  CPO Chevrolet Colorado and CPO GMC Canyon, as well as the CPO Toyota Tacoma. “Car shoppers are waking up to the new and upcoming offerings in the once sleepy midsize truck segment, resulting in demand outstripping supply, according to AutoTrader.com’s monthly scarcity report,” said Michelle Krebs, senior analyst at AutoTrader.com.
Source: Auto Remarketing
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Buick Cracks Top 10 on Consumer Reports Report Card; Acura, Mercedes, Infiniti Drop

Buick climbed into the Top 10 while Acura, Infiniti and Mercedes-Benz fell hard in the latest report card on reliability and performance from Consumer Reports. Lexus finished No. 1 for the third straight year, ahead of a rising Mazda. Fiat Chrysler’s Fiat brand came in last, just below corporate sibling Jeep. Buick’s rise to No. 7, from 12th in 2014, made it the top domestic brand for the second year in a row.
Source: Automotive News
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More Articles
 
Quotable

"Car shoppers are waking up to the new and upcoming offerings in the once sleepy midsize truck segment, resulting in demand outstripping supply."

   
-- Michelle Krebs, senior analyst at AutoTrader.com, commenting on the strong demand for small and midsize trucks, Auto Remarketing, Feb. 24

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