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Inside this issue
New Phoenix Center Study Demonstrates That Consumers Benefit from Intra-Brand Price Competition Among Auto Dealers
Congressmen Get Testy with CFPB Chief Cordray
Honda Running Ad Campaign to Boost Recall Repairs
Hyundai Eyes Second Plant in Alabama
Warren Buffett Is Officially a Car Dealer
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
New Phoenix Center Study Demonstrates That Consumers Benefit from Intra-Brand Price Competition Among Auto Dealers

Changing state franchise laws could reduce the number of dealers, which could soften competition and raise new car prices for consumers

In a new analysis released Wednesday entitled, The Price Effects of Intra-Brand Competition in the Automobile Industry: An Econometric Analysis, the Phoenix Center addresses the important question of whether automobile dealers for the same make and model of new cars and trucks compete on price. The study finds that consumers significantly benefit from "intra-brand" price competition for new cars -- often in the hundreds of dollars per sale. Cars are expensive and most consumers know to shop among dealers for the best prices. Yet, until this study there has been little to no empirical evidence on the price effects of intra-brand competition among different dealer franchises for the same automobile model. Using large samples of transactions for ten of the most popular new cars purchased in the state of Texas for the years 2011, 2012, and 2013, the Phoenix Center study estimates the effects of intra-brand competition on new car prices. "Laws exist in almost every state governing the retailing of new cars to consumers," adds study co-author Phoenix Center President Lawrence J. Spiwak. "These laws have encouraged large dealer networks, which the evidence suggests have led to significantly lower prices for consumers." Click here for the full study.
Source: The Phoenix Center

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Congressmen Get Testy with CFPB Chief Cordray

The Consumer Financial Protection Bureau and its critics on the House Financial Services Committee traded jabs in a tense session last week as CFPB Director Richard Cordray presented the bureau’s semiannual report. Committee Chairman Jeb Hensarling, R-Texas, used the occasion to advocate again that a bipartisan committee should lead the CFPB, not a single director. Hensarling repeated the word “unaccountable” a lot. That’s because Congress not only doesn’t control the bureau’s budget, it also can’t change its leadership. Only the president can remove the director. Rep. Ed Perlmutter, D-Colo., suggested that the CFPB is doing an “end around” in how it handles auto finance -- trying to regulate dealers indirectly even though Congress carved franchised dealerships out of the CFPB’s jurisdiction. Rep. Keith Rothfus, R-Pa., referred to a study sponsored by the American Financial Services Association that was critical of the CFPB’s statistical methods in trying to measure discrimination in auto loans.
Source: Automotive News

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Honda Running Ad Campaign to Boost Recall Repairs

Honda is launching an unprecedented U.S. ad campaign urging owners to get vehicles that have been recalled for safety problems repaired. The Japanese automaker will spend several million dollars on ads in 120 newspapers and 30-second radio spots in 110 markets. It's also sponsoring customized Facebook posts that will appear in owners' timelines. The ads — in English and Spanish — will begin running next week. Honda has recalled more than 5 million cars in the U.S. since 2008 because their air bags that can inflate with too much force, sending shrapnel into the vehicle. Six deaths have been blamed on the defective air bags, which were made by Japanese supplier Takata Corp.
Source: The Associated Press

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Hyundai Eyes Second Plant in Alabama

Plans by Hyundai to build a new plant in the U.S. would address the Korean automaker's need to build more crossovers in North America to restore lost market share. Reports from South Korea's Yonhap News Agency say the automaker plans to expand its manufacturing base in Montgomery, Ala., where Hyundai already has a plant that makes the Elantra and Sonata sedans.
Source: Detroit Free Press

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Warren Buffett Is Officially a Car Dealer

Warren Buffett is one of the wealthiest individuals in the world and one of the most successful investors in the history of business, with assets stretching virtually beyond estimation. And now he can add to his long list: ownership of the country's fifth-largest chain of automobile dealerships. It's official now, as Buffett has completed the acquisition of the Van Tuyl Group, the largest privately-owned chain of car dealers in America, which has been renamed Berkshire Hathaway Automotive.
Source: AOL Autos Autoblog


Editor's note:
Warren Buffett and Larry Van Tuyl will participate in a panel session during the 2015 NADA/J.D. Power Automotive Forum in New York City on March 31. The session will be moderated by CNBC's Becky Quick.

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Quotable

"The data show that having multiple same-brand dealers in close proximity produces significant price cuts for the consumer. More auto dealers means lower consumer prices."

    -- George S. Ford, chief economist of the Phoenix Center, referring to new study on intra-brand price competition for new cars, The Phoenix Center, March 11

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