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Inside this issue
Has High Court Raised Bar for CFPB in Auto Bias Cases?
NADA: Used-Vehicle Sales Up 1.3% through June 2015
Path to Positive Equity Grows
Transportation Chief Vows 'Muscular' Safety Oversight
Honda Recalls 4.5 Million More Cars for Takata Air Bags
GM & GM Financial Consolidating Remarketing Organizations
Ally Adds 3 Account and Credit Info Features for Auto Customers
Millennials Embrace F&I Jobs, Spark Change
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Has High Court Raised Bar for CFPB in Auto Bias Cases?

From the outside, the Supreme Court's ruling last month upholding disparate impact claims in housing discrimination lawsuits may look like a headache for auto dealers, but a provision in the decision could give the Consumer Financial Protection Bureau a hurdle that could work in dealers' favor.

The CFPB uses statistics to show that when auto lenders allow dealerships to set their own amounts of dealer reserve -- the share of a car buyer's interest rate that the dealership makes for arranging the loan -- minorities end up paying higher interest rates than others borrowers with similar credit. The CFPB says that disparate impact, whether intentional or not, amounts to illegal discrimination. But last month's court ruling in a housing case says a disparate-impact claim that relies on a statistical disparity must point to a specific policy that caused the disparity. The CFPB may be hard-pressed to do that because dealer reserve is not a policy "but rather a compensation method," according to Paul Metrey, chief regulatory counsel for the National Automobile Dealers Association.

The ruling also implies that the disparity be shown using reliable data, another hurdle for the CFPB… If the Supreme Court’s housing decision translates to auto lending, a disparate-impact claim must count on reliable data and show a specific policy that caused the disparity. Without those two important pieces, there shouldn’t be a case.
Source: Automotive News

Editor's note: To download NADA's Fair Credit Compliance Policy & Program, click here.
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NADA: Used-Vehicle Sales Up 1.3% through June 2015

Used vehicles retailed at new-car dealerships up 2.6 percent in June year-to-date

Used-vehicle sales across all retail channels reached just under 4.4 million units in June bringing the year-to-date total to nearly 18.6 million used cars and light trucks, says the National Automobile Dealers Association. New-car dealers retailed 1.6 million used vehicles in June, up 2.5 percent for the month year-over-year. Retail sales by used-car dealers rose to 1.4 million in June, a 3.6 percent increase compared to the same month a year ago. Private-party transactions were up 1.1 percent in June 2015 compared to June 2014.
Source: NADA
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Path to Positive Equity Grows

The time it takes for consumers with new-car loans to reach a positive equity position on their vehicles has grown by 12 to 14 months over the past 15 years, but that’s not necessarily a bad thing, says Steven Szakaly, chief economist for the National Automobile Dealers Association. It now takes a consumer with a new-vehicle loan 36 to 38 months to reach positive equity. Back in 2000, it took around 22 months, he said. What hasn’t changed is that it still takes consumers about half their loan period to get into that positive equity position, Szakaly said. The time it takes to reach positive equity today just looks different because the lifetime of the car has changed, he said. The average new-vehicle loan term was 67 months in the first quarter this year, according to Experian Automotive.
Source: Automotive News
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Transportation Chief Vows 'Muscular' Safety Oversight

Transportation Secretary Anthony Foxx said the Obama administration’s auto safety oversight is going “much more muscular” — even as he called the agency massively underfunded. He noted that the National Highway Traffic Safety Administration is restructuring under the leadership of a new administrator, Mark Rosekind, who took over in December. Foxx referenced the blizzard of new auto technologies and autonomous cars headed to American roads in making the case for more funding.
Source: The Detroit News
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Honda Recalls 4.5 Million More Cars for Takata Air Bags

Honda Motor Co. called back 4.5 million vehicles globally in connection with Takata Corp. air bags, expanding the industry’s largest recall ever, amid a mounting toll of injuries or deaths related to the safety devices. About 36 percent of the total, or 1.63 million, involve vehicles in Japan ranging from the Fit small car to the CR-V crossover, Teruhiko Tatebe, a Honda spokesman, said by phone Thursday. The automaker is still compiling details on models affected in other markets, he said. It’s Honda’s third-biggest recall this year and its first since Takahiro Hachigo took over as president this month from a predecessor who was plagued by quality missteps.
Source: Bloomberg

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GM & GM Financial Consolidating Remarketing Organizations

Auto Remarketing has learned that General Motors and GM Financial are consolidating their remarketing organizations in the U.S. under the GM Financial brand. GM Financial sent an overview of the consolidation to Auto Remarketing on Wednesday, in which it explained the alignment in great detail. GM Financial will continue to sell vehicles at Manheim, ADESA and independent auctions, as well as through the GMFDealerSource.com online channel. The latter is a platform built exclusively for GM dealers where they can track upcoming maturities, get payoff quotes, ground returning cars and buy off-lease units. The company will have closed, open and open online sales; there will be 33 closed sales locations where GM franchised buyers can make purchases.
Source: Auto Remarketing
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Ally Adds 3 Account and Credit Info Features for Auto Customers

With federal regulators asking finance companies to provide consumers with more resources to manage their vehicle installment contracts and more, Ally Financial added three enhancements to its offering. At the National Association of Minority Automotive Dealers (NAMAD) annual convention on Wednesday, Ally announced that its auto consumers will soon have easier access to important account and credit information online. Beginning July 19, Ally will add customers’ annual percentage rate (APR) to their online account profiles and provide them their FICO score.
Source: Auto Remarketing
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Millennials Embrace F&I Jobs, Spark Change

Finance and insurance departments tend to have less trouble recruiting and retaining millennial staffers than sales departments, said Mary Byrne, general manager of Bruce Titus Automotive Group in Olympia, Wash. “Industrywide, everyone wants to work in F&I because it has this reputation as the job where you make the most money” for the time spent, Byrne said. F&I is known for offering the highest pay-to-work productivity balance, especially in contrast to the hours spent in sales chasing leads that may not pan out. “What else fits better with the millennial thought process?” she said.
Source: Automotive News
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Quotable
"If the Supreme Court’s housing decision translates to auto lending, a disparate-impact claim must count on reliable data and show a specific policy that caused the disparity. Without those two important pieces, there shouldn’t be a case."

    -- Automotive News on how the Supreme Court's recent ruling on disparate impact will affect the CFPB’s ability to bring charges of bias in auto lending, July 8

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