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September 1, 2015 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Crackdown on Racial Bias Could Boost Driversí Costs for Auto Loans
Fiat Chrysler Announces Buyback Program Details
Auto Sales Cool in August on Later Labor Day
Register Now for NADA's 'The Roadmap to Becoming a Millionaire Car Salesman' Webinar
From Cars to Buildings: Mazda Infuses Dealerships with Upscale Design
Top Stories
Crackdown on Racial Bias Could Boost Driversí Costs for Auto Loans

Consumer-finance regulator’s campaign triggers changes in how rates are set

A federal regulator’s campaign to fight bias against minorities is changing the way many car loans are priced, a move that is increasing costs for some consumers. The Consumer Financial Protection Bureau has reached more than $200 million in antidiscrimination agreements since 2013 with several large car-financing companies, including Ally Financial Inc. and American Honda Finance Corp., over allegations that dealers charged higher interest rates—in some cases adding up to $300 more in interest payments, on average—for African-Americans, Hispanics and other minority buyers. At least another eight large lenders are under federal investigation by the CFPB or the Justice Department, according to people familiar with the probes.

Some auto makers have responded by overhauling their loan pricing in ways that will likely mean higher costs for some borrowers. American Honda Finance Corp., a unit of Honda Motor Co., settled with the bureau and the Justice Department in July and lowered one portion of its loans’ interest rates, or markup, as a result. But it also raised a less-negotiable component of its rates, a move that could increase consumers’ overall loan costs. The results highlight the sometimes unpredictable consequences of attempts to regulate lending practices. The CFPB’s recent focus on auto loans “will invariably lead to many consumers paying more for auto financing,” said Jared Allen, a spokesman for the National Automobile Dealers Association, an industry group, which opposes the bureau’s initiative.

Other lenders have tweaked their pricing as CFPB scrutiny in the industry has been growing. BB&T Dealer Financial Services, a unit of Winston-Salem, N.C.-based BB&T Corp., in July replaced its variable dealer markup with a flat fee that pays dealers 3% of the loan amount up to $2,500. David Westcott, who owns a dealership in Burlington, N.C., that sells mostly new Buicks and GMCs, said his company hasn’t given out a loan from BB&T since the flat fees went into effect. Mr. Westcott, a former chairman of the National Automobile Dealers Association, said the annual percentage rates for borrowers on BB&T’s loans are now higher than the ones he can arrange with other lenders that still permit dealer markups.
Source: The Wall Street Journal
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Fiat Chrysler Announces Buyback Program Details

Owners of nearly 200,000 Ram pickups and Dodge SUVs are eligible for a repurchase program and up to $2,000 in incentives as part of a consent agreement with NHTSA.

Fiat Chrysler Automobiles on Monday announced the details of a buyback program that was imposed on the automaker after a federal investigation into a track record of poor recall completion rates that led to an unprecedented $105 million in penalties. The buyback program involves three of 23 Fiat Chrysler recall campaigns investigated by the National Highway Traffic Safety Administration. Customers who own the vehicles in the buyback program will receive cash and can use it however they please. Fiat Chrysler's additional incentives -- which were not required by the NHTSA -- are designed to reward customers who decide to stay with the automaker. Those incentives are on top of a trade-in value that will be calculated based on "good" market value plus 10% for nearly 200,000 Ram pickups and Dodge SUVs that qualify for the program.
Source: Detroit Free Press

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Auto Sales Cool in August on Later Labor Day

Fiat Chrysler posts a better-than-expected increase in U.S. sales

Fiat Chrysler Automobiles NV on Tuesday logged a better-than-expected 1.7% increase in U.S. auto sales in August despite a calendar quirk and a tough year-over-year comparison, extending the auto maker’s streak of sales gains to 65 months. More sales results from auto makers are due out later Tuesday, and overall U.S. sales are expected to cool in August as the impact of a later Labor Day masked an otherwise strong month of buying. Much of the blame for the lackluster sales is the accounting for Labor Day holiday purchases. For the first time since 2012, those sales will be included in September results. Traditionally, Labor Day sales are reported in August when the holiday falls in early September. This year, it falls on Sept. 7. Last August also included one more selling day, which—coupled with the impact of Labor Day—helped make it the strongest month for auto sales of 2014, according to Sterne Agee. Still, the seasonally adjusted annualized rate is expected to come in above 17 million new cars and trucks for the fourth month in a row as the gravy train of low lease rates, cheap gas and consumer enthusiasm continues to roll. The last time the industry had a four month sales streak above 17 million vehicles was 2006.
Source: The Wall Street Journal

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Register Now for NADA's 'The Roadmap to Becoming a Millionaire Car Salesman' Webinar

NADA University Online will host the webinar "The Roadmap to Becoming a Millionaire Car Salesman" tomorrow, Sept. 2 at 1 p.m. ET. The free webinar, presented by Sean Bradley from Dealer Synergy, will discuss the eight ways to sell a car and maximize everyday sales opportunities. Bradley will cover how to make as much money as possible and how to take control of a dealership's financial landscape through projection and forecasting tools. Click here to register.
Source: NADA University Online
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From Cars to Buildings: Mazda Infuses Dealerships with Upscale Design

Mazda has been trying to move up-market for some years now and the sophisticated design of its current vehicles have given the company a good boost in that regard. Now the Japanese automaker hopes to translate some of the upscale design principles from its vehicles to U.S. dealer showrooms as part of a larger effort it calls Retail Revolution. Though you won’t be seeing creased metal or flowing forms inspired by wind and waves, as featured in the “Kodo” or “soul of motion” design on Mazda vehicles, you will see more upscale décor at dealerships. “Retail Evolution embodies the spirit and direction of the Mazda brand, while offering an upscale experience,” said Jim O’Sullivan, president and CEO of Mazda North American Operations, in a statement announcing the new dealership design.
Source: Forbes
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Quotable
The CFPB's recent focus on auto loans "will invariably lead to many consumers paying more for auto financing."

   --  Jared Allen, a spokesman for NADA, commenting on the CFPB's campaign to do away with dealer assisted financing, The Wall Street Journal, Aug. 31

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