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September 8, 2015 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Dems Pressure Fiat Chrysler to Support Recalled Rental Ban
Lexus to Offer Direct Line to Dealer Service
Apple, Google Bring Smartphone Functions to Car Dashboards
German Luxury Brands Take Aim at Model S and Model X
European Style Work Vans Spur a U.S. Sales Revival
CARS: A Brand-by-Brand Look at New 2016 Models
Top Stories
Dems Pressure Fiat Chrysler to Support Recalled Rental Ban

A pair of Democrats is pressuring automaker Fiat Chrysler to support a bill that would ban car rental companies from distributing recalled vehicles. Sen. Barbara Boxer (D-Calif.) and Rep. Lois Capps (D-Calif.) said Wednesday that Fiat Chrysler should also publicly back their proposed legislation to ban recalled rentals after agreeing to a settlement with regulators that included the terms of the fine.
Source: The Hill

Editor's Note: FCA-NHTSA Agreement Could Hinder Ability of Customers to Buy Vehicles

Last month, Fiat Chrysler Automobiles (FCA) agreed – by way of a consent order with the National Highway Traffic Safety Administration (NHTSA) – to develop and implement a policy against selling unremedied recalled vehicles in the U.S.  While both parties said the aim was to improve recall execution and completion rates, neither appeared to recognize the negative impact that such an overly and unnecessarily broad approach to recalls would likely have on consumers.  Moreover, there is also no indication that the parties determined, or even studied, whether this policy would actually improve the overall safety of the driving public.   

Federal law prohibits the delivery of new vehicles with unremedied safety recalls. The law also contains a requirement that dealers be compensated for holding a recalled new vehicle in inventory until the remedy and related parts become available. This has been the law since the Motor Vehicle Safety Act was enacted in 1966.

The federal law does not restrict the delivery of used vehicles subject to recall.  But the FCA-NHTSA agreement contains a provision(1) that could impose such a restriction on dealers, without compensation(2). (See footnotes below.)


Unduly restricting the delivery of used vehicles subject to safety recalls would immediately and severely depress the value of consumer trades with unremedied safety recalls, especially when the dealer considering the value of the trade-in is unauthorized or unable to perform the recall remedy.   Consequently, consumers may find themselves unable to buy the new or newer used vehicle they need or want.

Franchised dealers have a direct incentive to remedy open safety recalls when authorized to do so, when the remedy and parts are available, and when they are reimbursed adequately.  But not all of those conditions are always present.

It is often and increasingly the case that it can take months after a safety recall is announced before the fix and/or parts become available.  Moreover, when off-brand vehicles are involved, dealers are not authorized, let alone trained or equipped, to perform safety recall remedies on them.


Predictably, off-brand trade-ins with open recalls and in-brand trades with open recalls but with no fix or parts available would be worth significantly less to dealers if dealers could not resell them or did not get reimbursed for carrying costs.  The residual values of unremedied recalled lease vehicles also would be impacted, with the likely impact that leasing will become more expensive for consumers.


There is, however, a simple, viable approach to recalls that doesn't bring undue economic harm to consumers.


Rather than implementing a blanket grounding of all used vehicles with open recalls, this provision should only be applied to recalled used vehicles subject to a "stop drive" prohibition.  For the vast majority of recalled used vehicles that do not pose an immediate risk of injury or harm, prudence dictates that dealers disclose the existence of the recall at the time such vehicles are sold or leased.



(1)  Develop and implement a process to deter dealer sales of unremedied vehicles subject to recall, including training of dealers on the importance of complying with the FCA US policy against selling unremedied recalled vehicles, and imposing a financial penalty consisting of obtaining a chargeback of the new vehicle preparation fee and/or prohibiting any dealer from receiving any incentive from FCA US, if the dealer sells an unremedied recalled vehicle regardless of whether new or used.

(2)  The FCA has at least 60 days from July 24th to submit a plan to NHTSA on how it will implement the above restriction, after which NHTSA may suggest changes. At this point, it is unclear whether this provision is intended only to apply to those used vehicles impacted by the recalls that are the subject of the FCA-NHTSA agreement.

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Lexus to Offer Direct Line to Dealer Service

It's a checkup without even going to the doctor's office. Lexus this month will begin offering a service through its Enform telematics system that will enable dealers to remotely look into a customer's check-engine light or other warning on the instrument panel. The service, Enform Service Connect, will be offered on all 2016 Lexus models starting with the freshened ES sedan, which is rolling into stores now.
Source: Automotive News

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Apple, Google Bring Smartphone Functions to Car Dashboards

Playing deejay with voice commands will get easier for more Americans this fall as some best-selling cars get updated with software that integrates smartphones into the dashboard. With the 2016 model year, Apple’s CarPlay and Google’s Android Auto will turn cars as affordable as a base model Chevy Spark into rolling robotic assistants that give directions to nearby restaurants or play the latest hits with commands as simple as “Play Ellie Goulding.”
Source: The Associated Press

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German Luxury Brands Take Aim at Model S and Model X

German premium-car makers are taking Tesla very seriously. Four have vehicles in the works or under consideration that take dead aim at the upstart U.S. electric vehicle maker. The latest to join the chase: Mercedes-Benz. Mercedes is working on an electric car with a range of up to 311 miles that could compete with Tesla's Model S battery-powered sedan, development chief Thomas Weber told German magazine Auto Motor und Sport. Meanwhile, the e-tron quattro concept Audi will showcase at this month's Frankfurt auto show previews an all-electric crossover coming in 2018 that will compete with the coming Tesla Model X. BMW is reported to be planning an i5 electric car based on the 5 series that would rival Tesla's Model S.
Source: Automotive News

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European Style Work Vans Spur a U.S. Sales Revival

Mark Unger bought a European-style work van for his Orlando, Fla., restaurant business and strange things began to happen. Driving was fun again, he says, and customers even asked to pose for photos in front of it. The 35-year-old restaurateur's new Ford Transit, a 9-foot-tall van with plenty of space to cart equipment and Mediterranean dishes, to replace a truck that he said required an entire parking lot to turn around.
Source: Dow Jones Business News

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CARS: A Brand-by-Brand Look at New 2016 Models

The 2016 model year has plenty of workhorses, including new versions of the Toyota Tacoma and Nissan Titan pickups, Chevrolet Malibu and Kia Optima sedans and the Honda Civic small car. But it also has some sparkling show horses. Ford, Audi, Ferrari and Acura all have new supercars. Cadillac is launching the racetrack-ready CTS-V. Dodge is unleashing its fastest Viper ever, and Lamborghini has amped up the power in its Aventador. Drivers with a smaller budget can also have a lot of fun in the new Ford GT350, Audi TT or Mazda MX-5 Miata.
Source: The Associated Press

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Quotable
"We are working on an intelligent concept for a highly attractive electric vehicle with a range of ... 249-311 miles."

    -- Mercedes-Benz development chief Thomas Weber, Automotive News, Sept. 7

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