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September 14, 2015 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
NADA Hopeful Key Bill Will Pass
Late Dealer's Quality Processes Help Store Thrive
Chip Card Readers May Be Required by Oct. 1
U.S. Car Industry Growth to End
Subaru Sees Higher North America Sales After Dodging China Slump
Marchionne Says FCA Will Continue to Make V-8s Despite Tightening Regs
Auto Veteran John Krafcik is New CEO for Google Cars
Top Stories
NADA Hopeful Key Bill Will Pass

The car dealership trade group has lobbied for the legislation that would put reins on the Consumer Financial Protection Bureau.

A Congressional bill is making NADA feel less threatened by a regulatory agency that has sought to change the way dealers are compensated for arranging customer auto loans. NADA had lobbied for the legislation that would put reins on the Consumer Financial Protection Bureau, a product of the Dodd-Frank financial reform act and an agency that has challenged a long-standing practice of dealers adding to an indirect auto loan’s percentage rate as compensation for acting as a middleman. The pending legislation that would affect the CFPB has bipartisan support and is expected to go to the House floor in late September or early October, says Andrew Koblenz, NADA’s executive vice president of legal and regulatory affairs. He's hopeful of its passage "but now is not the time to take the foot off the gas," he said at this year’s F&I Industry Summit. "We still have a little ways to go.” The legislation would repeal a two-year-old CFPB bulletin NADA says was intended to pressure lending institutions to shift from the so-called dealer reserve practice to something such as flat fees for dealers.
Source: WardsAuto

Editor's note: H.R. 1737 will likely come up for a vote on the House floor this fall. It is vitally important that NADA members generate more Democratic cosponsors prior to the vote. H.R. 1737 currently has 133 cosponsors (76 R's and 57 D's). NADA is strongly encouraging dealers to contact their Democratic House members and ask them to cosponsor H.R. 1737, and support H.R. 1737 when it comes to the floor for a vote. Click here for a list of H.R. 1737 cosponsors. Click here for NADA's issue brief, and visit www.nada.org/cfpb for more information.
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Late Dealer's Quality Processes Help Store Thrive

The late Albuquerque Ford dealer Don Chalmers was one of those people who could persuade others to do things they might not normally do. Take Lee Butler, for instance. He left a rewarding career as a quality manager on advanced aircraft systems at Honeywell to work at Don Chalmers Ford in Rio Rancho, N.M., as director of performance excellence, not a common title in the auto dealer world. Butler says: "People thought I was nuts -- they'd say: 'You've been at Honeywell 20 years and you're going to a car dealership?'" Butler would respond by saying: "You don't know Don Chalmers." That's how persuasive Chalmers was. So when he died in 2014 from a rare form of lymphoma at age 65, a question loomed: How would Don Chalmers Ford move forward without its charismatic leader?

Chalmers set a goal that Butler and his boss, Gary Housley, have committed themselves to achieving: seeing Don Chalmers Ford become the first domestic-brand car dealership to earn the Malcolm Baldrige National Quality Award, named after the man who served as secretary of commerce under President Ronald Reagan. Only one dealership has won the Baldrige award: Park Place Lexus in Plano, Texas, in 2005.
Source: Automotive News
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Chip Card Readers May Be Required by Oct. 1

A reminder to dealers that many of the major credit card companies have announced that retailers must implement “chip-card” (“EMV”) reading devices by Oct. 1, 2015, or they could face potential contractual liability for any fraud that may occur.  Dealers should consult their counsel and their credit card providers to determine the outlines of their contractual obligations. Click here for NADA’s memo.
Source: NADA Regulatory Affairs

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U.S. Car Industry Growth to End

There appears to be general agreement that new car sales in the United State are going to decline. The only questions left to answer are “How soon?” and “By how much?” In June, the National Automobile Dealers Association (NADA) said that U.S. car sales likely would begin to decline in 2017 after threatening new all-time sales records in both 2015 and 2016. The association cited higher interest rates making cars more expensive to finance, a drop in used car prices and a continuation of the trend of keeping cars longer. NADA does not expect car sales to fall off a cliff, as they did in 2009, but expects a gradual decline.
Source: 24/7 Wall Street
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Subaru Sees Higher North America Sales After Dodging China Slump

Fuji Heavy Industries Ltd.’s Subaru sees sales of 700,000 vehicles in North America as early as in 2017 as it dodges a slump in China. The carmaker may sell more than 600,000 vehicles in North America in 2015, five years ahead of its mid-term plan, Chief Executive Officer Yasuyuki Yoshinaga said in an interview at the company’s headquarters in Tokyo. Subaru has gained market share in the U.S. as the brand long known for all-wheel-drive vehicles continued to win more mass-market customers. American consumers purchased more passenger vehicles than their Chinese counterparts for a second straight month in August, helped by affordable fuel prices and as an equities rout in China sapped discretionary spending. Subaru, which earlier this year put its China production effort on hold, is cutting exports to the world’s largest auto market and is shipping more cars to the U.S., where its deliveries have risen for 45 consecutive months.
Source: Bloomberg
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Marchionne Says FCA Will Continue to Make V-8s Despite Tightening Regs

Tougher fuel economy and emissions standards won't mean the death of Fiat Chrysler's V-8 engine lineup, CEO Sergio Marchionne says. But in an interview with Automotive News last month, Marchionne conceded that it is getting harder for FCA to stay in compliance with the federal corporate average fuel economy rules. For now, he said, the key for keeping powerful engines in FCA's lineup is the purchase of clean air credits. "One of the things that we learned to do is how to buy stuff," Marchionne said. "We buy credits. ... The purchase and sale of credits is actually more efficient than capital today."
Source: Automotive News
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Auto Veteran John Krafcik is New CEO for Google Cars

Prototypes of the self-driving test fleet are being built in Livonia for testing in California.

Industry veteran John Krafcik will join Google later this month as CEO of the Self-Driving Car Project as efforts intensify to get autonomous vehicles on the road. Krafcik is a well-respected executive and engineer, known for using data to drive decisions as well as experience in a broad range of fields including sales and marketing, product development, technology and manufacturing. "Over the last few years, we’ve made more progress with our self-driving car technology than we ever thought possible," Google executives said in announcing the news. They noted the test fleet has logged more than 1 million miles of autonomous driving on public roads.
Source: Detroit Free Press
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Quotable
"Have a methodology, be transparent and ... do a cost analysis to find out the impact (switching from dealer reserve to flat fees) would have on the market."

   -- Andy Koblenz, NADA’s executive vice president of legal and regulatory affairs, commenting on the CFPB's attempt to change the way dealers are compensated for arranging customer auto loans, WardsAuto, Sept. 11

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