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October 2, 2015 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
NADA Hosts Dealer Fly-in to Washington
Editorial: CFPB Admits Using Bad Math to Restructure $900 Bil Auto Finance Industry
Cheap Gas, Labor Day Weekend Drive Automakers' U.S. Sales in Sept.
VW's Horn to Face U.S. House Panel Over Emissions Violations
U.S. Regulator Extends Diesel Emissions Probe to Other Car Models
GM Targets Double-Digit Earnings Growth in 2016
Jack Kain Receives NADA's Capitol Achievement Award
Top Stories
NADA Hosts Dealer Fly-in to Washington

More than 500 new-car dealers and dealer association executives from across the country traveled to Capitol Hill this week for NADA’s Washington Conference to attend briefings and meet with members of Congress to discuss key policy issues, which include protecting consumer choice in auto financing and supporting legislation that boost consumer recall completion rates.

In remarks to conference attendees, NADA Chairman Bill Fox stressed the importance of correcting misconceptions in the nation’s capital about the retail-auto industry.


NADA Chairman Bill Fox delivers remarks during NADA's Washington Conference on Sept. 30, 2015.

“There’s a disturbing pattern of regulators wrapping ‘red tape’ around our industry and yet, they don’t fully understand it,” said Fox, a multifranchise dealer in the upstate New York cities of Auburn and Phoenix. “That’s why we need to keep working hard to get H.R. 1737 passed in the House, and explain that dealer-assisted financing is really a consumer issue.”

In July, the House Financial Services Committee passed NADA-backed H.R. 1737 by a bipartisan vote of 47-10 to rescind the Consumer Financial Protection Bureau’s flawed auto finance guidance that would limit or eliminate a customer’s ability to receive discounted auto loans at dealerships. This bill also calls for more transparency from the agency and a public notice and comment period when future auto lending guidance is issued.

This week, dealers and state dealer groups made more than 300 congressional visits on Capitol Hill to increase bipartisan support for H.R. 1737. The bill currently has 147 cosponsors (86 Republicans and 61 Democrats). A full House vote is expected this fall. Click here for the list of cosponsors.

Concerning proposed bills on recalls, Wes Lutz, chairman of NADA’s Government Relations Committee, urged dealers to ask their members of Congress not to cosponsor H.R. 2198 and H.R. 1181, saying the legislation “misses the mark by requiring recalled vehicles be grounded instead of actually fixed.”


Wes Lutz, chairman of NADA's Government Relations Committee, speaks during NADA's legislative conference in the nation's capital.

“Imagine what would happen if dealers could only offer a fraction for customer trade-ins, or couldn’t accept them at all. This could be the reality if the Blumenthal amendment is passed,” said Lutz, a dealer in Jackson, Mich. “Dealers support a 100 percent recall completion rate. Congress should focus on legislation that helps increase recall completion rates.” 

There are 64 million vehicles on the road today under open recall, but many of the defects have nothing to do with vehicle safety, Lutz added.

Other speakers included Rep. Frank Guinta (R-N.H.), lead sponsor of H.R. 1737; Rep. David Scott (D-Ga.); Sen. Rand Paul (R-Ky.); Rep. Tulsi Gabbard (D-Hawaii); FTC Commissioner Maureen Ohlhausen; NADA President Peter Welch; and political analysts Charlie Cook and Amy Walter.
Source: NADA

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Editorial: CFPB Admits Using Bad Math to Restructure $900 Bil Auto Finance Industry

Shakedown: After accusing the ninth-largest bank auto lender of discriminating against minorities, the president's consumer watchdog admits his analysis is less than perfect. Still, according to Monday's federal order, Cincinnati-based Fifth Third Bank will have to make $18 million in restitution for allegedly marking up loans for blacks and Latinos. It will also have to cap the interest rates it charges customers, which Consumer Financial Protection Bureau chief Richard Cordray called "a significant step toward protecting consumers from discrimination."

Yet on Tuesday, as the ink was still drying on the settlement, Cordray confessed under grilling by House banking panel chief Jeb Hensarling that the disparate impact methodology that his agency uses to determine lending bias "overestimates" racial disparities in loan pricing. Hensarling presented Cordray with leaked internal agency memos showing agency officials have expressed reservations about their own math used to justify cracking down on the auto finance industry — for discrimination that, it turns out, even they aren't sure exists.

In short, Cordray is trying to restructure the $900 billion auto finance industry based on bad math. Even Democrats see this is wrong. Many have crossed the aisle to vote for bills to reform the CFPB and rein in its rogue director.
Source: Investor's Business Daily
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Cheap Gas, Labor Day Weekend Drive Automakers' U.S. Sales in Sept.

U.S. auto sales surged in September to their strongest in more than a decade, with the Detroit Three clocking double-digit growth as cheap gasoline and ultra-low interest rates drove demand for sport utility vehicles and pickup trucks. Sales also got a boost from the calendar, with the entire Labor Day weekend falling in September for the first time since 2012. The holiday weekend is traditionally important for sales. Total vehicle sales for the month shot up 15.8 percent from a year earlier to 1.44 million cars and light trucks, equal to a seasonally adjusted annual rate, or SAAR, of 18.17 million, according to research firm Autodata Corp. That topped estimates for a SAAR of 17.6 million and was the highest since the 20.6 million clocked in July 2005.
Source: Reuters

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VW's Horn to Face U.S. House Panel Over Emissions Violations

Volkswagen of America CEO Michael Horn will go before a U.S. House panel next week to answer questions from lawmakers about the company’s violations of U.S. diesel emissions rules. Horn will be joined by EPA officials at the Oct. 8 hearing before the Oversight and Investigations Subcommittee of the U.S. House of Representatives’ Energy and Commerce Committee, according to a statement from the panel.
Source: Automotive News
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U.S. Regulator Extends Diesel Emissions Probe to Other Car Models

The U.S. regulator that exposed Volkswagen's rigging of emissions tests is investigating more than two dozen diesel car models made by BMW, Chrysler, General Motors, Land Rover and Mercedes-Benz to find out whether they engaged in similar cheating, the Financial Times reported. The scandal has prompted the EPA to toughen and broaden emissions tests for all automakers in an effort to thwart any other cheating activities, a move that could add to industry costs and higher regulatory hurdles.
Source: Reuters

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GM Targets Double-Digit Earnings Growth in 2016

General Motors Co told Wall Street on Thursday that its recovery is gathering momentum with improving margins, strong brands, new markets for high-tech vehicles, and prospects for stronger profits in coming years. The No. 1 U.S. automaker said it is targeting an increase in earnings per share to between $5 and $5.50 per share before items, from the $4.50 per share that Wall Street analysts expect for this year. GM earned $3.05 per share in 2014 before items. GM said it will increase its return to investors by stronger profit margins in China and North America, as well as operating efficiencies and share buybacks. An improving U.S. economy and rapid jobs growth have put 2015 U.S. car sales on track for sales of more than 17 million.
Source: Reuters

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Jack Kain Receives NADA's Capitol Achievement Award


Jack Kain (left) welcomes Sen. Rand Paul (R-Ky.) to NADA’s annual legislative conference on Sept. 30.

NADA named Jack Kain as the recipient of its 2015 Capitol Achievement Award. “This is a complete surprise, and I sincerely thank all of you and look forward to continue working with all of you,” said Kain, president of Kain Ford in Versailles, Ky., at the NADA Washington Conference on September 30. NADA’s Capitol Achievement Award is given to dealers who have made significant contributions on behalf of dealers over the years and go above-and-beyond efforts to support pro-dealer legislation in Congress. Kain has been an NADA board member since 1995, and served as chairman in 2004. He joined the Dealers Election Action Committee Presidents Club in 1996, and has been a DEAC trustee since 2000 serving as secretary-treasurer and three terms as finance chairman.
Source: NADA


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Quotable
"The economy still has room to grow and so do auto sales, particularly now that the millennials are entering the workforce and starting households."

   -- Mustafa Mohatarem, GM's chief economist, commenting on strong September auto sales in the U.S., Reuters, Oct. 1

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