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March 10, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Cordray to Appear at Financial Services Committee Hearing Next Week
Honda Readies Financial Aid to Dealers Over Takata Airbag Recalls
Fiat Chrysler Tells U.S. Dealers They Can Close Standalone Fiat Showrooms
Michael Horn Out as CEO at Volkswagen Group of America
Millennials are Finally Arriving in the Car Market
84 Months Could Be Loan Limit for Most Lenders, Experian Says
GM Halts Sale of 1,579 New Trucks, Cars Over Defect Concern
Preview of Upcoming Auto Conferences
Top Stories
Cordray to Appear at Financial Services Committee Hearing Next Week

CFPB Director Richard Cordray will appear before the House Financial Services Committee next week to report on the Bureau’s activities and face questions from lawmakers about the harm those activities cause consumers. Since Cordray’s last appearance before the committee in September 2015, the committee has issued two staff reports detailing how the CFPB spent significant resources attempting to regulate automobile dealers, despite the fact that federal law explicitly prohibits the CFPB from regulating those businesses.

The two staff reports used internal CFPB documents to reveal that the Bureau was able to secure its potentially “market-tipping” enforcement action against Ally Financial and its Ally Bank subsidiary because of “undue leverage” – the company needed Washington regulators’ approval for a broader restructuring of its business.  The reports also exposed the Bureau’s flawed distribution of $80 million in settlement proceeds without first verifying that recipients are eligible to receive the money.  As a result, and as internal Bureau documents admit, some white borrowers will receive settlement checks over alleged racial discrimination against African-Americans, Hispanics and Asians. Following release of the two committee staff reports, the former CEO of Ally Financial said the Obama Administration abused its power by holding the bank’s business hostage in order to coerce the settlement.

Next week’s hearing will take place on Wednesday, March 16 at 10:00 A.M. in room 2128 of the Rayburn House Office Building. Additional information and a livestream of the hearing can be found at financialservices.house.gov.
Source: House Financial Services Committee

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Honda Readies Financial Aid to Dealers Over Takata Airbag Recalls

American Honda Motor Co. plans to offset the financial hit that dealers are taking from the recall of millions of vehicles with potentially defective Takata airbag modules. Beginning this month, the automaker will compensate Honda and Acura dealers for depreciation costs for vehicles that cannot be sold because of the airbag recall, according to a company notice sent to dealers this month and obtained by Automotive News. The company says it also will provide financial assistance to defray floorplanning costs incurred from the temporary suspension of vehicle sales at Honda and Acura dealers. Honda informed dealers that the reimbursement plan will go into effect the week of March 28. But it has not finalized the claim process, according to the notice.
Source: Automotive News

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Fiat Chrysler Tells U.S. Dealers They Can Close Standalone Fiat Showrooms

Move changes CEO Sergio Marchionne’s strategy for brand

Fiat Chrysler Automobiles NV has given its U.S. dealers more control over its struggling Fiat brand, telling them they now have the option to close their separate Fiat showrooms and sell the vehicles alongside the Chrysler, Ram, Jeep and Dodge brands. Those who continue operating separate showrooms will receive financial subsidies of sorts, which include $1,000 in “rent assistance” for every car sold. Fiat pricing will also be dropped by several thousand dollars to make the cars more attractive. The moves, confirmed by several dealers attending a meeting in Detroit Wednesday, represents a significant reversal in Chief Executive Sergio Marchionne’s plan for the Fiat brand.
Source: The Wall Street Journal


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Michael Horn Out as CEO at Volkswagen Group of America

U.S. dealers call move a 'serious blow,' cite 'mismanagement' of diesel scandal

Michael Horn, CEO of Volkswagen Group of America, is leaving the company six months after the German automaker admitted to rigging U.S. diesel emissions tests. Horn, 54, is departing “by mutual agreement” to pursue other interests, effective immediately, VW said in a statement late Wednesday. He will be replaced on an interim basis by Hinrich Woebcken, who on April 1 will take over as head of VW’s North American region. Horn’s exit comes amid slumping U.S. sales at the VW brand and continued struggles to reach a deal with U.S. environmental regulators for fixes to some 600,000 VW Group vehicles fitted with illegal emissions-masking software.
Source: Automotive News

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Millennials are Finally Arriving in the Car Market

Millennials were once a source of panic in the auto industry. Dubbed the "go nowhere" generation, they weren't getting driver's licenses, never mind buying cars. Headlines declared it was "The End of Car Culture." New data suggests at least some of that worry was misplaced. Millennials -- especially the oldest ones -- are these days buying cars in big numbers. "This whole idea that they're not going to need cars is absolutely ridiculous," said Steven Szakaly, the chief economist for the National Automobile Dealers Association. "The new-car buyer age is just happening much later."
Source: The Associated Press

Media Advisory: Steven Szakaly, NADA chief economist, will hold a press briefing at the 2016 NADA Convention and Expo in Las Vegas at 8:30 a.m. PT on Friday, April 1. He will discuss how sales are tracking based on NADA’s 2016 forecast of 17.7 million new cars and light trucks and highlight key economic conditions and trends, as well as challenges, shaping the retail-auto industry. Szakaly will also release NADA Data 2015, an annual report on new-car dealership sales and financial trends, and discuss the key findings from NADA's 2015 Dealership Workforce Study. For more information, contact Charles Cyrill at ccyrill@nada.org or 216.870.8837.

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84 Months Could Be Loan Limit for Most Lenders, Experian Says

Loan terms lasting six to seven years accounted for nearly 30 percent of all new-vehicle loans again last quarter, making them the second most popular option among borrowers. Longer loans keep consumers’ monthly payments low, but at some point, terms will cap, and 84 months could be the widely accepted limit, Experian Automotive says. Terms of 73 to 84 months made up 29 percent of new-vehicle loans in the fourth quarter, a 12 percent climb year over year, Experian said in part 2 of its Fourth Quarter 2015 State of the Automotive Finance Market report released last week. Indeed, loans of 73 to 84 months hovered near 30 percent throughout 2015, accounting for 29.5 percent of new-vehicle loans in the first quarter, 28.8 percent in the second and 27.5 percent in the third.
Source: Automotive News

Media Advisory: Experian Automotive executives, Melinda Zabritski, senior director of automotive finance, and Erik Hjermstad, senior automotive market analyst, will hold a press briefing at the 2016 NADA Convention and Expo in Las Vegas at 11:30 a.m. PT on Friday, April 1. They will provide an in-depth look at the current state of the auto finance market, as well as examine leasing trends, highlighting key areas including demographic characteristics, regional trends, shifts in market share and repurchase behaviors of lease-off customers, including detail into loyalty rates, defection destinations and sources of new customer conquest. For more information, contact Roslyn Whitehurst at 714.830.5578 or roslyn.whitehurst@experian.com.

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GM Halts Sale of 1,579 New Trucks, Cars Over Defect Concern

General Motors has ordered dealers to stop selling 1,579 pickups and cars in the U.S. because the driver's side air bag may not deploy correctly in a crash. A recall of those new Chevrolet Colorado, GMC Canyon and Chevrolet Malibu is in the works to replace to replace driver-side front airbags. Until the fix comes through, though, GM doesn't want any of them to be sold.
Source: USA Today

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Preview of Upcoming Auto Conferences

The 2016 NADA Convention & Expo in Las Vegas is just around the corner, and attendees would be smart to review what’s on the docket before they arrive for the huge event that has a full agenda. The NADA event is scheduled for March 31 through April 3 this year at the Las Vegas Convention Center — although some of the activities will take place off site. There’s much on tap for NADA, so for a full agenda and to register, check out www.nadaconvention.org.
Source: Auto Remarketing

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      Quotable
      "This whole idea that they're not going to need cars is absolutely ridiculous. The new-car buyer age is just happening much later."

          --- NADA Chief Economist Steven Szakaly, on more millennials entering the new-car market, Associated Press, March 9


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