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Inside this issue
Editorial: Debates Regarding Car Sales Shift into High Gears
Honda and Takata Conducted Stealth Airbag Fix in 2009, Report Says
U.S. Judge Sets April 21 Deadline for VW, EPA to Reach Diesel Fix
FCA Seeks Dismissal of Ill. Dealer Suit Alleging Inflated Sales
Porsche's 20-Year Plan is a Gamble on Efficiency, Starting with the Macan
Technology Takes Center Stage at NY Auto Show
ADESA to Auction a Harley-Davidson Motorcycle at NADA Convention for Canine Companions
Top Stories
Editorial: Debates Regarding Car Sales Shift into High Gears

Tesla, the electric-car company founded by Elon Musk, says it’s free to open a store in Richmond, or anywhere else in the commonwealth it wants to. The Virginia Automobile Dealers Association says that’s bunk, and has sued — claiming Tesla is violating its contractual obligations.

Who’s right? Hard to say. Three years ago the two parties reached a court settlement allowing Tesla to open a store in Northern Virginia. Tesla claims the agreement does not prohibit other stores, and VADA claims it does. But the terms of the settlement are confidential, so outside observers are stuck watching an it-said/they-said argument. Whoever is correct, the principle is clear: Follow the agreement, or get it changed.

We know this much: Virginia law prohibits car makers from owning or running car dealerships. That carves out a safe space in the marketplace for independent dealerships. Those dealerships compete against one another fiercely — but at least they don’t have to worry about yet more competition from the very auto manufacturers they buy from.

Tesla itself presents little threat to the dealers. It sells pricey, high-end electric roadsters that are destined to remain a small slice of the luxury-car market. And while it is introducing somewhat more accessible models, at least for now it won’t be going head-to-head against F-150s, family SUVs, or the other mass-market vehicles that provide the baseload profits at most car sales companies. So allowing Tesla to open a handful of stores around the state poses little threat by itself.

The trouble lies in the qualifier “by itself.” Tesla’s case could set a precedent and undermine Virginia law, or lead to — pardon the term — wholesale repeal. If Tesla is allowed to make direct-to-consumer sales, then bigger companies might want to as well. And if they win the right to, then — for instance — not only would Toyota be able to under-price independent dealerships, it also would have a financial interest in muscling them aside. Why let Big Al’s Auto Sales take a slice of the profit on a new Camry when Toyota could keep it all?

Virginians have done well under the existing arrangement. Having a filter between manufacturers layers in a customer safety net. (Volkswagen’s recent scandal involving emission-control manipulation offers a painful reminder on that score.) Moreover, car dealers employ a lot of local people who possess valuable skill sets, whose welfare should enter into the equation.

Finally, vertical integration of the car-sales industry raises concerns about creating quasi-monopolies: If you couldn’t buy a Hyundai from anyone except Hyundai directly, would you get a better deal — or a worse one?

Questions like that are theoretical for now. But as the economy evolves toward ever more direct-to-consumer models (as it has with information on the Internet and ride-sharing through Uber), the car-sales industry will find itself under increasing pressure to follow suit — if the public comes to prefer the Tesla approach, that is. Legislation can slow the pace of change, but in the end consumers generally get their way.
Source: Richmond Times-Dispatch

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Honda and Takata Conducted Stealth Airbag Fix in 2009, Report Says

In August of 2009, after ruptured airbag inflators in Honda vehicles were linked to least four injuries and a death, the automaker quietly requested a design change and did not notify U.S. regulators, Honda confirmed in response to inquiries from Reuters. Honda Motor Co. asked supplier Takata Corp. to produce a "fail-safe" airbag inflator, according to Takata presentations and internal memos reviewed by Reuters. The previously undisclosed redesign could make Honda and Takata more vulnerable in more than 100 pending federal lawsuits and dozens more state suits, according to several legal experts and an attorney suing the companies. The request shows that Honda understood the safety risks posed by the inflators long before it started expanding recalls by the millions in 2014, the attorneys and law professors said.
Source: Reuters

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U.S. Judge Sets April 21 Deadline for VW, EPA to Reach Diesel Fix

A U.S. judge today gave Volkswagen AG and U.S. regulators until April 21 to reach a diesel emissions fix covering about 600,000 vehicles following the automaker's massive emissions cheating scandal. U.S. District Judge Charles Breyer, and lawyers for the Justice Department and VW, said at a court hearing in San Francisco that they were making progress in intensive negotiations, but issues remain and no settlement has been reached yet. Breyer said the remedy could involve fixing the 580,000 vehicles on U.S. roads or buy backs and other options, but said he would not disclose any details of the ongoing talks. If no deal is reached by April 21, Breyer said he would consider holding a trial on the issue this summer to address the vehicles that the U.S. Environmental Protection Agency says emit up to 40 times legally allowable pollution in real world driving.
Source: Reuters

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FCA Seeks Dismissal of Ill. Dealer Suit Alleging Inflated Sales

Automaker calls claims 'baseless' and 'an attempt to smear'

Fiat Chrysler fired back [Thursday] against Illinois dealerships that filed a civil racketeering lawsuit alleging FCA paid dealers to improperly inflate sales, saying the allegations are “baseless” and an attempt to “publicly smear” the automaker. The response, filed late Thursday in U.S. District Court in Chicago, is the first legal salvo from FCA since dealerships owned by the Napleton Automotive Group filed a suit on Jan. 12. In its response Thursday, FCA seeks to have the Napleton dealerships’ suit dismissed entirely, saying it is “replete with conclusory allegations, substitutes vitriol for plausibility, and relies on wholly illogical theories devoid of any legal support.” FCA’s response alleges that the Napleton dealerships had sued FCA after the automaker had notified Napleton’s “crown jewel” -- Napleton’s Arlington Heights Motors in Arlington Heights, Ill. -- that it had failed “to achieve the minimum level of sales that it had agreed to in its dealer agreements.”
Source: Automotive News

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Porsche's 20-Year Plan is a Gamble on Efficiency, Starting with the Macan

Not every automaker at every car show debuts some crazy concept or high-power brand-new model. Many times, and especially this year at the New York Auto Show, the debuts are racing versions or so-called facelifts on existing models. But auto shows are also major opportunities for networking among the ranks -- among journalists, executives and publicists alike -- and for introducing yourself to key players when you’re the new guy. So it goes this week with Porsche AG. At the show this week in Manhattan, the German automaker introduced three model upgrades -- the 911R, 718 Boxster and an efficient four-cylinder Macan -- along with its new president of North America, Klaus Zellmer. Zellmer was promoted to the role in November as part of an executive reshuffle within parent company Volkswagen after the diesel engine-fixing scandal last year. So while Porsche didn’t show a super-hyped new concept, it is using the show to devote massive amounts of time and energy to laying the groundwork, across all platforms, for electric, hybrid and, other efficient but non-diesel vehicles in the next two decades.
Source: Bloomberg

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Technology Takes Center Stage at NY Auto Show

The Motor City and Silicon Valley are colliding this week at the New York auto show. The show is a testament to the automotive industry’s convergence with the technology sector. So-called disruptors such as Google Inc. and Apple Inc. weren’t at the show’s press days Wednesday and Thursday, but they were a topic of discussion as automakers unveiled their latest advancements.
Source: The Detroit News

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ADESA to Auction a Harley-Davidson Motorcycle at NADA Convention for Canine Companions

ADESA will auction a 2014 Harley-Davidson Dyna Street Bob FXDB motorcycle with 2,533 miles at the 2016 NADA Convention & Expo in Las Vegas. The live auction begins at 1 p.m. on Saturday, April 2, at the ADESA booth (#2331C). The auction is not open to the general public.

Proceeds from the event will benefit the NADA Foundation’s Frank E. McCarthy Memorial Fund, which supports Canine Companions for Independence (CCI). McCarthy served as NADA president for more than 30 years.

Staff Sgt. Sebastian “Sam” Cila, USA (Ret.) and service dog, Gillian, will represent CCI. Bob Bunger, national director of development for CCI, will also be in attendance.

The 2016 NADA Convention runs Thursday, March 31, to Sunday, April 3. For more information and to register, visit www.nadaconvention.org
Source: NADA

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          -- VW in a statement on the automaker's April 21 deadline to reach a diesel emissions fix, Reuters, March 24 

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