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April 6, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
U.S., Volkswagen May Not Reach Emissions Deal By April 21
If New-Vehicle Sales Stall, Will F&I Step Up?
Shelby Statement at Hearing on Consumer Finance Regulations
White House Now Wants to Pay for December Tax Deal
Lexus to Introduce Haggle-Free Pricing
PSA Plots 3-Stage Return to U.S.
Chase Bank Drives Off with Maserati
Women Fueling Sales Gains for Lincoln
Top Stories
U.S., Volkswagen May Not Reach Emissions Deal By April 21

The top U.S. environmental official expressed uncertainty on Tuesday about whether the Obama administration and Volkswagen AG will meet an April 21 court deadline to come up with a plan to address excess emissions from 580,000 diesel vehicles sold in the country. EPA Administrator Gina McCarthy told reporters that the two sides were in "really robust" ongoing talks but said she did not know if they would agree to a deal by April 21. She declined to say if the administration would accept a partial fix of the polluting vehicles or if it would insist that Volkswagen offer to buy them all back. VW, Europe's biggest automaker, faces its biggest crisis in recent memory after it acknowledged in September that it had rigged exhaust emission tests for up to 11 million vehicles worldwide.
Source: Reuters

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If New-Vehicle Sales Stall, Will F&I Step Up?

Dealerships have long relied on the finance and insurance department for profit. If new-vehicle sales flatten or decrease, F&I departments could be part of the solution to securing healthy dealership profits -- but not on their own, industry insiders say. Parts and service are significant areas for retaining dealership profit, too, said Pete DeLongchamps, vice president of financial services and manufacturer relations at Group 1 Automotive Inc. of Houston. But he noted that "the best retailers are focusing on service-based initiatives through F&I," with products such as vehicle service contracts or prepaid maintenance to maximize service retention.

Steven Szakaly, chief economist for the National Automobile Dealers Association, suggests dealers integrate "what's sold in F&I [with] what happens on the service side." Dealership staffers should follow up with customers who buy F&I products, such as service contracts or prepaid maintenance, to encourage them to come back to the store for service, he said. Selling F&I maintenance and service products is vital to long-term service and F&I revenue. "Now that vehicles are lasting longer, capturing that service work after year five is important," Szakaly said.
Source: Automotive News

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Shelby Statement at Hearing on Consumer Finance Regulations

U.S. Senator Richard Shelby (R-Ala.), Chairman of the United States Senate Committee on Banking, Housing, and Urban Affairs, [Tuesday] delivered the following opening remarks during a full committee hearing on “Assessing the Effects of Consumer Finance Regulations.”

“The Bureau has enormous power over consumer financial matters. It has, however, no statutory mandate to write balanced regulations that protect the economy or promote institutional safety and soundness. “As it continues to exercise its considerable regulatory powers, it does so without any meaningful statutory check by Congress. “For example, its actions in the indirect auto lending space have pushed the envelope on its jurisdiction under Dodd-Frank. “In order to circumvent Dodd-Frank’s explicit exemption for auto dealers, the Bureau has targeted auto lenders. “To do so, it has also circumvented the regular rulemaking process that has been in place for 70 years. This process ensures transparency and accountability in federal regulations. “Instead of setting clear rules, the Bureau is using enforcement actions to reshape the auto finance industry. “As demonstrated by settlements with the Bureau, its goal has been to limit the interest rate that dealerships charge based on factors other than financial risk.

“What’s more, these limits often differ leading to an uneven playing field not only among companies that have settled, but also between them and the rest of the market. “I fear that this has set a dangerous precedent for the role of a regulator in our financial markets. “In addition, the Bureau continues to base its fair lending enforcement on the controversial legal theory of disparate impact, under which a company can be held liable for policies that lead to different results, even without any intent to discriminate. “Further, as part of this process, the Bureau uses a methodology to identify ‘victims’ that is known to produce inaccurate results. As a consequence, settlement funds may regularly go to individuals who have not been harmed in any way. “Outcomes like this should cause the Bureau to seriously reevaluate its approach in this area. “Instead, we have seen the Bureau and its Director double-down on the same faulty methodology.
Source: U.S. Senate Committee on Banking, Housing, and Urban Affairs

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White House Now Wants to Pay for December Tax Deal

The Obama administration now wants to pay for that giant tax deal approved in December. After agreeing to stick the bill's $680 billion cost onto the deficit, the administration now wants business tax reform to cover that cost. "Reforming the business tax system must be done in a fiscally responsible manner, including paying for December's business tax cuts," the administration said in an update of its business tax reform framework. It's a case of too little, too late, given the unlikelihood of a tax overhaul this year - something the Senate's top Republican underscored [Tuesday]. Asked about the administration's new inversion regulations, Majority Leader Mitch McConnell called for comprehensive tax reform, while also scoffing at the chances of that happening anytime soon. "We really need to scrub the whole code," he told reporters. "The chances of doing that between now and the end of this presidency are slim to none, even if we agreed that it would be revenue neutral to the government, which I don't think is the president's position."

McConnell also said he's not interested in corporate-only tax reform, noting "most American businesses are not corporations" and lawmakers are not going to "carve out one section of American business and give them breaks and leave the others with very high rates."
Source: Politico

Editor's note: NADA has been strongly urging Congress to take a comprehensive approach that addresses both the individual and corporate tax rates to promote fairness in the treatment of all businesses, regardless of their entity form.

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Lexus to Introduce Haggle-Free Pricing

Toyota Motor Corp.’s Lexus luxury division is about one month away from launching a no-haggle pricing experiment that it developed with 11 U.S. dealers who volunteered. A significant number of retailers are unwilling to go along. “Many of our dealers, philosophically, are opposed,” said Jeff Bracken, group vice president and general manager for Lexus. “They’re saying, ‘You’re wholesale. We’re retail. Stay out of our business.’” Lexus wants to experiment with the new system in part to woo younger buyers, some of whom regard haggling as a retail experience better suited for their grandparents’ generation. About 44 percent of consumers don’t want to negotiate the price of a vehicle, a survey by car-buying website Autotrader found last year. While respondents said haggling was their top frustration, most said it’s the only path to a fair price, so 56 percent were committed to duking it out.
Source: The Detroit News

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PSA Plots 3-Stage Return to U.S.

Tavares' updated plan initially just calls for car sharing, possibly of EVs

PSA Peugeot Citroen unveiled a 10-year plan that could eventually mean the return or launch of Peugeot, Citroen and DS models in the U.S. market. In an hourlong presentation for analysts and investors today at PSA’s Paris headquarters, CEO Carlos Tavares said the updated blueprint would allow the automaker to “come back to a place where we can make significant profits.” Still, Tavares’ plan for the U.S. market was pretty scarce of details. It is one part of a broad “Push to Pass” program outlined Tuesday to build upon a two-year recovery that has seen PSA swing from near-bankruptcy to its highest profitability in 14 years, with the help of a rescue from the French government. PSA has formed a team to study the U.S. market, customer and regulatory requirements, but selling vehicles in the U.S. would be just the third step in a three-step plan, Tavares said.
Source: Automotive News

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Chase Bank Drives Off with Maserati

Fiat-owned automaker will partner with JPMorgan Chase to boost North American sales.

JPMorgan Chase and high-end automaker Maserati North America are partnering in an auto-finance agreement that could help put more of the sleek sedans and sporty SUVs on U.S. streets. The Italian automaker, which is owned by Fiat Chrysler Automobiles NV, joins existing Chase Auto Finance partners Jaguar Land Rover, Mazda, Subaru and Enterprise Car Sales. At a time when auto sales in the U.S. are chasing all-time highs, it looks as if the bank is prepared to continue expanding its roster of partnerships, according to Jagdeep Dayal, head of Chase Auto Finance's private label business. "Our private label solutions are tailored to meet the unique needs of each brand," Dayal said. "We'd be honored to partner with additional auto brands to serve their customers' needs."
Source: CNBC

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Women Fueling Sales Gains for Lincoln

Women get most of the credit for the Lincoln luxury brand’s recent growth, Ford officials say.

WardsAuto data shows January-March sales reached 24,905 units, up 16.0% from 21,478 year-ago, as truck models – all CUVs and SUVs – gained 27.1% for the period. Citing IHS Automotive registration data, Ford says women are behind much of that increase in CUV/SUV demand, with registrations among female buyers jumping 45% in the past decade. The population of women among Lincoln buyers grew at a rate 11 times faster than the brand overall during the past 10 years and two times faster than the overall luxury-vehicle sector, the automaker says.
Source: WardsAuto

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More Articles
           
          Quotable
          "If new-vehicle sales plateau, we are dealing with the influx of used vehicles. But with used vehicles comes an opportunity for the consumer to value something like a service contract or GAP."

             ---  Rick Kurtz, senior vice president for distribution at F&I product provider Protective Asset Protection, on the value of F&I products for dealerships, Automotive News, April 6

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