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April 8, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
CFPBs Cordray Defends Regulation By Enforcement
Mercedes Diesel Owners File Lawsuit in U.S. Over Diesel Emissions
NADA Chief Not Hung Up With Modern Technology
IRS Issues 2016 and Revised 2015 Vehicle Depreciation Limits
Toyota to Launch Ann Arbor Autonomous Car Research Base
Europes Car Boom Leaves Auto Makers Hunting for Profits
GM Design Chief Welburn to Retire July 1
Top Stories
CFPBs Cordray Defends Regulation By Enforcement

Consumer Financial Protection Bureau Director Richard Cordray defended the bureau’s use of regulation by enforcement to senators on the Committee on Banking, Housing and Urban Affairs, during the bureau’s semi-annual report to Congress hearing [Thursday]. Senators pressed Cordray on the agency’s using enforcement, rather than rulemaking, to set an auto-lending standard, but he maintained that regulation by enforcement is the bureau’s best option. The CFPB has issued enforcements against major auto lenders -- including Ally Financial, Fifth Third Bank, American Honda Finance Corp., and Toyota Financial Services -- that limits the lenders’ ability to adjust dealers’ retail margins on auto loans. The bureau did so without making a rule. “What concerns me is that the rulemaking is an entire process that requires a level of transparency and gets input. There’s a cost-benefit analysis,” said Sen. Pat Toomey, R-R.I. “My worry is that if we’re using enforcement instead of rulemaking, we’re going to miss those pieces.”

Sen. Mike Rounds, R-S.D., said he was concerned that the auto lenders, who did not admit guilt even though they agreed to change lending standards based on CFPB requests, made a business decision to settle the lawsuit with minimal expense. Cordray, however, continued to defend his stance on regulation by enforcement. He said one option is to do research and adopt a rule. “But another way is to investigate facts of individual circumstances, and if you find an actual violation of law, clean it up. That’s what we do all the time by enforcement.” He called regulation by enforcement “a nice slogan people like” and said that somehow it’s become “a bad thing.”

Sen. Joe Donnelly, D-Ind., said that many dealers in his state are concerned about the CFPB’s oversight. The CFPB was “kind of leery about talking with auto dealers” initially, Cordray said, because the bureau has no jurisdiction over dealers and didn’t want to “cross that line.”
Source: Automotive News

Editor’s note: NADA submitted testimony for the hearing defending dealer-assisted financing and opposing CFPB’s policy to eliminate dealer discounts on credit. Click here to view the testimony.

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Mercedes Diesel Owners File Lawsuit in U.S. Over Diesel Emissions

Owners of Mercedes diesel cars filed a new lawsuit in the U.S. saying the vehicles likely contained a "defeat device" used to cheat emissions testing, an accusation that Daimler, which owns the carmaker, denied. U.S. law firm Hagens Berman, which had already filed a complaint in February, said new tests had shown that Mercedes BlueTEC cars produced nitrogen oxide emissions in virtually all road tests that were far higher than in controlled lab tests. "The fact that Mercedes passed the dynamometer test in all tests, but failed the real world test, is suggestive that like VW, Mercedes is implementing a 'defeat device'," it said in its complaint filed in the District Court of New Jersey. Daimler said in a statement on Friday: "We consider this class action lawsuit to be unfounded. Our position remains unchanged: A component that inadmissibly reduces emissions is not used in Mercedes-Benz vehicles."
Source: Reuters

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NADA Chief Not Hung Up With Modern Technology

2016 NADA Convention & Exposition

It’s an on-stage first for a National Automobile Dealers Association chairman. Delivering his inaugural speech at the trade group’s convention [in Las Vegas], Jeff Carlson pulls out his smartphone and shoots a selfie, inviting the audience to do the same. He aims to demonstrate life in the digital days. His phone also becomes part of his appearance two days earlier at the American Financial Services Assn. annual Vehicle Finance Conference. But that phone moment isn’t planned. It rang while he’s on stage, leaving Carlson a bit chagrined. “Who would think it would go off now?” he tells the audience, holding it up and adding, “This is the future, right now.” (No, he didn’t go so far as to take the call.) Smartphones are ubiquitous, and smart dealers have adapted to customers armed with them. As Carlson notes, many people use their phones “to shop us while they’re in our showrooms.” It is part of a rapidly changing auto-retail industry, Carlson says. “The thing about evolution is that someone has to keep up with it. Dealers have done that.”
Source: WardsAuto

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IRS Issues 2016 and Revised 2015 Vehicle Depreciation Limits

The IRS has issued guidance (Rev. Proc. 2016-23) providing revised limits for the amount of first-year depreciation taxpayers can take for a business-use passenger automobile (including a truck or van) in 2015 and the new depreciation limits for 2016. The guidance also includes the lease inclusion amounts that vehicle lessees must include in income for 2016.
Source: IRS

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Toyota to Launch Ann Arbor Autonomous Car Research Base

Toyota Motor Co. on Thursday said it will collaborate with the University of Michigan to create a major autonomous vehicle research base in Ann Arbor as part of its $1 billion Toyota Research Institute in California. The Ann Arbor location — an existing building on Green Road, near the University of Michigan’s north campus — will open in June and eventually employ 50 engineers, faculty members and other employees. Toyota will use the hub for research in artificial intelligence and robotics to support fully autonomous driving and to accelerate scientific discovery in materials science. Toyota declined to comment on how much of the $1 billion investment is going into the Ann Arbor location.
Source: The Detroit News

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Europes Car Boom Leaves Auto Makers Hunting for Profits

Rebound is helping luxury car manufacturers but mass-market brands aren’t feeling the benefit

After years of cost-cutting, slimming and moving production to low-wage countries, Europe’s car makers should be sitting pretty. But in the midst of their biggest sales boom in years, the payoff for many has been barely break-even. Cheap financing and pent-up demand have driven 2015 European car sales to the highest level in six years. IHS Automotive reported on Wednesday that sales in Western Europe—which accounts for about 80% of the continent’s total—rose 5.1% in March. Gains were lifted by Italy, which posted a 17% increase, and France, where sales jumped 7.5%, both over a year earlier. “Europe is a place where a good year means the car industry breaks even,” said Adam Jonas, an auto analyst with Morgan Stanley.
Source: The Wall Street Journal

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GM Design Chief Welburn to Retire July 1

Australian Simcoe to become first non-American head of design

Ed Welburn, General Motors’ debonair head of global design who radically transformed the look of the automaker’s car and truck lineup, is retiring effective July 1. He will be succeeded by Australian Michael Simcoe, vice president of design at GM’s International Operations, the company said today. Simcoe, 58, is the first non-American appointed to the top design post at GM. He will begin taking over for Welburn on May 1.
Source: Automotive News

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