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Inside this issue
Economic Analysis Reaffirms That State Franchise Laws Lower Prices, Benefit Consumers
Opinion: Here's How Financial And Other Regulators Are Issuing Rules Without Writing Them
VW Yet to Ask EPA for Sales OK
Your Carís Been Studying You Closely and Everyone Wants the Data
Mercedes Beats BMW at Half-Year Mark in Luxury-Car Sales Race
Google Self-Driving Car Project Names General Counsel as Scrutiny Rises
GM, Lyft Expand Express Drive Program, Tout Partnership
Top Stories
Economic Analysis Reaffirms That State Franchise Laws Lower Prices, Benefit Consumers

Retail prices for new cars are lower for consumers because of state franchise laws, according to a new economic analysis from the Phoenix Center for Advanced Legal and Economic Public Policy Studies.

The analysis, “State Automobile Franchise Laws: Public or Private Interests?” found that state franchise laws serve to foster intense competition among franchised new-car dealers, which “demonstrably lowers prices for consumers” and “alter[s] the way consumers buy cars and service in a positive way.”

“Franchise laws do not limit competition or lead to higher prices,” said study co-author and Phoenix Center Senior Fellow Professor T. Randolph Beard. “In fact, all the evidence suggests that there is intense competition leading to very low margins on new car sales.”

The Phoenix Center study came in response to recent scrutiny of state franchise laws by the Federal Trade Commission (FTC) and others, and the suggestion that these laws are outdated. The study concluded, however, that state franchise laws are indeed still very beneficial to consumers.

“When selling an automobile-service bundle, our analysis indicates that franchised auto dealers have a better incentive with respect to consumer desires than car manufacturers,” said study co-author and Phoenix Center Chief Economist Dr. George S. Ford. “As such, it is not unreasonable for state legislatures to choose a market design that best serves their constituents in the form of local auto franchise laws.”
Source: NADA


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Opinion: Here's How Financial And Other Regulators Are Issuing Rules Without Writing Them
By Clyde Wayne Crews Jr.

At the end of June, I testified in a U.S. Senate Homeland Security Regulatory oversight subcommittee hearing on Examining the Use of Agency Regulatory Guidance. Federal agencies, it turns out (probably not to your surprise) are now overusing so-called “Guidance Documents” to sneak around the normal written public notice-and-comment rulemaking process set up for agencies to democratically rather than unilaterally issue substantive new regulations (the Administrative Procedure Act of 1946). Guidance is legal, but had been intended to be interpretive (“interpretative,” actually, in the law); not intended to make new policy or to be legally binding. But things have changed. (Here are my written and oral remarks from the Senate hearing.)

Guidance from the Consumer Financial Protection Bureau in the form of a “Bulletin” on “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act” limits the ability of automobile dealers to offer discounts to customers allegedly in the name of credit fairness and eliminating racial bias (“When such disparities exist within an indirect auto lender’s portfolio, lenders may be liable under the legal doctrines of both disparate treatment and disparate impact”). Given the size of the auto lending marketplace this is clearly an economically significant measure that at the very least required a rulemaking rather than guidance, as well as concerns that even the CFPB recognized internally that it was overestimating bias led to bipartisan House of Representatives passage of H.R. 1737 the “Reforming CFPB Indirect Auto Financing Guidance Act” (a Senate version S. 2663 awaits action) to revoke the guidance. The bill would force CFPB “to withdraw the flawed guidance that attempts to eliminate a dealer’s ability to discount auto financing for consumers. The bill also requires the minimal safeguards the agency failed to follow, such as public participation and transparency.”
Source: Forbes

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VW Yet to Ask EPA for Sales OK

Volkswagen dealers eager to hear about resuming sales of new diesels will have to keep doing what they've been doing for nearly 10 months now: wait. After U.S. officials announced the $15 billion VW settlements in late June, an EPA official told Automotive News that VW still hadn't applied for the agency approvals needed to sell new diesel-powered vehicles. "They need to address our concerns" before sales can resume, the EPA official said.
Source: Automotive News

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Your Carís Been Studying You Closely and Everyone Wants the Data

As you may have suspected, your car is spying on you. Fire up a new model and it updates more than 100,000 data points, including rather personal details like the front-seat passenger’s weight. The navigation system tracks every mile and remembers your route to work. The vehicular brain is smart enough to help avoid traffic jams or score parking spaces, and soon will be able to log not only your itineraries but your internet shopping patterns. The connected car will be a wonderful convenience or an intrusive nightmare, depending on your tolerance. For automakers, it could be a gold mine, which is why the industry is building firewalls to keep the likes of Google Inc. and Apple Inc. at bay -- and hoping to pry you away from their phones and apps when you’re motoring.
Source: Bloomberg

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Mercedes Beats BMW at Half-Year Mark in Luxury-Car Sales Race

Mercedes-Benz solidified its sales lead over the BMW brand in the first half of the year, moving closer to a goal of unseating its rival for the first time since 2005. BMW’s six-month deliveries rose 5.8 percent from a year earlier to 986,557 autos, compared with a 12 percent gain to just over 1 million cars for Daimler AG’s Mercedes. That left Munich-based BMW trailing its Stuttgart-based rival by 20,062 vehicles.
Source: Bloomberg

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Google Self-Driving Car Project Names General Counsel as Scrutiny Rises

Google self-driving car project said it had appointed its first general counsel, as U.S. regulators increase their scrutiny of autonomous vehicles. Google named Ken Vosen as the top lawyer for its self-driving car project. He was most recently chief legal officer at The Climate Corporation, an environmental analysis firm and a unit of Monsanto Co. He was also previously counsel at O'Melveny & Myers LLP. His hiring was reported earlier by Recode. The move could be a sign that Google is preparing to make its self-driving car unit a separate company. The program is now part of its X research laboratory unit.
Source: Reuters

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GM, Lyft Expand Express Drive Program, Tout Partnership

General Motors and ride-hailing company Lyft Inc. said on Monday they would expand their short-term rental program to California and Colorado, building on an effort that GM President Dan Ammann said has "dramatically exceeded expectations." The program, called Express Drive, makes GM cars available to Lyft drivers along with insurance and maintenance. It currently operates in Chicago, Boston, Washington, D.C., and Baltimore. The expansion will include two electric vehicles as options in California, the 2017 Chevrolet Bolt EV and the extended-range electric 2016 Chevrolet Volt.
Source: Reuters

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              "When selling an automobile-service bundle, our analysis indicates that franchised auto dealers have a better incentive with respect to consumer desires than car manufacturers. As such, it is not unreasonable for state legislatures to choose a market design that best serves their constituents in the form of local auto franchise laws."

                  -- Dr. George S. Ford, chief economist at the Phoenix Center and coauthor of a new study on the consumer benefits of state franchise laws, Phoenix Center, July 12

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