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July 20, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Industry Groups Ask for Support for Senate Bill to Preserve Auto Loan Discounts for Consumers
U.S. Considers Expanding Automated-Driving Technology Oversight
VW Earnings Rise Amid Recovery From Diesel-Emissions Scandal
Fiat Chrysler Confirms Federal Investigation into Sales Reports
Volkswagen's Audi Plans Electric Car Push to Put Heat on Tesla
Lincoln Opens Brand Experience Center in California
Top Stories
Industry Groups Ask for Support for Senate Bill to Preserve Auto Loan Discounts for Consumers

S. 2663 is essential to keeping auto financing competitive, affordable

A broad coalition of business groups involved in the making, selling, servicing, financing and auctioning of vehicles urged Congress this week to support Senate legislation to preserve a consumer’s ability to get discounted auto loans at the dealership.

In a letter to U.S. senators, the group of nine trade associations asked for help in passing S. 2663, the “Reforming CFPB Indirect Auto Financing Guidance Act.” The legislation, introduced by Sen. Jerry Moran (R-Kan.), would rescind the Consumer Financial Protection Bureau’s 2013 auto finance guidance that could lead to limits on a consumer’s ability to receive a discounted auto loan from a dealer. 

“Access to affordable credit is essential to the vehicle industry and its customers, and the ability of a dealer to discount credit is often necessary to sell the vehicle,” the group wrote. “Since 2013, the CFPB has pressured finance sources to limit a dealer’s ability to discount credit based on a deeply flawed method for measuring lender compliance with the Equal Credit Opportunity Act (ECOA).  Industry stakeholders have tried, unsuccessfully, to work with the CFPB to preserve discounted auto loans by proposing a Department of Justice (DOJ) model that effectively manages fair credit risk while allowing discounts for legitimate business reasons.”

Like its House counterpart – H.R. 1737, which passed on a bipartisan vote of 332-96, including 88 Democrats, on Nov. 18, 2015 – S. 2663 would also require the CFPB to engage in an open and transparent process when issuing future auto finance guidance.

“The CFPB’s attempt to eliminate the consumer-friendly practice of a dealer discounting credit has been sought not by rule, but by guidance and non-public enforcement actions,” the letter read. “This guidance was issued without any public comment, consultation with CFPB’s sister agencies (including those that Congress authorized to regulate auto dealers), or transparency.  Indeed, by the CFPB’s own admission, the agency did not study the impact of its guidance on consumers.” 

The letter also noted that S. 2663 would require the CFPB to follow an open process prior to issuing any new guidance related to indirect auto financing; and is purely a process bill, and therefore does not intrude on the CFPB’s structure, jurisdiction, or authority, nor does it direct a result.

Additionally, the open and transparent process required by S. 2663 would provide a framework for the industry to adopt a DOJ fair credit model, which effectively meets the CFPB’s stated objective of addressing fair lending risks without preventing consumer discounts for legitimate business reasons, the letter explained.

“When Congress created the CFPB, surely it did not intend the agency to use its power to stop vehicle retailers from offering consumers discounts,” the letter continued. “Keeping auto financing competitive is not only warranted, it is essential for the vehicle industry and its customers. That is why this legislation easily passed the House, and why the Senate should pass S. 2663.”

The letter was signed by: Peter Welch, President, National Automobile Dealers Association; Mitch Bainwol, President and CEO, Alliance of Automobile Manufacturers; Chris Stinebert, President and CEO, American Financial Services Association; Phil Ingrassia, President, National RV Dealers Association; Steve Jordan, CEO, National Independent Automobile Dealers Association; Frank Hugelmeyer, President, Recreation Vehicle Industry Association; Cody Lusk, President, American International Automobile Dealers Association; Frank Hackett, CEO, National Auto Auction Association; and Tim Buche, President and CEO, Motorcycle Industry Council.

Click here for the full text of the letter.

Editor's note:  NADA's Legislative Affairs office is urging dealers to contact their Democratic Senators today to ask for their vote on S. 2663, which will keep auto loans accessible and affordable for consumers.  S. 2663 is of utmost importance and U.S. Senate members need to hear directly from dealers today.  Click here for NADA’s issue brief and visit www.nada.org/cfpb for more information.

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U.S. Considers Expanding Automated-Driving Technology Oversight

Existing motor-vehicle safety rules don’t address autonomous vehicles

Federal auto-safety regulators are weighing requiring approval of automated-driving technologies before they reach the road, potentially expanding government oversight of auto makers after the first fatal crash involving a vehicle driving itself. Existing motor-vehicle safety rules don’t address autonomous vehicles, meaning regulators have no authority to block automated-car technologies before they are introduced. The National Highway Traffic Safety Administration is often limited to addressing potential safety problems after mishaps occur.“There is no express prohibition of autonomous vehicles in ... federal motor vehicle safety standards,” U.S. Transportation Secretary Anthony Foxx said.
Source: The Wall Street Journal

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VW Earnings Rise Amid Recovery From Diesel-Emissions Scandal

Volkswagen AG’s first-half earnings exceeded market expectations, sending its shares up the most in three months, as improvements at its namesake car brand eclipsed concerns about the growing price tag for the emissions-cheating scandal. Operating profit before special items rose to 7.5 billion euros ($8.25 billion) in the first six months of 2016 from 6.99 billion euros a year earlier, the German carmaker said in a statement. The preliminary earnings figures, released in advance of the full quarterly financial report due on July 28, showed Volkswagen’s operations have been recovering even as the company continues to wrestle with legal fallout from the scandal.
Source: Bloomberg

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Fiat Chrysler Confirms Federal Investigation into Sales Reports

Fiat Chrysler Automobiles released a statement Monday confirming it's under investigation by the U.S. Securities and Exchange Commission for the way the automaker reports sales figures to the public in quarterly reports. FCA, which also said it had been contacted by the U.S. Justice Department, said that it was cooperating with the probe. The investigation could call into question FCA's 75-month streak of positive year-over-year sales increases.
Source: Detroit Free Press

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Volkswagen's Audi Plans Electric Car Push to Put Heat on Tesla

Audi will aim for electric cars to account for a quarter of its sales by 2025 as part of a strategic overhaul following the emissions scandal at parent Volkswagen, company sources said, in a move that could step up the challenge to U.S. group Tesla. Audi, which has been slow to embrace battery-powered vehicles, will now invest about a third of its research and development (R&D) budget into electric cars, digital services, and autonomous driving, two company sources told Reuters. In the wake of Volkswagen's diesel test cheating, regulators around the world have intensified a clampdown on toxic fumes, potentially providing a boost in demand for zero emission cars. Customers have, however, been slow to adopt electric cars which have a limited operating range and long recharging times.
Source: Reuters

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Lincoln Opens Brand Experience Center in California

Lincoln Motor Co. recently opened a 5,200-square-foot experience center in a swanky shopping center in Newport Beach, California, that it hopes will draw more people to the brand. Guests can use the center to casually browse Lincoln vehicles, customize their own car and set up an appointment with the closest dealer to buy it, or just relax with a free cup of coffee. It’s situated at Fashion Island in Newport Beach, an upscale, open-air shopping center...  Lincoln’s hometown luxury rival, Cadillac, recently opened a similar center in New York. Called Cadillac House, the 12,000-square-foot space includes a coffee shop and space for events and vehicle exhibits. The brand said it will also use it for film screenings or tech-talk events.
Source: The Detroit News

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Past Articles
 
Quotable
"When Congress created the CFPB, surely it did not intend the agency to use its power to stop vehicle retailers from offering consumers discounts. Keeping auto financing competitive is not only warranted, it is essential for the vehicle industry and its customers. That is why this legislation easily passed the House, and why the Senate should pass S. 2663."

    -- Nine trade associations wrote in a letter to U.S. senators, July 19


 
"The numbers show a historic record result in the second quarter, and that's just spectacular considering the headwinds VW faces with declining revenues and all the woes triggered by the diesel scandal."


    -- Juergen Pieper, a Frankfurt-based analyst at Metzler Bank, commenting on Volkswagen AG’s first-half earnings, Bloomberg, July 20

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