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December 19, 2016 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
NADA Chairman: The Year at a Glance
Year-End LIFO Conformity Reminder
Top 10 Dealership Tax and Assurance Tips for 2016 Year-End
FTC Settles 6 Auto-Recall Advertising Cases
GM Puts Bolt at the Center of Its Long-Term Vision
Expect Change in Washington to be Slow
North America Light-Vehicle Production Up 3.6% in November
NADA Convention Launches Mobile App
Top Stories
NADA Chairman: The Year at a Glance
By Jeff Carlson


As the last month of 2016 is well under way, we often become engrossed in holiday plans, end-of-year travel and New Year's resolutions. But it's equally important to pause and appreciate what we've accomplished over the past year. The National Automobile Dealers Association would like to thank its amazing dealer network-over 16,500 strong-for the hard work and passion that helped us earn a record-breaking year.

In the regulatory and legislative arenas, NADA continued to hold its defensive line with the Consumer Financial Protection Bureau's intrusion into our business. We worked hard to gain traction for the critical Senate Bill 2663, which aims to curb the CFPB's regulatory overreach. We tackled many other regulatory agencies with the knowledge that many of their policies have a significantly negative impact on the dealer business. We quantified and communicated the potentially negative economic impact to consumer affordability. This includes examining CAFE rules, recall mandates, manufacturer direct sales and many others. NADA's messages were effectively circulated and re-circulated through the year in major news outlets including The Wall Street Journal, Bloomberg and The New York Times, just to name a few. Click here for the full commentary.
Source: NADA

Carlson is 2016 NADA chairman and a Ford and Subaru dealer in Glenwood Springs, Colo.

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Year-End LIFO Conformity Reminder

The last-in, first-out (LIFO) inventory method could generate significant tax benefits for dealerships. During times of inflation, this method places a lower value on inventory, allowing dealers to defer taxes and improve cash flow. The tax deferral may be viewed as an interest-free use of cash. The LIFO method has many technical requirements, including the so-called conformity requirement that mandates a taxpayer using the LIFO method for tax also must use the LIFO method for financial (book) accounting.

As year-end approaches, automobile dealers should be careful to verify that all year-end financial statements, including factory dealer statements, are in compliance with IRS LIFO conformity rules and regulations. Failure to comply with the conformity rules could result in the termination of the dealer’s use of the LIFO inventory accounting method for tax purposes and the recapture of the entire LIFO reserve.

A dealership may use the LIFO inventory method only if it has used no method other than the LIFO method for inventorying goods for the purpose of a report or statement covering a taxable year. Dealers who use LIFO should verify that all financial statements – to shareholders, to partners, to other proprietors or beneficiaries, or for credit purposes – report income on the LIFO basis. Normally, a LIFO adjustment should be included at least once a year on factory dealer statements. All statements covering a taxable year, or any other 12-month period, must have the LIFO adjustment. It also is necessary to verify that the income for any short taxable year is calculated on the LIFO basis. A reasonable estimate of the LIFO adjustment is acceptable. The LIFO adjustment should encompass all LIFO inventory (such as new and used vehicles and parts).

An automobile dealer’s financial statements provided to the manufacturer and its credit subsidiary, with which the dealer finances its purchase of new automobiles, are “for credit purposes” because they are issued to a creditor with whom the dealer maintains a continuing credit relationship. On the statements provided to the factory, an automobile dealer must reflect the LIFO adjustment on the income statement for both a current month and the year to date as well as on the balance sheet. Such statements may reflect the income statement adjustment either as an adjustment to cost of goods sold or on the line for other income and expense.
Source: Crowe Horwath LLP

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Top 10 Dealership Tax and Assurance Tips for 2016 Year-End

Is the thought of a chaotic year-end getting you down? Sometimes a simple set of reminders that brings you back to the basics can be the cornerstone to successfully closing your calendar year. We understand and recognize that dealers operate in a world where tax planning and year-end audits or reviews may not appear in their "favorites" list, which is why we are sharing our consolidated "Top 10 List" of tax and audit or review items for you to consider adopting into your year-end process. Click here for the list.
Source: Dixon Hughes Goodman LLP

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FTC Settles 6 Auto-Recall Advertising Cases

The FTC announced today that it had (i) finalized its January 2016 proposed consent orders with General Motors and two auto dealer groups to resolve allegations of deceptive advertising related to used vehicles that are subject to an open safety recall, and (ii) entered into proposed consent orders with three other auto dealer groups to resolve similar allegations.  Among other provisions, the finalized and proposed consent orders generally prohibit the dealers from stating or implying that used vehicles they offer for sale are safe, have been repaired for safety issues, or have been subject to a rigorous inspection unless (i) the vehicles are not subject to an open safety recall, or (ii) the dealer clearly and conspicuously discloses – in close proximity to the representation – any material qualifying information related to open safety recalls, including (a) the fact that advertised vehicles may be subject to open safety recalls, and (b) how consumers can determine a used vehicle’s recall status.  In addition, prior to the consummation of the sale, the dealers must provide to the purchaser any written notification that they have received from a manufacturer that the motor vehicle is subject to an open safety recall or they must provide a document that conveys the same information in a substantially similar format.  (Two of the proposed consent orders also permit an alternative type of written notice.)  Further, the dealers may not misrepresent whether there is or is not an open safety recall on any used vehicle, whether they repair used vehicles for open safety recalls, or any other material fact about the safety or recall status of used vehicles they offer for sale. 

 
The FTC issued a Statement of the Federal Trade Commission Concerning Auto Recall Advertising Cases that explain the actions in more detail.  The FTC’s actions do not address other duties that may apply under state law.

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GM Puts Bolt at the Center of Its Long-Term Vision

General Motors is making the Chevrolet Bolt the centerpiece of not only its electric vehicle portfolio but also of its work on self-driving technology. Days after delivering the first Bolts to customers in California last week -- and fulfilling CEO Mary Barra's promise to launch the vehicle by year end -- GM revealed plans to start building a test fleet of autonomous Bolts in January on the same Michigan assembly line as the regular version of the car. Barra also said the automaker immediately would begin running autonomous Bolts on public roads in the Detroit area for the first time.
Source: Automotive News

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Expect Change in Washington to be Slow

When President-elect Trump takes office in January, we will see lots of new faces in Washington, including those of cabinet members and new heads of key agencies with auto industry oversight.

 
But as for auto executives who might be promoting a quick and radical overhaul of rules and regulations, I would advocate moderation. No doubt we will see substantial changes in the way the industry and its businesses are run, but they won't happen overnight and there will be just enough monkey wrenches tossed into the works to keep people on their toes.
Source: Automotive News

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North America Light-Vehicle Production Up 3.6% in November

North America light-vehicle production rose 3.6% from like-2015 to 1,493,423 units in November. Increases in both car (+3.1%) and light-truck (+3.8%) output brought the region to a best-ever November total. 
Source: Wards Auto

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NADA Convention Launches Mobile App


 

The new NADA100 mobile app for the 2017 NADA Convention and Expo in New Orleans is now available in the App Store and Google Play. Search for NADA100.

Key features include:

  • Real-time alerts;
  • Workshop and event schedules; 
  • The option to download and email workshop handouts;
  • Locate and schedule meetings with exhibitors; and
  • Rating the workshop sessions.

The NADA convention runs from Thursday, Jan. 26, to Sunday, Jan. 29. The advance online registration discount of $75 for NADA member dealers and their managers ends Jan. 20. For more information or to register, visit www.nadaconvention.org.  
Source: NADA Convention & Expo

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Past Articles
       
      Quotable

      "For auto executives who might be promoting a quick and radical overhaul of rules and regulations, I would advocate moderation. No doubt we will see substantial changes in the way the industry and its businesses are run, but they won't happen overnight and there will be just enough monkey wrenches tossed into the works to keep people on their toes."

       
      -- Automotive News Editor-in-Chief, Keith Crain, Automotive News, Dec. 19
       
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