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September 28, 2017 FacebookTwitterFlickrRSSSEND TO A FRIENDPRINT
Inside this issue
Supreme Court to Take Up Car Dealership Overtime Case
Trump Proposes the Most Sweeping Tax Overhaul in Decades
Senate Self-Driving Vehicle Bill Slowed by Trucks, Preemption
Fiat Chrysler to Engage in Settlement Talks Over Diesel Emissions
Toyota to Form Electric Car Technology Venture with Mazda
Midsize U.S. Sedan Demand Stalls Out to Lowest on Record
Detroit Three's to Lose Dominance of North American Auto Output in 2017: IHS
Top Stories
Supreme Court to Take Up Car Dealership Overtime Case

The Supreme Court is giving car dealerships a second chance to put the brakes on overtime pay for service advisers. The court has agreed to take up — again — a case involving a California dealership that claims those advisers are similar to salesmen or mechanics, and therefore exempt from overtime requirements under the Fair Labor Standards Act. The 9th U.S. Court of Appeals disagreed. Last year, the Supreme Court told the appeals court to take another look — but this time, don’t defer to a Labor Department rule that service advisers aren’t exempt from overtime requirements. The lower court once again ruled that service advisers are eligible for overtime pay. Now the Supreme Court will get a chance to review that ruling.
Source: The Associated Press

Editor’s note: Today, the Supreme Court granted certiorari in Encino Motorcars, LLC v. Navarro, a case brought by “service advisors” employed by a California dealership who argued that they should not fall within the federal “salesmen, partsmen, and mechanics” exemption from the Fair Labor Standards Act’s overtime pay entitlement.  The Supreme Court is agreeing to review a January 2017 decision by the Ninth Circuit Court of Appeals holding that the exemption did not apply, while admitting that it was in direct conflict with several other federal and state decisions on point.  This is the second time that the Supreme Court has accepted an appeal of a Ninth Circuit decision involving Encino.

As in the past, NADA is providing support to the dealers who are litigating this case and will work with the state dealer associations in the Ninth Circuit to file a "friend of the court" brief on behalf of those dealers in anticipation that the Supreme Court will resolve the issue in favor of the dealer defendants and of all those dealers who have for decades applied the overtime exemption to service advisors.  Briefing in the case will begin later this year with oral argument scheduled for some time in 2018.

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Trump Proposes the Most Sweeping Tax Overhaul in Decades

President Trump on Wednesday began an ambitious push to slash taxes and salvage what remains of his embattled legislative agenda in Congress this year, proposing a politically challenging array of tax cuts for individuals and businesses that would constitute the most sweeping changes to the federal tax code in decades. Provisions such as the alternative minimum tax and the estate tax, a levy on inherited wealth that Mr. Trump has derided for years, would be gone under the Republican proposal.

The proposal calls for reducing the corporate tax rate to 20 percent from 35 percent, a shift that supporters say is needed to make American companies more competitive with their counterparts around the world. A new tax rate of 25 percent would also be created for so-called pass-through businesses, such as partnerships and sole proprietorships, which are currently taxed at the rate of their owners. About 95 percent of businesses in the United States are structured as pass-throughs and they generate a majority of the government’s corporate tax revenue.
Source: The New York Times

Editor’s note: Yesterday, President Trump and Republican leaders released a revised framework for tax reform, which includes some positive elements but leaves the details to Congress.  Next month the House and the Senate are expected to consider a budget resolution which will set the procedural stage for the House Ways and Means and Senate Finance Committees to begin writing the specific bill language to implement the framework.  The tax-writing process is likely to intensify throughout the fall and may continue into 2018. 

As Congress enters this all-important phase of filling in the details, NADA will continue fighting for pro-growth tax measures that stimulate consumer demand and facilitate capital retention for dealers so that they can continue to provide jobs and investment on Main Street.  NADA will focus on key preferences such as LIFO, the deductibility of interest and advertising, the estate tax, as well as rate relief for businesses, including pass-through entities.  Finally, NADA will continue to inform Congress how the proposed changes would alter the dealers’ effective tax rate, because that will determine the impact on the dealers’ ability to drive economic activity and growth on Main Street.

Click here for the one-pager on President Trump's and Republican leaders' tax reform framework. Click here for NADA's tax reform priorities.

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Senate Self-Driving Vehicle Bill Slowed by Trucks, Preemption

Senate Commerce, Science and Transportation Committee wanted to mark up self-driving bill on Oct. 4

A Senate panel may have to move a House bill on self-driving vehicles rather than its own legislation and deal with self-driving commercial trucks later, if Democrats hold a hard-line position, the committee chairman told Bloomberg BNA.

“If we can't get the agreement here pretty quick, I mean the alternative is to move the House bill,” Sen. John Thune (R-S.D.), chairman of the Senate Commerce, Science and Transportation Committee, told Bloomberg BNA Sept. 27.

Though Thune continues to work through points of contention with Peters and ranking member Bill Nelson (D-Fla.), he said the committee's Democrats keep raising issues that have delayed a compromise. A revised draft of the bill had been expected by Sept. 27, a week before the anticipated markup.

“I think everything is on the table right now. Just like the technology is new, the discussions are new,” Sen. Amy Klobuchar (D-Minn.) told reporters.
Source: Bloomberg BNA

Editor's note: Congress should ensure that legislation regulating self-driving vehicles explicitly preserves state vehicle licensing and franchise laws. Click here to view NADA's HAV issue brief.

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Fiat Chrysler to Engage in Settlement Talks Over Diesel Emissions

Fiat Chrysler Automobiles NV will engage in settlement talks with lawyers representing vehicle owners suing the automaker over excess diesel emissions in Washington on Oct. 12, a court-appointed settlement adviser said Wednesday. In May, the U.S. Justice Department sued Fiat Chrysler, accusing the company of illegally using software that led to excess emissions in nearly 104,000 U.S. diesel vehicles sold since 2014. It also faces numerous lawsuits from owners of those vehicles.
Source: Reuters

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Toyota to Form Electric Car Technology Venture with Mazda

Toyota Motor Corp. has established a new venture to develop electric vehicle technology with partner Mazda Motor Corp., seeking to catch up with rivals in an increasingly frenetic race to produce more battery-powered cars. Toyota said in a statement the new company will develop technology for a range of electric cars, including minivehicles, passenger cars, SUVs and light trucks. Toyota will take a 90 percent stake in the joint venture, called EV Common Architecture Spirit Co. Ltd., while Mazda and Denso Corp., Toyota’s biggest supplier, will each take 5 percent.
Source: Reuters

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Midsize U.S. Sedan Demand Stalls Out to Lowest on Record

Only about one in 10 new cars sold in the U.S. is a midsize sedan, a sharp decline for the best-selling vehicle segment in 20 of the last 27 years, according to data from car-shopping website Edmunds. Models like the Toyota Camry and Honda Accord -- both of which were redesigned this year to counteract the slump -- have slipped to the fifth most popular segment, behind compact SUVs, large trucks, midsize SUVs and compact cars. The trend is unlikely to reverse even if gas prices rise, as nearly a quarter of midsize sedan owners are choosing small SUVs when trading in their wheels.
Source: Bloomberg

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Detroit Three's to Lose Dominance of North American Auto Output in 2017: IHS

North American vehicle production by the unionized Detroit Three automakers will fall behind the combined North American output of Tesla Inc and automakers from Europe and Asia for the first time this year, IHS Markit forecast on Wednesday. In 2017, the Detroit Three could build 8.6 million vehicles in North America, while Tesla and foreign automakers build 8.7 million, IHS Markit analyst Joe Langley said on Wednesday.
Source: Reuters

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Quotable
"Once someone gets used to the higher ride, extra space and creature comforts they can get in an SUV, it’s almost a fool’s errand to convince them to go back to a sedan."

    -- Jessica Caldwell, Edmunds executive director of industry analysis, commenting on the sales decline of midsize sedans, Bloomberg, Sept. 27

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