NADA Headlines - 05/09/2013 (Plain Text Version)

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Commentary: CFPB Guidance Lacks Transparency and Research

By David Westcott / NADA Chairman

The Consumer Financial Protection Bureau (CFPB) issued fair lending guidance this spring that seeks to change the way dealers are compensated for arranging financing without demonstrating that problems exist with the current compensation method or without analyzing the effect that such change would have on the marketplace. When a federal agency seeks to upend an enormously efficient $783 billion market, it should only do so in a manner that is transparent, thoroughly researched, and that benefits from interagency coordination and public feedback. The foundation for the CFPB's guidance wholly rests on a theory of liability called “disparate impact.” Under this theory, if an auto finance policy results in certain groups of consumers paying more for credit than similarly-situated consumers in other groups, then unintentional discrimination is taking place. The bureau claims that this theory exists under the Equal Credit Opportunity Act and Regulation B and is using it to target the compensation arrangements used by indirect auto lenders with dealers. Click here for the full commentary.
Source: NADA Chairman's Column (May)

Guidance / Model Forms Issued for Required Health Care Reform Law Notices

The U.S. Department of Labor (DOL) on May 8 provided “temporary guidance” regarding the written notice employers are required to provide to their employees under the Patient Protection and Affordable Care Act (PPACA). PPACA requires that applicable employers must provide each employee with a written notice providing the employee with information about the state and federally-facilitated health insurance exchanges and how to request assistance, describing the availability of a premium tax credit (if applicable) and outlining the implications for the employee if they choose to purchase a qualified health plan through an exchange. The notice requirement was originally scheduled to take effect on March 1, 2013, but subsequent guidance has indicated that the timing for distribution of notices will be the late summer or fall of 2013 in coordination with the open enrollment period for exchanges.
Along with technical release, the following model notices have also been issued by DOL:

Dealers should consult their health care consultant, insurance carrier, or other outside professional to determine which form is appropriate for your dealership, and how to properly complete and distribute that form to your employees. For more details click here.
Source: NADA Regulatory Affairs [return to top]

Automakers Hawk Electric 'Compliance Cars' to Meet Rules

Each big automaker now has a electric car to sell, but they face losses on them

Automakers are in the uncomfortable position of building mostly at a loss a class of small electric cars that garner a lot of attention but few sales just to satisfy rules imposed by one state, California. As a result, they've acquired the name "compliance cars." They include electric versions of such familiar models as the Chevrolet Spark, Honda Fit and Toyota RAV4. Most are being produced primarily or solely to meet California's mandate that large automakers sell a percentage of zero-emission cars in order to sell traditional cars in the state. Though automakers have held splashy unveilings of these electrics, they often are selling by the hundreds in an industry where tens of thousands determine profitability. Limiting losses on the cars, not making a profit, has become the carmakers' initial goal. Though the automakers have taken different approaches to their electric cars, what the cars have in common is relatively high sticker prices compared to conventional versions, even after most buyers qualify for up to $7,500 in federal tax incentives and often substantial state or local government subsidies. Thus, because automakers must not just build but also sell the cars to satisfy California's regulations, the automakers are adding loss-making discount sales and lease deals to ensure they can move the vehicles.
Source: USA Today [return to top]

Tesla's Disappearing Data

Tesla Motors regularly gave out a crucial number that gave the public a good idea of how much demand existed for its electric cars. On Wednesday, the company said it was no longer going to provide that data, explaining that it was “no longer a meaningful metric.” The figure in question is how many reservations existed for Tesla’s cars at the end of each quarter. The reservation number was useful because it could be analyzed to calculate how many orders were coming in each quarter for its cars. Outsiders valued that visibility because, over all, it's hard to gauge how much demand exists for Tesla's automobiles.
Source: The New York Times [return to top]

Audi Pushes Aggressive Global Expansion Amid Growing Demand

Carmaker opens Mexico plant, eyes North and South America

Fresh from breaking ground on a new factory in Mexico, Audi AG CEO Rupert Stadler is pushing an aggressive global expansion program, with plans that could include plants in Brazil and the United States. Stadler expects the 150,000 Q5 SUVs that the Mexican plant will produce starting in 2016 will be easily absorbed by strong demand in the United States and Europe. There is a seven-month waiting list for the Q5. Growing demand for other Audi models will have to be met either with expansion of the Mexico plant or new facilities in North and South America. Like its sister brand Volkswagen, which has a new factory in Chattanooga, Tenn., Audi could choose to build its own plant in the United States.
Source: The Detroit News [return to top]

Why Chevy Execs are Suddenly Watching 'Mad Men'

One of Joel Ewanick's big moves in his brief reign as chief marketing officer of General Motors was to combine two rival ad agencies and give them the Chevrolet account, ousting Campbell Ewald after decades of experience. It turns out that Don Draper had that exact same idea in 1968. On the latest episode of AMC's Madison Avenue drama "Mad Men," Draper, the show's top creative mind/philanderer/drinker/identity thief, dumped one car company -- Jaguar -- before making a play for a much bigger, more prestigious fish: Chevy. He won the account after he and a competitor agreed to merge so they could take on Campbell Ewald and the other big boys wooing GM.
Source: Automotive News [return to top]