NADA Headlines - 06/17/2013 (Plain Text Version)

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CFPB Takes Center Stage at NAF Conference

There was a reason the National Automotive Finance (NAF) Association's 17th annual Non-Prime Auto Finance Conference recorded its highest attendee count in a decade. The more than 330 people in attendance, mostly auto finance execs, were there to hear the Consumer Financial Protection Bureau's Rick Hackett talk about the bureau's recent and upcoming activities. Top of mind at the conference was the CFPB's recent targeting of the auto finance industry, including guidance the bureau issued in March regarding dealer participation programs offered by auto finance sources. In his opening remarks, Jack Tracey, executive director of the association, attempted to keep audience members focused on getting answers rather than using Hackett's presentation to air their grievances. “We are here to talk about the realities we're facing and what we need to do in order to comply,” he said. Hackett told audience members there is “an integrated effort across the bureau to apply different talent and tools to auto finance.” He also confirmed that supervisory investigations of auto finance sources are underway, adding that the CFPB is most interested in exploring the effect of dealer mark ups on protected classes.
Source: F & I and Showroom

Revolving Door in Full Swing at New Consumer Bureau

At least nine senior officials at the Consumer Financial Protection Bureau have left to join the private sector since the beginning of the year. The exodus began in January, when the regulator's deputy director, Raj Date, announced his resignation, with more than 12 employees departing overall. Date helped set up the new bureau, a product of the Dodd-Frank financial reform law, but left to begin his own bank consulting firm, which launched in April. Former CFPB employees told American Banker they worried about the high rate of turnover. The regulator had a 9 percent attrition rate for fiscal 2012, the magazine found.
Source: The Hill [return to top]

Chrysler Adds Spiff to Stair-Step Program

Chrysler Group has tweaked its stair-step sales incentives to make them more palatable to dealers, said Reid Bigland, the automaker's head of U.S. and Canadian sales. Starting this month, dealers who hit two-thirds of their monthly sales goal by the 20th of the month will receive extra payments related to the stair-step incentives. The payments are in addition to bonuses earned when dealers reach their monthly sales goal. Under stair-step plans, dealers receive per-vehicle bonuses when they meet factory-set sales goals. Friction can arise when dealers cut low-profit deals to boost sales but fail to reach the goal and miss the bonuses. The National Automobile Dealers Association has attacked stair-step incentives such as Chrysler's volume growth program as unfair, saying they lead to two-tiered wholesale pricing with some dealers getting vehicles at lower prices than other dealers. About 30 percent of Chrysler's 2,500 dealerships miss their goals in any given month, said Gary Brown, chairman of the Chrysler National Dealer Council, and a dealer on New York's Long Island. Brown said the dealer council discusses Chrysler's stair-step program each time it meets, and did so again last week.
Source: Automotive News [return to top]

Could Automotive Supply Chain Snap?

A combination of rebounding sales and an unprecedented number of new models in the works has stretched the auto parts supply chain so taut that the entire industry is holding its collective breath that it does not snap and jeopardize the recovery. New car sales are on pace to exceed 15 million in the U.S. this year and as many as 85 million globally. A record 500 vehicle launches are expected by 2016. Globally, Michael Robinet, managing director for IHS Automotive Consulting, forecasts 500 vehicle launches from 2012 to 2016, or about 135 a year compared with 100 a year in the past and only 85 a year in 2010 and 2011. “There's a lot of pressure on a supply base that's already strained,” he said. “If suppliers can't handle the pace, launches could start slipping.”
Source: Detroit Free Press

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Ford Applies Lessons of U.S. Crisis in Europe Upswing

Automaker gains market share on strength of new vehicle introductions

The slump in European auto sales that has prompted plant closings and layoffs may finally be turning the corner for Ford Motor Co. The Dearborn automaker is gaining market share on the continent, thanks to a handful of new vehicles, said Roelant de Waard, vice president of marketing, sales and service for Ford of Europe, in a telephone interview. Ford is following the same restructuring template overseas that worked in North America during the U.S. economic crisis four years ago. “It's fair to say there are a lot of parallels. I think the analogies are remarkable,” de Waard said. “The retail share, which is what we also focused on in the U.S. with all the new products, we're following that trend in Europe.” Ford's European restructuring plan is nearly identical to the one executed in the States: slash thousands of jobs, cut a good deal of vehicle production, and inundate the market with new and refreshed vehicles. The turnaround of Ford's North American operations is the defining moment of Alan Mulally's six-plus year tenure as the automaker's CEO.
Source: The Detroit News

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Automakers Race to Make Tiniest, Peppiest Engines

Here comes the attack of the three-cylinder, 1-liter engines

After ballyhooing ever-bigger V-8s for years, the auto industry is now jostling for the bragging rights when it comes to making engines as small as possible — and thus more fuel efficient. Lately, the attention is going to those who are making the smallest engines of them all — a new breed of 1-liter, three-cylinder power plants. The sudden focus on the smallest of engines reflects the marketing power of being able to advertise eye-popping miles-per-gallon totals when gas prices surge, a sea change from a decade ago when bigger was better. Now, small engines rule.
Source: USA Today [return to top]

Walt Arfons, a Pioneer With Cars Using Jet Engines, Dies at 96

Walt Arfons and his half brother, Art, were the ultimate tinkerers. Working in garages adjoining their family's feed mill and hardware store in Akron, Ohio, after World War II, they scooped up discarded automobile and truck parts along with old aircraft engines and patched them together to fuel their obsession with speed. They had no technical training or financial backing at first, but they built some of the fastest racecars of their time, dragsters of the 1950s and jet-propelled cars that set world speed records on the Bonneville Salt Flats in Utah in the 1960s. When Walt Arfons died of pneumonia in Akron on June 4 at 96, six years after his brother's death, he was remembered for designing, building and racing the first jet-powered dragster and for adopting drogue parachutes, previously used in aircraft, to act as racecar brakes.
Source: The New York Times [return to top]