NADA Headlines - 06/18/2013 (Plain Text Version)

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Supreme Court Threatens Dubious Housing Bias Theory

In what could neutralize a key Obama administration weapon to sue home lenders for discrimination, the Supreme Court agreed Monday to hear a case challenging the use of a questionable civil-rights theory. The bench's conservative majority has been spoiling to strike down so-called disparate impact liability claims in housing and lending bias cases, legal experts say. It was poised to do so last year, but administration officials pressured a petitioner into dropping the case just weeks before the court was scheduled to hear oral arguments. In the case now before the court — Mt. Holly v. Mt. Holly Gardens Citizens in Action — a New Jersey town argues it was unfairly sued for discrimination under a disparate impact claim, which carries a low standard of proof. Activists representing blacks and Latinos claim a town plan to redevelop a high-crime neighborhood is racist simply because it impacts more minorities than whites, regardless of any intent to discriminate. They say it's a violation of the Fair Housing Act. However, unlike other anti-discrimination laws, the FHA does not explicitly cover disparate impact claims. Nor does the Equal Credit Opportunity Act. Yet the administration has cited both acts in bringing a record number of disparate-impact claims against mortgage lenders.

The agencies are now coordinating disparate-impact investigations with the new Consumer Financial Protection Bureau — which has launched an aggressive anti-discrimination campaign against auto lenders as well. "If the Supreme Court holds that disparate impact claims cannot be pursued, that legal avenue will no longer be available to private and governmental litigants," Ballard Spahr, a Washington law firm helping represent Mt. Holly in the case, said in a statement.
Source: Investor's Business Daily

Editor's note: The Consumer Financial Protection Bureau (CFPB) has used the same “disparate impact” theory of liability to pressure auto finance sources to change the way they compensate dealers for arranging financing for consumers. Consumers currently can negotiate with the dealer to obtain financing at a lower cost than is available from any other finance source. The CFPB recently issued disparate impact “guidance” that seeks to have finance sources compensate dealers with a flat fee, thereby eliminating consumers' ability to negotiate more competitive rates with dealers. The outcome of this case will likely have a direct bearing on the CFPB's efforts to use the disparate impact theory of liability to force this change in the marketplace. Apart from this legal challenge, NADA is working with a bipartisan group of House Financial Services Committee members to have the CFPB explain both the basis for its allegation that finance source policies that allow for negotiation have a disparate impact on certain groups of consumers and the extent to which it has measured how removing this competitive force from the marketplace would affect the cost of credit for consumers, particularly those who struggle to obtain conventional financing.

GM Poised to Leap Out of 'Lease Hole'

As first post-crash lessees return, sales and share are expected to grow

General Motors has a secret weapon in its bid to gain U.S. market share this year. Just consider the lease portfolio at Paddock Chevrolet in Kenmore, N.Y. Owner Duane Paddock says he's finally beginning to see customers trickling in with expiring 36-month leases, after having barely any off-lease customers in 2012. The lease drought -- a lingering effect of the recession and GM's 2009 bankruptcy -- cut off a major customer stream for a store that once averaged about 180 lease returnees a month. "By about November we expect to be full-blown" with returning lessees, says Paddock, estimating that his sales staff will convert more than 50 percent of those into fresh leases or sales. He expects a few hundred off-lease customers to return this year, rebounding to nearly 1,800 next year. For nearly two years, GM dealers have been suffering through a shortage of off-lease customers. That's because leasing by GM dealers all but dried up in late 2008, amid the financial crisis, and didn't resume in earnest until mid-2010. Three years later, those first post-crash lessees are returning to Cadillac, Buick-GMC and Chevrolet showrooms.
Source: Automotive News [return to top]

U.S. Fuel Economy Maintains Record Level as Truck Sales Grow

The WardsAuto Fuel Economy Index held steady for the third straight month in May, as U.S. light-vehicle sales matched the record average fuel-economy rating of 24.3 mpg set in March and equaled in April. The May FEI score represented a 1% increase over year-ago and a 16% gain on the base rating established in fourth-quarter 2007. But while the score remained the same, the market continued to shift away from the segments with the highest average fuel economy to those with lower ratings, raising doubt about the industry's ability to maintain its current record-high efficiency level.
Source: WardsAuto [return to top]

European Car Sales Fall to 20-Year Low Amid Unemployment

European car sales fell to a 20-year low in May as record joblessness caused by a recession in the euro area reduced demand at PSA Peugeot Citroen, Renault SA, Fiat SpA and General Motors Co. Registrations dropped 5.9 percent to 1.08 million vehicles from 1.15 million a year earlier, the Brussels-based European Automobile Manufacturers' Association, or ACEA, said. The figure was the lowest for the month since 1993, said Quynh-Nhu Huynh, the group's economics director. The ACEA compiles data for the 27-nation EU plus Switzerland, Norway and Iceland. Peugeot, Renault, Fiat and GM's deliveries fell at least 10 percent in the region last month as price cuts failed to attract buyers. European political leaders are seeking ways to revive a shrinking economy weighed down by the sovereign-debt crisis, with unemployment in the 17 countries using the euro reaching 12.2 percent in April. Auto-industry executives are forecasting that the European car market will shrink a sixth consecutive year in 2013, with a possible recovery starting by the final quarter.
Source: Bloomberg [return to top]

Officials Trying to Lure Joint Fiat-Chrysler Headquarters to Tennessee

Auburn Hills has some competition if Fiat decides to move its joint Fiat-Chrysler headquarters to the U.S. Tennessee officials are making the case to Fiat head Sergio Marchionne to select their state for the Italian automaker's joint headquarters with Chrysler Group. Marchionne met with Tennessee Gov. Bill Haslam and others on Sunday at a ceremony to mark the expansion of Fiat subsidiary Magneti Marelli's components plant in Pulaski. WPLN-FM [Nashville, Tenn.] reports that Marchionne said Tennessee officials have been “working me over pretty well.” When he rhetorically asked where those assembled for the ribbon cutting where they would prefer the headquarters to be, Haslam replied: “I vote right here.”
Source: Detroit Free Press

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Opinion: Big Brother is Watching

By Keith Crain

I am constantly amazed by how much bureaucracy dealers face running what used to be called small businesses. I'm not sure many dealers in North America would consider their dealerships small businesses. But by some government standards, they are small. Today it's almost imperative to have legal assistance on the payroll. What was a simple business a couple of decades ago has turned into a nightmare for many dealers around the country. There isn't much you can do today that doesn't run up against some local, state or federal law or regulation. Many are patently ridiculous. But that doesn't seem to matter as far as the regulators are concerned. Heaven help you if you are thinking about opening a dealership or expanding an existing one. And you always have the factories imposing new rules and regulations that could cost hundreds of thousands of dollars. But the most grievous challenge facing the North American auto dealer is being bombarded by overzealous regulators who seem to be fighting one another to create and enforce more unnecessary standards.
Source: Automotive News [return to top]