NADA Headlines - 07/03/2013 (Plain Text Version)
The Obama administration will delay a crucial provision of its signature health-care law, giving businesses an extra year to comply with a requirement that they provide their workers with insurance. The government will postpone enforcement of the so-called employer mandate until 2015, after the congressional elections, the administration said [Tuesday]. Under the provision, companies with 50 or more workers face a fine of as much as $3,000 per employee if they don't offer affordable insurance. It's the latest setback for a health-care law that has met resistance from Republicans, who have sought to make the plan a symbol of government overreach.
By David Westcott, NADA Chairman
Late last month, House Republicans—including 27 members of the Financial Services Committee—sent a letter to the CFPB questioning the intent and methodology behind its [auto lending] guidance. The House letter which was dated June 20, asked the CFPB to explain how it determined two important data points in its study regarding disparate impact in the auto industry: the background of certain borrowers and the pricing discrepancies.
This isn't the first time Congress has stepped in to question the unfounded guidance. A letter dated May 28, was circulated by Congresswoman Terri Sewell to colleagues on the House Financial Services Committee. Their letter also asks for the analysis and methodology behind the guidance. Despite these requests, the CFPB has not revealed any of this information, including the data it used to run its statistical analysis. This poses a major problem since dealers resoundingly agree that a federal agency has an obligation to provide transparency, reliable data analysis, interagency coordination and public feedback when it attempts to change the financing method of a $783 billion auto loan market. Although the CFPB is not accusing dealers of intentional discrimination, the series of actions it has taken could drastically change how auto finance sources compensate dealers for arranging auto loans. Dealers across the nation understand that changing the system could stifle competition and end up costing consumers more—ultimately hurting the people the CFPB is trying to protect in the first place.
The auto industry's recovery continued in June, as U.S. buyers bought new cars and trucks at a pace not seen since before the great recession. Major American car makers reported higher sales, driven by demand for pickup trucks, small cars and cross-overs. U.S. buyers were heartened by the signs of a strengthening recovery and took advantage of low interest rates and wider credit availability. Rising consumer confidence hit a six-year high in June, and rising home construction positively affected consumer demand for cars.
Electric vehicles had their strongest month in June this year as major automakers cut prices and added hefty incentives to boost sales. General Motors Co. — after a series of disappointing sales months for its plug-in hybrid Chevrolet Volt — reported sales jumped by 53 percent to 2,698 in June, up over the 1,760 in June 2012 after it offered incentives worth as much as $5,000 off 2012 models and $4,000 off 2013 models. For the first half of 2013, sales are up 11.8 percent. Nissan Motor Co. said sales of its all-electric Leaf were up 315 percent over June 2012 to 2,225, for its second-best ever month. Nissan has now sold 9,849 in the first half of 2013, more than the 9,819 it sold in all of 2012. In January, Nissan said it was cutting the price of the entry-level Leaf 18 percent to $28,800 for the 2013 model as it launched U.S. production. Honda Motor Co. had its best-ever month in June with 208 Fit EVs sold, after selling 83 in the first five months of the year.
By Tom Walsh
Happy days really are here again for the U.S. automobile industry. Enjoy them for a moment — or perhaps even for a couple years. Then start watching closely, very closely, to see how long Detroit's carmakers and their foreign-owned rivals can stand prosperity. June was a boffo month in U.S. auto showrooms, as cars and trucks sold at a brisk annual pace approaching 16 million vehicles, a level not seen since mid-2007. That's when a swoon quickly became a free fall that sent auto sales plummeting to an annual pace of 9.5 million, the lowest since 1975, which culminated in the bailouts and bankruptcies of General Motors and Chrysler. Now sales are approaching boom levels again. Transaction prices keep rising. Automotive profits in North America are robust. Consumer sentiment is improving, housing starts and prices are up. When home builders are building again, they buy pickups, lots of them. Sales of large pickups by Ford, GM and Chrysler's Ram brand have all risen more than 20% during the first half of 2013. Things are peachy in the industry when sales are on the rise, but what happens the next time they dip? Will automakers dial back assembly line output to meet demand? Or will they revert to the bad habits of yore and keep cranking out cars, even if they must cut prices or offer 0% loans to move the metal?