NADA Headlines - 02/26/2015 (Plain Text Version)

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Bloomberg View: CFPB Proves Its Critics Right

By Ramesh Ponnuru

Car dealers sometimes make discounts, at their discretion, on loans they help to arrange with financial companies. That's a pretty fundamental aspect of how they do business. Yet the federal government is trying to put a stop to it. The Consumer Financial Protection Bureau, an independent agency established by the Dodd-Frank financial-regulation law in 2010, says that letting the dealers exercise discretion opens the door to discrimination based on race and sex (whether or not that discrimination is intentional). So it's leaning on lenders to eliminate or at least limit that discretion and come up with "a different mechanism" for compensating dealers. The CFPB's position runs into three difficulties that invalidate its approach to this issue -- and suggest how prone to abuse this new agency may become. Click here for the full commentary.
Source: Bloomberg

Lender Groups Want Answers From the CFPB

A letter sent last week by the American Financial Services Association and other trade associations to Richard Cordray, director of the Consumer Financial Protection Bureau, was aimed at prodding the CFPB to publicly respond to a study AFSA commissioned last year. “There certainly has been more than enough time for them to address some of the issues,” Chris Stinebert, CEO of AFSA, told Automotive News in a phone interview. AFSA released the study in November. At that time, the CFPB said the bureau would “review it carefully.”

The study was performed by Charles River Associates. Its conclusions criticized the CFPB’s approach to auto lending. Specifically, the study questioned the statistical method the CFPB uses to identify borrowers that belong to legally protected classes, such as minorities. Besides AFSA, last week’s letter was signed by the American Bankers Association, the Consumer Bankers Association, the Financial Services Roundtable and the U.S. Chamber of Commerce.

“The Associations request that the Bureau conduct a thorough review of the CRA study, provide a public response to its findings and recommendations, and correct any bias in its testing methodology, before pursuing further dealer mark-up discrimination claims through supervisory or enforcement action,” the letter said.
Source: Automotive News

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Commentary: Another NADA Convention for the Ages

By NADA Chairman Bill Fox

If there's any industry that's rooted in resilience and progress, it's the retail-auto industry. Over the past several years, America's new-car dealers have survived many challenges and have a lot to be proud of today. Last year, the nation's franchised auto dealers sold 16.4 million new cars and light trucks and generated more than $13 billion in taxes. Dealers prove their worth every day, and car buyers benefit from the automotive franchise network because is the best and most efficient method of bringing new vehicles to the driving public. This year, NADA's forecast calls for sales of more than 16.9 million new vehicles. I commend all dealers for their dedication and hard work, which marked the successes of last year. Last month, NADA hosted a successful convention and exposition in the great city of San Francisco. And, in case you missed it, I asked my fellow dealers a pivotal question: When was the best time to be a car dealer? The thousands of dealers and dealership employees in attendance at the convention already knew the answer to that question. Today is the best time to be a car dealer. Click here for the full commentary.
Source: NADA Chairman's Column [return to top]

NHTSA Orders Takata to Preserve Air Bag Inflators

The agency will upgrade its investigation into the Japanese firm to an engineering analysis, a formal step in the agency’s defect investigation process

Federal safety regulators have ordered Takata to preserve all air bag inflators removed through the recall process as evidence for an investigation and lawsuits. The order also ensures the National Highway Traffic Safety Administration has access to all data from the testing of those removed inflators. “This department is focused on protecting the American public from these defective air bags and at getting to the bottom of how they came to be included in millions of vehicles on U.S. roads,” U.S. Transportation Secretary Anthony Foxx said. Foxx also announced that NHTSA will upgrade the Takata investigation to an engineering analysis, a formal step in the agency’s defect investigation process.
Source: Detroit Free Press [return to top]

GM Cuts Car Production as Truck Sales Soar

General Motors says it's shutting two car plants for a week each as car sales sag while truck and big SUV sales boom. It's a result of buyers renewing their dormant love of trucks and big SUVs now that fuel prices are relatively low, and paying less attention to the mileage advantages of smaller cars. The automaker doesn't disclose specifics of production, but did confirm that GM's Orion, Mich., factory is scheduled to close March 9 - 13. The so-called "flex" line at GM's Oshawa, Ontario, Canada factory will halt production April 13 - 17. It's at least the second halt for Orion this year. At the same time, GM is running three shifts at the Arlington, Texas, plant the builds full-size SUVs such as the Chevrolet Suburban and Cadillac Escalade. And it's about to add a third shift at Wentzville, Mo., where it makes the new mid-size Chevy Colorado and GMC Canyon pickups and traditional-design full-size commercial vans. "We build to market demand," GM spokesman Bill Grotz said, without giving details.
Source: USA Today [return to top]

Ford Begins Edge Production, Hires 400 New Workers

Ford Motor Co. on Thursday will announce the hiring of 400 workers at its Oakville Assembly Plant near Ontario, Canada, as it begins production of the 2015 Edge crossover. The Dearborn automaker will offer the mid-size crossover for the first time in Europe, and it also will be sold in North and South America, Asia, Africa and the Middle East. The 400 new hires will join more than 1,000 workers whose hiring was announced last year. Ford previously announced a $563 million investment in the plant that included the installation of more than 250 advanced robotics systems.
Source: The Detroit News [return to top]

Volvo CEO Expects Turnaround in U.S.

Auto maker's strong sales in China offset declining performance in North America

Volvo Car Corp. Chief Executive Håkan Samuelsson expected the company to sell 500,000 cars this year, up about 7% compared with 2014, thanks to new products, continued growth in key markets and an expected turnaround in the U.S. “After many hard years we will see growth in the U.S. in 2015,” Mr. Samulesson said in an interview. The Swedish car maker, owned by China’s Zhejiang Geely Holding Group Co., on Thursday said its operating profit rose 17% in 2014, as strong sales in China offset a decline in North America.
Source: The Wall Street Journal [return to top]