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NADA Headlines (April 30, 2010)

Senate to Start Debate on Wall Street Reform Bill

WASHINGTON – Senate Democrats and Republican leaders late Wednesday agreed to start debate on S. 3217, the bill that would create the Bureau of Consumer Financial Protection (BCFP). The Senate will soon consider several amendments, including the Brownback amendment, sponsored by Sen. Sam Brownback, R-Kan. The Brownback amendment would preserve the ability of dealers to provide affordable financing for their customers. Proponents of a proposed super agency with new and unprecedented powers want to include dealers in the new BCFP, which would likely limit or eliminate dealer-assisted financing. “We are up against very powerful forces, with the Obama administration, Department of Defense and consumer groups attempting to give senators the impression that dealer-assisted financing is detrimental to consumers,” says David Regan, NADA vice president of legislative affairs. Read more from NADA Legislative Affairs.

Editor's note: With the Senate moving to consider amendments to the Wall Street reform bill on Tuesday, NADA’s legislative office is urging dealers to call both of their senators and ask them to support the Brownback amendment to the Wall Street reform bill. Senators can be reached through the Capitol switchboard at (202) 224-3121. The Brownback amendment will preserve the ability for consumers to find affordable financing for a vehicle purchase. Dealers are also urged to provide their Senators and NADA with examples of how they have helped their customers, particularly military personnel, find reasonably priced financing. Send these anecdotes to NADA at legislative@nada.org. For more information on the Brownback amendment, visit www.nada.org/brownback or call (202) 547-5500.

NADA Leader Declines to Testify for Chrysler in Arbitration Hearing

WASHINGTON -- The vice chairman of the National Automobile Dealers Association said today that he refused an invitation from Chrysler Group to testify in arbitration against a rejected Utah dealer who was his neighbor and competitor. Stephen Wade, owner of Stephen Wade Auto Center in St. George, Utah, had been listed by Chrysler as a potential witness in an April 19 arbitration filing. In an interview, Wade said he never agreed to be a Chrysler witness. "No matter what I did, it would be taken wrong," Wade said in a phone interview. "I never would agree to testify against another dealer. I have great feelings of concern for those in this situation, and I didn't want to add to it in any way." Wade said he wouldn't pass judgment on any Chrysler dealer who testified, saying it was an individual decision. NADA Chairman [Ed] Tonkin said this week that the dealer association would not take a position on whether dealers should testify against other dealers. Read more from Automotive News.

GM Prepares Affidavit from Former CEO Henderson for Arbitration

WASHINGTON -- General Motors Co. has prepared for use in arbitration an affidavit from former CEO Fritz Henderson that says the dealer cuts initiated in 2009 could save the company $2.6 billion — an assertion widely challenged when Henderson made it in congressional testimony last year. Henderson's affidavit, a copy of which was obtained by Automotive News, states that GM dealer cuts could achieve savings of $2.15 billion in direct dealer-support programs and $415 million in reduced structural costs, based on a volume of 3.1 million vehicle sales a year. “A significant reduction in the number of dealer rooftops is key to allowing GM to compete more effectively in the market,” his April 23 affidavit says. Some dealers questioned why GM would introduce Henderson's affidavit after his replacement, Ed Whitacre, has reversed so many dealer cuts. “It seems the new management at GM has already more or less disavowed this flawed thinking,” said Alan Spitzer, an Ohio dealer who is co-leader of a rejected dealer group called the Committee to Restore Dealer Rights. “Why doesn't Henderson submit an affidavit that says the world is flat?” Read more from Automotive News.

April U.S. Auto Sales Expected Up Double-Digits

DETROIT - Automakers expect to see a double-digit increase in April U.S. auto sales over the same period a year ago when the recession roiled the industry. U.S. auto sales are likely to rise more than 20 percent for a seasonally adjusted annual rate of 11.4 million units in April, according to a Thomson Reuters poll of 12 economists. This April, Toyota Motor Corp's <7203.T> sales are expected to surge for a second consecutive month after the automaker extended record discounts to jumpstart sales that had tumbled earlier in 2010 in the wake of safety recalls that now cover more than 9 million vehicles. Hyundai U.S. sales chief Dave Zuchowski expects industry sales to be up 21 percent in April after a recovery that had been a little softer earlier in 2010. "Consumer confidence is a little bit better," Zuchowski told Reuters in a telephone interview. "Credit is loosening up a little bit. And there are more buyers out in the marketplace. We're certainly benefiting from that." Read more from Reuters.

Bills in Michigan House Would Protect Auto Dealers

Two state legislators have introduced bills in the Michigan House that would strengthen franchise laws to better protect automotive dealers. John Walsh, R-Livonia, and Roy Schmidt, D-Grand Rapids, have introduced two bills in reaction to the hundreds of dealerships that lost their franchise rights last year as General Motors and Chrysler restructured their operations during bankruptcies. “We lost three dealerships in Livonia,” that employed a total of about 300, Walsh said. “It just doesn’t seem right. I am just trying to even the playing field.” Read more from the Detroit Free Press.

U.S. Economy Grows 3.2 Pct in Q1

WASHINGTON -- The U.S. economy grew at a slightly slower-than-expected pace in the first quarter, held back by inventories and exports, but resurgent consumer spending offered evidence of a sustainable recovery, a government report showed on Friday. Gross domestic product expanded at a 3.2 percent pace, the Commerce Department said in its first estimate -- marking three straight quarters of growth as the economy climbs out of the worst recession since the 1930s. Consumer spending, which normally accounts for 70 percent of U.S. economic activity, added 2.55 percentage points to GDP last quarter, the biggest percentage contribution since the fourth quarter of 2006. Read more from Reuters.

Auto Dealers Ready for New Cars - And New Hires

NEW YORK -- Tom Allen's General Motors dealership used to employ 49 people. Between the Detroit giant's bankruptcy and the termination notice he got last May for his Chevrolet and Cadillac lines, 26 employees have either been laid off or left. But in March, GM reversed course and notified Allen that his Monroe, Mich., store was one of 666 dealerships chosen to live on. Now in the final stages of finalizing his franchise reinstatement, Allen is already lining up interviews to start hiring again. Not all of the 2,000 dealers GM cut last year are celebrating good news. More than half of the axed dealers appealed their termination and began preparing for an arbitration hearing. In March, GM reversed course and said it would offer to reinstate 661 of those dealers, a total it later upped to 666. But some 400 dealers are still working through the arbitration process. Chrysler, which cut 789 dealers from its network, offered to reinstate 50 but is also arbitrating around 400 cases. Read more from CNNMoney.com.

House Dems Want $9 Car Fee to Fund Safety Law

Washington -- Two House Democratic leaders want to impose a $9 fee on each new car to bankroll a major increase in auto safety programs, as part of a massive rewrite of auto safety laws. House Energy and Commerce Committee Chairman Henry Waxman, D-Calif., and Rep. Bobby Rush, D-Ill, who chairs the subcommittee that oversees the National Highway Traffic Safety Administration, released a 26-page draft of a bill to reform auto safety measures. The proposal would require brake-override systems and event-data recorders on all vehicles. It also would require new standards for pedal configuration and require new standards to prevent pedals from getting trapped in floor mats. The bill would fund NHTSA's budget increase by imposing a $3 fee on all new car sales -- a fee that could raise $30 million to $45 million a year -- and hike that to $9 per vehicle after three years. The fees would then increase annually at the rate of inflation. Read more from The Detroit News.

Toyota Offers a Fix for S.U.V.’s Control Problems

Toyota said Thursday it had resumed sales of the Lexus GX 460 after fixing a problem with the stability control system that could cause the luxury sport utility vehicle to roll over. The company said it had released a software upgrade for the vehicle to Lexus dealerships and had begun contacting GX 460 owners to schedule repairs. “Thanks to the quick response and hard work by our engineers, we were able to identify and correct the issue in just about two weeks,” Mark Templin, general manager of the Lexus division, said in a statement. “This is our assurance to Lexus customers that their safety and satisfaction are our top priorities.” Toyota stopped selling the GX 460 on April 13 after Consumer Reports said the vehicle, which is new for the 2010 model year, failed to prevent its rear end from sliding sideways during sharp turns. Last week it announced a recall of the GX 460 and the Land Cruiser Prado, an S.U.V. sold overseas. Read more from The New York Times.

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