NADA Headlines (May 3, 2010)
Opinion: Exempt Dealers from Bill
Dealer-assisted retail financing must be exempt from oversight by a proposed consumer protection agency that's part of the financial regulation bill in Congress. The Obama administration, consumer advocates and the Pentagon -- which says some soldiers have been victims of unscrupulous dealers -- want to subject dealers to another layer of superfluous regulation. There already is sufficient oversight of dealer finance practices by the Federal Trade Commission, Federal Reserve and state agencies. Dealers didn't cause the financial meltdown on Wall Street. Dealers don't lend money. Dealers are middlemen who only help their customers arrange financing. Dealers don't belong in the financial regulation bill. Read more from Automotive News.
Editor's note: Contrary to some reports, the Wall Street reform bill on the Senate floor does cover all automobile dealers, not just "buy here, pay here" dealers. Bipartisan commitments for Sen. Sam Brownback's (R-Kan.) amendment, which will preserve the ability of consumers to find affordable and competitive financing for their vehicle purchases, continues to grow. With a vote quickly approaching, NADA's legislative affairs office is urging dealers to call their senators TODAY and ask their support for the Brownback auto dealer amendment. Senators can be reached through the Capitol switchboard at (202) 224-3121. For more information, visit www.nada.org/Brownback or call (202) 547-5500.
WASHINGTON -- An unlikely new tenant in the halls of the Federal Reserve would set out sweeping rules on a wide swath of consumer transactions, possibly making it one of the most powerful new federal agencies in a generation. The proposed agency is causing concern and confusion, however, among owners of small businesses ... who fear that by allowing any customers to buy on credit, their businesses could be subject to significant new regulations. Much of the bewilderment — and therefore the argument — stems from the imprecise nature of some of the proposed rules. The new agency would regulate financing provided by most car dealers, for example, but not by rent-to-own furniture vendors, according to the bill’s advocates. A review of the consumer protection provisions, which account for 335 pages of the 1,565-page bill, shows that the intent of the legislation is not to cover Main Street businesses. But the ambiguity of some terms — like the word “significantly” — leaves the regulations open to a broad interpretation. But Republicans and business groups have countered that the new agency’s approach is scattershot rather than focused, and would stifle the ability of small Main Street businesses to offer credit to strapped customers. “There is growing concern that in an effort to hold Wall Street accountable, this bill could catch the little guys up in the same net as the big banks,” Senator Mitch McConnell of Kentucky, the minority leader. Read more from The New York Times.
WASHINGTON -- Chrysler Group is asking the U.S. Bankruptcy Court to block a Colorado dealer reinstatement law, arguing the law is pre-empted by bankruptcy laws.The law requires Chrysler and General Motors Co. to offer a rejected dealership the right of first refusal if the automaker wants to reopen a point in the rejected dealer's market. If the automaker has awarded such a franchise, it must offer to reinstate the rejected dealership or compensate it. In December, Chrysler challenged similar laws enacted by Illinois, Oregon, Maine and North Carolina. North Carolina backed off enforcement in a settlement with Chrysler. Illinois, Oregon and Maine are contesting the challenge. Read more from Automotive News.
DETROIT — U.S. auto sales continued to rise in April as the stabilizing economy and attractive discounts brought more consumers into showrooms. Monthly sales totals, which are due to be released on Monday, are expected to come at a seasonally adjusted selling rate of around 11.3 million cars and light trucks, according to people familiar with the figures. That would be slightly lower than the level of 11.78 million vehicles the industry reached in March, but a clear rise from the year-ago level of 9.72 million. In April, several auto makers reported substantial sales gains, according data from analysts and people familiar with the figures. Ford Motor Co. is on track to see a sales rise of about 25% from a year ago, these people said. Nissan Motor Co. could see an even greater increase, could be the industry's biggest leader; some analysts predict it will report growth of 50% or more in April. Read more from The Wall Street Journal.
General Motors Co. last month increased its sales 6.4 percent — fueled by more purchases of pickup and crossover vehicles. Sales of GM’s four core brands — Chevrolet, Buick, GMC and Cadillac — rose 19.7 percent in April compared with a year earlier, driven by an increase in new crossover vehicles such as the Chevrolet Equinox and sales of full-size pickups. Read more from The Detroit News.
DETROIT -- After years of cost cutting, Ford Motor Co. finally has higher revenues to brag about. Revenues in North America totaled $14.1 billion in the first quarter, up from $10.0 billion in the first quarter of 2009. The increase, announced last week, suggests that the automaker's substantial first-quarter net profit -- $2.1 billion -- has legs. It's too early to declare victory at Ford, in part because its domestic competition is still recovering from bankruptcy. And Toyota Motor Corp. suffered image-damaging recalls to fix unintended acceleration. Nevertheless, it's safe to conclude that Ford's comeback is on solid ground. Read more from Automotive News.
U.S. auto sales strengthened a year after bankruptcies began to batter the auto industry, with Chrysler Group LLC forecast to post its biggest monthly gain since 2005. Industrywide deliveries in April may have risen to an annualized rate of 11.4 million light vehicles, the average of 8 analysts’ estimates compiled by Bloomberg, compared with a year earlier. Chrysler, which entered Chapter 11 on April 30, 2009, before emerging controlled by Turin, Italy-based Fiat SpA, may have climbed 15 percent, 6 projections show. The yearly rate of domestic sales in April may be less than the 11.8 million seasonally adjusted annualized pace in March, when Toyota Motor Corp. offered its biggest incentives to counter global recalls, spurring competitors to add discounts. Automakers were buoyed by consumer confidence that rose in April to its highest since September 2008, as measured by the Conference Board’s monthly index. John McEleney, who has a Toyota and a Buick, GMC and Cadillac dealership in Clinton, Iowa, said sales were up 30 percent at his Toyota store and increased about 20 percent among his GM brands. “Sales were really pretty good, but not quite as good as March,” McEleney said, adding that sales may keep gaining this year. “We’re seeing a lot more showroom traffic and a lot more Internet activity. People are feeling better about their jobs, too.” Read more from Bloomberg.
U.S. consumer spending rose twice as fast as income in March as saving dropped to its lowest level in 18 months and a closely watched indicator of inflation remained stable. Separately, U.S. factory activity strengthened in April, with the Institute of Supply Management's manufacturing index rising to 60.4 from 59.6 a month earlier. Personal income rose 0.3% in March as a weak labor market continued to keep a lid on wage growth, the Commerce Department said Monday. Meanwhile, consumer spending -- which accounts for 70% of demand in the U.S. economy -- increased by 0.6% from the prior month, likely lifted by government efforts to spur economic growth. With income growth sluggish, U.S. consumers slowed their pace of saving in March. Americans in March saved $303.9 billion as the national saving rate slid to 2.7% from 3.0% the previous month. Read more from The Wall Street Journal.
DETROIT—Chrysler Group LLC said the National Highway Traffic Safety Administration is investigating a potential "sticky accelerator pedal" problem on some of its 2007 Dodge Calibers. The auto maker said an internal probe found the issue is limited to fewer than 10,000 Calibers built during a five-week period over March and April 2006. Chrysler said consumers who bought a Caliber during that time frame should take their vehicles to a dealer for a free inspection. "It's too soon to comment," Chrysler spokesman Nick Cappa said when asked if a recall would be initiated. "We are still in the initial stages." Read more from The Wall Street Journal.