NADA Headlines (June 7, 2010)
Senate Reform Legislation the Likely Model As House, Senate Conferees Prepare to Meet
Senate Reform Legislation the Likely Model As House, Senate Conferees Prepare to Meet
A Senate-passed bill that would broadly overhaul U.S. financial services regulation is the most likely template for House and Senate conferees as they prepare to hammer out remaining differences on the broadest effort to restructure the banking system and the capital markets since the 1930s. The Senate-passed bill would establish a Consumer Financial Protection Bureau (CFPB), while the House bill calls for a similar unit, the Consumer Financial Protection Agency (CFPA). In a June 4 conference call with reporters, Harvard Law School Professor Elizabeth Warren, frequently mentioned as a candidate to head the consumer agency, said the new consumer protection authority must have broad independence and freedom to “partner” with state attorneys general. “We want an independent agency, one with independent rulemaking, a strong head of the agency, an independent budget and no veto from banking interests. We want an agency that doesn't have carve-outs,” Warren said, calling those features “the essential tools for a vigorous agency.” Among other points, Warren and other colleagues on the call said disagreements continue on an exemption for some auto finance businesses. Although the administration opposes the exemption, the Senate, in a non-binding vote May 24, instructed its conferees to partially exempt financing handled by retail auto dealerships from oversight by the consumer agency. The 60-30 vote approved a motion by Sen. Sam Brownback (R-Kan.) to instruct conferees to adopt the exemption, which was included in the bill passed by the House. Warren said she hopes to eliminate that provision from the final bill.
Source: Bureau of National Affairs
Editor's note: Dealers and employees must make a strong push with conferees from their states to keep language in the final financial reform bill that preserves dealer assisted financing, keeping auto loans and leases available and affordable. Senate conferees are: Sen. Shelby (R-AL), Sen. Lincoln (D-AR), Sen. Dodd (D-CT), Sen. Chambliss (R-GA), Sen. Crapo (R-ID), Sen. Harkin (D-IA), Sen. Gregg (D-NH), Sen. Schumer (D-NY), Sen. Reed (D-RI), Sen. T. Johnson (D-SD), Sen. Corker (R-TN) and Sen. Leahy (D-VT). Likely House conferees are: Rep. Waters (D-CA), Rep. Gutierrez (D-IL), Rep. D. Moore (D-KS), Rep. Frank (D-MA), Rep. Maloney (D-NY), Rep. Meeks (D-NY), Rep. Watt (D-NC) and Rep. Kanjorski (D-PA). Key messages to stress include: existing regulators and stiff competition keep dealer-assisted financing affordable for car buyers from all walks of life; dealerships had nothing to do with the financial meltdown; dealers are not banks and do not underwrite, fund or service loans. Finally, under the Brownback amendment, dealers would still be effectively regulated and all auto lenders and ALL auto loans will still be kept under the agency. Conferees can be reached through the Capitol switchboard at 202-224-3121. Please contact NADA Legislative Affairs with any updates or feedback at 800-563-1556. More information can be found at www.NADA.org/keepcreditaffordable.
By Tammy Darvish
Headed by the National Automobile Dealers Association, we are again visiting Congress for protection on the financial reform bill, which proposes to add burdensome rules that would eliminate dealer-assisted financing. The provision would threaten the fragile recovery of the auto industry, as profits improve and customers return to showrooms, after a tumultuous year of bankruptcies, bailouts and the dealership closures. The House has approved an amendment that would exempt auto dealerships from the law. The Senate passed a nonbinding provision instructing the upcoming House-Senate conference committee to follow suit. We'll be watching the reconciliation process to make sure that the exemption goes through. Read more from The Washington Post.
Editor's note: Tammy Darvish, vice president of DARCARS Automotive Group, Silver Spring, Md., represents the Washington, DC, metropolitan area new-car dealers on NADA's board of directors.
DETROIT -- Ford Motor Co. will take a three-part approach to retaining Mercury customers disenfranchised by the brand's demise. Ken Czubay, Ford's U.S. sales chief, told Automotive News that the company is displaying a phone number on its Web sites for concerned Mercury customers to call. By the end of this week, new Mercury owners will be sent a letter addressing the shutdown. Ford also plans consumer offers for service and new-car incentives to retain the brand's buyers. After announcing plans last week to close Mercury by year end, Ford offered the 1,700 dealerships with Mercury franchises cash for the loss of the brand. Total compensation would range from the very low thousands up to about $700,000, sources said. Read more from Automotive News.
DETROIT -- Ford Motor Co. must do with Lincoln what it has done with the Ford brand -- infuse it with new energy and sparkling product -- if it is to offset the loss of Mercury sales when that 71-year-old brand dies. Ford clearly will need more volume from Lincoln to appease Mercury dealers -- especially those who currently have Lincoln-Mercury stores. "We have to make a very compelling case to our dealers very quickly," says Mark Fields, Ford's president of the Americas, in an interview. Mercury sales represent about 50 percent of most Lincoln-Mercury stores' volume. Ford leaders know filling that gap will be a challenge. Read more from Automotive News.
Reinstated Cadillac dealer John Holt says his sales staff has never had to sell cars that aren't already on his lot. But that may have to change. That's because the Oklahoma dealer, whose Cadillac franchise was part of the first round of General Motors Co. reinstatements this spring, is selling out of Escalade SUVs and SRX crossovers faster than he is receiving them from the factory. "Our thought process is going to have to change from selling something that's here to selling something that's on its way," he says. Brian Hamilton faces the same scenario. He is adding Buicks and Cadillacs to his Chevrolet store in Kearney, Neb., after GM reinstated those franchises. He was first able to order vehicles about a month ago and has 14 Buicks and nine Cadillacs on the way. Four Buicks will arrive any day, but the Cadillacs won't start coming until late June or early July. Read more from Automotive News.
About halfway to the deadline to complete dealer arbitrations, Chrysler Group LLC continues to prevail in most cases brought by dealers who are fighting the automaker's shutdown orders. The tally as of Friday was 21 decisions favoring Chrysler, while six arbitrators sided with dealers. Initially, 418 Chrysler dealers notified the automaker of their intent to arbitrate. But many have withdrawn, been dismissed, abandoned or settled. Only 112 are still to be heard, and they should be wrapped up by end of July, said spokesman Mike Palese. The process began in April. Read more from The Detroit News.
WASHINGTON — The Chrysler Group said on Friday that it was recalling nearly 35,000 Dodge Calibers in the United States and around the world to fix a potential problem with sticky gas pedals, the same issue that has affected millions of Toyotas. The company said that it would recall about 25,000 Calibers in the United States from the 2007 model year and a limited number of 2007 Jeep Compass sport utility vehicles to inspect vehicles built from March to May in 2006. Chrysler said the problem involved “pivot bushings in vehicles with oversize accelerator pedal bearing pockets.” The problem occurs if the bushing becomes dislodged. Chrysler dealers will inspect the recalled vehicles and replace affected pedals with a new unit at no charge to customers. Read more from The Associated Press.
When Stephen W. Neal was stocking shelves and cleaning up spills for Giant supermarkets more than 30 years ago, he never could have imagined what happened to him this week: President Obama and Vice President Biden dropped by to give him a pat on the back. Neal, 55, now owns K. Neal International, which has a revenue of more than $65 million and 105 people on its payroll in Northern Virginia and Maryland. It is one of the region's largest outlets for selling and fixing trucks and buses. "This company employs workers from all over the greater Washington area," Obama said Friday, after he and Biden toured Neal's firm in the 5000 block of Tuxedo Road in Hyattsville. "After two years of recession that caused so much pain in so many communities, this is also an example of a company that is starting to see business pick up again." Read more from The Washington Post.