March 2018 SDADA Column

South Dakota Automobile Dealers:

This is my final column as the South Dakota NADA Director so I want to start off by thanking you, my fellow dealers, for the opportunity to serve in that capacity for the past nearly 11 years. I appreciate the input, feedback and support you have given me as we worked together on the challenges facing the automotive industry both nationally and in our state.

I reflected upon the (over one hundred!) columns I have written during my tenure. What a long, strange trip it's been!

Among the challenges we faced together were: The Great Recession of 2008, CAFE Standards, Red Flags Rule, bridge loans for automakers, automaker bankruptcies, "Cash for Clunkers", facilities image programs, the Dodd-Frank bill and creation of the CFPB (and our exclusion from their oversight), navigating the barrage of Obama Administration regulations (Risk Based pricing, Privacy notices, etc.), the threat to repeal LIFO, stair step programs, electric cars, autonomous vehicles, disparate impact allegations, recalls and, most recently, tax reform.

January 2017 SDADA Column

NADA began when a group of 30 dealers came to Washington to fight a proposed 5% luxury tax on new vehicles. Advocating for their customers, these dealers successfully argued the automobile is a necessity, not a luxury. Those dealers won that argument and NADA is still fighting for dealers, their employees and their customers 100 years later.

In a time when all trade associations are struggling to find a way to be relevant to their members, NADA still boasts a 90%-plus membership rate. NADA truly is the "Voice of the Dealer" in all it says and does.

Our association has, in Peter Welch, a President and CEO second to none. We have an exceedingly knowledgeable and ultimately professional staff that is always "looking around the next corner" to help protect and advise dealer-members of both threats and opportunities.

I have been fortunate to serve as your NADA Director since August of 2007. In the 9+ years that I have served as director, I have had occasions to fight on the front lines with many of these fine people against threats from the manufacturers, legislators, regulators and disruptors that face our business. I can report that I'd much rather have them on my team than be facing them. They are formidable foes!

The National Automobile Dealers Association is us. It is the dealers in all 50 states; large and small; multi-point dealers and single point dealers; import and domestic; in metro areas and in rural communities; publicly owned and privately held; working together to make our industry better for our businesses, our employees and our customers.

Let us all celebrate that! As we look forward to our nest century, let us remind ourselves that our success lies in our employees and our customers. When we serve them, our industry thrives!

Happy birthday, NADA!

July 2015 SDADA Column

But the bottom line would be that auto dealers would be exempt from direct supervision by the consumer financial protection bureau. The Senate auto dealer compromise, if accepted by House negotiators, would be one of Obama's most high profile losses in his efforts to overhaul Wall Street regulations. The main contours of the House and Senate bills generally match the administration's goals, but Obama has personally lobbied against efforts to carve auto dealers out of the consumer agency's jurisdiction.   - CBS Money Watch, June 23, 2010

In 2010, a Senate made up of 59 Democrats and 41 Republicans and a House made up of 233 Republicans and 200 Democrats passed a Dodd-Frank bill creating the Consumer Financial Protection Bureau (CFPB). Immediately concerns were raised since due to its unprecedented investigative and regulatory authority, its lack of accountability, and the unparalleled authority placed in its sole director, Richard Cordray.

Despite the above mentioned dealer exemption, the CFPB has made every effort possible to indirectly end the auto lending business model. Beginning with the Ally Bank settlement in December 2013 ($98 million) and recently the agreement by American Honda Finance Corp. to pay up to $25 million, the CFPB has bullied, intimidated and harassed automobile lenders in an attempt to end discretionary dealer markups.

The CFPB continues to have the dealer finance model squarely in its crosshairs. I don't think I need to mention to this audience that were it not for finance income, the new vehicle department would be largely unprofitable in most stores.

Though a couple of automotive lenders have embraced a flat fee model, most have remained committed (for now) to the current dealer discretion finance model. One has to wonder how long they (especially non-captives) will endure the CFPB's scrutiny.

NADA recently filed a Freedom of Information Act (FOIA) request to make public an agency memo that appears to plainly undermine the Bureau's long-standing claims that it is not targeting auto dealers through enforcement actions.

The Dodd-Frank Act specifically prohibits the CFPB from regulating auto dealers. Yet the Bureau's actions have caused many, including both Republican and Democratic members of Congress, to question whether the CFPB has attempted to skirt its jurisdictional boundary in an effort to regulate dealers.  -NADA News Release

Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colo.) have introduced H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act of 2015. The legislation would repeal a CFPB bulletin from 2013 that was designed to pressure lending institutions into eliminating the availability of auto financing discounts.

Stay tuned. It would seem this issue is far from settled!

Blumenthal Wants to Ground Used Cars With Open Recalls

The Senate will soon vote on an amendment that would make it illegal to sell for dealers to sell any vehicle with an open recall. Though the Senate Commerce Committee (chaired by Senator Thune) shot down the Democratic amendment proposed by senators Ed Markey (D-Massachusetts), Bill Nelson (D-Florida) and Richard Blumenthal (D-Connecticut) that would ground vehicles with an open recall, it appears the amendment will be introduced on the Senate floor.

As we dealers know, many recalls have almost nothing to do with vehicle safety. We have recently seen recalls for items as trivial as a printing error in the owner’s manual. General Motors recalled Camaros because the air bag warning label on the sun visor may peel off.

Senator Thune recognized the logistical issues that go with such a policy when interviewed in the New York Times earlier. Imagine a South Dakota dealer taking an Infiniti or Porsche with an open recall on trade. The dealer would have to load that vehicle on a trailer and haul it to Minneapolis or Omaha. That would not lead to  favorable treatment for a consumer either.

Keep your eye on this issue as well.

ICYMI (In Case You Missed It…)

Subaru dealership employee chastises manufacturers for offering more lucrative car deals through Costco than through their own dealer network.

NHTSA blocks former chief from testifying in a class-action lawsuit against Toyota.

Despite some main stream media reports to the contrary, more than one industry expert says there is no bubble in automobile lending.

And finally…

Obama's overtime plan might impact auto dealers

Why Didn't Anyone Ask That Before?

What is anti-colonialism and what does it have to do with the 2012 American Presidential election? Dinesh D'Souza's Obama's America: Unmaking the American Dream explores that and so much more about our 44th president.

D'Souza is a political commentator, public intellectual and author who is currently the President of The King's College in New York City. He served as a policy advisor to President Ronald Reagan. He has done a magnificent job or researching and documenting this book.

It builds on his previous book, The Roots of Obama’s Rage (which I also thought was a very interesting read), upon which the movie 2016: Obama's America, the movie, is based.

D'Souza believes that another four years will allow Obama to finish the job he has started in his first term, that is to further diminish America's economy and her role in the world. He suggests Obama's ideology is global justice which, to him, means a redistribution of wealth and power away from America and towards the rest of the world.

But it is the building of the story and the documentation - with literally a tsunami of evidence - that is so compelling. D'Souza is a brilliant guy and that seems so evident as you read this book.

I wish everyone would read this, consider the questions and decide for themselves. Whether you like Obama or not, whether you'll vote for him or not, this books vets him as he should have been vetted prior to his election in 2008.

Chrysler Dealers' Case Moves Forward

It will be interesting to see if this gives this case some traction. The U.S. Court of Federal Claims denied the government's motion to dismiss dealers lawsuit against the U.S. Treasury Department alleging the government violated the Constitution in taking their store franchises. These dealers who were terminated during Chrysler's 2009 bankruptcy. The lawsuit contends that the Obama administration violated the Fifth Amendment, which says private property shall not "be taken" for public use "without just compensation". Details can be found here.