Friday, June 28, 2013
As I mentioned at our SDADA board meeting in Pierre, the threat from Tesla is not their ability to sell $100,000 plug-in cars in South Dakota; but rather their desire to avoid state franchise laws in selling automobiles without utilizing dealers. There is a very real threat of Tesla CEO, Elon Musk, trying to do an end run around the state courts and filing a lawsuit in federal court to nullify our franchise laws.
As you know, we have spent a lot of time and money fortifying our franchise law to protect our very significant investment. The thought of a federal court striking these laws down distresses me immensely!
Do you trust your franchise with a federal judge? If not, please stay engaged on this issue.
Talking Points on CFPB’s Disparate Impact Initiative
The Consumer Finance Protection Bureau (CFPB) continues its all out assault on automobile dealers. The CFPB wants to change the way finance sources compensate dealers for arranging financing. This is an obvious critical attack on our business model. At our NADA Board Meeting in Colorado Springs, NADA attorneys, Andy Koblenz and Paul Metrey, provided an in depth overview of this issue, why the CFPB’s approach is both procedurally and substantively flawed, and what Congress and the media should be demanding from the Bureau to support its initiative.
They have prepared talking points that summarize this issue. These can be used with lenders, lawmakers, the media or other members of the automotive industry. You can find these talking points here.
If you need additional information, please contact Paul or Andy at (703) 821-7040.
Letter to CFPB Demands Release of Information Supporting its Fair Lending Allegations
A letter circulated by Rep. Terri Sewell (D-Ala.) and signed by 12 of her Democratic colleagues on the House Financial Services Committee was sent to CFPB director Richard Cordray on May 28. The letter asks for the analysis and methodology supporting the CFPB’s assertion in recent fair lending guidance issued to finance sources that there may be disparate impact discrimination in indirect auto lending. The CFPB is using this allegation to push finance sources to compensate dealers with flat fees instead of dealer reserve. Despite numerous requests, the CFPB has steadfastly refused to release this information or any data supporting its efforts to eliminate the dealer’s ability to discount the interest rate offered to consumers. This lack of transparency, coupled with the members’ concern that “credit markets function competitively and efficiently,” prompted this inquiry. The other signers of the letter were Reps. Joyce Beatty (Ohio), William Lacy Clay (Mo.), John Delaney (Md.), Bill Foster (Ill.), Denny Heck (Wash.), Dan Kildee (Mich.), Gregory Meeks (N.Y.), Patrick Murphy (Fla.), Ed Perlmutter (Colo.), Gary Peters (Mich.), David Scott (Ga.) and Kyrsten Sinema (Ariz.) A copy of the letter can be found here.
Rivera Hired as NADA VP of Legislative Affairs
Ivette Rivera has been hired to replace David Reagan as the vice president of Legislative Affairs. Ivette returns to NADA most recently held the position of executive director of Legislative Affairs and was involved in many critical issues and played a key role in dealer exemption from CFPB and the Cash for Clunkers program. This is a great hire for NADA. Ivette will do a great job.
New NADA President Testifies before Senate on Rental Car Recall Bill
NADA President Peter Welch testified May 21 before a Senate consumer protection subcommittee on S. 921, a bill concerning rental car recalls. During his testimony, Welch emphasized the vital role that auto dealers play in fixing recalled vehicles. While supporting the purpose behind the bill, Welch informed Senators that recall work can sometimes be delayed because the part needed to remedy the recalled vehicle has not yet been designed or manufactured. Under the bill, a rental vehicle would have to be put out of service if the part needed was unavailable. NADA’s president cautioned Senators against regulating “multinational corporations with fleets of hundreds of thousands of rental vehicles” the same as “auto dealers with fleets of five loaner vehicles.” Welch also raised concerns that the bill would subject dealers to new federal inspections, new federal reporting requirements and stiff new penalties. For a copy of Welch’s testimony, click here.