February 2017 SDADA Column

What does a 50 mpg pickup look like? Is it something that your customers would drive? Would it
serve the utility that your customers need from their truck?

Those questions embody what is at stake in the current and ongoing battle over clean air standards. In 2011, the Obama administration and the EPA called for an industry-wide standard of more than 50 miles per gallon by 2025. The deal called for the EPA to conduct a “mid-term review” of rules for 2022-25 by April 2018.

The EPA, acting before Trump's inauguration, ruled on Jan. 13 that no change in the regulations was warranted for 2022-25. The auto industry was caught a bit off-guard by this development and they are not be happy about the quick and rather incomplete "review".

Auto executives want Trump to roll back clean-air standards. They feel that the standards are too rigorous and could cost America jobs.

One of the problems in attaining such high MPG standards is consumers' appetite, or lack thereof, for electric vehicles. Certainly, South Dakota dealers do not see a rush of consumers knocking down the doors to get electric vehicles. I have yet to have one of my ag producer customers ask me when an electric 3/4 ton pickup would be available to pull his stock trailer.

Hopefully, the Trump administration can bring a common sense approach to the idea of clean air standards and fuel economy. As dealers, we just want affordable options that serve our customers needs. If those are electric, fuel cell or other alternative energy options, that is fine.

Just let us sell what our customers want at a price they can afford!

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!

December 2016 SDADA Column

Red sky at night, sailors' delight.
Red sky at morning, sailors take warning.
- from an ancient rhyme often repeated by mariners

It's almost morning in the Trump administration and I see a red sky!

Tax reform is a recurring threat in DC. Every politician that runs calls for tax reform and every incumbent up for reelection calls for tax reform. It's a standard line in every candidate's stump speech. There's been much lip service paid to the topic and very little elbow grease expended.

That could be changing. It would appear that the Republican Congress and the Trump administration are both serious this time - as in they want real tax reform!

House Ways and Means Chairman Kevin Brady (R-Texas) released a "Tax Reform Blueprint" in July 2016 that outlined the general provisions of a comprehensive tax reform package. When the new Congress convenes in January, the House Ways and Means Committee, the Senate Finance Committee, and the Trump Administration will begin developing the actual text for a tax reform bill.

Here's where it gets complicated...One of the provisions included in the Tax Reform Blueprint, the “Border Adjustment Tax” (BAT), has generated significant concern among several industries, including the automotive sector.  The BAT is not a tariff.  Tariffs are taxes imposed on specified imported products (e.g., the 25% chicken tax imposed on the import of light pickup trucks since 1963).

The House Republican proposal (including the BAT) would modify business income taxes in several ways: reduce the rate from 35% to 20%; accelerate depreciation schedules, eliminate all interest deductions; exempt the cost of exported goods from the taxable receipts subject to income tax (they would be taxed in the jurisdiction in which they were sold); and disallow the cost of any imported goods as a deductible business expense.

November 2016 SDADA Column

The ground beneath me still quakes from the aftershocks of the 2016 presidential election. Donald J. Trump delivered the most improbable of election victories in United States history as he completely shocked pundits, media and other experts.

Now the business of governing begins. What does that mean for Americans? What does that mean for car dealers?

Fortunately for businesses, Trump will be working with a Republican majority in both the House and the Senate. He should have a decent chance to advance some of his agenda.

He is likely to seek vast cuts in regulations that have hampered the small businesses across our country. This bodes well for car dealers.

Trump has said he would dismantle Dodd-Frank Wall Street regulation. Hopefully, that means he is likely to reel in the Consumer Finance Protection Bureau. Regardless, the environment is right for NADA's S 2663, our next effort to tame the CFPB, to be passed.

He has indicated a desire to revise our tax system to make our business tax rate more competitive to keep jobs in America, create new opportunities and revitalize our economy. Again, this likely will serve for small businesses well.

NADA's agenda should find a more favorable environment across the regulatory agencies in DC. That should mean less government in our dealerships.

Hopefully, Trump can focus on those issues that will find some consensus in Congress. There are many issues that both sides agree need attention. Mr. Trump, stay with those....and relinquish your Twitter account!

December 2015 SDADA Column

Since June 16, 2015, one person has been on the news virtually every night. Every Sunday he is on some (or all) of the Sunday morning news shows (often on the phone!). His presence has made typically uninteresting early campaign debates “must see” TV. Despite pledging to spend as much as $1 billion on his campaign, he has spent less than $2 million as of the most recent election reports.

But why would Donald Trump spend any more than that? That attention has propelled Trump to the top of virtually every national and early-state poll. Facebook has a tool (Facebook Signal) that journalists use to identify trends, photos, videos and posts from Facebook and Instagram for use in their storytelling and reporting. According to Facebook Signal, he is responsible for 80 percent (or more) of the conversation around the 2016 presidential race on any given day.

Love him or loathe him, Trump could teach all of us a thing or two about getting free publicity. I would love to see a dollar value for the publicity that he has gotten the past six months. Which raises the question: Is all publicity is good publicity?

I don’t know what will happen in the Republican race over the next six months but I do know we can count on two things: we will see much, much more of “The Donald” and it won’t be boring!

Consumer Finance Protection Bureau Gets Thrashing in Press

Since the House of Representatives voted to pass H.R. 1737, the Reforming CFPB Auto Financing Guidance Act, on Nov. 18, 2015, the CFPB has been deservedly ridiculed in the media. Many news outlets have found the CFPB actions so onerous that they have called for most drastic actions.

The Wall Street Journal has been particularly pointed in its criticism as they published an opinion piece entitled “Shouting ‘Racism’ Is a Career Move” in which they detail how the CFPB justified framing people for crimes they didn’t commit presumably if it serves a policy or political agenda. The WSJ also posted a video entitled “Consumer Financial Profiling Bureau” on their website in which they discuss the federal enforcement agency’s flawed model of racial discrimination in auto lending. Then on December 9, the WSJ followed up with “The Consumer Bureau Cover-Up” in which they suggest that the CFPB knew their data showing racial bias was false but sued anyway.

U.S. News and World Report published a December 2 article entitled “Take Away the CFPB's Keys” in which they rip the CFPB for overreach and call for the abolition of the federal agency. They praise Congress for their bipartisan rebuke of the CFPB and ordering it to ensure that a cost impact and other real studies are conducted before this kind of policy can take effect.

All of this criticism of the CFPB has me crying crocodile tears! I only wish I have had the chance to shed these tears five years ago!

New York Times Takes Cheap Shot at Auto Dealers

The New York Times published an article in their December 1 issue suggesting that car dealers won’t sell electric cars. They could not cite any reasons why we might not be interested in selling electric vehicles but we were the reason electric cars haven’t reached the heights they were supposed to.

Peter Welch, president of NADA, wrote a Letter to the Editor, published in the December 9 issue of the NYT. In it, he explains that dealers sell what consumers want and the reality is that electric vehicles — and the infrastructure that supports them — unfortunately do not yet suit the needs, desires or budgets of most car buyers.

ICYMI (In Case You Missed It…)

Dealers accused of running a monopoly?

Do you remember this Saturday Night Live skit about bows on cars?

Are people ready to buy cars through vending machines?

Hey boss – what do I do with the $50,000 cash I found in this trade-in?

This New Yorker was scammed in Billings by fake auto dealership.

Woman destroys her husband's car after catching him with his mistress.