NADA Chairman: Keep Auto Retailing Affordable for Consumers
BILL FOX: WE’RE FIGHTING FOR FAIR FINANCING, REASONABLE RECALL POLICIES IN CONGRESS AND PRACTICAL FUEL ECONOMY RULES.
DETROIT (Oct. 7, 2015) - When determining new federal rules that shape the retail-auto industry, Bill Fox, chairman of the National Automobile Dealers Association, said misinformed policy decisions in the nation's capital often lead to higher costs that will ultimately hurt car buyers.
In remarks to the Automotive Press Association in Detroit on Wednesday, Fox, a multifranchise new-car dealer in the upstate New York cities of Auburn and Phoenix, outlined NADA's key policy initiatives, which include protecting consumer choice in auto financing, supporting legislation to increase consumer recall completion rates, and achieving a practical balance between government regulations and costlier fuel economy rules.
NADA, on every issue, has had the extraordinary challenge of explaining the reality of the retail-auto market to regulators, legislators and media, he said.
“Actions in Washington are taking away our customers' right to benefit from the dealer franchise system, especially rules governing dealer-assisted financing. When you're paying $30,000 for a car, you should have every possible financial advantage,” Fox added. “These advantages-driven by fierce competition-make up the foundation of the retail automotive market. And Washington shouldn't be in the business of denying consumers these rights, or taking away these advantages. But that's exactly what's happening.
In March 2013, the Consumer Financial Protection Bureau (CFPB) issued flawed guidance on the indirect auto financing market that would limit or eliminate the option for car buyers to receive discounted auto loan rates at the dealership.
“As a matter of principle, consumers have the right to negotiate. They always have the right to seek a better deal. And they should always have the right to choose the loan that's best for them,” said Fox, a partner at Fox Dealerships, Inc., which sells Chevrolet, Chrysler, Dodge, Honda, Jeep, Ram, Scion, Subaru and Toyota brand vehicles.
In July 2015, the U.S. House Financial Services Committee passed NADA-backed H.R. 1737 by a bipartisan vote of 47-10 to rescind the CFPB guidance. The bill, which was introduced by Reps. Frank Guinta (R-N.H.) and Ed Perlmutter (D-Colo.), would bring openness, transparency and an informed decision-making process to regulating the auto finance market, he said.
The bill also requires the CFPB to study the true impact on consumers before issuing new guidance; places provisions for a public comment period; and requires the CFPB to consult with the agencies that currently share jurisdiction over the indirect auto finance market, Fox added.
Last week, dealers and state dealer association executives made more than 300 congressional visits on Capitol Hill to increase support for H.R. 1737. The bill currently has 147 cosponsors (86 Republicans and 61 Democrats). A full House vote could occur later this month.
Fox added that NADA, along with the National Association of Minority Automobile Dealers and the American International Automobile Dealers Association, strongly support the voluntary adoption of a compliance program that protects dealers and their customers from the risk of credit discrimination, while preserving the availability of auto loan discounts for car buyers. The NADA-NAMAD-AIADA Fair Credit Compliance Policy & Program, which was issued in January 2014, is modeled from a program developed by the U.S. Department of Justice, Fox said.
New Video: Dealer Financing Benefits Consumers
Fox also showed a video with the stories of real car buyers who saved money by financing their new-vehicle purchases through local dealerships, which is at the center of a new NADA initiative to showcase the true economic value of optional dealer-assisted financing, and better inform opinion leaders, elected officials and the media about the debate over the elimination of dealer reserve.
Fox also discussed another proposal in Congress, an amendment sponsored by Sen. Richard Blumenthal (D-Conn.), which would ground all vehicles sold at a dealership under an open recall, despite the fact that the vast majority of recalls do not require the drastic step of grounding the vehicle, and reduce trade-in values.
“There are 64 million cars under open recall right now. But the vast majority of them don't require the drastic step of grounding the vehicle. In fact, the National Highway Traffic Safety Administration-and manufacturers-only include stop-drive orders on 6 percent of the recalls they issue,” he added. “The majority of open recalls are for minor issues-like a phone number misprint in the owner's manual. But if the Blumenthal amendment were to become law, every single one of those cars with an open recall would be grounded.”
Fox added that new fuel economy rules will increase the average price of new cars and light trucks by $3,200 or more, which car buyers will have to pay up-front.
“There's no doubt we all want cars to be more efficient. There's no doubt we want to preserve our environment and reduce emissions. But there has to be a practical balance,” he said. “The problem is that 7 million Americans will be priced out of the new-car market because they won't be able to afford the increase.”
The total cost of the U.S. Environmental Protection Agency/NHTSA fuel economy rule will be about $210 billion, Fox said.
Click here for Fox's full remarks.