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CAFE: Dealers know what sells

February 3, 2012
By Mark Scarpelli, Chicago Metro NADA Director
The following letter to the editor by NADA Chairman Stephen Wade was published in the Jan. 23 issue of Automotive News.
“To the Editor: 
The Jan. 16 editorial about fuel economy (“NADA must be reasonable about CAFE proposals”) overlooks a couple of key points: 
-- The National Automobile Dealers Association supports both continuous improvement in fuel economy and a single national standard to help get us there. 
-- When it comes to determining what sells in the showroom, auto dealers are in the best position to offer relevant comment. 
We know firsthand, for example, that for the overwhelming majority of Americans fuel economy is not a major factor when deciding what car to buy. Price matters most. So when we learn that the proposed standards could add at least $3,200 to the price of the average car, we are naturally concerned. 
The proposed rule requires a leap of faith, a sort of build-it-and-they-will-come approach, which may work in the movies but not in real life. In testimony at the EPA/National Highway Traffic Safety Administration public hearing in Detroit on Jan. 17, for example, manufacturer after manufacturer cautioned that there is no certainty as to how consumers will respond. It’s no wonder that even they called for a strong midterm review in 2018. 
The manufacturers may be able to produce the right product mix, but it is the dealer who will have to pay for the product and then hope there are interested consumers. Dealers have already lived the nightmare of empty showrooms. To reap the societal benefits of higher fuel economy, government policy should encourage fleet turnover, not shrink the dealers’ customer base.”
In other news . . .
• Due to NADA efforts, Congress halts an inconsistent rule on service advisor exempt overtime status. In April 2011, the U.S. Department of Labor — without any advance warning — issued a notice indicating that it intended to reverse its position on the overtime-exempt status of service advisors. 
Doing so would have overturned three decades of regulatory interpretation and a consistent line of federal and appellate court rulings that service advisors are exempt from overtime. It would have forced dealers to make disruptive compensation and staffing changes and would unnecessarily complicate regulatory compliance. 
The NADA argued that those changes would expose dealerships to unnecessary litigation and were not properly justified. After pursuing regulatory remedies, NADA sought assistance from Congress. The recently signed fiscal year 2012 Omnibus Appropriations Act preserves the exempt status of service advisors for one year, until Sept. 30, 2012. 
With the appropriations bill now on the books, Congress has sent a clear message that the exemption should not be altered in the future. For more information contact Doug Greenhaus of NADA Regulatory Affairs at (703) 821-7040.
Used-vehicle prices start the year on a positive note. Dealers’ preparations for the spring selling season pushed AuctionNet wholesale prices over the first half of January in a familiar direction – up.  At a segment and model-year level, January’s results make for an interesting juxtaposition, as vehicles at opposite ends of the efficiency spectrum — large SUVs, mid-size cars, and compact cars — outpaced all other segments in terms of month-over-month price appreciation, according to auction data supplied to the NADA Used-Car Guide through its partnership with the National Auto Auction Association (NAAA). 
A 40 percent year-over-year drop in AuctionNet supply, combined with normal seasonal demand, pushed large SUV prices up by an average of 1.3 percent compared to December. Car prices, on the other hand, are benefitting both from the reduction in supply and the elevated level of fuel prices. As a result, mid-size and compact car average prices grew by a collective 1 percent over the first two weeks of the month. 
Regarding price declines, only luxury car segments saw prices fall from December levels. But the average drop of 1 percent was close to a one-point improvement over what normally is seen for the period.
Dealer alert: The NADA reminds dealers to protect their data. As part of the NADA’s ongoing efforts to promote compliance with the full range of legal and regulatory obligations affecting franchised dealers, the NADA sent a brief memo to all NADA members that underscores the importance of dealers protecting their electronic data. Additional educational resources on this and other regulatory compliance topics are available at and
• Four NADA-Google Learning Hub webinars will be offered free to NADA members. The first webinar, “The Smartphone Revolution,” is activated on-demand for members in Learning Hub, in the Internet category. Next up is “The Google+ Project for Dealers,” to be presented live Feb. 29. Subsequent topics and dates will be announced later.