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Chairman calls for F&I 'transparency'

November 22, 2010
The issue of dealer reserves is far from reserved

When Charley Smith took the reins of the National Automobile Dealers Association in February, he said he knew that dealer-arranged financing would be a hotbutton topic. "I thought that issue would be the most difficult and challenging issue I would face as chairman. I haven't changed my view," Smith said April 1 to a gathering of Illinois and Missouri  dealers."This issue is part of a well orchestrated attack on dealers by consumer advocategroups nationwide. This is the latest 'issue of the day,' " he said. The attorneys general  in Illinois and New York introduced legislation this year that would force dealers to disclose on their vehicle finance contracts that they make a profit on the transactions. And "60 Minutes" on April 4 aired a derogatory piece on dealer reserves. Smith called for more transparency in the financing process, suggesting that dealers assure their customers that loan rates are negotiable. The NADA joined two other trade associations in February in calling for such voluntary disclosure. The CATA also supports voluntary disclosure. "If we are to believe our critics," Smith said, "the problem is one of disclosure. But I believe the vast majority of dealers treat their customers honestly and fairly every day. Most customers don't understand financing, and that has caused misinterpretations that we have something to hide." Smith said dealers and their employees must be open with their customers. "Our customers will certainly remember the sales process, but nothing will stick in their minds more than how they were treated in the F&I department," he said. Smith also touched on current processes to determine CSI scores. He said the surveys should be simplified and the rating procedures revised. "I think one question could summarize all measures of satisfaction: How willing is the customer to recommend you to others or return to you himself?" said Smith.

 

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