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President\'s 2010 spending bill includes dealer rights provision

November 10, 2010
 By Ray Scarpelli Sr., Metro Chicago NADA Director

President Obama’s 2010 Spending Bill, which he signed in December, contains a provision granting certain GM and Chrysler dealerships and former dealerships the right to demand binding arbitration with GM or Chrysler to determine whether that manufacturer must be required to restore the dealership to the manufacturer’s dealer network.

Congressional passage of the bill and the subsequent signing by the president was the culmination of months of work by the NADA and other dealer groups to obtain a fair and meaningful arbitration process for affected dealers. The NADA praised members of Congress, including Majority Leader Richard Durbin (D-Ill.), for their efforts to gain a fair resolution for dealers.

"The NADA commends the Senate and House leaders who fought to keep the dealer rights amendment in the spending bill," the association issued in a statement. "The dealer rights provision will provide affected General Motors and Chrysler dealers and their respective automakers with a fair arbitration process to resolve ongoing concerns about recent dealership closures."

NADA Protects Auto Dealer Exclusion in House Financial Reform Bill

Led by the NADA’s strong grassroots efforts, auto dealers would be exempt from oversight by a new Consumer Financial Protection Agency (CFPA) under a sweeping overhaul of the nation’s financial regulatory system passed by the U.S. House of Representatives on Dec. 11.

An amendment supported by the NADA and sponsored by Rep. John Campbell (R-Calif.), to exclude auto dealers from CFPA jurisdiction, gained broad, bipartisan support; while a separate amendment that would have included auto dealers under the jurisdiction of the CFPA was withdrawn by its sponsor, Rep. Mel Watt, (D-N.C.). The 1,279-page bill passed by a vote of 223-202.

To address concerns from Rep. Watt and other committee members, the NADA worked with Rep. Campbell to clarify the scope of the exemption. Under the bill, banks and finance companies that fund and service auto loans arranged by dealers for their customers would be regulated by the CFPA, including dealerships that operate "buy here, pay here" lots.

"It is quite clear that representatives on both sides of the aisle realized auto dealers were not part of the problem that caused the economic downturn," said David Westcott, chairman of the NADA’s Government Affairs Committee and a multi-franchise dealer from North Carolina. "Dealer-assisted financing is already effectively and efficiently regulated at both the federal and state levels."

The financial reform legislation will be considered by the Senate Banking Committee in early 2010.

In other legislative and regulatory news . . .

As part of a statutory mandate to develop a more understandable template for privacy notices issued by dealers and other financial institutions, the Federal Trade Commission and the federal banking regulatory agencies jointly issued a new model privacy notice that, effective Dec. 31, 2009, serves as a safe harbor for the language used in the notice for financial institutions that choose to adopt it.

Dealers who continue to provide their finance and lease customers with a privacy notice that uses language from the sample clauses contained in Appendix A to the text of the original Privacy Rule (which required compliance since 2001) will lose safe harbor protection for the language used in those notices after Dec. 31, 2010. Accordingly, dealers should consider transitioning to the new notices before the end of 2010. For more information, see the NADA’s announcement of this amendment to the FTC Privacy Rule at (click on "Search Regulatory Topics by Government Agency" and then click on "GLB Act: Privacy Rule" under Federal Trade Commission).

In NADA news . . .

• NADA Compensation Study 2009 mailed

This year’s guide contains two valuable additions: NADA Chief Economist Paul Taylor has significantly expanded the introductory analysis section to provide greater insight into the data; and an entirely new section is provided on pay plans. Employee compensation and benefits are among dealers’ most significant expenses, and a motivated and skilled staff is critical to dealers’ business success. The NADA Compensation Study 2009 serves as a resource to help dealers assess their situation and balance those needs.

• NADA Management Guides to be delivered online

With the February launch of NADA University, member publications no longer will be printed and mailed; they’ll be available online only at NADA University’s Resource Toolbox. The new, easier-to-use format provides an executive summary, electronic routing to staff, and online tracking to ensure the material was reviewed and understood. NADA University includes significant new training, resources, and technology—much of which will be provided free to NADA and ATD members and their staffs. We need current, correct email addresses in order to deliver this unprecedented new training and education resource. Be there when we launch NADA University!