Chicago Automobile Trade Association
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CATA Bulletin
February 3, 2014

 

National dealer groups promote compliance with fair credit laws

January 31, 2014

The federal Consumer Financial Protection Bureau last March issued "guidance" to indirect auto lenders alleging that the industry has engaged in unintentional, statistical discrimination against protected minority classes.
 
In Jan. 25 remarks at the NADA Convention & Expo in New Orleans, outgoing association Chairman David Westcott said: "Our message is simple: the CFPB’s effort to coerce the industry into adopting flat fees will harm the car-buying public. Rest assured that the NADA will continue to lead the charge and defend in-dealership financing."
 
Now comes the NADA Fair Credit Compliance Policy & Program, one that dealers may wish to consider to satisfy fair credit laws. The NADA publication also is supported by the American International Automobile Dealers Association and the National Association of Minority Automobile Dealers.
 
Treating customers in a fair and consistent manner and strictly abiding by all anti-discrimination laws is central to the mission and success of dealers. The NADA publication is designed to further that mission by providing dealers with an optional Fair Credit Compliance Program they can adopt which: (a) establishes a Fair Credit Policy for the dealership that sets forth an unambiguous commitment to fair credit compliance; and (b) creates a general framework for promoting compliance with fair credit laws.
 
Dealers who adopt this or a similar approach would individually establish a pre-set amount of compensation their dealership would include in credit offers to every consumer, unless any one of several pre-determined and pro-competitive reasons for deviating from that amount is present in the transaction. The approach also provides that any person offering an extension of credit must record and document any deviation from the dealership’s pre-set amount of compensation.
 
Finally, it establishes a periodic review process for management personnel to examine the documentation and, if necessary, take corrective action. This voluntary approach to fair credit compliance is designed to help dealers who adopt it to both promote their commitment to fair credit compliance and strengthen their ability to demonstrate that they have taken a consistent approach to the pricing of consumer credit.
 
Fulfilling these goals is particularly important in light of 2013 allegations by the federal CFPB that finance sources that purchase credit contracts from dealers create a "significant risk" of fair credit violations when they allow dealers to exercise discretion in determining the amount they earn for qualifying and extending credit to consumers.
 
The CFPB maintains (and has already entered into a consent order with one finance source) that such dealer discretion unintentionally results in certain groups of consumers (based on race, color, national origin, and other factors) paying more dealer compensation than similarly situated consumers in other groups. While the national dealer associations take these allegations seriously, their spokespersons said that they – along with a large bipartisan group of U.S. senators and representatives – have not received essential information from the CFPB demonstrating that such unintentional discrimination exists.
 
However, the nature of the CFPB’s allegations underscore the importance of strengthening the compliance resources that are available to our members in this area. The NADA Fair Credit Compliance Policy & Program is based on a compliance program that two dealers adopted in 2007 consent orders to resolve Department of Justice allegations of unintentional credit discrimination.
 
While neither the DOJ nor any other federal agency has stated that adopting this approach satisfies the requirements of federal law, it nevertheless provides a useful template for dealers to consider in developing their own approach to fair credit compliance.
 
The publication contains: (a) a brief overview of this issue; (b) general and specific instructions for completing the Fair Credit Compliance Program template; and (c) the actual Program template. Dealers are not required to adopt this Program.
 
If dealers decide to adopt this Program (or any part of it), it is essential that they make dealer specific entries where noted in the template and otherwise modify the Program to reflect their operational circumstances. It is imperative that dealers consult with qualified legal counsel when making these individual decisions.
 
 

Chicago Auto Show revs engines for its 106th edition, Feb. 8-17

January 31, 2014

The Chicago Auto Show, the world’s third largest auto show and the largest on a continuous floor, opens Feb. 8 for a 10-day run in the North and South halls of McCormick Place. Show-goers will have to cross 1.3 million square feet of display space to touch it all.
 
Not that every day isn’t a special day down at the Chicago Auto Show, but show organizers again will add structure to the 10-day run of the show, which will feature hundreds of cars, trucks, sports utility, concepts, and specialty vehicles on display. There will be plenty to catch the eye.
 
Women’s Day
 
Women will be admitted Tuesday, Feb. 11 for just $6. Manufacturers will present special women-oriented programs on the purchase and lease of cars and maintenance. It’s a day all about the ladies at the Chicago Auto Show.
 
Telemundo Hispanic Day
 
Chicago Auto Show exhibitors on Friday, Feb. 14 develop and host Hispanic-flavored events. For more information about scheduled events, visit www.telemundochicago.com
 
Family Day
 
The Chicago Auto Show will host family fun on Monday, Feb. 17 — Presidents Day and the show’s final day. Again this year, Family Day is expected to be a great conclusion to the nation’s premier auto show.
 
Food Drive
 
Show attendees Feb. 12-14 can exchange three cans of food for a voucher good for a half-price discount off a full-price adult admission.
 
Special Guests, Celebrity Appearances
 
Keep up to date on all the excitement happening at the Chicago Auto Show, with a full schedule of events and appearances at ChicagoAutoShow.com.
 
 

New-car dealers face both challenges and opportunities ahead

January 31, 2014

By Mark Scarpelli, Chicago Metro NADA Director
 
New-car dealers and their nearly 1 million employees across the nation worked hard last year, and we began to see our industry regain momentum. As we closed out 2013 with 15.6 million new-car and light-truck sales, we can only hope to ACCELERATE from here.
 
While other industries struggled within the rebounding economy, ours soared. Auto sales have risen to their highest level since the recession. Last year’s sales increased 8 percent from 2012, and favorable circumstances — available credit, a wide selection of new vehicles and pent-up demand — all helped to bring customers back into our showrooms.
 
Despite forecasts of new-vehicle sales to surpass more than 16 million units this year, the road back still has many obstacles ahead. The National Automobile Dealers Association is working hard every day to protect and promote our businesses.
 
We have a major concern with the Consumer Financial Protection Bureau because it appears to be very uninformed on how dealer-assisted financing actually benefits car shoppers. Democrats and Republicans in the House and Senate share this concern, which is why they have called upon the CFPB to allow for greater public participation on this issue.
 
If the CFPB carefully considers the facts on the ground — as opposed to misinformation circulated by some agenda-driven consumer advocacy groups — it would have a greater appreciation for the fact that the dealer-assisted financing model has been enormously successful in increasing access and reducing the cost of credit for millions of Americans.
 
Unfortunately, the CFPB has not revealed sufficient information about its statistical methodology for measuring whether disparate impact is present in an indirect auto lender’s portfolio to know how real or speculative its claims are. To this day, we still don’t know, among other things, what factors the CFPB holds constant to isolate a customer’s background as the sole reason for any pricing disparities that may exist among different groups of consumers.
 
The debate over the franchised dealer network also came to the forefront last year. I’m extremely proud to be a dealer and to help my customers get the vehicles they need and perform service work. The franchise system creates competition, and the primary beneficiary is the customer. That’s why all 50 states have enacted some form of a dealer franchise law.
 
The franchise system is the gold standard that, without a doubt, makes the U.S. model the most competitive in the world. And that’s because dealers take on what our customers shouldn’t have to — from a complex system of titling and registration, to reams of regulatory paperwork. This is a message we will keep telling to whomever doubts it, and to whoever questions the importance of the franchise system.
 
We made some headway with our manufacturers last year, too. Last September, we received an invitation to meet with the 14-member board of directors from General Motors Co. in Detroit. It marked the first time the NADA met with an OEM board of directors. As dealers, we work hard every day to establish good relationships with our manufacturers. This meeting was a significant opportunity to open new dialogue and share ideas.
 
The good news is the economy is recovering and auto sales are helping to lead the way. Our industry and the nearly 1 million dedicated and resilient men and women working at new-car dealerships who helped us get to where we are today deserve a lot of credit.
 
It was an honor to serve my fellow Metro Chicago dealers this past year. Have a happy and successful 2014.
 
 

Scarpelli ascends to NADA executive committee; Roberts lauded for convention

January 31, 2014

Mark Scarpelli, who three years ago became the National Automobile Dealers Association's director for metropolitan Chicago dealers, on Jan. 27 ascended to the NADA board's executive committee, when he was named 2014 chairman of the board's regulatory affairs committee. Scarpelli is president of Raymond Chevrolet-Kia in Antioch.
 
Another area dealer, Desmond Roberts, drew praise for serving as chairman of the just-concluded 2014 NADA Convention & Expo in New Orleans. Roberts, president of Advantage Chevrolet in Bolingbrook and Hodgkins, is one of two At Large-East directors on the NADA board.
 
Both Scarpelli and Roberts also served on the CATA board of directors, Scarpelli until 2010 and Roberts until 2012.
 

AIADA installs Kull as 2014 chairman

January 31, 2014

The American International Automobile Dealers Association on Jan. 27 elevated Marlton, N.J., dealer Larry Kull to be its 2014 chairman, at the AIADA’s 44th annual meeting and luncheon.
 
"I don’t expect to eliminate government involvement in our stores or our industry, but I will work throughout this year to ensure that those making the laws and setting the regulations have some understanding of how our businesses are run," said Kull. "It must be our mission in Washington to educate them."
 
Kull and several family members operate a successful group of dealerships that include Honda, Hyundai, Kia, Toyota, Scion, Subaru, Buick, GMC, and Chevrolet franchises.
 
Kull has served on the AIADA’s board of directors for several years, including recently as treasurer. In addition to his involvement with the AIADA, Kull also is a board and executive committee member of the New Jersey Coalition of Automotive Retailers. Kull and his dealerships support numerous local charities and initiatives, including the NADA Charitable Trust Ambassadors Program. Kull also serves on the board of the Cooper Medical School at Rowan University in Camden, N.J.
 
Also during its annual meeting, the AIADA recognized Orange County, Calif., auto dealer David Wilson with its 2014 David F. Mungenast Lifetime Achievement Award. The award is named after the late AIADA chairman who was known throughout the auto retail industry for his commitment to his community and the industry. Wilson operates Wilson Automotive Group, a group of 16 dealerships that has been recognized as one of the ten biggest dealership groups in the country.
 
Other AIADA 2014 officers include Jenell Ross, immediate past chairwoman (Centerville, Ohio); Brad Hoffman, chairman-elect (East Hartford, Conn.); and Greg Kaminsky, secretary/treasurer (El Cajon, Calif.)
 
 

The connected car era has arrived

January 31, 2014

In a smartphone-centric world, automakers aren’t just selling cars anymore; they’re playing an integral role in shaping the "connected world" future. Cars themselves are becoming mobile hotspots that link the vehicle to the home and to the outside world. In-car connectivity applications now allow a vehicle to interact with other aspects of an owner’s life.
 
Many of today’s cars have features that go beyond hands-free calling, as some are able to read text messages aloud and access owners’ social media accounts. Moreover, car connectivity is becoming a two-way street, as vehicles now also are able to send pertinent information back to their owners via their smartphones.
 
Recognizing this growing trend, the Chicago Automobile Trade Association — producer of the Chicago Auto Show — has partnered with Connected World magazine to present the Connected World Conference at the 2014 Chicago Auto Show.
 
An established exposition for the past three years, the Connected World Conference has successfully coupled connected technology providers, app developers and industry experts. Bringing this conference to the Chicago Auto Show adds a public element that hasn’t been tapped in previous technology conferences.
 
The Connected World Conference examines the convergence of the automobile with today’s new communications and infotainment technologies. The Connected World Conference will be in a 20,000 square-foot pavilion on the show floor.
 
The Connected World Conference will showcase technologies, products and services developed to enhance the in-car experience. App developers, device makers, software companies, and product and car manufacturers collectively will provide 10 days of programming during the show. The Connected Car of the Year award winners will be announced Feb. 6 during the show’s Media Preview.
 
The Connected World Conference will feature multiple exhibits that provide a tour of the technologies coalescing around the connected car. These exhibits include connected energy, connected healthcare/fitness, and a special start-up zone for innovators seeking funding.
 
Advanced programming includes presentations on connecting the car to the house, to physicians, to other vehicles, and to our health and fitness.
 
 

Show to ignite conversation with #FuelCAS

January 31, 2014

To fuel conversation surrounding the hottest vehicles, the latest automotive trends, interactive exhibits, special events and celebrity appearances, the Chicago Auto Show will engage its fans to participate in the first #FuelCAS Social Media Scavenger Hunt.
 
Each day, show-goers will have the chance to participate in a series of challenges throughout the show floor. For example, one challenge might be to take a Vine video of an indoor test track experience; another might be to take an Instagram photo of the latest concept vehicle. Fans automatically will be entered to win prizes provided by sponsors and manufacturers.
 
Challenges may be completed across the following platforms: Facebook, Twitter, Vine, Instagram and Instagram Video, making it easy for anyone to participate no matter their social media channel preference. It’s no surprise social media provides an extremely human element to the marketing world, where consumers can directly connect with brands, and vice versa.
 
The Chicago Auto Show’s official hashtag, #FuelCAS, was constructed with the following strategy in mind: to unite the automotive industry and fans by streaming all conversation surrounding the show to highlight the latest innovations, identify trends and capture real-time consumer feedback.
 
 

Sedgwick deflects Q4 2013 jobless claims

January 31, 2014

One hundred forty CATA dealer members reported a combined 503 unemployment claims during the fourth quarter of 2013 to Sedgwick Claims Management Services, Inc., which has been serving CATA dealers under various names since 1979. The company’s efforts saved those dealers a total of $450,213.00 in benefits by contesting the claims.
 
Sedgwick CMS monitors any unemployment claims against its clients and contests all unwarranted claims and charges. The company counts about 265 CATA dealers among its clients.
 
The number of claimants and affected dealers and benefit amounts were at their lowest numbers in years. Claims that can be protested and subsequently denied help minimize an employer’s unemployment tax rate. The rate can vary between .55 percent and 8.55 percent of each employee’s first $12,960 in earnings.
 
The 2014 average unemployment tax rate & new employer rate for Illinois employers is 3.95 percent, or about $512 annually per employee ($535 in 2013). The rate continues to inch down from 2007, as the Illinois economy continues to improve.
 
"The unemployment tax is really the only controllable tax, in that it’s experience-driven," Schardt said. An ex-employee’s claim affects the employer’s tax rate for three years.
 
For new enrollees, client fees amount to $2.60 per employee, per fiscal quarter. For the fee, Sedgwick monitors all unemployment claims; files any appeals; prepares employer witnesses for hearings, as necessary; represents the client at any hearings; verifies the benefit charge statements; and confirms the client’s unemployment tax rate.
 
To discuss retaining the company, call Schardt at (773) 824-4325 or Bruce Kijewski at (773) 824-4322.
 
 

Congratulations! (Feb. 2014)

January 31, 2014

The Autobarn Mazda Evanston, Continental Mazda of Naperville, Schaumburg Mazda, and CJ Wilson Mazda (Countryside) in 2013 were among the Top 10 certified pre-owned volume Mazda dealers in the Midwest region.
 
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