Chicago Automobile Trade Association
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CATA Bulletin
March 30, 2015

 

Sunday car sales bills get 3 backers

March 27, 2015

Democratic state senators from Chicago last week joined as co-sponsors of two of three bills introduced in February that would lift the ban on vehicle sales on Sundays in Illinois.
Senate Bill 1780, the most far-reaching of three bills, would lift Illinois’s blue law that prohibits new- and used-vehicle sales on Sundays. Another, SB 1835, would allow for the sale of motor vehicles by licensed dealers for not more than two hours on Sundays. And SB 1706 would permit Sunday sales of motor vehicles if the licensed dealer is a person who observes religious worship on a day other than Sunday.
Sens. Heather Steans and Kwame Raoul are co-sponsors of SBs 1780 and 1706; Sen. Patricia Van Pelt on March 25 became a co-sponsor of SB 1780. Sen. Jim Oberweis (R-Sugar Grove) introduced all three measures. 
 
The CATA has advised its members to be prepared to contact senators when, and if, the bills get a committee hearing.
The bills all moved March 11 to the Senate Transportation Committee. Obwerweis also introduced legislation last year to open dealerships on Sundays, but that effort faltered in the 21-member Transportation Committee, which is led by Sen. Martin Sandoval, D-Cicero.
 
Oberweis contends that consumers would appreciate being able to buy a car on Sunday. But 84 percent of new-car purchases involve financing which has to be arranged through lenders that are closed Sundays.
CATA President Dave Sloan said he hasn’t heard from any consumers clamoring to buy a car on Sundays.
 
"In a state where there are plenty of things that are broken and need to be fixed," said Sloan, "this law isn’t one of them. We urge Sen. Oberweis to spend time on issues that matter to Illinois taxpayers."
 
 

Advertised car prices wrongly doing the math on limited rebates: BBB

March 27, 2015

Dealership websites continue to be a primary source of vehicle prices proclaimed in ways that violate two Illinois rules on motor vehicle advertising, according to the Better Business Bureau, which monitors area dealers’ ads.
 
Patricia Kelly, counsel of the BBB’s Chicago office, added that advertising vehicle prices which are not available to all consumers is one of the new "zero tolerance" issues which the BBB forwards to the attention of the state’s attorney general’s office.
 
Section 475.310 of the Illinois Rules on Motor Vehicle Advertising states that "… all costs to the purchaser at the time of sale … including any costs of delivery, dealer preparation, and any other charges of any nature … must be included in the advertised price, except for taxes, license, title and DOC fee. In addition, "Purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price."
 
A related rule is that limited rebates cannot be reflected in advertised prices. Only rebates available to all consumers may be deducted from advertised prices, as stated in Section 475.530 of the advertising rules. The two rules work in tandem to ensure all advertised vehicle prices are available to all consumers who see or hear an advertisement, no matter the format.
 
Kelly said dealership websites continue to be a primary source of violations of the two rules.  
 
"Prices are advertised that include limited rebates," she said. "Prices are also advertised that exclude freight charges. Advertised prices often exclude dealer added-on products or enhancements that will cost consumers. These dealer add-ons must be included in advertised prices."
Kelly said the BBB wants dealership Internet managers and other personnel to watch for these issues and correct them on a continuing basis. "We have seen corrections made only to have language on websites revert to the prior problematic language. Therefore, such Internet personnel must monitor these issues continually," she said.
Kelly also cautions dealers with multiple stores and websites to make sure that all their operations adhere to these standards once a particular store is identified with a problem.
"It is not a satisfactory resolution," she said, "to merely fix the identified store. All stores within the dealer’s business operation should be reviewed and adjusted, even if only one store is called to that dealer’s attention by the BBB or otherwise.
"The BBB wants to remind dealers that advertising prices that are not available to all consumers is a zero tolerance issue which will draw the attention of the Attorney General."
Matters referred to the AG’s office likely involve more than an advertising issue, Kelly said. Consumer complaint problems also are likely to be included in any resolution discussions depending on the nature of the complaints. Volume alone could be an element in opening a larger case. 
In addition to the two sections on advertising noted above, the other three zero tolerance matters are:
 
Rule 475.540. Dealers continue to advertise that they will pay an amount equal to or over a book value for consumers’ trade-ins. Some dealers purport to desire to merely purchase consumers’ vehicles without selling them vehicles in an effort to skirt the rule. This claim has been rejected as a way to avoid a violation.
 
Rule 475.590. Free gifts, prizes and other incentives are being used extensively in connection with the sale of motor vehicles. Often items of significant value are being combined with offers of minor value. Dealers are assigning a money value to customer loyalty programs such as car washes. Whatever the value, dealers are prohibited from offering anything to consumers in connection with selling vehicles where the price is negotiated.
 
Consumer Fraud Act, section 2 (j) (1). This provision prohibits dealers from using coupons in the sale of a motor vehicle. BBB reviewers have seen coupons, or vouchers, used extensively in connection with specific trade-in amounts and offers of trade-in assistance.
 
 

Feds broaden crackdown on dealership fraud

March 27, 2015

The Federal Trade Commission is broadening its enforcement of car dealerships to crack down on deception and fraud in operations that go beyond advertising.
 
The latest actions, announced March 26, also target auto-loan application fraud and deceptive practices related to add-on products and services.
 
Jessica Rich, director of the FTC’s Bureau of Consumer Protection, outlined the "Operation Ruse Control" initiative.
 
The FTC is pairing up with numerous law enforcement agencies to conduct a "nationwide and cross-border crackdown on deception and fraud in the auto marketplace," the agency said.
 
It includes more than 250 actions from more than 30 law enforcement agencies. Those actions range in charges that include deceptive advertising, criminal automotive loan application fraud, odometer fraud and deceptive marketing of car title loans.
 
Add-on products
 
Among the six new actions announced by the FTC are its first auto enforcement cases involving add-on products or services. These two FTC cases include more than $2.6 million in monetary judgments. The FTC defines add-on products as products or services a dealer or other third party adds to the vehicle lease or finance contract.
 
At a press conference, Rich said, "Consumers have told us that in many cases, the prices of add-ons are not disclosed adequately or they fail to provide the promised benefits."
 
She added, "To date, the FTC has also brought dozens of other auto-related cases involving subprime auto loans; deceptively marketed car title loans; dealer misrepresentations about prices, discounts, who will pay off the amount owed on a trade-in vehicle; and scams in which companies promise to reduce auto debt in exchange for a large up-front fee, but then take consumers’ money and do nothing."
 
String of FTC enforcement
 
Operation Ruse Control is the latest in a string of actions by the FTC to address practices by car dealers.
Since the FTC began Operation Steer Clear, a nationwide sweep the FTC unveiled in January 2014, the FTC has settled with 12 dealerships accused of deceptive advertising.
 
Under those settlements, if the dealers failed to comply at any point over the next 20 years, they could face a fine of as much as $16,000 each day a deceptive ad runs.
 
The settlements are part of an FTC crackdown on dealer advertising that began three years ago. In March 2012, the agency settled with five dealers that it had accused of running deceptive ads. In late 2013, the FTC settled with two more.
 
In January 2014, when Operation Steer Clear was announced, the agency warned that it wouldn’t let up.It’s doing the same now.
 
"Protecting consumers in the auto marketplace remains a top priority for the FTC," Rich said. "If auto dealers are not following the rules of the road, we will step in to apply the brakes."
 
In response to the FTC announcement, the NADA released the following statement:
 
"(The) NADA strongly supports governmental efforts to address fraud and other prohibited conduct in the marketplace, and we continuously work with federal agencies to provide comprehensive compliance information to our members. It is important to recognize that the enforcement actions announced today are not indicative of any systemic problems within the auto industry - nor, as the agencies acknowledged, are they reflective of the overwhelming number of honest businesses that make up the nation's franchised dealer network. 
 
"They do, however, involve serious allegations, and while we have no first-hand knowledge of the facts surrounding these individual cases, we share the agencies' view that there is absolutely no place for fraud or deceptive practices in any part of the business community."
 
 

Google pushes for self-driving car by 2020

March 27, 2015

After six years of work and some concerns from the public, Google is pushing even harder for its driver-less cars to become reality, and now insists they will be on the road within five years.
 
Chris Urmson, director of Google’s self-driving car project, said the technology will be widespread and relatively standard by 2020. Unlike the semi-autonomous cars being developed by automakers, Google’s vehicles will have no steering wheel whatsoever, being controlled exclusively by computer.
 
Such a push could meet considerable resistance from regulators and drivers, who will want to be assured of the technology’s safety and ability to react to road conditions. 
Security is even a worry for some, after last month it emerged that a connected and highly-computerized car from one of the unnamed traditional automotive manufacturers was hacked by a 14-year-old with his pocket money.
Nevertheless, driverless cars are envisioned to be the future of much travel, and many people say they will potentially reduce accidents dramatically while making the commuting experience much more pleasant.
Urmson, speaking at the 2015 TED conference — for Technology, Entertainment, Design — told delegates that his eldest son will be eligible to take his driver’s exam in four and one-half years, but that the Google team is "committed to making sure that doesn’t happen" because of the advent of driverless cars.
 
One of Google’s strongest arguments with regulators and the public is the potential safety of driverless cars — as long as the technology works correctly, that is. 
Arguing that the annual deaths on the roads of more than 1.2 million people worldwide can be drastically reduced by lessening the human error element, the technology giant said driverless cars will help prevent many accidents before they happen. Electric car manufacturer Tesla feels the same, with CEO Elon Musk also insisting that the U.S. could eventually "outlaw" human-driven cars.
Google’s second prong of defense against those trying to stop its progress is its projected reduction of traffic jams, while improving the driving experience. A Google spokesman said that by automatically improving travel routes given the latest traffic and by taking away all of the work of driving, travel time can be both shorter and better spent. More than 1 million hours collectively are wasted in traffic every day by drivers, Urmson said.
Google has invested heavily in the research over the last six years since it began the project, which has been one of its key strands of its experimental development work, alongside artificial intelligence, virtual reality, 3-D imaging, smart contact lenses and glasses, and remote rural broadband. Its automated cars so far have driven more than 700,000 road miles.
When traversing a real road, the cars assess vehicles, people and infrastructure in terms of lines, boxes and dots, quickly processing and reacting to changing circumstances such as traffic lights, other cars, motorcyclists and cyclists, and pedestrians. 
 
The company also carries out more than 3 million miles of simulated testing every day.
 
Google remains at the prototype stage, but production is not all that far away. An early prototype car, revealed in December, was criticized for its low speed, but Google insisted its primary focus was on making the cars safe before making them faster.
 
A key question Google faces is whether it can, in reality, produce cars on a mass scale, and it is expected to eventually rely on traditional automakers to start off mass production. It is understood to be in discussions with several large car manufacturers, including General Motors and Ford.
 
Urmson told USA Today that "what’s evident is that making cars is really hard, and the car companies are quite good at it." He added, "In my mind, the solution is to find a partnership."
 
 

House bill caps CFPB funding

March 27, 2015

A bill passed by the U.S. House would set new limits on, and effectively cut, the amount of money the Consumer Financial Protection Bureau can spend.
 
The legislation, passed with nearly exclusive Republican support, was originally aimed at placing new limits on agencies writing regulations, requiring them to conduct more analysis on their impact and subjecting them to additional legal review. The bill caps CFPB funding at $550 million — $36 million less than the Congressional Budget Office estimated the CFPB would spend in fiscal 2016.
 
Agency backers argued that Republicans would simply look to stifle the agency with budget cuts, and noted that other banking regulators also have funding arrangements that fall outside congressional purview. Currently, the CFPB receives its funding from the Federal Reserve.
 
 

Congratulations! March 2015

March 27, 2015

Bill Hartigan, of Heritage Cadillac in Lombard, and 20 other Cadillac dealers nationwide were named winners of the 2014 Cadillac Dealer of the Year award.
 
The Audi Exchange, in Highland Park, is one of 12 dealerships comprising the 2014 Audi Magna Society Elite. Magna Society members include Fletcher Jones Audi, in Chicago.
 
Arlington Toyota, in Palatine, was named among the nation’s top 25 Toyota dealerships based on certified used-vehicle sales in 2014.
 
The 2014 Acura Dealership of Distinction Award recipients include Continental Acura of Naperville (19-year recipient); Acura of Libertyville and McGrath Acura of Westmont (13-year recipients); and Arlington Acura in Palatine (4-year recipient).
 
Tom Van Prooyen, proprietor of Schepel Buick-GMC (Merrillville, Ind.), and Stephen Woodring, principal of Woody Buick-GMC (Naperville) were among 17 winners of the 2014 Buick Dealer of the Year award. Van Prooyen also was one of 19 winners of the 2014 GMC Dealer of the Year award, as was Terry D’Arcy, owner of D’Arcy Buick-GMC (Joliet).
 
Fifty-three U.S. Mercedes-Benz dealerships won the automaker’s 2014 Best of the Best award, including Loeber Motors (Lincolnwood), Mercedes-Benz of Chicago, Mercedes-Benz of Orland Park, and Mercedes-Benz of Westmont.
 
Chevrolet’s 2014 Dealer of the Year award winners include Mike Anderson, of Mike Anderson Chevrolet of Merrillville (Ind.); and Curtis Pascarella, of Phillips Chevrolet (Frankfort).
 
Autobarn Volkswagen Countryside and Jennings Volkswagen, in Glenview, were named platinum-level members of the 2014 Wolfsburg Crest Club, for meeting the highest German standards for sales and service excellence.
 
Rod Baker Ford (Plainfield), Hennessy's River View Ford (Oswego), Highland Park Lincoln, and Van Drunen Ford (Homewood), were named 2014 Masters Award winners of Ford Credit’s Partners in Quality award for achieving high levels of customer satisfaction and loyalty to Ford Credit.
 
 
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