Tag Archive | "NADA"

NADA: Jobs and Payroll Up at New-Car Dealerships

McLean, Va. – As the U.S. economy gains momentum and auto sales increase, employment at franchised new-car dealerships continued to rise, up 3.2% last year, according to the National Automobile Dealers Association (NADA) in its latest state-of-the-industry report.

In 2012, total employment at new-car dealerships increased to 963,400 employees, up from 933,500 the previous year, according to NADA Data 2013, a report on dealership sales and financial trends. The average number of employees per dealership rose from 53 to 55 last year.

There was also a net increase of 95 franchised dealerships, bringing the total to 17,635 at the end of 2012.

New-car dealerships had an annual average payroll of $2.9 million in 2012, up 12% from the previous year. The total payroll for all U.S. new-car dealerships was $51.6 billion, up 12.6%.

Average weekly earnings of employees at U.S. new-car dealerships last year was $1,030, up 9.1% from the previous year.

Sales, payroll and employment and at new-car dealerships as a percentage of total U.S. retail activity in 2012:

  • Sales accounted for 14.9% of total U.S. retail sales.
  • Payroll accounted for 12.3% of total U.S. retail payroll.
  • Employees accounted for 6.3% of total U.S. retail employment.

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NADA Announces New Dates for 2015–2018 Conventions

McLean, Va. — Beginning in 2015, the National Automobile Dealers Association (NADA) Convention and Expo will be held Thursday to Sunday instead of Friday to Monday.

“After surveying the membership and exhibitors, the consensus was to end the convention on Sunday, instead of Monday,” said Desmond Roberts, chairman of NADA’s Convention Committee and a Chevrolet dealer in Hodgkins, Ill. “The Thursday to Sunday timeframe will allow convention attendees to be back at work earlier the following week.”

For more than 40 years, the NADA convention has been held Friday to Monday. The 2014 NADA and American Truck Dealers (ATD) conventions will be held concurrently in New Orleans from Friday, Jan. 24, to Monday, Jan. 27.

The following are the revised dates for the 2015-2018 events:

2015: San Francisco (Jan. 22-25)

2016: Las Vegas (March 31-April 3)

2017: New Orleans (Jan. 26-29)

2018: Las Vegas (March 22-25)

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NADA: Used-Vehicle Prices Drop, But Remain at Elevated Levels

McLean, Va. — Prices for used cars and light trucks up to eight years old declined 2.1 percent in May — the largest drop since last October, according to the NADA Used Car Guide’s June edition of Guidelines.

In terms of U.S. dollars, the average trade-in price of used vehicles up to eight years old slipped from $15,320 last year to $15,263 in May 2013 year to date, a modest drop of $57.

“While prices this year have held up well, a growing supply of three-year-old vehicles is applying downward pressure on prices for late-model used vehicles,” said Jonathan Banks, executive automotive analyst, NADA Used Car Guide.

Banks said the increase in used-vehicle supply is, in part, the result of more fleet and lease sales after 2009, the same time new-vehicle sales hit a 30-year low with fewer trade-ins. “Some used-vehicle segments are feeling the squeeze of higher supply more than others,” he added.

The NADA estimates that the late-model supply of midsize cars and compact and luxury utility vehicles has increased on average by 16 percent. By comparison, the late-model supply for the overall market has increased by 8 percent.

Trade-in prices for midsize cars have depreciated by 2.8 percent over the first five months of the year, declining from an average of $13,120 in January to $12,749 in May. Overall market prices have declined by 1.9 percent over the same five-month period, while prices for full-size pickup trucks are up nearly 1 percent. Prices of used luxury cars and utility vehicles have fallen the most this year, down 3.3 percent on average.

“Despite the price declines in May, there is little evidence to suggest a substantive negative change in any of the major drivers underpinning overall used-vehicle price performance,” Banks said. “With gasoline prices holding steady and consumer sentiment at its highest level since 2007, we’re expecting an above-average performance in June.”

Average trade-in values, according to June’s edition of the NADA Official Used Car Guide, were reduced by a modest 1.3 percent. The NADA Used Car Guide expects that price depreciation for compact and midsize cars will be among the highest recorded in June, with depreciation of midsize and luxury utility vehicles following closely behind. Price declines for full-size pickup trucks are expected to remain minimal for another month.

Just like the new-vehicle market (sales up 7 percent in May YTD), used-vehicle demand is supported by favorable credit conditions, stable gasoline prices, rising consumer confidence and higher home prices, Banks added.

The NADA’s seasonally-adjusted used-vehicle price index moved to 122.1 in May, representing a 0.6 percent improvement over April’s figure of 121.3. With a year-to-date loss of just 0.4 percent, the index’s five-month average of 122.5 remains just slightly below 2012’s historical peak of 122.9. The index is a seasonally adjusted measurement of the change in price for used vehicles up to eight years old.

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NADA Chairman: ‘CFPB Guidance Lacks Transparency and Research’

McLean, Va. — Chairman David Westcott took to the National Automobile Dealers Association (NADA)’s Web site to call out the Consumer Financial Protection Bureau (CFPB) for its lack of transparency in its quest to regulate dealer participation programs. Westcott criticized the CFPB for releasing its fair lending guidance regarding dealer participation without demonstrating that problems exist and without analyzing the effects of any changes it makes to that compensation method.

“When a federal agency seeks to upend an enormously efficient $783 billion market, it should only do so in a manner that is transparent, thoroughly researched and that benefits the interagency coordination and public feedback,” he wrote.

The chairman also called out the CFPB for centering its guidance on a theory of liability called “disparate impact.” Under that theory, if an auto finance policy results in a certain group of consumers paying more for credit than similarly-situated consumers in other groups, then unintentional discrimination is taking place.

“The bureau claims that this theory exists under the Equal Credit Opportunity Act and Regulation B and is using it to target the compensation arrangements used by indirect auto lenders with dealers,” he wrote. “The bureau favors arrangements in which indirect lenders compensate dealers through the use of flat fees instead of arrangements that allow dealers to discount the credit rates that they offer to consumers in order to earn their business.”

The chairman’s post also questions the CFPB’s lack of oversight and for not coordinating its enforcement actions with other regulatory agencies like the Federal Trade Commission and the Federal Reserve Board. To read Westcott’s letter, click here.

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NADA Extends Deadline for Dealership Workforce Study

McLean, Va. — The deadline to participate in the 2013 Dealership Workforce Study has been extended to June 30, the National Automobile Dealers Association (NADA) and the American Truck Dealers group announced.

Launched last year by NADA University in partnership with DeltaTrends, the Dealership Workforce Study provides dealerships with individual and aggregated peer data, as well as national and regional data, on compensation and benefits, retention and turnover, work schedules and hours of operation. As a result, participating dealerships are in a better position to effectively manage their hiring and retention practices to gain a competitive edge for long-term growth.

“As more of our members learn about the wealth of information and level of detail in these reports, they’re telling us they don’t want to be left out,” said Kenneth C. Vance, chairman of NADA’s Dealership Operations Committee and a new-car dealer from Eau Claire, Wis. “We’re responding to their requests by pushing back the deadline so everyone who wants to participate has ample opportunity.”

When the study is completed, participants will receive a complimentary individualized Basic Report comparing their dealership’s workforce data against data aggregated on a regional and national basis. They may also purchase an individualized Enhanced Report, which further compares their dealership’s data against data for their franchise and state.

In addition to the individualized reports, a full Dealership Workforce Study Industry Report will also be provided to all participants at no additional charge. The Industry Report captures, analyzes and tabulates dealership workforce data for every U.S. region. It provides position-specific data on retention, tenure and turnover, as well as health and retirement benefits and hours of operation.

Participation is conducted through a secure web-based portal that can be found at www.nadaworkforcestudy.com.

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CFPB Takes Aim at F&I Products

Via F&I Showroom

Less than two months after the Consumer Financial Protection Bureau (CFPB) confirmed it was watching policies related to dealer participation by issuing guidance to indirect auto lenders, the bureau appears to be targeting the sale of extended warranties and other F&I products.

Reports suggest that the CFPB has issued subpoenas to U.S. auto lenders related to the sale of products such as extended-service contracts and other add-ons. Service Contract Industry Council (SCIC) Executive Director and General Counsel Timothy J. Meenan said the move is “possible and probable” based on media reports, but he has yet to receive confirmation.

“It appears that they are looking at lending practices for sales of automobiles, and also looking at issues involving add-on products,” Meenan said.

In March, the CFPB said it would hold lenders that offer auto loans through dealerships responsible for unlawful, discriminatory pricing. It alleged that bank policies which allow auto dealers to mark up the interest rates on retail installment sale transactions in exchange for services rendered have caused a disparate impact, meaning that members of minority groups pay higher rates. Several banking institutions, including Ally Financial, received letters stating that they could face lawsuits under the Equal Credit Opportunity Act (ECOA).

Groups such as the National Automobile Dealers Association (NADA) and the National Association of Minority Automobile Dealers (NAMAD) have denounced the bureau’s actions, as the CFPB has not revealed how it is conducting its analysis. Using the disparate impact theory, the CFPB has taken the position that violations of the ECOA can be pursued based solely on statistics — meaning a lender can potentially be held responsible for unintentional impacts on minorities.

NADA’s Director of Public Relations, Charles Cyrill, said the organization was not aware of any CFPB action related to F&I add-ons. “We have not received any information about CFPB investigations regarding optional products other than dealer reserve,” he explained.

The CFPB has not publicly confirmed the targeting of F&I products, but a spokesman did not deny recent reports.

“When I look at what the CFPB’s been doing with mortgages and with, say, credit card companies, they’ve gone after things that are potentially misleading,” Meenan said. He explained that while credit card companies have been known to sign up customers for add-on products without their knowledge or understanding, car buyers must sign a contract for F&I add-ons that says, “Yes, I want this.”

Last year, the CFPB reached settlements with credit card issuers such as Capital One Bank, which agreed to refund approximately $140 million to 2 million customers, as well as pay a $25 million penalty for the way it marketed add-on products like payment protection.

“I think those kinds of misleading practices don’t really apply to automobile service contracts,” Meenan said. “You can, in the first 45 days, cancel a service contract and get all your money back. And thereafter, you can get the pro rata share back… There are lots of good consumer protections in these products that I think the CFPB will find attractive.”

The CFPB is not the only agency looking at the auto industry. At a panel discussion at George Mason University on May 2, Jon M. Seward, deputy at the U.S. Department of Justice’s Housing and Civil Enforcement Section, said that the DOJ has experienced a shift in referrals of violations from federal bank regulators including the CFPB.

“We’re seeing a lot more referrals involving pricing discrimination allegations in the unsecured consumer lending space; a number of auto-related referrals either involving indirect auto lending or some involving buy-here, pay-here car dealerships,” Seward said in a video.

In December 2012, the department signed a memorandum of understanding with the CFPB aimed at strengthening their coordination in connection with fair lending investigations. That’s why, Meenan says, “We’re not taking anything lightly… We are in a fact-finding mode using local council and others to find out what it is the CFPB is after.”

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