AUTOMOTIVE NEWS AT A GLANCE

NADA Raises Concerns About NHTSA's Proposed Fuel Economy Standards

The National Highway Traffic Safety Administration’s proposed 4.5 percent boost per year over five model years (2011–2015) is “very aggressive and unprecedented,” NADA recently said, and may require “too much too soon.” NADA stressed the importance of consumer demand to the success of the standards, warning, “...unless and until consumers actually buy any new vehicles covered by NHTSA’s proposal, the fuel economy and greenhouse gas emissions benefits associated with those vehicles cannot and will not be realized.” NADA also suggested that NHTSA “may have grossly understated the net costs and overstated the net benefits of the proposal.”
Although NHTSA is proposing to use attribute-based standards with continuous curves, NADA is concerned that some of the standards would inhibit manufacturers from producing light trucks for small-business owners and recreational vehicle users. However, NADA strongly supports NHTSA’s conclusion that state attempts to regulate the manufacture or sale of vehicles with respect to greenhouse gases are preempted by federal law.
In a related matter, NADA last month joined a number of New Mexico dealerships in asking for summary judgment in a case involving the adoption of California’s tailpipe greenhouse gas standards by the state of New Mexico, the county of Bernalillo and the city of Albuquerque. The motion asks the court to declare that federal fuel economy and clean air laws preempt state and local motor vehicle greenhouse gas regulations. The summary judgment motion notes that New Mexico’s regulations would require fuel economy increases for passenger cars that are 15 to 25 percent above what NHTSA has found to be the maximum feasible for the six largest automakers selling vehicles in the state.

In other regulatory news...

  • Dealers should be aware that the Federal Trade Commission has specific restrictions on new-vehicle fuel-economy advertising: If both city and highway fuel economy are referred to in an ad, both EPA’s “estimated city mpg” and “estimated highway mpg” must be disclosed. If only the city or highway is referenced, then only the corresponding EPA estimate must be used. When advertising combined fuel economy, dealers also must include the EPA “estimated city mpg.” In all fuel economy ads, EPA must be identified as the source of the information and all numbers must be referred to as estimates. Last year, the FTC asked for comments on the necessity and impact of fuel-economy advertising restrictions. NADA suggested several changes but generally supported the FTC’s restrictions. NADA will inform members when the FTC finalizes its review. For more details on fuel economy advertising, obtain Management Education’s L14 bulletin at www.nada.org.
  • In response to the government’s recent announcement that it is upgrading its crash-test program for vehicles, NADA says it supports most of the enhancements, such as a new crash-avoidance program that will rate vehicles on the presence of select advanced technologies—specifically electronic stability control, forward collision warning and lane-departure warning systems. But NADA remains concerned about measuring crashworthiness with a single metric that combines the star ratings from the front, side and rollover programs into a model-specific “Vehicle Safety Score.” To address these concerns, NADA intends to fully participate in NHTSA’s upcoming rule-making process, which will address how new safety information should be presented to the public. 
           The new program will continue to assess passenger cars, pickup trucks, sport utility vehicles and vans on the existing five-star scale, but will add an overall safety rating that combines scores from several crash tests. The new system will start in the 2010 model year, and will include new front-end tests and a test in which the vehicle strikes a pole sideways to simulate the wrapping of a vehicle around a tree.

In NADA news...

  • Visit NADA’s new full-service Dealer Attitude Survey (DAS) Web site to take the summer 2008 survey, available online through Aug. 7. The survey format is online only, which will speed up the processing time for the results. Dealers must fill out a brief registration form at the new site to receive a unique user ID to participate in the summer and subsequent surveys. Dealers have received instructions on where to access the new site. For questions, contact NADA Industry Relations at industryrelations@nada.org, or call 703.821.7010.
  • NADA President Phil Brady and SEMA (Specialty Equipment Market Association) President and CEO Chris Kersting recently announced a first-of-its-kind, comprehensive “Dealer Day,” to help dealers tap into the $38 billion accessory market. The half-day program, designed exclusively for NADA members, is scheduled for Nov. 5 at the Las Vegas Convention Center during the 2008 SEMA show. Its purpose is to give dealer principals the ideas, tools and resources to integrate strong and successful accessory programs at their stores. It’s the first time the SEMA show will dedicate an exclusive program for NADA members. There is no cost to attend Dealer Day. “At a time when many dealers are looking for new ways to generate additional revenue and sales, this program will provide [them] with new ideas and strategies to help improve their bottom-line performance by creating profitable accessory programs,” says Brady. Participating dealers also will have an opportunity to meet directly with proven experts who will share real-world case studies. To register or receive more information about the program, e-mail dealerlink@sema.org
  • NADA director Dale Early received the Jesse Jones Visionary Award, presented last month by the National Association of Minority Automobile Dealers. Early is a director at-large of NADA and a Texas auto dealer. The award, which recognizes an individual’s vision, vigilance and work initiatives that have increased opportunities for ethnic minorities, was presented to Early at the 2008 NAMAD Annual Membership Conference held in July in La Jolla, Calif. “I am honored to receive this award because Jesse Jones was my first dealer role model,” said Early, owner of Deerbrook Forest Chrysler/Jeep in Kingwood, Texas, and chairman of NADA’s public affairs committee.
  • NADA Insurance announced that its hole-in-one insurance program, ACECO, continues to experience strong financial growth, despite the downturn in the automotive industry. The trend indicates that U.S. auto dealers are continuing to support charitable and invitational golf tournaments in their local communities. And, with the average hole-in-one insurance premium being just a few hundred dollars, golf tournament sponsorship is a very cost-effective way for a dealership to advertise. “Many of our dealers are finding that golf sponsorship is a very effective advertising medium,” said NADA Insurance Vice President Lin Peacock. “While wanting to scale back expenses, our dealers still want to continue to be a prominent part of their local business communities. ACECO hole-in-one insurance offers NADA dealers a way to sponsor highly visible golf tournaments — with zero risk and at very little cost.”
            To help dealers gain even more exposure, ACECO will provide any policyholder with a free press release template that can be completed and sent to the local media to announce the dealership’s support of the tournament. Visit www.nadainsurance.com today or call 888-828-8540 to obtain a quote for your next tournament sponsorship.
  • For the sixth year in a row, NADA will partner with TIME magazine for its annual dealer advertorial section in October. TIME has had a 40-year relationship with NADA and dealers around the country through the TIME Magazine Dealer of the Year Award. This multipage special section will be published in the October 20 issue of TIME. This section builds awareness among car-buying consumers, enhances the image of the automobile industry and serves as a valuable tool in educating the public on the importance of dealers and the positive impact they have in their communities. NADA asks that in the coming months, dealers promote this year’s special section whenever there is an appropriate opportunity, both with fellow dealers and with OEM representatives. The section highlights the valuable role of the auto industry—and of dealers specifically—to the more than 4 million people who read TIME each week. Titled “Automotive Innovation,” this year’s key topics may include:
    • Technology & performance
    • Green driving tips
    • Greener products
    • New safety features
    • Entertainment & navigation
    • The trend toward green dealerships
    • Sidebars throughout the section on dealer community involvement

In legislative news...

  • NADA, a leader in the fight for total-loss vehicle disclosure, applauds the efforts of the National Insurance Crime Bureau (NICB) for creating a new Web-based service with total-loss data for consumers. “This is a step in the right direction, but because the information is limited, we still need federal legislation that would expand total-loss disclosure,” said Ivette Rivera, NADA’s executive director of legislative affairs. “We would like all insurers and rental car companies to leverage existing technology, such as vehicle history reports, to keep dangerous, rebuilt cars and trucks off the road to truly protect consumers.” The NICB’s VINCheck (http://www.nicb.org/) allows consumers to check five vehicles per day —one VIN at a time —for reports of severe damage, flood or theft. The Web site includes mostly insured vehicles, but lacks access to the records of self-insured vehicles, rental fleets and insurers who are not NICB members. NADA continues to seek further transparency — through support of total-loss legislation in Congress — by urging insurers to make this same total-loss information commercially accessible to vehicle history providers so that dealers, wholesalers, auctions and remarketers of used cars can provide another layer of protection for consumers. “With hundreds of cars underwater throughout the Midwest, used-car buyers need every tool available to ensure that they do not unknowingly end up with one of these refurbished flood cars,” Rivera said. Since the Gulf Coast hurricanes of 2005, NADA has been advocating for federal legislation, H.R. 1029 and S. 545, that would require the insurance companies to disclose the VINs of totaled vehicles on a more complete and timely basis and “red flag” potentially unsafe cars and trucks. For more information, visit: www.nada.org/tld. NADA also offers the following 10 inspection tips to help prospective used-car buyers spot a flood-damaged vehicle:
    • Check the vehicle’s title history by VIN through commercially available vehicle history reports like Carfax or Experian Auto Check. The report may state whether a vehicle has sustained flood damage.
    • Examine the interior and the engine compartment for evidence of water and grit from suspected submersion. 
    • Check for recently shampooed carpet.
    • Look under the floorboard carpet for water residue or stain marks from evaporated water not related to air-conditioning pan leaks. 
    • Inspect for rusting on the inside of the car and under interior carpeting, and visually inspect all interior upholstery and door panels for any evidence of fading. 
    • Check under the dashboard for dried mud and residue, and note any evidence of mold or a musty odor in the upholstery, carpet or trunk. 
    • Check for rust on screws in the console or other areas where the water would normally not reach unless submerged. 
    • Look for mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power steering pumps and relays. 
    • Complete a detailed inspection of the electrical wiring system, looking for rusted components, water residue or suspicious corrosion. 
    • Inspect the undercarriage of other components for evidence of rust and flaking metal that would not normally be associated with late-model vehicles.
  • More on total loss disclosure. NADA supports the move by Liberty Mutual to provide Carfax with data on every car it declared a total loss and sold for salvage over the past five years. This information will then be disclosed to buyers via Carfax vehicle history reports. Liberty Mutual’s action represents another significant step toward NADA’s goal of making insurer data on total-loss vehicles readily available to the public and dealers. Liberty Mutual’s announcement comes on the heels of another recent, positive initiative—the creation of a limited total-loss database by a coalition of auto insurers and law enforcement agencies. NADA will continue to push all insurance companies and large rental-car agencies to make total-loss records available to all used-car buyers.
  • NADA remains neutral on a bill recently approved by a congressional panel that would keep auto dealers from forcing customers into binding arbitration to settle disputes. The bill, sponsored by Rep. Linda Sanchez (D-Calif.)., would not impact the NADA-backed 2002 law that protects dealers’ rights under state law. Sanchez pointed to the 2002 law, which keeps automakers from requiring dealers to accept binding arbitration in their franchise agreements. “It seems only fair that consumers receive the same protections,” she said. While lobbying for the 2002 law, NADA went on record stating that it would not oppose future efforts by Congress to outlaw mandatory binding arbitration in consumer contracts. Also, NADA’s neutrality does not prevent state or metro associations or individual dealers from taking a position on this issue. NADA will keep dealers advised of new developments on this legislation.
Colorado Automobile Dealers Association
 290 East Speer Boulevard Denver, CO  80203
 Telephone:  303.831.1722  |  Facsimile: 303.831.4205
 www.cadaonline.org