WASHINGTON – The National Automobile Dealers Association (NADA) urges House and Senate conferees to keep finance options for car buyers affordable and accessible when considering legislation to overhaul the nation’s financial system.

“The House and Senate sent a very clear and bipartisan message that Main Street auto dealerships should not be in a Wall Street reform bill,” said David Regan, NADA vice president of legislative affairs.

During consideration of the Wall Street reform legislation, members of Congress voted to keep in place the sound regulatory structure that has allowed millions of consumers to buy new vehicles at competitive interest rates instead of creating an uncertain regulatory regime under a new agency.

Late last year, a strong bipartisan majority in the House Financial Services Committee voted 47-21 to support an auto dealer amendment, sponsored by Rep. John Campbell, R-Calif, which seeks to keep dealer-assisted financing a competitive option for auto shoppers. The amendment was retained in the final House bill.

On May 24, the Senate, by an overwhelming bipartisan margin (60-30), voted to support a “motion to instruct the conferees” offered by Sen. Sam Brownback, R-Kan., to keep the auto dealer language in the conference report.

“Auto dealerships are not banks. Dealers help consumers find affordable credit by arranging financing through a network of third-party lenders,” Regan said. “Dealerships do not underwrite, fund or service auto loans or leases and those that do will be subject to the new agency’s regulations, even under the Brownback/Campbell auto dealer language.”

Regan further emphasized that the new consumer agency proposed in the bill would have direct federal oversight over all auto loans. All banks, finance companies, credit unions and, dealerships that directly fund and service auto loans would also be regulated.

Regan said that false allegations by various groups were an attempt to confuse lawmakers, but many in Congress realized that the claims are without merit. For instance, baseless claims regarding dealer practices toward the military were dismissed because no data exists to back up the claims. In fact, when the Department of Defense presented a comprehensive report on predatory lending directed at the military in 2006, the report did not specifically identify dealer-assisted financing as a problem, instead focusing on payday loans, auto title lending, and refund anticipation loans. Click here for the report.

Similarly false claims alleging discriminatory practices also did not withstand scrutiny. A study cited by opponents failed to factor in an individual’s creditworthiness when determining a loan’s interest rate.

Congress also recognized that the Brownback/Campbell auto dealer language preserves all existing state and federal consumer protection statutes and regulations that govern dealer-assisted financing. Dealers’ retail financing activity would continue to be effectively regulated by the Federal Reserve Board and the Federal Trade Commission.

Regan urged the bill’s conferees to remember that dealer-assisted financing is optional for car buyers and provides more convenience, more competition and more choices for consumers. Dealers’ relationships with numerous lenders allow them to help consumers find more competitive financing. Often an automaker’s captive finance company enables dealers to provide 0 percent financing, which banks and credit unions do not offer.

“The vast majority of Congress looked at the facts and clearly saw that auto financing did not cause the financial crisis,” Regan said. Auto financing is sound because lenders must look primarily to the borrower for repayment, since financing is secured by a depreciating asset (the vehicle). Since 2004, 60-day auto loan delinquencies have never exceeded 1 percent, even during the worst of the recent recession.

“Consumers win when they have multiple financing options. Conferees must keep auto financing affordable for consumers from all walks of life by keeping competition in the marketplace,” Regan added.

WASHINGTON – Today, the Senate endorsed pro-consumer auto dealer language preserving affordable auto financing options for car buyers in the Wall Street reform bill, which now proceeds to House-Senate conference negotiations.

In response, the National Automobile Dealers Association (NADA) President Phil Brady released the following statement:

“The Senate clearly supports not including Main Street auto dealers in the Wall Street reform bill. Dealers across the country are pleased that both the Senate and House are now on record supporting language which is pro-consumer and preserves dealer-assisted financing as an affordable, convenient and competitive source of credit.

“Senators clearly understand that dealers are not lenders—they do not underwrite, fund or service auto loans. They also realize that jurisdiction of the Bureau of Consumer Financial Protection over auto dealers is unnecessary because dealers are already effectively regulated by the Federal Reserve, the Federal Trade Commission and state agencies.

“Dealers especially applaud Senator Brownback’s leadership in building strong bipartisan support in the Senate and for appreciating that dealers were as much victim of the credit crisis as were consumers. We urge the House-Senate conferees to retain language which preserves auto dealers’ ability to provide affordable financing options for consumers in the final bill.

“NADA would also like to thank all the many dealers and their employees around the country that made their voices heard on such an important issue. This was a vote in favor of consumers and Main Street businesses.”

WASHINGTON – Lending to the nation’s 17,000 franchised dealers to purchase new- and used-vehicle inventory continues to lag, making it a top issue for the National Automobile Dealers Association (NADA). The dealer association said that a hearing on Feb. 25 by the Congressional Oversight Panel on the Troubled Asset Relief Program (TARP) highlights the ongoing need to provide more liquidity for auto business lending.

“This hearing underscores a much larger problem: lenders are still too often unwilling to lend to auto dealers to buy cars and trucks for sale to their customers,” said Andy Koblenz, NADA vice president for legal and regulatory affairs.

During the hearing, Ron Bloom, from President Obama’s Automotive Task Force, emphasized the need for action saying that the future of the U.S. auto industry hinges on the ability of policy makers to restore the free flow of credit to auto retailers and car buyers.

“By extending the Federal Reserve’s successful Term Asset-Backed Securities Loan Facility (TALF) and expanding the government’s small business loan guarantee programs, we create the best environment for banks and finance companies to be comfortable lending to dealers again,” Koblenz said.

Utilizing TARP, the Fed created TALF to jump-start and return the secondary loan market, where lenders’ loans are bundled and sold, to a sustainable level so lenders can move loans off their books and access more funds to make additional loans.

In a Feb. 24 meeting with the Federal Reserve Bank of New York, Koblenz outlined the need to continue TALF for wholesale or floorplan loans past the program’s March deadline. 

TALF has been successful in getting consumer credit transactions moving again. Credit cards, consumer vehicle loans and home mortgages, among others, have rebounded. Yet, wholesale credit for dealers is still “stymied” for some reason, Koblenz added.

“It doesn’t make sense; floorplan credit is traditionally one of the lowest risk loans a lender can make,” Koblenz said.

The Fed meeting is part of a two-pronged approach by NADA: In addition to its TALF efforts, the other is to boost lender interest in government-backed loans. Already successful in lifting an outdated ban on floorplan lending guarantees by the Small Business Administration (SBA), NADA is urging Congress to increase the amount of funds that the government will guarantee.

“With dealers holding on average $5 million in inventory at any one time, the $2 million loan limit for SBA-guaranteed loans simply isn’t enough,” Koblenz added. “Only Congress can increase these limits.”

Koblenz said that SBA’s Dealer Floor Plan Financing Program — pushed for by NADA and created by the Obama administration — is the right idea, but banks haven’t warmed to it. Unfortunately for many dealers, even as access to credit improves, the temporary pilot program is slated to end Sept. 30.

“Extending the SBA program, increasing the loan guarantee limits, making other program adjustments and continuing the TALF program specifically for floorplan securitizations should give lenders the comfort to offer floorplan lines of credit,” Koblenz said.

ORLANDO, Fla. – The nation’s new-car dealers and the trade organization that represents them have much to look forward to in 2010 as the industry rebounds after a tough year that brought many changes, the incoming chairman of the National Automobile Dealers Association (NADA) said at its convention in Orlando.

NADA is ready to “hit the ground running” to tackle a fresh slate of issues this year with a new attitude and new agenda that relies heavily on feedback from dealer members, said 2010 NADA Chairman Ed Tonkin, a multifranchise dealer from Portland, Ore. Tonkin is the second chairman in a row to follow his father in the position. Ron Tonkin led the association in 1989.

After avoiding an “Armageddon” for many in the industry last year, Tonkin said NADA will now turn its attention to the challenges ahead: IRS issues like UNICAP and LIFO; avoiding a patchwork of mileage standards under the new Corporate Average Fuel Economy (CAFE) requirements; and closely monitoring Congress to avoid unnecessary and burdensome regulation.

Tonkin said NADA’s work to get dealers exempted from oversight under the proposed Consumer Financial Protection Agency is an example of how the organization is well suited to represent dealers in Washington.

He also said last year’s restructuring in the industry has created a “watershed moment” for automakers to establish a true partnership with their dealers—an opportunity that may not come again.

“Like my dad has said, ‘the bird doesn’t always fly by twice,’” Tonkin said. “With new ownership and new people in charge, [automakers] have a golden opportunity to craft a new relationship with their dealers, one based on a genuine spirit of cooperation.”

And though much uncertainty remains, Tonkin said dealers should be optimistic. With expected sales of nearly 12 million in 2010, rising employment and improved lending, the future is bright, he said.

“We’ve faced difficult times before and what did we do? We sold cars and trucks—in bunches,” he said. “Every possible scenario you could imagine we dealers have remained the constant. That’s strength, that’s resiliency and that’s what America’s new car and truck dealers are all about.”

NADA, founded in 1917 and based in McLean, Va., represents nearly 17,000 new-car and -truck dealers operating about 37,500 separate franchises, both domestic and international.

ORLANDO, Fla. – U.S. light-vehicle sales will reach just short of 12 million units in 2010 as credit becomes more available and consumer confidence improves with rising employment, said Paul Taylor, chief economist for the National Automobile Dealers Association.

“Industry sales will increase to 11.9 million light vehicles for 2010,” Taylor said.

Speaking at the NADA Convention & Exposition in Orlando, Taylor reported that sales of crossover utilities and small and midsize cars improved in January compared to the same month last year. January sales of crossovers, the only vehicle segment whose sales improved in 2009, were up about 14 percent compared to January 2009, Taylor said. Sales of midsize cars are also gaining, he said, outpacing last year’s monthly result by about 21 percent.

Hybrid vehicle sales declined in 2009 but less than the overall industry. Toyota continues to lead the way, accounting for more than two-thirds of hybrid sales in 2009.

Developments in 2009 also had an impact on automakers’ shares of the market. Taylor reported that General Motors and Chrysler both lost market share in 2009 as they underwent bankruptcies and slowed production. Ford Motor Co. and Hyundai improved their respective shares of the market by producing small, fuel-efficient cars and crossovers.

One bright spot for the industry in 2009 was “cash for clunkers,” giving sales a big boost in the fourth quarter. “‘Cash for clunkers’ made new-vehicle ownership possible for many consumers who have never purchased a new car before,” Taylor said. “It was also a boon for dealers, who saw showroom traffic increase dramatically. Many new cars and trucks were sold to buyers who did not have a qualifying ‘clunker’ trade-in,” Taylor added.

Slow new-car sales in 2008 and 2009 contributed to a shortage of used cars that lifted used-car prices, Taylor said. According to data provided to NADA through a partnership with the National Auto Auction Association, the average price of one- to five-year-old vehicles improved last year in every segment. “And strong used-car prices help new-car sales,” Taylor said.

Jonathan Banks, senior director of editorial and data services for NADA Used Car Guide, reported that all used-vehicle segments posted double-digit percentage increases year-over-year in January, compared to the low points experienced during 2009. He said that values on most segments are in line or above pre-recessionary levels.

Looking ahead, Banks said the economic fundamentals point to a strong used-car market in 2010.

“Used-vehicle supply, even with the expected million-plus increase in trade-ins, will remain relatively low,” he said. “Economic fundamentals point to improved demand, and more constraint on new-car production should keep those transaction prices in check. Seasonality effects are expected, but will be muted since used-vehicle prices are positioned relatively high compared to prices during the past five years.”

Banks added that gas prices remain the “wild card” factor for the year, as some forecasters expect fuel prices to reach and top $3 per gallon. He noted that NADA will monitor that metric and make adjustments to forecasts, if necessary.

On the Toyota situation, Banks said its values are expected to experience above-average deterioration during the next six months and settle in at a lower premium, compared to substitute models with comparable quality. “In the short-term, there will be a potential lift in competitive prices as dealers migrate towards other options,” he added. “This has already been witnessed in the new car side for both retail and fleet sales.”

ORLANDO, Fla. – After a year that battered the auto industry—the lowest new-vehicle sales rate since World War II, near-automaker liquidations and more than 2,000 dealership closures—it’s time for the industry to come together, John McEleney told thousands of dealers today at the National Automobile Dealers Association (NADA) convention.

“Ultimately, dealers and manufacturers are in the business of selling cars,” McEleney, 2009 NADA chairman, said. “And we have to do that together.”

After the tragic series of events in 2009 that threatened the auto industry more than at any time in six decades, NADA took “immediate action to support dealer interests,” he said.

“Our biggest challenge was convincing the President’s Task Force that dealers are not an incremental cost to manufacturers,” said McEleney, a General Motors, Toyota and Hyundai dealer from Clinton, Iowa. “The fact is the distribution system that exists for automakers today is extremely efficient. All costs of the retail side of the business are paid for by dealers.”

McEleney, who attended the 1971 NADA convention in San Francisco as a college student when his father, Warren McEleney, concluded his term as NADA president, said the most difficult part of his year in office was hearing first-hand from dealers who either lost their Chrysler franchises or were placed in wind-down with GM.

“The damage inflicted on these dealers, their families and their employees is unimaginable,” said McEleney, whose family has been selling cars for four generations. “They were essentially denied an opportunity to make a living in this industry. Third- and fourth-generation dealerships were shuttered. A lifetime creation of capital was wiped out by the stroke of a pen.”

He said dealers from every state in the country were instrumental in telling their story to Congress and why lawmakers should intervene to support affected dealers. Last December, legislation was passed that provided terminated GM and Chrysler dealers with a “second chance,” he said.

“NADA harnessed the influence and power of 17,000 new-car dealers and successfully leveraged that power in Congress to the benefit of dealers throughout the country,” he said. “We hope the manufacturers have learned something from this crisis. Three lessons come to mind: listen to your dealers; respect your dealers; and help your dealers succeed. If it’s positive results you seek, then embrace a positive approach.”

During a tough sales year in 2009, McEleney said “cash for clunkers” was an example of dealers, manufacturers and government working together for the good of the industry.

“If it weren’t for NADA, there would not have been a ‘cash-for-clunkers’ program, period,” he said. “There would not have been the initial $1 billion funding and there would not have been the additional $2 billion funding. This program was NADA working at its best.”

Last December, new-car dealers were excluded from oversight of the proposed Consumer Financial Protection Agency. The House bill, as it was originally written, would have hurt dealers and their customers, he said.

“It needed to change, and we got it changed,” McEleney said. “And we’re fighting in the Senate for the same thing.”

In the final weeks of his chairmanship, the Toyota recall became front page news. McEleney said it was too early to tell how Toyota’s market share will be affected, but dealers have been working diligently to fix the recalled vehicles as quickly as possible.

“This underscores the importance of having a strong dealer network in place to handle just such situations,” he said. “NADA is asking Congress, as it begins to investigate the recall, not to give countenance to any unsubstantiated rhetoric, which has the effect of unjustifiably alarming the public about the Toyota brand.”

McEleney added that Congress should not rush to judgment.

“Ill-advised comments reverberate through the entire buying public, impacting auto dealerships, their employees and our local and national economy,” he said.

Two weeks ago, NADA launched its Trucks for Haiti campaign. About 72 hours later, more than 100 were donated by dealers from around the country.

“Even though the past 12 months have been the most turbulent in the auto industry since the Great Depression, America’s dealers found the resources to help those in dire need,” McEleney said.