Our Federal Government Takes No Holiday

Dealers Urged to Participate in NADA Washington Conference

There is never a dull moment in Washington, D.C. Those who wield the levers of governmental power are always in motion looking for new laws to pass and regulations to approve to affect members of the business community, regardless of size and economic footprint. After all, those in Washington charged with doing the people’s business would not be attentive to their jobs, in their eyes, if they just sat around all day staring out their windows.

Who is in charge goes a long way to determine how far the pendulum of pain – or help – swings to and fro. Once the Biden administration with a Democratic Congress replaced the Trump administration, keen observers knew the pace of progressive government was going to pick up substantially, with the economy and the business community in its sights.

Long gone are the days when a Democratic administration respected the virtues of the market economy and the economic benefits it brought to the players, especially employees, and their families. Afterall, if there are going to be spending plans and social programs to smooth out the edges, government needs the revenues to do it. An economy on the ropes helps no one.

This is where groups such as the National Automobile Dealers Association (NADA), the American Truck Dealers (ATD) – a part of NADA, the American International Automobile Dealers Association (AIADA), and your Massachusetts State Automobile Dealers Association step in. Throughout the year – with events such as NADA’s Washington Conference, the ATD Forum, or AIADA’s Fly-In – they engage with the Members of Congress and regulators to confront matters impacting their dealerships and the automotive industry.

NADA Director Scott Dube points out all the time auto dealers have their work cut out for them as Congress continues to back measures that put businesses at risk.

“We can never stop putting effort into making sure our representatives know who we are, what we do, and how vital our contribution is to their districts and our communities,” Dube said. “We may not agree on every issue, but as we have seen proven during the past decade or so, when the chips are down the time put into establishing these relationships can really pay off. It is important to make our presence felt in Washington and through visits. More often than not, seeing is believing.”

“A substantial part of what MSADA does for our members is to stay in touch with our U.S. senators and representatives so that they know that what they are doing, or not doing, has an impact back home at our members’ dealerships,” said MSADA Executive Vice President Robert O’Koniewski. “Our engagement cannot be sporadic. Building relationships through constant communications can help to move policies in certain directions at times.”

Six months into a new Congress split between a Republican House and a Democrat Senate, with the Biden administration working through the next two years toward a potential re-election campaign, the issues NADA and franchised dealers face are piling up.

“We have our annual NADA Washington Conference coming up in September,” stated Dube. “Many of the issues we are looking at today will be on our agenda. I urge dealers to join us in Washington on September 12-13 when we do our Congressional visits so we can keep our industry at the forefront of policy development.”

FTC Vehicle Shopping Rule

The big picture: The FTC’s proposed Vehicle Shopping Rule would drastically alter the entire process by which franchised dealers advertise and communicate with their customers and sell and finance new and used vehicles and voluntary protection products.

Changes that franchised dealers would have to make under the proposed rule would inject massive amounts of time, cost, inefficiency, and complexity into the vehicle sales process at a time when the entire auto industry is united behind an effort to simplify and streamline vehicle sales, shorten transaction times, and improve the customer experience.

The FTC absolutely needs to go back to the drawing board before forcing implementation of a series of unstudied and untested mandates that will have significant negative impacts on customers.

What’s next: NADA is urging Congress to use its authority – including oversight and potentially budgetary authority – to highlight how fundamentally flawed the Vehicle Shopping Rule is.

Why it matters: There is bipartisan concern in both the House and Senate over the rule’s lack of evidence, questionable justification, and absence of consumer testing – as well as the FTC’s rush to judgment, failure to conduct any regulatory due diligence, and problematic testimony by the head of the agency, Lina Kahn. NADA is using all available resources to broadcast these concerns and amplify the message that the FTC needs to scrap this proposed rule and start over.

EPA Emissions Rulemakings

The big picture: NADA’s entire advocacy staff has been very active in response to the Biden Administration’s new and very aggressive emissions proposed rulemakings for new light-, medium- and heavy-duty vehicles, which were announced in April.

NADA continues to support the auto industry’s efforts to raise critical questions about the feasibility and impacts of such aggressive targets for EV adoption, remind stakeholders that dealers are ready and essential for any meaningful growth in EV adoption, and emphasize the need for others – beyond auto manufacturers and dealers – to step up and do much more themselves.

What’s next: In upcoming comments to the Administration – and ongoing public comments – NADA will explain everything that dealers are doing to get ready for widespread and mass-market EV adoption, including the $5 billion-plus in investments dealers are making in tools, training, and equipment necessary to facilitate a first-tier education, sales, and service experience for EV customers across the entire market and pricepoint spectrum.

NADA also will continue to explain that any meaningful growth in EV adoption will depend on a broad, unified strategy that considers the vital importance of consumer incentives, charging infrastructure, utility capacity, resources for battery manufacturing and the availability to consumers across the country of these newly-produced EVs themselves – just to name a few key factors.

Why it matters: America’s new-car dealers are doing their part on the road to electrification of our vehicle fleet. In addition to being ready, dealers are essential to the broad, mass-market adoption of the EVs that are now beginning to arrive in our showrooms. But others, including government at all levels, need to do their part as well.

Sale and Service of EVs

The big picture: Franchised dealers are ready for EVs and are essential to widespread consumer EV adoption.

What’s next: As the EV market enters the mainstream, EV customers will come to resemble the average car buyer more and more, and those mainstream customers are demanding that dealers play a central role in their transition to electric.

This is why the investments and commitments that dealers are making to prepare for EVs are so vital operationally, to OEM relationships, and politically.

Why it matters: Policymakers, opinion leaders, media outlets, many environmental groups, and other influencers continue to have difficulty accepting the reality that the franchised dealer network is a clear competitive advantage to selling both ICE vehicles and EVs.

EV Tax Credits

The big picture: The EV tax credits that took effect in 2023 as part of the Inflation Reduction Act are far from perfect. But NADA still believes that they are workable in the showroom and for customers. At the same time, it is important to continue down the positive path we’re on in terms of implementation. Policymakers should recognize any further narrowing of the credit, or anything that complicates a customer’s ability to easily understand how the credit works, is only going to limit its effectiveness as a pillar to more widespread EV adoption.

What’s next: NADA will continue working with Treasury and the IRS to address the numerous unresolved issues involved with the implementation of these credits. In addition, NADA will continue to educate dealers directly through the NADA compliance assistance webpage, webinars, and workshops – including at the 2023 NADA Show.

Why it matters: Dealers need to be viewed by customers, policymakers, automakers and the general public as helpful facilitators of available tax credits for the purchase of eligible new and used EVs.

LIFO Relief

The big picture: NADA is still working to see that Congress passes retroactive LIFO relief legislation. The “Supply Chain Disruptions Relief Act,” which provides identical relief to last year’s bill, has now garnered 60 cosponsors in the Senate, demonstrating that this legislation is not just overwhelmingly bipartisan, but also filibuster-proof. Work is continuing to grow the number of House bill cosponsors, which stood at 40 at the beginning of June.

What’s next: While challenges remain with passing this legislation, Congressional leaders have been supportive in securing additional cosponsors, especially in the House, which will help gain favorable consideration.

Why it matters: Many dealers – particularly smaller dealers – are still having difficulty replenishing vehicle inventories. And all dealers should remind Members of Congress that this is technical and noncontroversial legislation that would merely provide relief to these dealers whose inventories disappeared due to an unprecedented interruption of global supply chains.

Dealer-Assisted Financing

The big picture: Despite its clear benefits to consumers, government regulators continue to view dealer-assisted financing with skepticism. And the main focus of that skepticism is whether dealer participation is earned in a manner that violates anti-discrimination laws.

What’s next: NADA continues to promote and stress the importance of the optional NADA/NAMAD/AIADA Fair Credit Compliance Policy and Program as the optimal way to mitigate fair credit risk while maintaining the ability of dealers to discount financing, which is the hallmark of the beneficial nature of dealer-assisted financing to consumers.

Why it matters: The FTC, the CFPB, state attorneys general, and their many allies continue to bring forth investigations, examinations, and enforcement actions against franchised dealers and lenders – all rooted in allegations of discrimination or discriminatory outcomes in auto lending. These cases perpetuate the cycle of regulatory, media, and other stakeholder scrutiny.

Voluntary Protection Products (VPPs)

The big picture: Like with dealer-assisted financing, government regulators continue to express skepticism about VPPs – despite their demonstrated value and the favorable customer satisfaction scores they receive.

What’s new: VPPs are a prime target of the FTC’s Vehicle Shopping Rule. And VPPs are consistently part of enforcement actions alleging discrimination in the F&I office. However, earlier this year, the NADA Model Dealership Voluntary Protection Products Policy – a template policy to assist dealers in implementing a formal policy on the sale of VPPs – was incorporated into a settlement between Massachusetts and a dealership over allegations of price discrimination.

Why it matters: The Massachusetts case is the first instance of NADA’s VPP Policy being accepted as part of a settlement between a state government and a dealership. This demonstrates the broad recognition of the policy’s significant value – to dealerships and regulators – as an effective compliance template. It’s also why NADA highlighted the VPP Policy as a workable alternative to the very problematic provisions contained in the FTC’s Vehicle Shopping Rule.

Military Lending Act

The big picture: In April, the U.S. Court of Appeals for the Fourth Circuit upheld a federal district court decision holding that a vehicle financing contract with a service member that includes GAP Waiver and other related costs remains part of the vehicle financing exclusion to the Military Lending Act (MLA).

This decision – at least in the Fourth Circuit, and potentially elsewhere – affirms the view that the financing of GAP Waiver does not trigger compliance with the MLA’s duties and restrictions.

What’s next: Regardless of the next steps that may be taken by the plaintiff (DOD) in this case or the government, NADA will continue to explain to courts and policymakers the significant value that VPPs can provide to consumers, and that Congress never intended for service members to be deprived of the opportunity to benefit from these protections.

Why it matters: NADA spent years seeking affirmation that dual purpose financing (financing of both a motor vehicle and related items such as GAP waiver) with a service member fits squarely within the motor vehicle financing exclusion of the MLA.

OEM Engagement

The big picture: NADA is focused like a laser on the obvious shift in the way many OEMs are speaking publicly about the retail process, as well as many of the changes being implemented between OEMs and their dealers. NADA also knows that, despite the fact that they have not been operationalized on a widespread basis, these ongoing references to direct sales, direct and exclusive sale of post-purchase vehicle services, the monopolization of the customer experience, or dealers as agents, etc., cannot realistically be seen by dealers, NADA or state associations as anything other than threats that go to the very core of the franchise system.

What’s next: NADA uses the regular Dealer Attitude Survey meetings, as well as constant engagement at the highest levels, to discuss these issues head on with OEM leaders.

Why it matters: OEMs we engage with appreciate that we are increasingly leaning in to the dealer-OEM relationship. Dealers appreciate the clarity that most OEMs have provided by publicly committing to their dealers and recognizing the competitive advantage dealers provide.

“The perception is that government does not really do anything, especially to help the folks back home on Main Street,” Opined O’Koniewski. “The reality is, if government does do something, we need to make sure that there is no absence of viewpoint from the franchised dealers. It is always particularly easy for a politician to vote a certain way if they never hear from the concerned parties. That is why our upcoming Congressional visits will be so vital. I urge our dealers to sign up and participate.”