There seemed to be a clear message at this year’s National Automobile Dealers Association (NADA) Convention and Expo in New Orleans, La., namely to ensure the economy keeps ticking along and consumers are able to continue buying cars in order to help fuel it.
During her keynote address, former U.S. Secretary of State Hillary Rodham Clinton said that auto dealers are crucial to maintaining growth in the economy.
“Building and selling cars helped create the American middle class,” said Clinton, who received a standing ovation from the audience. Many of those in attendance were particularly interested in her support, not only of car dealers but of small businesses in general, largely seen as the backbone of the nation’s economy.
“The resurgence of the auto industry over the past few years has been a driving force behind our recovery,” Clinton said. “And you, the auto dealers of America, continue to play a vital role in communities all across our country.”
She urged America’s leaders to work together to help foster a spirit of cooperation similar to that following World War II, which witnessed one of the greatest and most enduring periods of economic prosperity the country has ever seen. “There is no challenge too big or too hard when Americans work together,” she said.
Nevertheless, despite positive signs and good growth witnessed in auto demand, there are still concerns over consumer debt levels, financing and affordability for consumers.
That’s something NADA is looking to address with its Credit Compliance Policy and Program, announced in New Orleans. The new program was developed in response to concerns from the Consumer Financial Protection Bureau in the U.S., which last year, issued guidance saying it had several fair credit concerns over a dealership’s ability to price auto credit.
According to NADA, the Bureau is pursuing an approach which would eliminate the ability for dealers to cut into retail margins in order to beat a pricing offer from a bank, credit union or even another dealership. Instead, the Bureau said it views flat fees as an appropriate form of compensation for dealers that arrange financing. “This greatly weakens the competition that creates significant downward pressure on interest rates to the benefit of all car and truck buyers,” said Andy Koblenz, Executive Vice-President and General Counsel for NADA.
With its Credit Compliance Policy and Program, NADA has taken steps to address the Bureau’s concerns while also protecting a consumer’s right to negotiate a lower finance rate, via its Credit Compliance Policy and Program which was announced at the convention.
Besides addressing the Bureau’s concerns the program also allows dealers who adopt it to discount financing rates based on their own set of criteria and not the credit history of the person who is buying the vehicle.
“The ultimate goal is to keep auto financing affordable and accessible to all,” said Koblenz. “[With the Credit Compliance and Policy Program] dealers have a powerful tool to document and demonstrate that their financing policies comply with fair credit laws.”
