Volume 113, No. 20 October 10, 2016

Bill would delay new overtime pay rule for 6 months How amended Legislation to delay for six buzz, but also a lot of con- Department should with- MLA Regulation months the implementation fusion about who will qualify draw its rule and work to date of the new overtime for additional pay. responsibly modernize the affects dealers rules for workers passed The new rule doubles the nation’s overtime rules. The Department of De- the U.S. House in late Sep- salary threshold for over- However, the department fense recently amended a tember. It now is before the time eligibility and requires has refused to heed these regulation known as the Senate, which is scheduled to automatic adjustments every concerns and plans to imple- Military Lending Act Regula- meet for just 24 more days three years. ment the rule on Dec. 1. tion, which imposes certain this year. Concerns have been The National Automobile restrictions and requirements House Resolution 6094 raised that the rule change Dealers Association, which on creditors — including, would push back the start will stifle workplace flexibil- supports H.R. 6094, said potentially, auto dealers — date of the U.S. Department ity and opportunity, impose delaying implementation of when they extend credit to of Labor’s rule on overtime significant burdens on small the rule by six months would service members and their pay, scheduled to take effect businesses, jeopardize cru- provide workers, small busi- dependents. Dec. 1. The new rule is ex- cial nonprofit services, and nesses, nonprofits and col- Significantly, the amended pected to impact more than increase the cost of higher leges and universities more regulation, which took effect 4 million workers within the education. To prevent these time to prepare for dramatic Oct. 3, excludes from its cov- first year of implementation. consequences, backers of changes brought on by the erage “any credit transaction That’s creating a lot of H.R. 6094 said the Labor department’s final rule. that is expressly intended to finance the purchase of Families still need help after Louisiana flooding a motor vehicle when the Seven weeks after the devastating floods damage until you see it for yourself,” Carlson credit is secured by the ve- that swept through southern Louisiana, fi- said. hicle being purchased.” On nancial assistance for hundreds of dealership “Here’s the ask: I would like for you to do its face, this exclusion would employees and their families is still needed. what we have done,” said Carlson, in a plea seem to address any claim Jeff Carlson, the 2016 chairman of the to dealers across the country to donate to that the MLA Regulation ap- National Automobile Dealers Association, the National Automobile Dealers Charitable plies to auto dealers originat- visited All Ford in Denham Springs, Foundation’s Emergency Relief Fund. “Each ing motor vehicle financing. La., to survey the flood damage more than of my dealerships has adopted a family and However, a recent De- a month after the storm, which has been contributed $1,000 per store to the charita- fense Department interpre- categorized as the worst U.S. natural disaster ble foundation, so that we can help people tation of a separate exclusion since 2012. restore their lives down here in the Baton to these requirements has “You don’t realize the magnitude of the See Relief Fund, Page 2 See MLA, Page 4 2 CATA Bulletin October 10, 2016

Dealership revenues, earnings up in latest NADA analysis Weekly earnings at U.S. which was relatively un- The NADA study ana- in Compensation, Benefits new-car dealerships in 2015 changed year-over-year and lyzed more than 385,000 & Retention, also provides were up an average $1,341, still well below the U.S. pri- payroll records from 1,956 comparisons by luxury and or 1.4 percent, compared to vate sector average of 46 new-car and -truck dealer- non-luxury dealer franchises. the previous year, accord- percent. ships. Each dealership pro- Dealers who provided in- ing to the latest Dealership • Dealership productivity, vided information on sales put to the study will obtain Workplace Study, which is measured as gross profit per volume, work schedules a complimentary copy of administered by the National employee, increased 0.4 per- and employee benefits. The the results. Nonparticipants Automobile Dealers Asso- cent, to $8,446. report, Automotive Retail: can buy the report by calling ciation. • Millennials comprised 42 National & Regional Trends (800) 557-6232. The analysis showed percent of all new-car deal- growth rates in the service ership employees, up from and parts departments rang- 38 percent in 2014. Millen- Relief fund Continued from Page 1 ing from 6.7 percent to 8.2 nials represented 60 percent percent. Average weekly of new hires at new-car deal- Rouge area.” earnings for sales consultants erships, and that percentage Matt McKay, president of All Star Ford, said 130 out of grew 2.7 percent year-over- is expected to continue to his 800 employees at 11 dealerships, lost their homes. “It’s year. increase in the future. gone. It’s totaled. “About 70 percent of my employees lost The NADA study, now • The ratio of women their cars.” in its fifth year, continues to working at new-car dealer- “We’re working very hard trying to identify the ones show a U.S. retail-auto in- ships was 18.6 percent, a who’ve had the biggest problems and visit with them first to dustry with strong growth slight increase in 2015. Wom- try and help them with their paperwork, with the state, with and earnings opportunities. en accounted for 20 percent FEMA and all those things,” McKay added. “Just to have a Other findings: of all new hires in 2015, the light at the end of the tunnel.” • Overall employee turn- same figure reported the pre- Will Green, president of the Louisiana Automobile Deal- over rate was 39 percent, vious year. ers Association, added that donations to the NADA Founda- tion are critical to help dealership employees get back to work quickly and establish normalcy. Fisker launches electric car company “Donations are not only vital now, but it’s vital to have , whose previous automotive venture a resource always and to have it solvent with funds readily collapsed in 2013 owing U.S. taxpayers $139 million, said available to help people quickly,” Green said. Oct. 4 he plans to launch a new electric car company next The CATA donated $10,000 to the relief fund following year to compete with Tesla. the flooding. Fisker declined to say who is funding his new Califor- To donate, visit www.nada.org/emergencyrelief or call nia-based venture, called Fisker Inc.; and a new battery (703) 821-7233. Personal or corporate checks can be mailed subsidiary, Fisker Nanotech. to NADCF Emergency Fund, c/o NADCF, 8400 Westpark The Danish automotive designer’s previous venture, Drive, Tysons, VA 22102. (Donations to the NADA Founda- , once was a rival to Tesla Motors in the tion are generally tax-deductible; contributors should consult nascent market for electric luxury cars. Founded in 2007, their tax advisors for details.) Fisker Automotive built fewer than 2,000 cars through 2012 while burning through $1.4 billion in private invest- The CATA Bulletin is published by the ments and taxpayer-funded loans from the U.S. Depart- Chicago Automobile Trade Association ment of Energy. Fisker left the company in March 2013, 18W200 Butterfield Rd. Oakbrook Terrace, IL 60181-4810 before it filed for bankruptcy protection. The CATA Bulletin is distributed via blast e-mail every other Friday In 2014, Fisker was purchased out of bankruptcy by except during the , when it is not produced. Listings of items for sale are subject to the approval of the CATA. Chinese auto parts maker Group, and renamed Candidates for employment must submit a full resume to the Editor. . Wanxiang also acquired bankrupt Review past editions dating to 1998 or search by subject at U.S. battery maker A123. It relaunched the www.cata.info. gasoline-electric hybrid sports car in August as the Karma David E. Sloan President, Publisher Revero. Erik K. Higgins Editor, Director of Dealer Affairs October 10, 2016 CATA Bulletin 3

Future auto regulations are ‘flawed,’ industry group says An trade now and are based on assumptions several years ahead of schedule,” he group said two federal agencies erred about consumer buying preferences said. in a July draft report that concludes that have changed in recent years. Sales U.S. Rep Fred Upton, R-Michigan, automakers are on track to meet fu- of cars have dropped in recent years in September urged regulators to ture mileage and emissions standards while sales of crossovers and SUVs consider the potential damage that and complained that the industry and have soared as they have become more tougher auto regulations could have public should be given more time to fuel efficient. on the industry if the future stan- comment. “It’s important to get the Midterm dards are not dialed back. The Alliance of Automobile Evaluation right,” the Alliance said “The industry is doing well now, Manufacturers said the U.S. Environ- in its comments. “If proposed stan- thanks in large part to pent-up de- mental Protection Agency and the dards are inconsistent with consumer mand after the last recession and very National Highway Traffic Safety Ad- behavior, we’ll jeopardize the health low interest rates that make financing ministration were “overly optimistic” of this industry, cost thousands of about as cheap as it has ever been,” and relied on “flawed assumptions” jobs, diminish environmental gains and Upton said during a Congressional about automaker readiness to meet sacrifice improved safety outcomes.” hearing that he chaired. “But these aggressive 2022 to 2025 gas-mileage The NHTSA sharply disagrees, and two temporary factors will not last, targets meant to jolt the economy says the industry has proven it can and the industry will be stuck with and reduce carbon emissions. The meet the 50.8 miles-per-gallon standard these costly standards that increase standards, referred to as Corporate for cars and light-duty trucks by 2025. every year.” Average Fuel Economy standards, During Congressional testimony last The Center for Automotive Re- were adopted in 2012. month, NHTSA Chief Counsel Paul search, in Ann Arbor, Mich., also said The draft report “relies on flawed Hemmersbaugh said the automotive that current vehicle fuel-economy assumptions and modeling that cast industry has proven over the past four requirements could harm the indus- an overly optimistic picture — one years that it is able to develop innova- try. that does not accurately reflect tive gas, electric and hybrid technology The nonpartisan organization consumer and market reality,” the Al- to meet higher regulatory standards. concluded that U.S. auto factories liance said Sept. 26. “Our new analysis confirms that and parts operations could slash up The government report and the the standards can be met largely with to 137,900 jobs through 2025 if the 60-day comment period that expired more efficient gasoline-powered cars,” federal government’s existing CAFE that day are part of a “midterm Hemmersbaugh said in his prepared standards remain in effect. evaluation” of fuel economy and testimony. “If the value of fuel savings to greenhouse gas emission regulations. He said the industry is poised to the new-vehicle buyer falls short of The agencies must adopt a final rule make additional gains with even more the cost of mandated fuel-economy on the regulations by April 2018. fuel efficient gasoline engines as well technologies, then U.S. automotive The Alliance asked the NHTSA and as with higher sales of hybrids such as sales, production and manufacturing the U.S. EPA for more time but that the Toyota Prius and electric cars such will fall with serious consequences for request was denied. as the electric Chevy Bolt, which goes the U.S. economy,” CAR researchers The Alliance said the existing regu- into production this month. Sean McAlinden, Yen Chen, Michael lations were crafted at a time when “In fact, many of today’s vehicle Schultz and David Andrea said in a gas prices were higher than they are models ... are meeting future targets statement. Falling credit approvals for car leases not necessarily a bad thing? The number of people being turned down for automobile an August in the past two years, reported Swapalease.com, leases due to poor credit has been growing since the begin- a Cincinnati-based company that matches people who want ning of the year and hit its highest point in August, according out of their existing contract with shoppers looking to take to a company that tracks that market, even though lending over a short-term lease. By comparison, the approval rate for institutions have loosened up credit standards in recent years August 2015 reached 85.7 percent. for car leases and purchases. Still, car sales and demand for leases have been strong in The credit approval rate of 57.7 percent for car leases in recent years, and even the recent slip in credit approvals may August was the lowest rate seen in 2016 and the lowest for not be a setback. 4 CATA Bulletin October 10, 2016

CATA, Joe Cotton Ford give to Boy Scouts The Chicago Automo- munity, and our mission is In its 106th year, the Boy munity in which he resides bile Trade Association in to amplify those efforts,” Scouts of America is nation- – even as an adult. September presented a said CATA Director Jay ally acknowledged, but most “It’s amazing what these $1,500 check to the Three Hopkins. “Donating to the are surprised to learn that scouts do for their com- Fires Council of Boy Boy Scouts of America is the funds raised locally stay munities, and how invested Scouts of America, as part the perfect fit as it aims to local. they become in their indi- of its Chicagoland Dealers impact local communities, “We’re so thankful for vidual projects,” said Conn. Care initiative. Joe Cotton and that’s exactly the role both the CATA’s and Joe “Three Fires Council Ford previously contrib- that CATA dealers play. Cotton Ford’s contributions provides these kids with uted $2,000 to the cause Dealers are often first to be to help local scouts,” said leadership skills from a and helped advocate for solicited for support from Three Fires Council Dis- young age and the opportu- the additional funds from their neighbors, and they’re trict Director Amy Seyller. nity to work hand-in-hand Chicagoland’s new-car happy to help. However, “These funds will allow with adults. Not only is it dealer association. often times, those stories us to put better resources a fantastic resume builder, The Chicagoland Deal- aren’t told.” into creating programs that but it instills in them at a ers Care program was The contributions from impact our community’s young age the importance created by the CATA to the CATA and Joe Cotton youth.” of giving back to their support member deal- Ford will directly support The relationship between communities.” ers’ charitable community the Three Fires Council’s Joe Cotton Ford and the The CATA has been a initiatives by providing wide range of programs Three Fires Council hits longtime supporter of local additional financial support and services that help the close to home. Joe Cotton nonprofit organizations. and advocacy to those in well-established organization Ford Community Relations Since its inception in 2008, need. successfully train its volun- Manager Pam Conn’s son the Chicagoland Dealers “We’re grateful for all teers, recruit more children, is deeply rooted in the Boy Care program has donated that CATA dealers do to and support the rich pro- Scouts of America and nearly $95,000 to local lend support to their com- grams the council offers. continues to serve the com- charitable organizations.

of the motor vehicle financing exclu- extent the amended MLA Regulation MLA sion from the MLA Regulation. applies to their individual operations; Continued from Page 1 In “Are Auto Dealers Required to • As noted, finance sources that par- caused some commentators to question Comply with the Amended Military ticipate in indirect vehicle financing whether the department views the mo- Lending Act Regulation?”, Andrew may have a different view on this mat- tor vehicle exclusion as narrow in scope Smith of Covington & Burling LLP ter and, as such, may communicate to and only applicable to the financing of outlines the compelling arguments sup- dealers certain actions they require deal- the motor vehicle itself (as opposed to porting why (i) the motor vehicle fi- ers to perform and/or refrain from as it the financing of the motor vehicle as nancing exclusion covers the financing relates to credit contracts dealers assign well as other related items that are fi- of a motor vehicle as well as other re- to them; and nanced with the motor vehicle). lated items; and (ii) consequently, the re- • Most significantly, there is no guar- Officials at the Defense Department strictions and requirements imposed by antee that courts, administrative agen- have been unwilling to clarify its view the amended regulation should not be cies, or others reviewing this issue will regarding the scope of the exclusion for applicable to auto dealers who engage agree with the article regarding the motor vehicle financing. in such financing. scope of the motor vehicle financing Some finance sources that take as- Note certain caveats that Smith iden- exception and whether the amended signment of credit contracts from deal- tifies in his article: MLA Regulation applies to dealer op- ers no doubt have been communicating • The article is generic and not in- erations. to dealers regarding this topic. To assist tended as legal advice to individual deal- The NADA will continue to monitor dealers who receive such communica- ers; this situation and provide further up- tions, the National Automobile Dealers • It therefore is essential that deal- dates when circumstances dictate or ad- Association asked an expert law firm to ers consult their own counsel for legal ditional relevant information becomes prepare a general analysis of the scope advice concerning whether and to what available.