The auto industry faces a dizzying array of competitive and regulatory hurdles. We have the roadmap. Our blog aims to provide dealers, manufacturers, suppliers and distributors with relevant, timely news that offer insights into the automotive industry. We strive to help our readers stay abreast of the rapidly changing automotive industry by providing the most up-to-date news information available. In short, we're here to help you manage your role in the automotive industry.

Arent Fox lawyers provide the insight, depth, and capacity necessary to face the challenges and opportunities that lie ahead for the automotive industry. The Daily Journal describes the practice as, "Thinking outside the box for automotive clients."

Regulatory Updates

8/23/13: "Tesla’s top safety rating comes with fine print"
8/21/13: "Agency Pushes Back on Tesla 5.4 Star Safety Rating Claim"

NHTSA is pushing back against Tesla Motors' claim the Model S had a crash test rating exceeding five stars. Clarence Ditlow, director of the Center of Auto Safety stated, "No matter what, you can't say it’s the safest car ever tested, just that it had the best overall test score of any vehicle tested by NHTSA."
Read the 8/23 Article
Read the 8/21 Article

8/16/13: "239,000 Hyundai Azera and Sonata vehicles from 2006-2011"
Hyundai-Kia America Technical Center Inc. will recall certain 2006-2010 Sonata vehicles manufactured 3/1/05 through 1/21/10 and 2006-2011 Azera vehicles manufactured 9/27/05 through 11/22/10 for potential damage to the rear control arms. The recall will affect vehicles sold in or currently registered in Connecticut, Delaware, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin, and the District of Columbia.
Read the Recall

8/15/13: "EPA Announces Revised Fuel Economy Label Estimates for 2013 Ford C-Max; Initiates Effort to Update Labeling Procedures to Keep Pace with Industry Trends"
The EPA received consumer complaints stating 2013 Ford C-Max vehicles did not reach 47 miles per gallon for highway, city and combined driving, and city and highway miles per gallon (mpg). The EPA re-tested the vehicles and new estimates are 43 mpg combined, 45 mpg city, and 40 mpg highway. Ford Motor Company volunteered to re-label the 2013 Ford C-Max Hybrids.
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8/14/13: "U.S. tells automakers to make recall information easier to find"
NHTSA will require automakers to install a website tool by August 14, 2014 to allow customers to easily obtain recall information. In addition, recall notices must be more explicit by including "urgent safety recall" in large capital letters. NHTSA’s final rule is less stringent than its original proposal, which would have required automakers to provide the agency with daily updates of VIN data.
Read the Article
Read the NHTSA Rule

8/8/13: "Honda Aces Crash Test. Kia and Nissan Fail"
IIHS tested 12 new compact cars, including the Honda Civic, Kia Soul, Kia Forte, and Nissan Sentra. The new "small overlap" test yielded the lowest rating, "Poor," for the two Kia models and Nissan Sentra. The new test, which crashes a car at 40 miles per hour and strikes a barrier with one-quarter of the driver’s side front bumper, is designed to mimic a type of impact that accounts for a quarter of all front-end collisions with serious or fatal injuries. The Honda Civic earned top scores for the new test; the Chevrolet Sonic, Cruze, and VW Beetle earned "Marginal" ratings.
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8/7/13: "An Uncertain Future for Tax Reform as Chairment Baucus and Camp Work to Move Proposals Through the Tax-Writing Committees"
The past two months have brought myriad of mixed signals for those who are following the efforts of the Chairmen of the Ways and Means and Finance Committees to enact tax reform this year. In June, the Senate Finance Committee announced they were seeking input from Senators on which tax breaks should retained under a "blank slate" approach. The comments, which were due by July 26, are to be kept confidential for more than 50 years and apparently at least 60 Senators have submitted recommendations. Chairmen Baucus and Camp have had two stops on their tax reform tour so far — in Minneapolis, MN and Philadelphia, PA. Both have indicated their intention to mark-up legislation in their Committees this fall. Chairman Camp has indicated that the House will likely consider tax reform before the end of the year. If Senator Baucus is able to pass a proposal out of the Senate Finance Committee, the likelihood of the Senate considering it remains very much in doubt. Majority Leader Harry Reid (D–NV) has stated that tax reform will only progress in the Senate if it raises significant revenue — at least $1 trillion in new tax revenue to be exact. This contradicts the insistence of Republicans that tax reform proceeds in a revenue neutral fashion and has prompted Minority Leader Mitch McConnell (R–KY) to concede that tax reform this year is in jeopardy. President Obama meanwhile has called for a "grand bargain" on business tax reform — lower corporate rates in exchange for an increase in spending on transportation and infrastructure projects. This is a significant change in position for the Administration and has soundly been rejected by the business community who maintains that any savings from tax reform should not be used on unrelated spending. The fall promises to be a busy time for the tax-writing Committees and given that tax packages seem to come together in the eleventh hour, tax reform remains possible this year.

8/7/13: "2,864,670 Fastec door handles for recreational vehicles from 2006-2013"
Fastec Industrial Corp. will recall certain model 43610, 40610, and 44610 door locks with a keyed paddle handle and deadbolt for use in recreational vehicles, manufactured January 2006 through April 2013, for deadbolts that jam. The interior side of the door lock may also jam, making it impossible to exit the vehicle.
Read the Recall

8/7/13: "33,021 Ford C-Max vehicles from 2013"
Ford Motor Company will recall certain 2013 C-Max hybrid vehicles with panoramic roofs manufactured 1/19/12 through 6/25/13 for failure to comply with safety standards for Occupant Protection in Interior Impact.
Read the Recall

8/7/13: "Toyota recalls 340K pickups for belt problem"
Toyota Motor Co. will voluntarily recall 342,000 Toyota Tacoma Access Cab vehicles from the 2004–2011 model years. A flaw in the seat belt system was found where screws attachinh the pre-tensioner to the seat-belt could come loose, affecting the ability for the restraint to protect the occupants in a collision.
Read the Article

Litigation Updates

8/22/13: "Volvo Cars Chief to Pay $668,000 to Settle MAN SE Probe"
Volvo Cars CEO Hakan Samuelsson agrees to pay $668,000 to social institutions in a settlement following an investigation of allegations of corruption in connection with his tenure as CEO for MAN SE, Europe’s third-largest truckmaker. The probe was launched last September in Munich after the former head of MAN’s audit department testified in a trial he informed Samuelsson in 2006 of possible corrupt business practices in Slovenia. MAN then agreed to pay 150 million euros in 2009 to resolve the inquiry which also yielded several indictments against company people. Samuelsson became Volvo Cars CEO last October, replacing Stefan Jacoby. The settlement is pending approval by shareholders at next year’s annual meeting.
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8/19/13: "Toyota loses bid to keep Lentz off witness stand in unintended acceleration trial"
Toyota Motor Corp. lost its appeal to bar North America Region CEO Jim Lentz from taking the witness stand to testify during Toyota’s first wrongful-death trial in connection to unintended acceleration claims. Company lawyers argued previously made video depositions of Lentz would suffice, but California Superior Court Judge Lee Smalley Edmon disagreed saying the recordings are for pretrial evidence-sharing and "there’s no question there is a difference between playing a videotaped deposition and testimony in person." Plaintiffs seek, among other things, $20 million in damages and argue Toyota should have installed an inexpensive brake-override system in the decedent’s vehicle that could have stopped the car. Toyota argues there was no defect in the subject vehicle, and driver error was responsible for the crash.
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8/14/13: Delta Airlines, Inc., et al. v. Visa, Inc., et al.
Delta Airlines, Inc. and 191 additional plaintiffs from a wide range of industries (e.g. travel, automotive, energy, retail, etc.), filed an antitrust suit against Visa and Mastercard alleging the defendants managed, coordinated, monopolized and controlled the issuance of credit and debit cards by fixing the default interchange fees on their member banks in violation of the Sherman Antitrust Act. Plaintiffs allege they were forced to accept such fees due to the absence of competition between banks in the market. Federal Reserve Board regulations set the maximum interchange fee for regulated issuers at $.21 plus 0.05% (plus an additional $.01 for fraud prevention for eligible issuers), or an average of $.23-.24 per debit transaction. By contrast, the signature debit interchange fees previously set by Visa and MasterCard average between $.58 and $.59.
Read the Complaint

8/12/13: BMW of North America, LLC, et al. v. Eurocar Technology, LLC, et al.
Plaintiffs BMW of North America and Bayerische Motoren Werke AG (collectively "BMW") filed a trademark infringement action against defendants Eurocar Technology and Marcelino Garcia with respect to defendants' unauthorized use of BMW’s Roundel, M-Stripes, and Mini Wings logos. BMW alleges the defendants are displaying the logos on flags, in print advertisements, and on their website without proper authorization.
Read the Complaint

8/12/13: "Jeff Schmitt Auto Group comes under fire"
The Fairborn, Ohio-based Jeff Schmitt Auto Group paid $625,000 since December to resolve 16 civil suits and 5 other complaints alleging unfair and deceptive business practices. The dealership group allegedly tacked an average of $4,000 to $7,000 in F&I products per customer, while the F&I managers either did not inform the customers or implied the products were free. The group also allegedly used the "five-finger close" — whereby a finance manager physically covers portions of the contract with their hands — to prevent customers from reading the contract while signing. The Dayton Better Business Bureau logged 79 complaints against the group over the past 36 months.
Read the Article

8/9/13: State Farm Fire and Casualty Company v. Franklin Center for Government and Public Integrity
Plaintiff State Farm Fire and Casualty Company ("State Farm") filed suit against defendants Franklin Center for Government and Public Integrity (FCGPI) dba, Kenric Ward (the website’s Virginia bureau chief), and Greentech Automotive Inc., seeking declaratory judgment that it has no duty to defend or indemnify the defendants. In the underlying defamation action, Plaintiff GreenTech Automotive, Inc. sued for an alleged $85 million loss after publication of two articles detailing Greentech’s use of the EB-5 program caused investors to waiver in investment commitments. GreenTech Automotive, Inc. is an electric car company established by Virginia gubernatorial candidate Terry McAuliffe.

Interests of the Industry

8/22/13: "Guilt-free SUV?: BMW creates plug-in X-5"
BMW developed a plug-in version of the X-5 SUV, which will be unveiled at the Frankfurt Motor Show. The plug-in concept will have a lithium-ion battery capable of a range of 19 miles and 75 miles per hour on electricity alone before the gas engine takes control.
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8/22/13: "U-M, Hyundai/Kia center partnering on 'highway hypnosis' research"
Hyundai Motor Co. and Kia Motors Corp. partnered with the University of Michigan to study "highway hypnosis", or the mental state in which a person may drive long distances with little to no recollection of having done so. The Hyundai-Kia technical center spearheading the research is exploring the use of EEG sensors to detect driver drowsiness prior to behavioral change taking place, e.g. head-nods and eyelid activity. Separately, the center is also working to improve vehicle fuel economy by using a dual pre-chamber lean-burn combustion system and studying in-cylinder flows.
Read the Article
View a PDF of the Research Paper

8/22/13: "Reynolds and Reynolds makes second acquisition in less than a week"
The Kettering-based auto dealer software and services provider acquired a second acquisition, this time purchasing Virginia-based Orlando Business Systems, which provides business forms to automotive dealerships. Orlando Business Systems will be absorbed into Reynolds and Reynolds' Document Services division. Terms of the acquisition are not disclosed.
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8/22/13: "Hyundai Workers Extend Strike"
Hyundai Motor Co. and its labor union have again failed to reach an agreement on wages and benefits resulting in an extension of union member strike efforts. A union spokesman said there is no progress on "major issues" and the duration of walkouts will double per day on Friday and Monday.
Read the Article

8/21/13: "Continental AG, Google to work on self-driving cars"
German auto parts maker Continental AG is close to joining with Google and IBM to develop autonomous driving systems for cars. Continental already has an alliance with Cisco Systems to work on driverless systems and data transfer between cars.
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8/21/13: "Ferrari Plans Hybrids to Follow $1.34 Million LaFerrari"
Ferrari plans to build more hybrids after the success of LaFerrari. Chairman Luca Cordero di Montezemolo said, "I don't believe in the electric cars, but I strongly believe in hybrids." The $1.34 million LaFerrari combines two electric motors with a 12-cylinder gas engine to cut fuel consumption by nearly 40 percent. To increase exclusivity, and despite profit gains, Ferrari plans to reduce overall deliveries by 400 cars this year to about 6,900 vehicles.
Read the Article

8/21/13: "EBay offers discounts for dealer-listing subscriptions"
EBay Inc. will offer discounts to auto dealers who purchase national subscriptions to list their vehicles. General manager of eBay Motors, Bryan Murphy, says the program includes support from consultants and tools to help dealers enhance their listings and track sales.
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8/21/13: "BMW Owners Waiting for Repairs on Supply Chain Breakdown"
BMW’s switch to a new supply-management system forced customers to wait for repairs while the German automaker struggles to deliver spare parts on time. The Dingolfing parts facility affected by the logistics switchover supplies BMW’s 40 parts-distribution centers. BMW has workers on extra shifts to help shorten the wait and aims to have the new system working without issue by early September.
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8/20/13: "Hyundai Motor Strike Cost $39 Million in Lost Production"
Hyundai Motor Co. union members cost the automaker 43.5 billion won ($39 million) in lost output today because of a staged partial strike. 45,000 union members participated in a 4-hour walkout resulting in the production loss of 2,106 vehicles. The strikes are a result of derailed wage talks where labor unions are demanding a pay increase of 130,498 won per month and for 30 percent of net income distributed to workers.
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8/20/13: "Chinese Electric Car Maker Dubs Its Top-Secret Tech "Snowden," After You-Know-Who"
Hong Yuan Lan Xiang (HYLX), a small Chinese electric carmaker, is seeking permission from the Chinese government to name its new electric car technology "Snowden" after the U.S. intelligence contractor currently in political asylum in Russia. HYLX says the new technology will "change the market" for eco-vehicles, and will likely cover various areas of electric vehicle technology.
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8/19/13: "GM Reopens Egypt Operations"
GM reopened its office and factory in Cairo after a precautionary shut-down last week as violent and deadly protests destabilized the country. A spokesperson for the company said: "The safety and security or our employees remains important to us... we will continue to monitor the situation closely." GM produces light trucks, cars, and minibuses in Egypt and currently employs 1,400 Egyptians.
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Alternate Source

8/19/13: "Reynolds and Reynolds buys Boston Company"
Reynolds and Reynolds, a Kettering-based auto dealer software and services provider announced it will purchase IMN, a digital marketing company that delivers newsletters and content for automotive and other markets. IMN will continue to operate from Boston under its own name. Terms of the acquisition are not disclosed.
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8/16/13: "European car market grew nearly 5 percent in July: Germany’s VDA"
New car registrations in Europe rose 4.8% to 1.02 million vehicles. Q2 corporate results also indicate some mass-market producers are closer to breaking even in Europe than previously estimated. Overall VW group sales rose 3.2% while European sales fell 3.1%.
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8/16/13: "Porsche North America’s Bartsch going to Infiniti"
Porsche’s North American Chief Operating Officer Michael Bartsch will leave the German automaker for Infiniti Motor Co. where he will take charge of its Americas division in September. Joe Lawrence, President and CEO of Porsche’s Canadian division, will replace Bartsch as COO of its North American business.
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8/15/13: "Ford lowers gas mileage of C-Max, offers rebates"
Ford Motor Co. will lower the gas mileage of its 2013 hybrid C-Max to 45 mpg in the city / 40 on the highway, from the previously advertised 47 city, after the vehicle fell under criticism by Consumer Reports. The automaker also plans to reimburse C-Max buyers $550, and leasers $325 in a one-time payment.
Read the Article
Read the EPA News Release
View a PDF of the EPA’s Revised Fuel Economy Label Estimate

8/14/13: "BYD’s eBus Swings Into Service in Israel; $113.8 Million Deal for 325 More Electric Buses in the Works?"
Dan Bus Company, Israel’s bus operator, began operation of the country’s first full-size electric bus: the BYD ebus. Dan Bus put in a 325-unit bus order at about $350,000 per unit average, aiming to replace nearly a quarter of its 1,300 buses with EVs.
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8/14/13: "Low loan losses support subprime health"
Data from Experian Automotive show delinquencies and repossessions have fallen to record lows despite escalations in subprime lending. Analysts find low interest rates keep loans affordable, thereby helping consumers avoid delinquencies and defaults. Subprime loans accounted for 35.2% of outstanding auto loans in Q2, compared from 34.9% from Q2 of 2012.
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8/11/13: "GM plans gradual pullout of South Korea as labor costs surge"
Mounting labor costs and vexatious unionism have driven GM to consider a longitudinal egress from South Korea. A source familiar with GM said, "We need to make sure we mitigate risk in (South Korea), not over the next 2-3 years but over time, not to become too dependent on one product source." GM Korea CEO, Sergio Rocha, estimated labor costs to increase 10-12% if GM was forced to count bonuses as workers' regular pay. Labor cost per vehicle is predicted to hit $1,133 this year, compared to $677 across global operations.
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8/9/13: "Opel to Exit Australia After 11-Month Effort Proves Unprofitable"
GM will stop selling its Opel brand in Australia after an unprofitable 11 month venture. Since September 2012, Opel sold 1,530 vehicles through the end of June. Opel’s board member for communications, Johan Willems, said, "The framework conditions in Australia have deteriorated drastically... It’s not financially feasible to continue exporting vehicles under the Opel brand."
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8/8/13: "Subaru’s 412% Surge Leads Carmaker to Debate Niche Status"
Subaru’s stock rose five-fold since the beginning of 2012 as the automaker benefits from a weakening yen and rising popularity in the U.S. The BRZ, jointly developed with Toyota, at one point had an eight-month waiting list in the U.S. while the new Forester SUV introduced in 2012 earned the highest safety marks given by IIHS. Subaru is investing $400 million into its Lafayette, Indiana factory to expand output by 100,000 units by the close of 2016.
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8/8/13: "Mazda: To Build Engine Factory in Mexico For $120M"
Mazda announced it will invest $120 million to build a new engine factory at its plant in Mexico. Mazda’s new factory will build engines using Skyactiv technology, and will build 230,000 engines per year. Operations are expected begin in October 2014.
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8/8/13: "BMW, Ferrari, VW cars contain metal mined by terrorists, Bloomberg says"
A Bloomberg Markets investigation found tungsten ore mined by a Columbian terrorist group in cars manufactured by BMW, Ferrari, and Volkswagen. The ore is illegally mined in the Amazon jungle by the FARC rebel group, which the U.S. and EU classify as a terrorist organization. After the ore is shipped and processed in Pennsylvania, it is shipped to Austria where it is used in engine crankshaft parts. BMW and VW said they avoid purchasing anything from tainted suppliers; Ferrari offered no comment.
Read the Article
Read the Bloomberg Report

8/7/13: "TI Automotive Said to Weigh Sale for up to $1.5 Billion"
TI Automotive, an auto-parts company founded in 1919, will explore business options including a sale that may fetch close to $1.5 billion. TI, which makes fuel tubes, lines, and tanks, generated almost $3 billion in revenue for 2012 and is owned by a group of U.S. and U.K.-based hedge funds.
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8/7/13: "Tata Motors Net Misses Estimates as Jaguar Growth Slows"
First-quarter net income slipped 23% to $282 million which missed the median estimate of 39 industry analysts. As India holds off loan purchases and experiences slow economic growth, deliveries of cars and commercial vehicles fell 19%. However, sales of Jaguar Land Rover increased 13%; the automaker is expected to introduce eight new or updated models this year.
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8/7/13: "Tesla Seen Posting Quarterly Loss After First Profit"
Tesla is projected to report $387.9 million in revenue, compared with $561.8 million in sales in Q1. The revenue recession may have been influenced by a new lease-style financing program which began in April. After rising 320% this year through August 6th, Tesla stock fell 5.7% to $134.06.
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8/6/13: "America’s car fleet hits new old age record"
The average age of all cars and trucks on U.S. roads stands at 11.4 years old, up from 11.2 last year and 9.7 ten years ago. Analysts believe people are simply holding on to their vehicles for longer than before as a result of improved engine designs and build quality.
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8/6/13: "GM to build 2 vehicles at Spring Hill, save 1,800 jobs"
General Motors will invest $167 million, in addition to a previously announced $183 million, to build two new mid-sized vehicles at its plant in Spring Hill, Tennessee resulting in the retention or creation of 1,800 jobs. The plant currently supplements a Canada factory in building the Chevrolet Equinox, as well as building the 2.5L engine for the 2013 Chevy Malibu. GM did not identify the new vehicles or when production would begin.
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8/6/13: "GM gives Chevrolet Volt a jolt with price cut"
GM is reducing the price of 2014 Volt by $5,000 making the cost $34,995, including shipping. In addition, a federal tax credit of $7,500 will further drop the price to $27,495. GM says the Volt can go solely electric for 38 miles, and owners average 900 miles between fill ups. Volt sales fell 3.3% last month, but are up 9.2% for the year. Comparatively, Nissan’s Leaf sales last month were up 371.9%.
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8/6/13: "Chrysler-Fiat won't invest in EVs until pricing improves, exec says"
Chrysler and Fiat will not invest in electronic vehicles until consumers are will to pay for the technology. Bob Lee, head of Global Powertrain, said both Chrysler and Fiat will expand their North American lineups with more diesels and downsized, turbocharged engines. Chrysler and Fiat do not currently have a hybrid powertrain, and offer one electric vehicle in North America. The Fiat 500e is for sale only in California.
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