11/13/13: “Goal for CFPB chief: Calming conflict on car loans”
CFPB Director Richard Cordray attempts to decrease tensions between the agency and auto dealers after a CFPB letter in March warned the agency detected biases against women and racial minorities when calculating interest rates.  Cordray expressed a willingness on behalf of the agency for more “openness and transparency,” indicating he want to avoid any step that would “throw a wrench in car purchases or create new problems.” NADA has met with the agency to try to find out how, exactly, dealers are being evaluated by the agency, but no clear answers have been given. The CFPB is grappling with how to enforce the Dodd-Frank law, which allows for the agency to supervise auto lenders, but not dealers.
Read the Article

11/13/13: “Vehicle Finance Industry Commissions Study to Address Fair Lending”
The American Financial Services Association is conducting an independent study in response to the CFPB’s accusation that dealership participation in interest rates creates a risk for discrimination against women and minorities. AFSA’s study will look into the effects of the “dealer-assisted financing,” financing model used by dealerships where banks are used as indirect lenders. The new study will weigh the costs and benefits of the current system versus changes like flat fees. While the CFPB is pressuring lenders to restructure the dealer compensation system, many critics of the CFPB argue that new regulation could raise the cost of credit to consumers. The CFPB says the current system allows for dealers to charge legally protected borrowers, such as minorities and women, more than other borrowers.
Read the Press Release

11/10/13: “Fire victim backs Tesla as Feds deepen probe”
Federal investigators are working with Tesla Motor Company after a third Model S accident resulted in a vehicle fire. Juris Shibayama, a Tennessee physician, said he was unable to avoid a trailer hitch in the highway which struck the bottom of his Model S sedan and started the fire. NHTSA issued a statement of preliminary investigation, in which it said: “[We are] in close communication with Tesla and local authorities gathering information about the incident to determine if additional action is necessary.” This marks the third instance of a Tesla igniting after an accident, and despite the impending investigation, the Tennessee driver still backed the automaker, “Had I not been in a Tesla, that object could have punched through the floor and caused me serious harm.”
Read the Article

11/1/13: FTC Commissioner Takes Privacy Questions on Reddit
Commissioner Maureen Ohlhausen conducts the Commission’s first AMA (Ask Me Anything) on Reddit – a 60-minute online crowd-sourced interview where she answered questions and provided recommendations to app developers to establish reasonable privacy practices for their products. Ohlhausen was sworn in FTC Commissioner in April 2012.
Read the Interview

10/24/13: “California Zero-Emission Push Grows to 8 States, 3 Million Autos”
California’s push for automakers to sell zero-emission vehicles expanded to include seven other states: New York, Massachusetts, Oregon, Vermont, Maryland, Connecticut, and Rhode Island. The eight-state agreement signed by the governors of each state strives to get 3.3 million zero-emission vehicles on the road by 2025. The eight states account for 23%of U.S. vehicle sales according to California’s Air Resources Board, and their main goal is to expand consumer awareness and demand for zero-emission vehicles.
Read the Article

LITIGATION UPDATES

11/8/13: Rahimi v. Tesla Motors, Inc.
Plaintiff Robert Rahimi filed a putative class action against Tesla Motors, Inc. alleging Tesla “engaged in a purposeful campaign” to buoy its stock price and downplay safety incidents where three Model S vehicles caught fire.  Plaintiff claims Tesla initially touted embellished safety accolades claiming the Model S was “The Safest Car in America,” and made false statements about the safety of its battery pack.  The lawsuit says investors were misled about the lack of prior fire incidents, the Model S’s material defects, Tesla’s future sales and declining revenue streams. As of November 4, 2013, stock was down $55.50, or nearly 29% from its Class Period High of $193.37 on Sept. 30.  Plaintiff calculates losses of over $6.5 billion in market capitalization in six weeks.
Related Article: 8/23/13: “Tesla’s top safety rating comes with fine print”
Read the Article
Read the Complaint

11/5/13: “Advantage Placed Under Bankruptcy Protection”
Advantage Rent A Car will file for Chapter 11 bankruptcy after Hertz terminated lease agreements which provided Advantage with its vehicles. Hertz sold Advantage after the FTC ordered the sale as a condition of Hertz acquiring Dollar Thrifty. Advantage’s new owners logged excessive auction losses and questioned the book value of its 24,000 vehicles acquired from Hertz last year. According to auction calculations, Advantage Rent A Car lost an average of $1,633/vehicle for 5,295 vehicles as of October 25, reaching a total loss of $8.6 million. Advantage is seeking court approval of procedures for the sale of its assets. Advantage proposes to sell its assets to stalking horse bidder, The Catalyst Capital Group, a Canadian private equity firm, or a higher and better bidder. The Catalyst Capital Group bid is to be filed by 11/20/13. Competing bids are due on 12/4/13; an auction will be held on 12/9/13; and a hearing to approve the sale will be held on 12/17/13.
Read the Article

11/4/13: “Visa Slapped With Class Action Over Zipcar Policy”
Visa cardholder Ron Davis filed a class action complaint against Visa alleging the company implemented a secret policy to refuse Auto Rental Collision Damage Waiver benefits to Zipcar renters because Zipcar is “not a car rental company” but a “car share company.”  Plaintiff contends there is no meaningful difference between Zipcar and other car rental companies, because Zipcar customers do not share ownership in the cars they rent and have no ownership rights in the vehicles.  The suit alleges, among other things, claims for breach of contract, violations of the Consumers Legal Remedies Act and unfair business practices.
Read the Complaint

11/1/13: “Ford Accused of Jilting Consumers on Lemon Law Buybacks”
Ford Motor Company is accused of violating California’s “lemon law” by including deductions beyond what is allowed when repurchasing or replacing defective vehicles. The putative class action complaint alleges Ford shortchanged consumers under the Song-Beverly Consumer Warranty Act by wrongfully deducting charges beyond the pre-delivery mileage offset (e.g. abnormal wear, collision damage, and broken glass) and failed to credit statutory damages, such as registration fees, full coverage insurance and extended service contracts. Plaintiff filed the Complaint individually and on behalf of all consumers who bought/leased a Ford in California and received repurchase or replacement offers from the automaker in the last four years, citing violations of the Song-Beverly Act, Unfair Competition Law, and Consumer Legal Remedies Act.
Read the Complaint

10/31/13: BWP Media USA, Inc. v. Prestige Motor Car Imports, Inc.
Plaintiff BWP Media USA, Inc. dba Pacific Coast News filed a copyright infringement suit against Prestige Motor Car Imports, Inc. dba Pagini Miami and Eber Importing Group dba Prestige Imports for its online display of copyright-protected photographs of Kim Kardashian in a new Pagani Huayra at the Prestige Imports car showroom in Florida. The Plaintiff claims Prestige Motor Car Imports failed to remove Plaintiff’s photographs from the website despite knowledge of their infringing conduct. BWP Media USA seeks statutory damages of $150,000 per infringement and the disgorgement of Defendant’s wrongful profit, suit costs, and a permanent injunction.
Read the Complaint

10/24/13: “Toyota Must Pay $3 Million for Oklahoma Crash, Jury Says”
An Oklahoma City state court jury decided Toyota Motor Corp. must pay $3 million in a lawsuit involving a 2005 Camry sped unintentionally and out of control off an Oklahoma highway exit, resulting in injuries to the driver and killing her passenger. Bookout v. Toyota Motor Corp. is the first test of a claim a defect in the vehicles’ electronic throttle-control system is at fault.
Read the Article

Industry News

11/12/13: “Dealers pay more, keep employees longer, study says”
According to NADA’s 2013 Dealership Workforce Industry Report, dealers experienced fewer employee turnover and hired more woman and young people in 2012. Additionally, dealers paid higher salaries which paralleled increased productivity. F&I managers income rose 8.4% to $128,434, while the average annual compensation for sales managers increased by 6.5% to $122,549. More than 2,240 dealerships were included in the study.
Read the Article

11/12/13: “Group 1 Automotive Acquires BMW, MINI and Cadillac Dealerships in Arlington, Texas”
Group 1 Automotive announced the acquisition of Moritz BMW/MINI and Moritz Cadillac in Arlington, Texas. The three dealerships are expected to generate $200 million in estimated annual revenues. Group 1 currently owns 144 dealerships, 182 franchises, and 36 collision centers in the U.S., U.K., and Brazil.
Read the News Release

11/12/13: “Nissan’s big drive for global growth”
Nissan is positioning itself for major growth with a new plant in Aguascalientes, Mexico, which has the capacity to build 175,000 new cars per year. 90% of those new vehicles, among which is the new Sentra sedan, are exported to U.S. and abroad. Once production from the new facility is combined with Nissan’s other two Mexico-based plants, nearly 10% of all the automaker’s vehicles will be built in Mexico.
Read the Article 

11/11/13: “All-Electric Kia Soul Under Development for U.S. Market”
Kia Motors confirmed the development of an all-electric version of the Kia Soul, scheduled for a 2014 release. The vehicle is touted as having a 120 mile range on a single charge, and is targeting everyday users and city commuters. The plug-and-charge system will recharge a depleted battery in five hours, or 25 minutes on a “fast” charge with 100kW output.
Read the Article

11/11/13: “Mazda SUV With Auto-Braking Feature Crashes in Japan Test Drive”
A Mazda CX-5 outfitted with an automatic-braking system crashed during a dealership test drive in Japan, injuring the driver and passenger. The vehicle crashed through a urethane barrier set up to demonstrate the automatic breaking technology. First introduced in February 2012, Mazda offered the technology as an optional safety feature before making it a standard feature for the refreshed CX-5 model. A Mazda spokesman said, “We will fully cooperate with the police investigation upon request.”
Read the Article

11/6/13: “New Way to Buy or Lease a Car: Shop, Click, Drive”
Chevrolet, Buick, GMC, and Cadillac dealers in the U.S. launched a new online retailing tool called “Shop-Click-Drive” which allows customers to choose a specific vehicle, get pricing estimates, review incentives, get information about their trade-in, and apply for financing. GM dealers in the U.S. have the opportunity to feature “Shop-Click-Drive” on their dealership’s website and GM VP of U.S. Sales Operation, Kurt McNeil said, “We want to make it easier and simpler for dealers to connect with customers who are looking to combine the convenience of online shopping with the personal service of a neighborhood dealership . . . We engaged dealers to help us develop “Shop-Click-Drive” to address this need.”
View the Press Release

11/5/13: “Behind the Scenes”
Arent Fox’s monthly recap of the latest news, trends, and developments in advertising, data security and privacy.
Read the article

11/4/13: “Kjell Qvale, 1919-2013”
Kjell Qvale, founder of Qvale Auto Group and known for being one of the first to import European auto brands to the United States, died in San Francisco at the age of 94 on 11/2/13.  Throughout 53 years in the auto industry, Qvale shared his passion for foreign cars as a sports car importer and dealer; and also created, manufactured and distributed the Jensen-Healey, a two-seater convertible sports car, with partner Donald Healey in 1970.
Read the Article

11/1/13: “Electric Car-Sharing Program Launches in London”
London now has an electric car-sharing program called “E-Car Club” where members rent vehicles starting at 5.50 pounds/hour, or 45 pounds/day. The program, currently only based in the London borough of Tower Hamlets, has two Renault Zoes and two Fluence saloons, but the fleet is expected to increase to 20 vehicles by the end of year before expanding nationwide. E-Car Club co-founder Christopher Morris said, “We want to improve mobility on a local level while reducing both the cost and environmental impact of each journey taken.”
Read the Article

10/30/13: “Consumer Group Files California ‘Car Buyers Protection Act’ Initiative”
Consumers for Auto Reliability and Safety filed a new initiative with the California Attorney General's office, that was aimed to appear on the November, 2014 ballot.
Read the Press Release
Read the Ballot Summary

10/30/13: “Honda to sell electronic parts unit to Nidec for about $500 million: Nikkei”
Honda agreed to sell its electronic parts subsidiary to Japanese precision motor-maker Nidec Corp. for $500 million. The deal is seen as part of the cooperative effort between Honda and Nidec to expand and mature the vehicle electronic controls field. The sale could occur as early as 2014.
Read the Article

10/30/13: “Tesla’s Huge Battery Deal Suggests Sales Could Quintuple Within 4 Years”
Tesla Motor Co. awards Panasonic a new 4-year supply agreement for 2 billion battery cells, or close to 300,000 vehicles. Analysts believe Tesla is poised to reach in excess of 100,000 vehicle sales in the final year of the agreement, which is nearly five times the 21,000 vehicles expected to sell in 2013. According to the Tesla press release, “Panasonic and Tesla have developed a next-generation battery cell technology that provides the highest energy density and best performance cells in the market. Panasonic’s cylindrical cell is a customized technology designed specifically for optimizing electric vehicle quality and life.”
Read the Article
Read the Press Release

10/29/13: “Treasury says taxpayers’ GM bailout loss now $9.7B”
The Treasury Department calculated a $9.7 billion loss on the $49.5 billion 2009 GM bailout. Taxpayers held 60.8% of GM in exchange for the bailout loans. The report states: “Through a series of stock sales, Treasury has divested its preferred stock and most of its common stock, reducing its stake to 7.3 percent. Because the common stock sales have al taken place below Treasury’s break-even price, Treasury has so far booked a loss of $9.7 billion on the sales.” The Treasury will conduct another selling round and anticipates to divest all its shares by the close of the first quarter.
Read the Article

10/24/13: “Tesla hires Apple VP to lead vehicle development”
Tesla Motors Inc. hires former Apple Inc. executive, Doug Field to be Vice President of Vehicle Programs. The former Apple exec who oversaw the development of products such as the MacBook Air, MacBook Pro, and iMac, began his career at Ford Motor Co. as an engineer, and later moved on to become Chief Technology Officer at Segway. Tesla CEO Elon Musk said in a statement: “Doug’s experience in both consumer electronics and traditional automotive makes him an important addition to our leadership team.”
Read the Article

RECALLS

11/12/13: “36,710 Chrysler Dodge RAM 4500 and 5500 trucks from 2008-2012”
Chrysler Group LLC is recalling certain 2008-2012 RAM 4500 and 5500 trucks manufactured 2/20/07 through 12/22/12 for failure of the left tie rod assembly, which may break, causing a loss of steering.
Read the Recall

11/12/13: “8,370 Chrysler Dodge RAM 1500, 2500, and 3500 trucks from 2014”
Chrysler Group LLC is recalling certain 2014 RAM 1500, 2500, and 3500 trucks manufactured 7/1/13 through 8/22/13 for warning lights that may not illuminate as designed.
Read the Recall

11/7/13: “91,559 Jeep Grand Cherokees from 2014”
Chrysler Group, LLC is recalling certain 2014 Jeep Grand Cherokee vehicles manufactured 1/8/13 through 8/20/13 for potential loss of anti-lock brake systems and electronic stability control, as well as loss of illuminated warnings in the dashboard display, increasing the risk of a crash.
Read the Recall

11/5/13: “43,500 Hyundai Genesis vehicles from 2009-2012”
Hyundai-Kia America Technical Center Inc. is recalling certain 2009-2012 Genesis vehicles manufactured 4/30/08 through 8/28/12 for brake fluid which may not protect against corrosion, reducing brake effectiveness.
Read the Recall

11/4/13: “344,187 Honda Odysseys from 2007-2008”
American Honda Motor Co. is recalling certain 2007-2008 Honda Odyssey vehicles manufactured 8/8/06 through 9/8/08 for software that may cause the sudden application of the brakes without the brake lights going on.
Read the Recall

11/1/13: “18,972 GM Chevrolet Silverado and GMC Sierra vehicles from 2014”
General Motors LLC is recalling certain 2014 Chevrolet Silverado and GMC Sierra 1500 vehicles manufactured 8/1/13 through 9/10/13 equipped with manual reclining seatbacks.  The affected vehicles do not conform “Head Restraints” requirements of the Federal Safety Standards.
Read the Recall

11/1/13: “36,272 Cargo Craft trailers from 2006-2013”
Cargo Craft, Inc. & Cargo Craft of Texas, Inc. is recalling certain 2006-2013 cargo trailers manufactured 1/1/06 through 4/25/13 for failing to conform to Federal Safety Standards.  The affected trailers are equipped with faulty Fastec-brand door locks, in which the deadbolt may potentially jam.
Read the Recall