March 12, 2012
Dealers Cry Foul as U.S. Regs Create More F&I Paperwork, Costs
Group 1 Automotive Inc. CEO Earl Hesterberg said the auto group sends out 9,000 "adverse action" letters every month to customers who have been turned down for a loan. The letters, required by 2010's federal Dodd-Frank Wall Street Reform and Consumer Protection Act, are only one example of a growing paperwork load in finance and insurance that costs dealerships time, effort, and money. Examples of such paperwork include rules governing identity theft, cash transactions and money laundering, the use of credit scores, maintenance and disposal of customer information, consumer disclosures on loans and leases, and nondiscrimination. The list goes on, and each regulated area generates its own paper trail. Some of the dealers and F&I managers who responded to a recent unscientific online Automotive News survey on F&I topics vented about the paperwork burden. Hypothetically, the federal government is committed to reducing unnecessary paperwork. That effort is codified in the 1980 Paperwork Reduction Act. There's also the Small Business Paperwork Relief Act of 2002, aimed specifically at reducing the burden of federal paperwork on small businesses. But in the end, a Congress demanding action usually wins out over concerns about the paperwork burden. For the latest on dealer concern over growing F&I paperwork, click here.
Mazda Plans U.S. Employee Buyouts, Possible Job Cuts as Earnings Decline
Mazda Motor Corp. plans to offer buyouts to U.S. employees and may make mandatory job cuts as earnings are hit by exchange rate pressure, reports BloombergBusinessweek. Employees of Mazda’s U.S. unit in Irvine, Calif., will be notified next week of buyout options, said Jeremy Barnes, a spokesman for the company. Dismissals are possible as a next step if too few workers leave voluntarily, he said. “It’s a result of the global headwinds we are facing,” Barnes said. He declined to say how large a reduction Hiroshima, Japan-based Mazda seeks. The company has 701 U.S. employees. The decision comes even as Mazda’s U.S. sales are surging this year, up 48 percent through February. The company is Japan’s most export-reliant carmaker and has forecast a 100 billion yen ($1.2 billion) annual loss after the yen appreciated against all major currencies during 2011. Mazda said last year that it plans to stop making Mazda6 sedans at a Flat Rock, Mich. Plant shared with Ford Motor Co. The company this week said it plans to raise as much as 151.2 billion yen in a record share sale to replenish capital as it braces for its biggest annual loss in 11 years. For the latest on Mazda’s employee buyouts, click here.
Volkswagen Targeting Revenue Rise in 2012
According to The Detroit News, Volkswagen AG, Europe's biggest carmaker by sales, is targeting a further increase in deliveries and revenues in 2012, as it reported a big drop in net earnings for the fourth quarter of last year. Volkswagen, which overtook Japan's Toyota last year to become the world's second biggest car company by total deliveries behind General Motors, said today that it earned (euro) 2.16 billion ($2.8 billion) in the October-December period. That compared with a hefty (euro) 3.2 billion in the final quarter of 2010. The company said revenues rose by a quarter to (euro) 43.06 billion from (euro) 34.33 billion. Volkswagen's operating profit slipped to (euro) 2.29 billion from (euro) 2.32 billion. For the whole year, Volkswagen earned (euro) 15.41 billion, more than doubling the previous year's figures. Revenues rose 26 percent to (euro) 159.34 billion. Volkswagen said its goal for operating profit is to match last year's (euro) 11.27 billion. It added that cost management will be important because "positive effects from the attractive model range and strong competitive position will be offset in part by increasingly stiff competition in a challenging market environment, especially in certain European countries." Read more about Volkswagen’s latest revenue figures here.
Are Cars to Blame for Distracted Driving?
Proposed federal guidelines for in-car technology, the subject of a Transportation Department hearing, require automakers to block drivers from plugging addresses into navigation systems or browsing the web. But, according to USA Today, devices drivers bring into their cars aren't addressed. "Is that tiny screened portable device with no industry driving safety guidelines irrelevant?" asks Tom Baloga, BMW vice president of engineering. No indeed, says Transportation Secretary Ray LaHood. He says the guidelines are a continuation of his "drumbeat" against distracted driving, which has led to the passage of more than 25 state laws against texting since he took office. "Our idea is that people should not be distracted by anything," LaHood said Friday. Baloga and other auto industry spokesmen argue some drivers will turn to their mobile devices for information they can't get from their cars. The federal proposal mirrors voluntary guidelines the Alliance of Automobile Manufacturers drafted a decade ago. But Rob Strassburger, the Alliance's vehicle safety vice president, plans to tell regulators that mobile devices need to be addressed at the same time, rather than after the auto industry guidelines are final, as planned. Click here to read more about distracted driving and the auto industry’s response to federal attention.
Tsunami Remembered: An Unforgettable Mark
Just over a year ago, chaos reigned in Japan as suppliers took on flood waters and OEMs scrambled to cover their supply chains. To put what happened into perspective, Auto Remarketing reached out to OEMs, dealers, and industry analysts who all shared frank assessments of what the 9.0 magnitude earthquake off of the northeast coast of Japan on March 11 and the resulting tsunami did. If executives and consumers didn’t already know how much the Asian country meant to vehicle production and sales, the disaster placed a laser focus on the fact. Kelly Blue Book's Alec Gutierrez told Auto Remarketing that more than anything else the tragedy’s biggest impact on the auto industry was Toyota and Honda’s loss of market share stemming from the disruption of their supply chain and subsequent production halt. “Although Toyota and Honda, similar to all manufacturers that have production facilities located around the globe, they were severely limited in their ability to produce vehicles due to the lack of critical components needed for production,” explained Gutierrez. Click here to read more from Auto Remarketing on the toll of last March’s earthquake and tsunami in Japan on the auto industry across the globe.
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