McLEAN, Va. — The Consumer Financial Protection Bureau’s possible elimination of rate participation will be the hot-button issue for the National Automobile Dealers Association in 2014, incoming NADA Chairman Forrest McConnell, III, told F&I and Showroom last week. McConnell was elected by the NADA’s board of directors on Oct. 8.
Last month at the association’s Washington Conference, more than 400 new-car dealers and execs met with members of Congress to discuss the Consumer Financial Protection Bureau’s charge that minorities are disproportionately impacted in the auto lending sphere, and are paying higher rates than non-minority customers.
Industry associations, including the NADA, are skeptical the bureau has uncovered data to support its allegation, mainly because the bureau has yet to disclose its methodology for determining disparate impact on minorities. This past March, the bureau, which claimed that discriminatory markups in auto lending may result in tens of millions of dollars in consumer harm each year, issued a bulletin warning finance sources that they will be held liable for unlawful discriminatory pricing on the part of dealers.
“I think [the CFPB’s efforts are] going to drive up the cost of credit for car buyers, which obviously raises their car payments,” McConnell told F&I and Showroom. “The current system works really well for customers and dealers.
“You've got 17,000 franchised dealers that are basically rate discounters … and [the CFPB] wants to absolutely take all of those out of the market to discount a rate.”
During the conference, dealers asked senators to sign a letter authored by Sens. Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.). It requests that the bureau explain how eliminating a dealer’s ability to “meet or beat” a competitor’s rate is good for consumers.
“The NADA is an incredibly effective organization when it comes to lobbying, and we also have a lot of contact with all the regulators,” said McConnell, who is a third-generation dealer and owner of McConnell Honda/Acura in Montgomery, Ala. “We provide them with a lot of information that helps them understand our business, how it works, especially the indirect lending model that every dealer uses.”
Serving alongside McConnell in 2014 will be Bill Fox, who was elected as vice chairman. Fox, who served as chairman of the NADA’s regulatory committee in 2013, agreed that the “CFPB is what it’s all about.”
“The CFPB needs to be responsible and be open about [what they are doing], and I don't think they've done that as yet,” Fox said.
McConnell and Fox will take office at the 2014 NADA Convention & Expo, scheduled for Jan. 24-27, in New Orleans.