F&I and Showroom, March 2014

Developments NADA Adds to Dealer Data Guidance DURING ITS ANNUAL CONVENTION in January the National Automobile Dealers Association NADA issued an addendum to the dealer data guidance it released this past August It includes a sample agreement dealers can issue to their technology vendors particularly those that require access to the dealerships DMS The issue today is dealers have all this sensitive data but to do business they really have to share it or allow folks to have access to it in some way or form said Bradley Miller the NADAs associate director of legal and regulatory affairs By necessity its going a lot of places The problem is the very complicated set of rules with respect to how you can share this information and its not easy to do The NADA is encouraging dealers to review the new materials and if applicable to present the addendum to service provider vendors for signature What it says is the vendor cant take any more data than they need they cant do anything else with it except provide the service Miller explained To an extent folks felt a little more free rein in the past with respect to this data The hope is that will change Although Miller did not name any specifi c companies he admitted that a major driver of the associations increased focus on data access is that vendors in many cases were exceeding what the dealer realized was happening in terms of extracting data 8 F I and Showroom March 2014 Dealer Groups Studying NADA Compliance Program Group 1 and AutoNation are testing the NADAs new fair lending program which was unveiled on Jan 24 But not all publicly traded groups are on board I n January the National Automobile Dealers Association NADA joined a handful of other organizations attempting to help dealers navigate the Consumer Financial Protection Bureau CFPB s scrutiny of rate participation policies when it unveiled a new fair lending compliance program at its annual convention in January Publicly traded dealer groups said last month theyre examining the associations solution but not all executives were enthused about adding an extra step to their transaction process The associations plan calls on dealers to document reason for variations in rate markdowns on retail fi nance contracts Roger Penske chairman of Penske Automotive Group noted during a Feb 13 investor call that he was not real enthused about having his dealerships record multiple reasons saying the plan would encumber the transaction Today the CFPB has not approved the NADA plan Penske said We continue to review their plan but At this particular time its a small portion of our overall income as fi nance reserve I just think we have to wait and see In the fourth quarter 2013 the group saw F I revenue increase 174 overall and 155 on a samestore basis Gross profi t per unit retailed improved 52 to 1037 In the U S market the groups F I per copy average was 1021 while average profi t per retail unit in international markets was 1076 Seventy percent of our F I income comes from the United States and 30 internationally Penske noted And when you look 60 is product and 40 is reserve so you will see obviously some pressure as interest rates would go up But today when you think about 40 or 70 about 30 of it is really F I reserve Offi cials at Group 1 which saw fourth quarter F I revenue grow 164 from a year ago to 789 million were more positive about the NADAs program We have endorsed the process improvements recommended by the NADA in response to concerns raised by the CFPB and intend to begin implementing these changes across our U S operations in the next several months said Earl Hesterberg Group 1 s president and CEO As such we are comfortable assuming our 2013 results in F I are sustainable going forward AutoNation offi cials have confi rmed the group is testing the program at a few of the companys 228 stores while offi cials with Asbury Automotive said the group currently employs a fi xed cap program on rate markdowns but does not document rate discounts as proposed under the NADAs plan