September 2007

Federal Legislative Activity

As Congress returns from its summer recess to a mix of old and new items on the Legislative agenda, we find a number of issues that can have a direct impact on the motor vehicle industry.

CAFÉ Legislation

The likelihood of Congress passing legislation by the end of the year to raise the fuel economy of the nation's cars and light trucks is diminishing.  Even as the White House has called for Congress to take action, the odds are low of House and Senate leaders overcoming procedural hurdles to begin work on compromise legislation, especially with the calendar filled with Iraq and spending Bills, making it unlikely a conference committee will be appointed until those measures are dealt with.

California’s Lawsuit Against Automakers Is Dismissed

A lawsuit instituted by California’s Attorney General against the world’s six largest automakers, claiming that the world’s automakers should be held accountable for the impact tailpipe emissions were having on the environment, was recently dismissed.  The Court ruled that it is impossible to determine to what extent automakers are responsible for contributing to global warming in California and that it is up to lawmakers, rather than judges, to determine how responsible automakers are for global warming problems.

States Can Regulate Greenhouse Gas Emissions

Meanwhile, a federal judge in Vermont has ruled that states can adopt their own greenhouse gas emissions rules without violating federal authority for fuel economy regulation.  In rejecting the attempt to block state-imposed fuel economy standards, the judge stated that the industry had not proved the regulations were illegal, unsafe or unattainable.  Under a U.S. Supreme Court order last April in another climate case, agencies are drafting first-ever federal greenhouse gas emissions limits for cars and trucks.  The administration is expected to offer its greenhouse gas proposal by year end, but Congress still may have to help mesh new federal greenhouse gas rules with the long-existing fuel economy program.
 

Right To Repair Legislation Returns

Right to Repair legislation is back on the forefront after the House Energy and Commerce Chairman reintroduced a Bill that would require automobile manufacturers to disclose to vehicle owners, repair facilities, and the Federal Trade Commission information necessary to diagnose, service or repair vehicles.  Similar Legislation has been introduced three times since 2001 without success.  This time, a provision that would have allowed lawsuits to be brought against manufacturers if sufficient information is not provided has been removed. 

Federal Regulatory Developments

NHTSA To Address Safety Issues

The head of the National Highway Traffic Safety Administration pledged action on a number of key auto safety and regulatory issues before the end of the year.  NHTSA is working internally to figure out a way to come up with a regulatory structure that combines its authority with that of the Environmental Protection Agency's.
 

Emissions Rules

The Bush administration is moving ahead on emissions rules to regulate tailpipe emissions as an air pollutant under the Clean Air Act, as the EPA is currently writing broad new rules to limit fuel consumption, as a result of President Bush’s so-called “20-in-10” plan to reduce gasoline consumption by 20 percent in 10 years.

New Air Bag Regulations And Fuel Economy Estimates On The Way

As of September 1, 2007 all automakers must place frontal and side crash test and roll over rating information on vehicle window stickers.  Also, as a result of the 2005 Congressional Order the stickers will show significantly lower fuel economy estimates for 2008 vehicles because the EPA introduced new testing procedures last December that more closely reflect real-world driving conditions.

In one of the most significant safety regulations in recent decades, automakers will have to equip all vehicles with side curtain air bags that provide head and torso protection in dangerous side-impact crashes by 2013.  While side-impact crashes account for only 9 percent of crashes, they account for more than 20 percent of auto fatalities. For the first time, NHTSA will require automakers to provide head protection for rear seat passengers.

Other Activity Of Interest

Bankruptcy Filings Increase

Consumer bankruptcy filings increased 17.3 percent nationwide in August from the previous month, according to the American Bankruptcy Institute.  Data provided by the National Bankruptcy Research Center indicates the figure was also up 31.2 percent from August 2006.

Hybrid Sales On The Rise  

Sales of new hybrid vehicles in the United States are on the rise, up 49 percent in the first seven months of this year, due largely to a boom in sales in the Midwest, which rose 57 percent. Recent predictions indicate total U.S. new hybrid sales will exceed 300,000 this year, comprising just over 2 percent of all sales. U.S. consumers bought 254,545 hybrids in 2006.

Case Of The Month

Our case of the month involves the advertisement of a car on the Internet, the use of out-of-date paperwork in the deal and confusing practices in the F & I department.  It involves dealership compliance.   

Compliance is an interesting word, it means having your dealership’s policies, procedures and paperwork in accordance with the law.  Every dealership should have a compliance program, but it doesn’t happen on its own.  Sure, in my 20 plus years representing dealers I’ve heard many of them say “I’ve been doing this for many years (you insert the number) and have never had a problem.”  Of course, that’s the discussion in the exhibit hall, at the auction or over a cup of coffee.  Back at my office, however, I can’t count the number of times I have received a call from that same dealer asking for our help because his streak of luck just ended in a lawsuit or regulatory matter that could cause serious financial harm to the dealership.