Issue link: https://read.dmtmag.com/i/561797
FINANCIAL On July 21, 2010, in a response to the bank meltdown of 2008-09, the Dodd-Frank Act became law. Lawmakers originally proposed this act in an effort to protect the people of the U.S. from unfair bank practices. One of the points of the act was to create the Consumer Financial Protection Bureau (CFPB). Even though the CFPB does not directly oversee dealers, it does oversee banks, and this affects how dealers need to run their finance departments. In March 2013, the CFPB released a bulletin stating that not only could deal- ers be held accountable for unfair lending practices and discrimination based on rate markup, but banks could also be held accountable based on the fact that they set the markup guidelines. To protect themselves from possible liti- gation, banks were asked to eliminate deal- ers' ability to mark up buy rates and to find a different mechanism to compensate dealers that does not result in discrimination, such as flat fees per transaction. In theory, this sounds like a good idea. In practice, the result has been the loss of income to dealers. In the past couple years, several banks have shifted to a flat-rate com- pensation plan for dealers. What this means is many banks have gone from paying the dealers several hundred dollars (possibly more) to paying a $100 flat fee. This has seriously impacted several dealers with whom I work. NOW THE GOOD NEWS! On July 29, 2015, the U.S. House Financial Services Committee passed House Resolu- tion 1737, a bill to revoke the March 2013 CFPS bulletin. The resolution passed with bipartisan support, 47 votes to 10. Not only did Resolu- tion 1737 withdraw the CFPB's guidance, but it also stated that the CFPB is required to make a full study of the costs and impacts of future guidance. The studies should include impacts not only to consumers, but also the financial impacts on small businesses such as dealers. The bill's proponents also want the CFPB to make public the studies they use to form 14 • September 17, 2015 • Powersports Business www.PowersportsBusiness.com Dealers can breathe easy over new House bill STOCK MARKET WATCH DEALER FINANCIAL SNAPSHOT JULY 2015 CDK Global Recreation dealerships' Same Store Sales were up 2.4 percent overall in July. The West was the only region to see an increase in all four cat- egories. U.S. service department sales had a 5.8 per- cent overall increase and was the only department to increase in each region. The Northeast was down 0.3 percent overall and was down in three of the four categories. The West experienced the highest increase in major units, up 8.5 percent. PARTS SALES In parts, 752 units were up, while 757 were down. SERVICE SALES 828 dealers were up in service, and 629 down. MAJOR UNIT SALES Nationwide, 700 dealers were up, while 654 were down. NORTHWEST -3.4% Parts Department 6.0% Service Department 1.1% Major Units 1.0% Overall MIDWEST 6.4% Parts Department 4.4% Service Department -0.8% Major Units 0.4% Overall NORTHEAST -3.8% Parts Department 2.2% Service Department -0.1% Major Units -0.3% Overall SOUTH -3.4% Parts Department 7.5% Service Department 2.1% Major Units 2.3% Overall WEST 4.4% Parts Department 7.8% Service Department 8.5% Major Units 7.6% Overall UNITED STATES 0.6% Parts Department 5.8% Service Department 2.3% Major Units 2.4% Overall Stock Price Percent Company Ticker 8/14/15 Change Cooper Tire & Rubber CTB $39.32 23.8% ArvinMeritor ARM $13.95 11.1% Honda Motor Corp. ADR HMC $34.08 9.6% Assurant, Inc. AIZ $79.60 9.0% Brunswick Corp. BC $54.11 4.1% Intl. Speedway Corp. Cl. A ISCA $33.29 -4.6% Speedway Motorsports, Inc. TRK $20.22 -6.6% MarineMax, Inc. HZO $17.16 -8.2% Universal Technical Institute UTI $4.88 -18.1% Spy Inc. XSPY $0.40 -32.8% POWERSPORTS BUSINESS WINNERS AND LOSERS MARKET WATCH Change 8/14/15 from 7/24 % Change Powersports Business Index 313.408 5.14 1.67% Dow Jones Index 152.015 -0.79 -0.52% S&P 500 Index 142.354 0.81 0.57% Source: Wells Fargo Securities LLC 0 50 100 150 200 250 300 350 400 11/7/14 12/5/14 1/2/15 1/23/15 2/20/15 3/13/15 4/10/15 5/1/15 5/22/15 6/19/15 7/24/15 8/14/15 PSB INDEX VALUE DOW JONES INDEXED S&P 500 INDEXED STOCK MARKET ACTIVITY F&I SOLUTIONS FOR MORE ON THE SAME STORE SALES DATA For more information on this report and other industry data, contact: cdkrecreation.com/dataservices *The Powersports Business Index has been adjusted to reflect the addition of CDK Global (CDK) on 12/5/14. their future guidance. Before any further guidance is offered, they must show that there is a need to issue guidance regarding areas such as possible discrimination. "We want to ensure that the CFPB's auto finance policy is based on accurate analysis and is based on the best interest of consum- ers," Rep. Ed Perlmutter, a Democrat from Colorado who introduced the bill along with Rep. Frank Guinta, R-Texas, told Auto- motive News. So for the near future, we can breathe easy. The government is not going to make moves to take away dealers' ability to receive income based on rate markup. Banks can also relax and continue to lend money without fear of being drawn into court on discrimination charges due to their dealer compensation programs. PSB Steve Dodds II is a trainer and consultant at Garage Composites with a focus on sales and finance departments. Contact him at steve@garagecomposites.com. became law. Lawmakers STEVE DODDS