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Some of the big public retail groups are reacting positively to the National Automobile Dealers Association’s recommendations that dealerships adopt a hard percentage cap on dealer reserve and then document any discounts offered. “We appreciate where [NADA is] going, to try to nail down something concrete,” said Craig Monaghan, CEO of Asbury Automotive Group, during a conference call on Tuesday. “We don’t feel like our industry or the [Consumer Financial Protection Bureau] has given us the clarity we would very much like to have.” Asbury already has its own fixed caps on dealer reserve and on F&I products, but it doesn’t document why customers may have gotten a discount, company officials said.
Meanwhile, AutoNation Inc. said on Jan. 30 it would try out the NADA approach at a few stores. Group 1 Automotive was more enthusiastic, saying on Jan. 24 it would implement the changes across its entire U.S. dealer network. NADA announced the recommendations on Jan. 24 as a way for dealerships to try and head off potential discrimination charges stemming from the Consumer Financial Protection Bureau’s oversight of auto lenders. The CFPB can’t regulate dealerships directly, but it is trying to get lenders to eliminate dealer discretion in setting dealer reserve. When dealerships offer discounts from their fixed cap on dealer reserve, to be competitive with rival financing offers, for example, NADA proposed they be documented based on a set of preapproved reasons. NADA e-mailed the “NADA Fair Credit Compliance Policy & Program” to members after it was announced, the association said.
Source: Automotive News