September 29, 2015
Two Senators Urge Justice to Take Hard Line Against VW
Two U.S senators urged the Justice Department to take a hard line in its investigation of Volkswagen AG for evading emissions requirements in 482,000 vehicles here. The Detroit News reports that Sens. Amy Klobuchar, D-Minn., and Richard Blumenthal, D-Conn., urged Attorney General Loretta Lynch to take strong civil and criminal actions after VW admitted to using illegal software to secretly turn off emissions equipment when 2009-2015 diesel cars were in real-world use. “Officials at Volkswagen should be granted no get-out-of-jail free card, and the department should accept no plea agreement with Volkswagen that does not ensure any and all information regarding criminal acts by high level officials is provided to the department,” wrote Klobuchar and Blumenthal. “The U.S. government needs to make it clear that these actions, whether involving safety defects, consumer deception, or regulatory violations, will not be tolerated by the American public.” VW said the so-called “defeat devices” were installed on 11 million vehicles worldwide; it has set aside $7.3 billion to pay damages. German prosecutors and at least 29 U.S. state attorney generals are investigating, as is the U.S. Justice Department aided by the FBI in Detroit. For the full story, click here.
Fifth Third Bancorp to Settle Discriminatory Lending Claims
Federal regulators reached an $18 million settlement with Fifth Third Bancorp on Monday over allegations that the lender’s pricing policies resulted in minority borrowers paying more on their car loans. According to the Wall Street Journal, the Consumer Financial Protection Bureau and the Justice Department claim that a portion of the annual percentage rate charged to African-American and Hispanic borrowers on Fifth Third loans was higher than the amount white borrowers were charged between 2010 and the first quarter of 2014. At issue is the so-called dealer markup—the amount of percentage points dealers can tack onto a loan that determines a borrower’s annual percentage rate. A Fifth Third spokesman said the bank neither admits nor denies wrongdoing. A bank statement emphasized that the bank has no way of knowing the races or ethnicity of borrowers whose loans are submitted to Fifth Third by auto dealers. The bank added that it “strongly opposes any type of discrimination and has, for many years, monitored for and taken steps to avoid any potential discrimination in its auto finance business.” This is the CFPB’s third public enforcement action in recent years on car loan lending discrimination. For more about the CFPB’s latest action, click here.
Could Ride-Sharing Services Slow U.S. Car Sales?
Global new car sales will soar from 70 million in 2010 to 125 million by 2025, but the way those cars are used and who will own them is going to change rapidly according to a new report from the McKinsey consulting firm. According to the Detroit Free Press, the 22 –page report does recognize that individual vehicle ownership is not going to disappear. One chart illustrates that, even in the technology-embracing San Francisco Bay Area, the cost of getting travelling 10,700 miles per year by ride-hailing services such as Uber or Lyft at more than $22,000 per year per vehicle equivalent is more than twice as expensive as a financed new vehicle (about $9,200 per year). But the McKinsey study says that for those who use Uber or Lyft for shorter distances per year, the cost is more competitive. Car sharing, through companies such as ZipCar, now owned by the Avis Budget Group, also continue to grow. Other major rental companies, as well as automakers, are getting into that market. Daimler launched Car2Go. BMW has Drive Now. Earlier this year Ford introduced “Peer-2-Peer, a car sharing option being tested through November in seven major cities. For more on how car sharing could impact auto sales, click here.
TPP Round Kicks Off in Atlanta
While last week was jam-packed with high-level meetings, including visit by Pope Francis and Chinese President Xi Jinping, as wells as the surprise resignation of House Speaker John Boehner, Politico reports that this week could theoretically top it for trade wonks. Ministers from countries participating in the Trans-Pacific Partnership will be gathering in Atlanta for what may finally be the end of the TPP “endgame.” TPP negotiators are already diving into what the Office of the U.S. Trade Representative describes as a "limited number of outstanding issues" holding up a deal, including talks on automotive rules-of-origin between the United States, Japan, Canada, and Mexico. But in a memo last week to other House members, Michigan Rep. Sander Levin listed a dozen major unresolved issues in areas ranging from labor and the environment to currency and state-owned enterprises. Still, at least one minister sounded optimistic they’d get a deal. "Notwithstanding [the difficult issues], a conclusion remains within imminent reach," Australian Trade Minister Andrew Robb said, according to media reports. “There are unresolved issues, but hopefully, those aren't intractable," Robb added, describing the deal as about 90 percent complete. For more on trade, click here.
Mueller Will Strengthen VW Brand's Independence
Volkswagen Group will strengthen the decision-making power of its main VW brand, CEO Matthias Mueller said, sticking to a decentralization strategy his immediate predecessor was working on before leaving in an emissions-testing scandal last week. VW brand "will in future be just as independent from the central corporation as Audi or Porsche," the luxury divisions that are the carmaker's biggest earnings contributors, Mueller told executives in a speech Monday. Automotive News reports that Volkswagen appointed Mueller, who was running Porsche, as its new head on Friday following a tumultuous week in which the automaker admitted to rigging some diesel engines to cheat on U.S. emissions tests. Mueller had assisted former CEO Martin Winterkorn in planning a reorganization to give Volkswagen's brands and regional units more say in operations, and persuaded the supervisory board to keep the project on its agenda that day, according to a person familiar with Mueller's thinking. The company, while "facing the most crucial test in its history," still has the support of the Porsche and Piech families and German state of Lower Saxony, its main shareholders, Mueller said Monday. For more on VW’s plans, and the latest reports on affected vehicles, click here.
CNA National Marks 20 Years as a CNA Subsidiary
This year CNA National is celebrating the 20th anniversary of its purchase by CNA, one of the nation’s oldest and largest insurance companies. Originally named Western National Warranty Corporation, CNA National has grown significantly since 1995. The number of active contracts has risen by more than two million, and the average amount of claims paid in a month has increased by over $15 million. The purchase strengthened CNA National’s position in the marketplace by adding the financial backing of a century-old parent company. Today, CNA National continues to focus on providing first-class customer service and offering the best possible products. With a solid reputation, multiple products, and a record 18 Dealers’ Choice Awards, CNA National is your number-one choice for providers. Talk to a representative today to see how they can help you grow your business. Call 800-345-0191, extension 769, or visit www.CNANational.com.
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