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August 31, 2015 Q&A

Auto dealers pushing international trade

Bradley Hoffman

Q&A talks with Bradley Hoffman of Hoffman Auto Group of East Hartford and chairman of the American International Automobile Dealers Association.

Q: You are chairman of the American International Automobile Dealers Association (AIADA). In your chairman's blog, you hailed the passage of Trade Promotion Authority. What does it mean for the automotive industry?

A: Trade Promotion Authority, passed in June, gives the president autonomy to negotiate trade agreements with America's allies and empowers Congress with oversight and final ratification of those agreements. Essentially, it's the first step in getting any trade agreements passed.

That's particularly important right now, as several crucial agreements are currently under negotiation. The Trans-Pacific Partnership (TPP) is probably the deal closest to completion. That agreement, which covers 12 Pacific nations including the U.S. and Japan, stands to remove or greatly reduce a number of barriers to global trade; one of which is the 25 percent tariff on all Japanese light trucks entering the U.S. For dealers and the auto industry as a whole, TPP will be a game-changer, creating a level playing field on which all brands can compete.

We're also keeping an eye on the Transatlantic Trade and Investment Partnership (TTIP) deal between the U.S. and European Union. Currently, the two superpowers have separate standards that cost manufacturers hundreds of millions of dollars as they re-engineer vehicles for each market. By standardizing regulations, the industry would be streamlined and those savings could be passed on to customers. TTIP is predicted to grow U.S.-EU auto trade by 20 percent.

The bottom line is this: 96 percent of the world lives outside of the United States. If the elected officials who oppose open trade think we are going to have a growth economy without trade, they're crazy.

Q: One of the things you said when you took over the chairmanship was, “This will be a year of ensuring that dealers' rights are respected by the Consumer Financial Protection Bureau.” What rights have been threatened by the CFPB? What steps has your group taken to protect those rights?

A: Auto dealers have been exempted from the CFPB's jurisdiction since 2010, but that hasn't stopped the agency from attempting to exercise oversight through dubious back-door methods.

Auto dealers are seeking accountability from the CFPB. We want to know what their goals are regarding dealer lending discretion and how they are collecting and analyzing the data they have used to censure some of our brands for discriminatory lending.

To give you an idea of what we're up against, just recently they refused a request to share leaked internal memos revealing an agency goal to target dealers.

I can tell you firsthand, this is a highly competitive business with narrow margins; no dealer or manufacturer is going to survive by artificially inflating interest rates for our customers. It's just not credible, and we want to know why the CFPB thinks it's happening. I'm personally concerned by the lack of transparency from the CFPB and the fact that it was established with no corresponding oversight by Congress.

Q: What do the next five years look like for the automotive industry? This is expected to be a strong sales year. Other economic factors seem strong for at least another good year in 2017. What do you think beyond that?

A: Dealers are eternally optimistic, and I'm no exception. I wouldn't be in this business if I didn't see it expanding and offering new opportunities. We are on our way to a sixth straight year of sales increasing in the U.S. This is unprecedented. That said, I notice many analysts see an eventual contraction of sales in the next few years.

What this industry has in its back pocket, and what I'm very excited about, is some really cutting edge new technology and designs are about to hit the market. If anything is going to keep sales hot for the next five years it's the quality and innovation of the products being offered. Also, let's face it, the population in our country is only going one way: up.

Q: What does the AIADA do and who does it represent? What sets you apart from a group like the National Automotive Dealers Association?

A: AIADA was established 45 years ago to represent the interests of international nameplate auto dealers in Washington, D.C.  Whereas the National Automotive Dealers Association seeks to represent all dealers in the United States, we have narrowed our focus to international nameplate dealers who represent approximately 54 percent of vehicles sold in the U.S.

We primarily represent these dealers on federal issues, like global trade, that uniquely impact retailers of international brands. 

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