One of the biggest stories at NADA 2014, the recent National Automobile Dealer Association conference in New Orleans, was the transparency of finance commission.
Regulators in the US are keen to exert greater control on dealer finance and a campaign by the Consumer Financial Protection Bureau (CFPB) could have a major impact.
Currently, dealers can control the rate spread on finance to a significant level. However, the CFPB is concerned about discrimination, with higher rates charged for certain groups.
The CFPB’s desired position is for lenders to stop allowing dealerships discretion in setting customer interest rates, which in turn would affect dealer commission.
To tackle this, NADA has endorsed a voluntary change at dealer level. At the conference, it tabled a plan under which each dealership would establish a percentage ceiling for a dealer’s finance commission.
Dealers and lenders here in the UK will be watching developments with interest.