Fuel prices remain a hot topic as the average price for regular gasoline across the country reached a record high in excess of $3.50 a gallon last week. According to the U.S. Energy Information Administration, this eclipsed the inflation-adjusted peak of $3.41 set in March 1981 when gasoline was $1.41 a gallon. Consumers are beginning to change their driving habits, evidenced by gasoline sales having fallen 2 to 11 percent a month so far this year. Five U.S. oil company executives appeared on Capitol Hill on Tuesday to explain why they were not to blame for record-high gasoline pump prices even as they reported $123 billion in profits in 2007.

Record gasoline prices and a contracting U.S. economy will reduce summer gasoline demand for the first time in 17 years, the government's top energy forecasting agency said last week.
Consumers can expect to pay an average of $3.54 a gallon during the summer driving season, which runs from April through September, up 61 cents from last year. The EIA cautioned, however, that gasoline prices in some parts of the country would exceed $4 per gallon.

FEDERAL LEGISLATIVE ACTIVITY

Use of Arbitration Threatened by “Fairness” Acts
There are currently two Bills in Congress that address the issue of arbitration. The Arbitration Fairness Act of 2007 would amend Chapter 1 of Title 9 of the United States Code, more commonly known as the Federal Arbitration Act. The Bill states that Mandatory arbitration undermines the development of public law and is a poor system for protecting civil and consumer rights. The Bill would prohibit a predispute arbitration agreement from being valid in a consumer dispute, that being where the subject of the transaction is for personal, family or household. The second Bill, titled The Automobile Arbitration Fairness Act of 2008 applies specifically to motor vehicle transactions. The NIADA views legislation such as this as unnecessary and not in the best interests of dealers or consumers. We believe that arbitration is a fair, affordable and accessible dispute resolution method for consumers and dealers alike.

Can a Car be too quiet?

Legislation setting a minimum sound level for vehicles sold in the United States by as early as 2010 was recently introduced in the House. The Bill, titled The Pedestrian Safety Enhancement Act of 2008, would require the U.S. Secretary of Transportation to lead a study to determine if a minimum sound level is needed to protect pedestrians, specifically those visually impaired. The proposed legislation stemmed from concern that visually impaired pedestrians may be put in danger because of quiet-running hybrid and electric vehicles. The Bill would give automakers two years to comply with any requirements developed and imposed as a result of the study.

FEDERAL REGULATORY ACTIVITY

Aggressive Targets Proposed for CAFÉ Increases
Last December, Congress passed and President Bush signed into law an Energy Bill that included the first mandated increase in the corporate average fuel economy (CAFÉ) program since it began in 1975. The car standard of 27.5 mpg has been unchanged since 1990 and the truck standard, at 22.5 mpg, is up slightly more than 10 percent since 1992. The Bill contained a congressionally mandated 40 percent increase in fuel economy standards by 2020.

In Rules proposed last week, the Administration is asking auto manufacturers to achieve a 25 percent improvement in fuel economy during the 2011-15 model years. The result would be cars that must average 35.7 mpg and light trucks that must average 28.6 mpg, for a combined 31.6 mpg by 2015. Department of Transportation Secretary Mary Peters called the proposal “an aggressive but achievable standard." She also indicated that it was the Department's goal to complete the new Rules by year-end.

OTHER ACTIVITY OF INTEREST

Bankruptcy Filings on the Rise
The American Bankruptcy Institute reported that consumer bankruptcy filings jumped 27 percent nationwide during the first quarter of 2008 compared to the same period in 2007. Citing data from the National Bankruptcy Research Center, the ABI indicated that consumer bankruptcy filings in March totaled 86,165, up 16.6 percent from March 2007. The Institute also indicated that 31.8 percent of all consumer cases filed in March were Chapter 13 filings. Experts predict this trend is likely to continue throughout 2008.

Popularity of Hybrids Continues to Increase
Sales of hybrid vehicles rose 38% in 2007. Although hybrid vehicle sales made up just 2.2 percent of the U.S. market share for the year, they grew steadily even as overall vehicle sales declined 3 percent. The Toyota Prius remained the best-selling hybrid in 2007, with just over a 50 percent share of the hybrid vehicle market. California remained the top state for hybrid vehicle sales in 2007 with 26 percent of all hybrid registrations there, followed by Florida, New York, Texas and Washington.

CASE OF THE MONTH
Our case of the month involves a test drive. While everyone in the car business knows that a test drive should be a pleasant experience for the customer, they also know that they sometimes turn out being a nightmare for the dealer. In this case, a consumer, Mr. Luu arrived at a Melbourne, Australia Honda dealership and arranged to take an Accord for a test drive. Instead of waiting on the salesman to get into the passenger seat of the car, however, Mr. Luu left and proceeded to drive for over 3,800 miles across the Australian Outback.

His six-day test drive journey took him through Australia’s Northern Territory and finally ended in an old mining town called Tennant Creek. Why did it end you ask? Well, not because of the inappropriateness of his test drive. Authorities apprehended Mr. Luu after allegedly failing to pay for a tank of gas and the Accord was recovered.
 

How he put so many miles on the car in 6 days I have no idea. Fortunately the car was not damaged, and the dealership will be able to recover monies from Mr. Luu for his excessive use of the vehicle, won’t they? Wait a second, when was he supposed to return the car? Additionally, how many miles was he allowed to put on it? I know, if it was your dealership we would look at the written Test Drive Agreement he signed. What, you don’t use one. You had better start! In fact, if you would like to hear about a few other things that are absolute do’s and don’ts for dealers today be sure to attend my session titled “Mistakes, Problems, And Other Dumb Stuff You Need to Avoid!” on Thursday, June 26th at the NIADA Annual Convention in Dallas, Texas. For more information on the Convention, visit the Association’s website at www.niada.com.