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Dealer boss fears VW sales face calamitous drop

Henry Payne
The Detroit News

The Volkswagen emissions scandal reflects poorly on everyone in the auto industry, the chairman of the National Automobile Dealers Association said Wednesday.

“I don’t think we have ever seen (a recall) where there was deliberately misleading information like we’ve seen at Volkswagen,” said Bill Fox, chairman of NADA, addressing the Volkswagen cheating scandal in an appearance before the Automotive Press Association Wednesday.

“I think Volkswagen sales are going to fall off the end of the world until they solve this problem, though I hope that doesn’t happen,” he added.

Volkswagen’s admission that its 2.0-liter diesel-powered cars cheated emissions tests has put the company and its dealer network in turmoil — leading to the resignation of VW CEO Martin Winterkorn, the threat of billions in government fines and a loss of consumer trust.

“It’s going to be a challenging time,” said Fox at The Detroit Athletic Club. “Our role ... is to ensure that the consumer is taken care of because it reflects badly on all of us in this industry.” Kelley Blue Book reports that VW diesels have lost 13 percent of their resale value since the scandal broke last month. There are some 650 VW dealers in the U.S. — 19 of them in Michigan.

But Fox added that he thinks diesel is a good, fuel-efficient alternative for the U.S. market.

“It works in Europe,” he said as he called for moderation in the wave of U.S. government regulations that, he says, are increasing costs and harming consumers.

Fox also addressed the controversial issue of modifying dealer franchise laws to allow manufacturers like Tesla Motors to sell directly to customers just as Apple sells computers through its own stores. Last year, Gov. Rick Snyder signed into law a bill banning manufacturer-to-consumer sales. Fox says he supports Tesla’s right to sell cars directly if state law allows.

“If that’s what they want to do and the law allows it, I don’t have a problem with that,” he said. “I don’t think it’s a very good solution. The advantage to the consumer is they have a local place where they can turn to instead of dialing 1-800-DIRECT.”

State auto dealers have lobbied against pro-Tesla laws.

Diesel is part of VW’s solution to meet the Environmental Protection Agency’s 54.5 mpg-by 2025 mandate — a regulation, Fox said, that will add “about $3,200 to the average price of a car. The problem is that 7 million Americans will be priced out of the new-car market because they won’t be able to afford the increase.”

Fox also criticized the Consumer Financial Protection Bureau for overstepping its authority in regulating the auto finance market, and warned against U.S. Senate legislation grounding all recalled vehicles from dealer resale until repaired — even though the National Highway Traffic Safety Administration says just six percent of recalled cars require so-called “stop-drive” orders.

“The retail vale of those vehicles would drop dramatically,” if the legislation passes, said Fox. “It would wreck the entire used car market.”

NADA Chairman Fox owns dealerships in upstate New York. The NADA represents more than 16,000 new-car and -truck dealerships in the U.S. and abroad.

Henry Payne is auto critic for The Detroit News. Find him at hpayne@detroitnews.com