Commentary: Financial industry overhaul poses new threat to auto industry

For a long time, when it came to approaching members of Congress, I was like Dorothy in "The Wizard of Oz." She was scared of the wizard until the curtain was pulled back and she saw that he was a human being like her.

Even though I'm based here in the Washington region, like many busy auto dealers, I rarely visited Capitol Hill. The whole legislative process intimidated me. I wasn't sure I had the knowledge, importance or credibility to communicate with lawmakers.

But that all changed last year when I co-created and chaired (along with Jack Fitzgerald of Fitzgerald Auto Malls) the Committee to Restore Dealers Rights. I was on the Hill three to four days a week, often all day, seeking government assistance to restore the rights of thousands of General Motors and Chrysler dealers whose franchises were abruptly taken from them. I personally visited 100 legislators to plead our case. Once, we even facilitated our own rally on Capitol Hill where nearly 200 auto dealers offered the lawmakers insights on who we are and how our business works.

Recently, our industry has been challenged again. Headed by the National Automobile Dealers Association, we are again visiting Congress for protection on the financial reform bill, which proposes to add burdensome rules that would eliminate dealer-assisted financing.

If that provision becomes law, auto buyers would be less likely to see the 0 percent, 1.9 percent and 2.9 percent interest rates that have become commonplace. The provision would threaten the fragile recovery of the auto industry, as profits improve and customers return to showrooms, after a tumultuous year of bankruptcies, bailouts and the dealership closures. We needed to insure that Congress understood that it was not the auto dealers who contributed to the financial crisis in our country; rather, we are a major contributor to the continued recovery.

We oppose it because the bill threatens the "captive finance companies" that are able to provide an avenue through which more Americans are able to obtain very affordable credit. When was the last time you saw a local bank offer 0 percent or 1.9 percent on any loan? Dealers aren't making money on those low rates, but they're helping to sell cars. Positive credit momentum in dealerships must keep improving to ensure economic growth.

The House has approved an amendment that would exempt auto dealerships from the law. The Senate passed a nonbinding provision instructing the upcoming House-Senate conference committee to follow suit. We'll be watching the reconciliation process to make sure that the exemption goes through.

Dealers are responsible for 20 percent of all retail spending in the country, and millions of Americans rely on our industry for their livelihood, financial security and health care. When we sell cars, our employees keep their jobs and the states get the sales taxes. The more cars we sell, the more we buy from the manufacturers -- and that allows them to keep the production line moving.

We want GM and Chrysler to succeed, but both will need to rebuild their dealerships lost through the closures to do so. In Maryland, 51.4 percent of all vehicles in operation are Detroit brands, yet as a result of the cuts, two-thirds of the dealerships are for imports. On Rockville Pike alone, after the cuts were made, there were only seven Detroit brand dealerships left and 45 import dealerships. How would GM or Chrysler be able to maintain any kind of market share with such a network?

Like all citizens in America, it's important for auto dealers to raise our voices. And it's important for Congress, the manufacturers and dealers to listen to each other. My experience this past year taught me that members of Congress welcome and encourage input from their constituents. While we may not always agree, each deserves the respect and right of being heard.

Tammy Darvish is vice president of Darcars Automotive Group, one of the largest auto dealers in the Washington area.