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CANADA DEALERS FOCUS ON LENDERS

TORONTO - Murray Koch is the first chairman of the Canadian Automobile Dealers Association, but he isn't the first dealer to take a turn at the wheel of Canada's national dealer group.

That isn't quite the paradox it seems. Last October, when the Federation of Automobile Dealer Associations installed Koch at the helm at its annual convention in Toronto, the federation also changed its name.

CADA's simpler and more logical title will be easier for the public to understand, says Koch (pronounced 'Kosh'). Perhaps more important, understanding will also come more easily to politicians.

As with the National Automobile Dealers Association, CADA's primary mission is 'lobbying the federal government to ensure that what they're doing today is not going to be counter-productive to the automobile business and the consumer alike,' said the 66-year-old Koch.

On that score, he says, Job 1 is to keep banks out of the retail vehicle leasing business. The country's Bank Act will be up for review in 1997, and CADA wants to get an early start on ensuring the new Liberal administration doesn't succumb to the persuasive powers of the Big Five banks.

'Our biggest concern here is that dealers have to depend on banks for their financing, and the banks want to become direct competitors with us,' said Koch. 'It's pretty difficult to compete with somebody you're borrowing money from. We think that's a direct conflict of interest.'

GST A BIG THORN

Another federal issue is the country's widely detested Goods and Services Tax. CADA believes it would benefit business, consumers and government alike if the tax were reduced from 7 percent to 4 or 5 percent, but made broader based. Food and some other essentials are now exempt.

Closer to home, a continuing thorn in the side of dealers is the fact that private sales of used vehicles are exempt from the GST. CADA estimates 60 percent of used-vehicle transactions in Canada fall outside the GST net - but many of the ostensibly 'private' sellers are in reality curbsiders.

Koch argues that this puts legitimate dealers at a competitive disadvantage. He hopes to sell the notion by pointing out that curbsiders potentially evade income taxes as well as the GST. 'The government is leaving a pile of money behind which we are trying to make them aware of,' says Koch.

Also on the subject of taxes, Koch is concerned about a trend toward environmental taxes that could prove self-defeating. 'We're trying to alert (the government) to be careful what they're doing,'says Koch.

For example, a federal gas-guzzler tax 'may stop a manufacturer from selling a higher-priced vehicle, and in turn it hurts the income to the government because they sell smaller and less-profitable vehicles and maybe make less money and pay less tax.'

FAMILY ROOTS

Koch is the co-founder and dealer principal of Koch Lincoln-Mercury in Edmonton, Alberta. The business was established in 1965 by Koch, his brothers Les and Loris, and their uncle Frank Paege. Murray took over as the dealer when Les died in 1969. Loris is still a partner.

In the arena of dealer-manufacturer relations, Murray Koch is concerned about the lack of franchise legislation covering the auto business. 'In the United States, virtually every state has franchise legislation which gives the dealer some protection when they have a dispute that can't be settled with the manufacturer.

'In Canada, some manufacturers have an arbitration board or panel that will hear some disputes, but most of them you have to go to court, and it's very difficult for a dealer to fight a large manufacturer in court.'

Koch's own province, Alberta, is moving to introduce franchise laws. Meanwhile, CADA is working on its own solution. Legal counsel Sonja Falkenberg has been meeting with representatives of the manufacturers trying to put together an alternative dispute resolution system.

Also due out soon is CADA's annual dealer satisfaction survey. It's a source of some pride. 'We get over 50 percent return, and I think that's a real credit to our survey and our staff at CADA,' said Koch. 'The manufacturers are very seriously interested in the results, and that bodes well for both of us, I think.'

-----------------------------------------------------------------------CADA AGENDA

1. Keep banks out of retail leasing business

2. Reduce, broaden Goods and Service Tax

3. Apply GST to 'private sellers'

4. Block self-defeating environmental taxes

5. Adopt franchise laws to protect dealers

You can reach Jeremy Sinek at jeremy.sinek@sympatico.ca

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