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Monday, April 14, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Dealership Jobs Hit 8-Year Low
Car Buyers to Face Tougher Time Securing Loans
NADA Offers Training in Risky Credit
Tiny Saves Gas, but Big Can Save Lives
Engineers Focus on Greener Auto Tech
More Cars Use Pricier Premium Gas
Ford Aims to Woo Key Group: Its Dealers
Ford Makes Plans to Sell 100k Hip Flex Crossovers Yearly
Huge Recall, but Many Cars Unfixed
New Chrysler Exec Has Clients, Quality in Mind
For Danish Drivers, Filling Up Will Be a Breeze
NADA Update
Openings Remain for May Dealer Academy Classes
New Poster Required to Recognize Changes to Family and Medical Leave Act
Lenovo Offers NADA Members Discount on Thinkpad Notebooks
STAR Answers Dealers' Questions About DMS Vendors
Top Stories
Dealership Jobs Hit 8-Year Low

Employment at new-vehicle dealerships sank this year to the lowest level since 2000, the U.S. Labor Department reports. In February, the most recent month for which data are available, franchised dealerships employed 1,096,100 U.S. workers — virtually the same as in February 2000. Dealership employment peaked at 1,151,000 in September 2005, the department says. Paul Taylor, chief economist of the National Automobile Dealers Association, said shrinking numbers of dealerships, lower new-vehicle sales and improved dealership technology are among the causes. Dealerships have less need for salespeople as sales drop and reliance on the Internet and information technology grows, Taylor said. At the same time, he said, the Detroit 3 are contracting and consolidating their retail networks.
Source:  Automotive News (Subscription required.)

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Car Buyers to Face Tougher Time Securing Loans

Lenders nationwide are tightening their standards for auto loans, which means more rejections, shorter loans and higher interest rates. For the first time in nearly a decade, dealers are telling large numbers of buyers that they can't afford the cars they want. CitiGroup this week slashed about 800 jobs in its auto-lending business and says it plans to cut the number of loans it offers. "People with decent credit aren't able to get the terms they think they should get," said Michelle Primm, managing partner of the Cascade Auto Group in Cuyahoga Falls, [Ohio] and a special director of the National Automobile Dealers Association. Mary Kay Bean, spokeswoman for JP Morgan Chase, said her company is demanding bigger down payments and will not write loans longer than 72 months for buyers with lower credit scores. Some buyers looking for new midsize sedans are leaving in used compact cars. Some buyers can't even afford that.
Source:  The Cleveland Plain Dealer

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NADA Offers Training in Risky Credit

DVD, manual shows how to work with subprime prospects
As many as three out of five shoppers who visit auto dealerships have blemished credit, the National Automobile Dealers Association estimates. In response, NADA is offering dealers a training DVD and manual that show how to set up "special finance" departments that work with customers who have risky credit. The credit crunch has elevated the need for special finance experts, says Jim Ziegler, a finance and insurance consultant in Atlanta. Ziegler has helped dealerships create special finance departments. "Special finance is becoming a staple part of the business," Ziegler told Automotive News in an e-mail message. Nearly every dealership that sells volume brands requires a special finance department or manager to address subprime customers' needs, Ziegler says.
Source:  Automotive News (Subscription required.)

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Tiny Saves Gas, but Big Can Save Lives

With gasoline prices having settled past $3 a gallon and increased talk about global warming, one of those darling little fuel-efficient cars like the Smart Fortwo, Toyota Yaris or Honda Fit may seem more attractive than ever. But are they safe? Knowing for sure is an enormously and perhaps hopelessly complex task. One problem is human ingenuity. People find so many ways to crash that one can’t test for all of them. Then there are variations in engineering. Also, cars of different sizes attract drivers of different ages, different levels of skill and different regard for self-preservation. Some side-impact crash tests done by the Insurance Institute for Highway Safety have indicated that although there can be exceptions to the bigger-is-better rule, fatality statistics show that, over all, small cars are more dangerous. Occupants of the smallest cars are about 51 percent more likely to be killed in a crash than those in midsize or large cars, according to 2006 fatality figures analyzed by the insurance group. It is not that automakers are not trying to make small cars safer. Over the last 10 or 15 years, they have become far more crashworthy, said Adrian Lund, president of the institute. But larger vehicles have also gotten safer. “So, the fact is that size and weight, even with all the improvements we have in crash protection, are still an important factor,” Mr. Lund said.
Source:  The New York Times (Registration required.)

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Engineers Focus on Greener Auto Tech

Push for gas-sipping vehicles tops agenda of auto engineer conference
About 35,000 people will descend on downtown Detroit beginning today for the four-day SAE International 2008 World Congress, grappling with the thorny issues of improving the fuel efficiency and safety of vehicles. The auto engineering group's focus this year is on the worldwide push to dramatically increase the fuel efficiency of automobiles, with the title of this year's conference being "A Climate for Change." Given the increases in fuel efficiency that President Bush signed into law last year, automotive engineering has taken on an even larger role than in the past. Increasing fuel efficiency standards by 40 percent to an industrywide average of 35 miles per gallon is forcing the engineering review of nearly every part and system that touches an automobile -- all to eke out even a fraction of a mile more.
Source:  The Detroit News

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More Cars Use Pricier Premium Gas

At a time of record pump prices for regular gas, automakers are introducing more cars that use even costlier premium. More may be on the way. Automakers are turning to smaller, high-performance engines, which use premium as a way to boost mileage without losing power. Being able to boast of a couple more miles per gallon can be a selling point but won't quell the ire down the road of buyers having to put in the glamour gas, says David Champion, auto testing chief for Consumer Reports. "People really, really, really dislike putting premium into their car," Champion says. "You see the cheaper fuel right in front of you, and you can't use it." Gasoline could hit an inflation-adjusted record this week. On Sunday, the nationwide average for a gallon of premium was $3.708, 33.7 cents higher than regular at $3.371, AAA says.
Source:  USA Today

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Ford Aims to Woo Key Group: Its Dealers

Consumers aren't the only audience Ford Motor is trying to win over with its new "Drive One" marketing and advertising campaign, which kicked off last week. The ailing auto maker is also trying to charge up its dealers. Many of Ford's more than 4,000 U.S. dealers have become frustrated with the company after suffering through years of declining sales and having few hit models to sell besides the Mustang and F-Series trucks. Ford is hoping its new marketing strategy, which includes online and viral elements as well as television and print advertising, will get dealers jazzed and turn them into grass-roots advocates for the company. "I'm asking you to help yourself," Jim Farley, Ford's vice president for marketing, pleaded at a gathering here last week, where Ford rolled out the new marketing drive for dealers. "Get your people excited." The campaign's tag line -- "Ford. Drive One" -- is designed to entice buyers to reconsider the brand, and Mr. Farley insisted that the company is going to stick with this marketing theme for a long time.
Source:  The Wall Street Journal (Subscription required.)

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Ford Makes Plans to Sell 100k Hip Flex Crossovers Yearly

Shift added to build car that appeals to those who never considered a Ford
LAS VEGAS -- Ford Motor Co. plans to sell 100,000 Flex crossovers a year and is adding a third shift at its Oakville Assembly Plant in Ontario to make sure it has the vehicles to meet that demand, said Jim Farley, Ford's chief marketing officer. Farley brought scores of the new full-size crossover with him to Ford's annual dealer conference here this week. As at the New York auto show last week, Ford used the opportunity to parade the Flex up and down the Vegas strip. The Flex attracted so much attention in Vegas that a Nevada state trooper pulled one over just to find out what kind of car it was and who made it. That made Farley's day. Ford designers told reporters that they set out to create a vehicle people could not ignore. "That's what we want. We don't want a vanilla car," said Flex design chief Rich Gresens, who added that novel elements like the grooved sides and unequivocally boxy profile make the vehicle stand out. "We were looking for something contemporary, something that would set it off, something that would make it unique."
Source:  The Detroit News

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Huge Recall, but Many Cars Unfixed

After six recalls to correct problems with millions of Ford Motor Company cruise-control switches blamed for almost 1,500 fires, the National Highway Traffic Safety Administration took an unusual step. In February, it issued a consumer advisory urging owners whose vehicles had not yet been fixed to have the switches disconnected immediately. “Vehicles are continuing to catch fire and buildings are continuing to catch fire because the remedy hasn’t been effected yet,” Rae Tyson, a spokesman for the safety agency, said. “This is a defect that could possibly have dire consequences, and we wanted to do what we could to try to make people more aware of the need to get vehicles back to the dealer quickly — if not for the permanent remedy, at least for a short-term remedy.” The recalls — which included what the government called a recall of a recall — began in 1999. They covered some 10 million Ford, Lincoln and Mercury vehicles from 1992-2004, a record number recalled for a single problem.
Source:  The New York Times (Registration required.)

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New Chrysler Exec Has Clients, Quality in Mind

Ex-Nissan officer is industry's first chief customer officer
Just hours after news of Chrysler's sale broke last summer, then-Nissan quality executive Doug Betts' phone was ringing. Cerberus Capital Management LP was on the line. Even before the private-equity firm purchased the Auburn Hills automaker, it recognized that Chrysler had a serious quality problem and pegged Betts, Nissan Americas' senior vice president for total customer satisfaction, to fix it. A reluctant Betts accepted the job only after learning it would not be an isolated quality executive, but a "c-level" title that had a corporatewide reach. Hence, the industry's first chief customer officer was born. From engineering and manufacturing to dealer sales and service, Betts monitors every aspect of the business that could affect a customer's perception of Chrysler LLC's quality. Such a broad approach was necessary to fix a quality operation plagued with slow decision making and vehicles that outsiders criticized as cheap looking.
Source:  The Detroit News

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For Danish Drivers, Filling Up Will Be a Breeze

Utility, U.S. Firm Plan A Wind-Powered Grid To Charge Electric Cars
Danish utility Dong Energy A/S last week announced a partnership with a California start-up to build a nationwide system to charge electric cars... The deal with Palo Alto-based Better PLC is the latest step in a global race to offer alternatives to traditional gasoline-fueled vehicles. For Denmark, it is a creative way to deal with an unexpected consequence of success in wind power. A country of 5.4 million residents, Denmark gets some 20 percent of its total electricity needs from wind. On windy days, that percentage can double. But the success of wind also poses a problem for Denmark that other countries, such as the U.S. and Britain, are just waking up to: how to balance power surges on windy days with dead times on still days. The deal with Better provides one outlet for that surplus. Consumers will be able to charge electric car batteries at windy times when power is cheap. Better and Dong are planning by 2010 to build the infrastructure to support a countrywide electric-car system, with charging spots and battery-exchange locations across Denmark. "Cars are the perfect match for wind power," said Shai Agassi, chief executive of Better, which is rolling out a similar network in Israel and has a deal with Renault SA and Nissan Motor Co. to build fully electric mass-market cars that run on lithium-ion batteries. "They charge sitting in the garage at night when there is little other demand for electricity."
Source:  The Wall Street Journal

[Editor's Note: The state of Hawaii is an attractive site for the deployment of electric vehicles, the Hawaii dealers wrote in a memo to their state government. There is however a missing piece that makes it harder for Better to deploy its charging infrastructure today. Gas prices, although highest of any state, are very low relative to most parts of Europe and around half the price of gas in Israel and Denmark, the first two areas chosen by Better for deployment. Given the constrained supply of batteries in the coming years, the business case for Hawaii suffers in comparison with many other potential markets. The state can help Better by providing revenue-neutral financial incentives for deployment of the infrastructure such as loan guarantees or feebate programs. Other measures, such as state purchasing of electric vehicles for its fleet or allowing carbon credits generated to be sold by Better, can also play an important role. This state assistance can make Hawaii a role model of responsible driving, renewable energy and clean transportation for the United States and the rest of the world. The deployment of an electric recharge grid coupled with renewable energy generation will create a virtual oil field in Hawaii that will lead to freedom from oil imports and full domestic control of Hawaii’s energy needs for transportation. It will reduce Hawaii’s carbon dioxide emissions and benefit consumers through less expensive mobility and considerable health benefits from lower air pollution. In addition, every dollar that consumers are no longer spending on gasoline (oil imports) will stay within the local economy benefiting all residents.]

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NADA Update
Openings Remain for May Dealer Academy Classes

A few seats remain open for the Dealer Candidate Academy (DCA) for successors and the General Dealership Managers (GDM) classes which are scheduled to start next month at the NADA Dealer Academy.

The DCA class begins on May 5, and the GDM class begins on May 19. All classes will take place at NADA headquarters in McLean, Va.

The Dealer Academy program comprises six one-week class sessions - one week every other month - with each session focusing on a different area of dealership operations. The initial session focuses on financial management, the next two on fixed operations (parts and service), the following two on variable operations (new and used), and the final session on overall dealership management.

For more information or to enroll, call (800) 252-6232, #5, or (703) 821-7216 (in Canada).

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New Poster Required to Recognize Changes to Family and Medical Leave Act

In late January, President Bush signed into law the National Defense Authorization Act for FY 2008 which amended the Family and Medical Leave Act of 1993 (FMLA).

Effective immediately, the amendment permits an eligible employee:

  1. Who is the “spouse, son, daughter, parent, or next of kin of a covered service member” to take up to 26 work weeks of leave to care for a “member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness.”
  2. To take FMLA leave because of “any qualifying exigency (as the Secretary shall, by regulation, determine) arising out of the fact that the spouse, or a son, daughter, or parent of the employee is on active duty (or has been notified of an impending call or order to active duty) in the Armed Forces in support of a contingency operation.”

Important:  Dealerships should put on display next to the FMLA poster a new Department of Labor poster informing employees of these changes. The FMLA Poster Insert for Military Family Leave Amendments is available free at http://www.dol.gov/esa/regs/compliance/posters/fmla.htm.

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Lenovo Offers NADA Members Discount on Thinkpad Notebooks

NADA members can save three ways during the month of April:

  • Instant savings with discounted Web pricing
  • Save even more with your NADA discount
  • Extra savings with eCoupon USXSAVE4SPRING at checkout

To take advantage of these savings, visit www.nada.org/ProductsServices/Technology, click on "PC Purchase Program" (member log-in required), then click on Lenovo, or call 800-426-7235. Enter eCoupon USXSAVE4SPRING at checkout for your cumulative discount. Free ground shipping is offered on all Web orders! Visit the Web site often for special limited-time eCoupons.

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STAR Answers Dealers' Questions About DMS Vendors
Standards for Technology in Automotive Retail (STAR) has developed new guidelines when dealers are evaluating Dealer Management Systems Dealer Management System vendors. Visit STAR's Dealer Infrastructure Guidelines (DIG) publication.  To learn what issues to consider when choosing a network provider, click here.
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Quotable
 
Shrinking numbers of dealerships, lower new-vehicle sales and improved dealership technology are among the causes [of reduced employment opportunities at dealerships.] Dealerships have less need for salespeople as sales drop and reliance on the Internet and information technology grows. At the same time, the Detroit 3 are contracting and consolidating their retail networks.

    -- NADA Chief Economist Paul Taylor, Automotive News, April 14

“So, the fact is that size and weight of vehicles, even with all the improvements we have in crash protection, are still an important factor.” 
   
    -- Insurance Institute for Highway Safety President Adrian Lund, referring to the crashworthiness of vehicles, The New York Times, April 14

Video Reports
 
April is Automotive Career Month. Learn About Careers in the Auto Industry.

 Learn about careers in the auto industry. 

 NADA/USA Today Innovation Award Goes to "Green" Dealership in Vermont.
 NADA Convention Heads to New Orleans in 2009.
 NADA Foundation Contributes to Canine Companions for Independence.
 2008 Convention Highlights

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