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Tuesday, April 29, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
With Demand Slipping for Its Pickups and S.U.V.'s, G.M. Will Lay Off 3,550
Toyota Division Inventories Soar to Record High
Auto Dealer Challenge: Selling in This Economy
Loss of Fuel Economy From Ethanol-blended Gasoline Hits Motorists in the Wallet
Circulation Off at Most Top Newspapers but USA Today, WSJ up
Opinion: New CAFE Rules: Fast, Furious and Mostly Fair
NADA Update
IRS to Issue Guidance on Special 50-Percent Depreciation Allowance
Girl Scouts Promote Automotive Careers
Survey of NADA Members Shows Commitment to Community
NADA to Members: Beware of Subpoena Email Scam
Dell Deals Available to NADA Members for Limited Time
Top Stories
With Demand Slipping for Its Pickups and S.U.V.'s, G.M. Will Lay Off 3,550

DETROIT — General Motors said Monday that it would slash production of big trucks and sport utility vehicles by nearly 140,000 units this year, a move that would eliminate assembly shifts at four plants and cause about 3,550 workers to be laid off. G.M., the world’s largest automaker, has gradually slowed production of many vehicles because of declining demand, but this is the largest one-time cut in recent years. G.M.’s need to make such a large cut, even after many of its truck and S.U.V. plants have been shut down for much of March and April because of a strike at a parts supplier, indicates how sharply sales of these vehicles have fallen. The declines mirror overall decreases in those segments for the industry, but G.M., the top player in both segments, has been hurt the most by the rapid shift in consumers’ preferences.
Source: The New York Times (Registration required.)

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Toyota Division Inventories Soar to Record High

LOS ANGELES — Toyota and Scion vehicle inventories have risen to record levels because the company misjudged just how much the U.S. market would decline this year. The number of units in dealership stock and en route have swelled to about 376,000. That's about 100,000 units more than were on the ground last summer, and up from about 348,000 a year ago. The main problem: Toyota produced lots of pickups and SUVs, a gamble that has not paid off. Higher inventories certainly aren't bad news for all Toyota dealers. Some that struggle to get enough product see an opportunity to expand their businesses. The recession and spiking gasoline prices are hammering all automakers, and Toyota's days supply is still lower than those of Dodge, Chevrolet and Ford. And no Toyota dealer is complaining about having too many Prius, Corolla, Camry or Yaris units. Steve Cain, general manager of Lewis Toyota-Scion in Topeka, Kan., is banking on an economic turnaround to fuel growth. Last August he had nine vehicles in stock. Now he has 130. But having sold 80 cars in March, Cain isn't worried about oversupply. "We're a little on the full side, but we've been asking for more inventory for two years and now we finally got it," Cain said. "This is a great opportunity. You have to take it when you can get it." 
Source: Automotive News (Subscription required.)

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Auto Dealer Challenge: Selling in This Economy

With the economy’s growth slowed and oil above $100 a barrel, auto dealers in San Luis Obispo County [Calif.] are finding that selling cars is more difficult than it has been in years. While some dealers continue to make sales and others believe that incentives make now a good time to buy, many acknowledge consumers have pulled back on big-ticket purchases. And analysts say customers this summer will see a rise in incentives as dealers try to entice buyers. “It is gas prices and the housing crunch,’’ said John Cole, an owner of San Luis Obispo’s Cole Chrysler Dodge and Cole Mazda. “When (the value of) your house goes down, people don’t have the equity, and they don’t want to spend money. Those two things have really started to have an effect.” Cole added that now is not the time to be bullish, saying the dealership is looking at a smaller inventory. “We’re not going to stock and order twice as many cars as we need,’’ Cole said. Scott Reneau, co-owner of Reneau Chrysler Dodge in Paso Robles, said some customers are choosing to repair their car or truck rather than buy a new one. “We’ve seen a switch in buying habits,’’ Reneau said. At Toyota San Luis Obispo, which sold the most new and used vehicles in the county last year, owner John Frangie said the dealership has noticed “about a 20 percent reduction in customers visiting us.”  “People are still buying vehicles,’’ said Frangie, noting that hybrids remain hot sellers. “But they are more cautious than they were last year.” Many auto dealers are optimistic about the future of their business and confident that more buyers will walk into their showrooms this year. Todd Reccord, part-owner of Rancho Grande Motors and owner of Cuesta Cadillac Saab, both in San Luis Obispo, said sales in March are up over last year. Shawn Koehler, general manager at Perry Ford Lincoln Mercury Jeep in San Luis Obispo, said retail sales are up about 5 percent, and the dealership is attracting customers with the Ford Focus, Ford Edge and Lincoln MKZ.
Source: San Luis Obispo Tribune

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Loss of Fuel Economy From Ethanol-blended Gasoline Hits Motorists in the Wallet

Charles Kigar doesn’t think twice when he has a choice of buying a gallon of conventional gasoline or a gallon of gas that contains ethanol at the same price. He buys the gas without ethanol. Conventional gas delivers more energy than a gallon that contains ethanol. If it’s a gallon of E-10, which is a blend of 10 percent ethanol and conventional gas now widely available in the Kansas City area, there’s an energy difference of about 3.4 percent. Now that may not seem like much when you’re topping off the tank this week. But over the course of a year of normal driving, it would take an additional 40 gallons of E-10 to go the same distance as conventional gas. If they were both priced the same, it would mean an extra $120. If it’s E-85, a blend containing 85 percent ethanol that can be used in specially equipped vehicles, the energy loss soars and more than offsets its lower cost, even though E-85 is about 60 cents per gallon less at retail than conventional gas. Mileage can suffer by about 25 percent with E-85, according to AAA. The energy economics of ethanol are a matter of concern to automakers such as General Motors Corp., which is counting on ethanol-fueled cars to give it time to develop other cars that can use other alternative fuels such as hydrogen. So far, GM has produced 3 million vehicles that can use conventional fuel or E-85. The price of E-85 needs to at least be competitive, after being adjusted for its energy content, with conventional gas to ensure that more of it is used, the automaker says. “Price equalization is really important,” said Alan Holder, manager of biofuels communications at GM.
Source: The Kansas City Star

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Circulation Off at Most Top Newspapers but USA Today, WSJ up

NEW YORK -- Circulation fell sharply at most top U.S. newspapers in the latest reporting period, an industry group said Monday, with the exception of the two largest national dailies, USA Today and The Wall Street Journal. Those papers eked out gains of under 1 percent, while The New York Times, the No. 3 paper, fell 3.9 percent in the six months ending in March, according to the Audit Bureau of Circulations. Newspaper circulation has been on a declining trend since the 1980s but the pace of declines has picked up in recent years as reader habits change and more people go online for news, information and entertainment. Metropolitan dailies have suffered the worst declines, a trend that continued in the most recent reporting period ...
Source: Associated Press

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Opinion: New CAFE Rules: Fast, Furious and Mostly Fair

After largely ignoring vehicle fuel economy for three decades, Washington now demands that automakers achieve 4.5 percent annual improvements in federal standards — starting just two years from this fall. That might seem unjust. But car companies understand that the world has changed and they need to change, too. Proposed rules for the 2011-15 model years, issued last week, would give the industry a solid head start on improving fleet-wide fuel economy by at least 40 percent by 2020, as the new law requires. At the same time, the rules appropriately address long-standing concerns that fuel economy standards are unfair to full-line automakers and promote dangerous downsizing of vehicles. The regulations create sliding scales of fuel economy targets for cars and trucks of different sizes. Each automaker, in effect, will have its own standards to meet based on the numbers of vehicles of each size that it sells. The rules aren't perfect. But there's time to revise the rules to correct such inconsistencies. The new rules don't and probably can't resolve a key criticism of fuel economy standards: Automakers can build plenty of fuel-efficient vehicles. But persuading American consumers to buy the vehicles — especially if they cost hundreds or thousands of dollars more — is another matter entirely.
Source: Automotive News (Subscription required.)

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NADA Update
IRS to Issue Guidance on Special 50-Percent Depreciation Allowance

The Economic Stimulus Act of 2008 includes more than direct payments to individuals.  It also provides several incentives to businesses, including a special 50-percent depreciation allowance for 2008 purchases, an increase in the depreciation limits on business vehicles, and an increase in the "Section 179" small business expensing limitation.

The 50-percent "bonus depreciation" allowance for qualifying purchases is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in 2008.  It allows taxpayers to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.  

The IRS recently announced that it will issue guidance on how the special 50-percent depreciation allowance can be used to make capital investments this year (as well as guidance on the new increased businesses expensing limitation.)  Recognizing that there will be questions in the meantime, the IRS stated that businesses may rely on the regulations previously issued regarding bonus depreciation (found at Treas. Reg. Sec. 1.168(k)-1) until the guidance is issued.

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Girl Scouts Promote Automotive Careers

Fast-Track to Automotive Careers: A Girl’s Guide is a 12-page booklet about automotive careers produced by the Girl Scouts of the USA with funding from the Department of Labor. In it, AskPatty.com founder Jody Devere says, “Dealerships want to hire more women, but they just aren’t applying for the jobs. Go visit a dealer! They hire a lot of young people and many jobs don’t require a four-year degree.” Consider inviting local Girl Scouts to your next career event, visit a troop meeting to make a career presentation or give a copy of an NADA career video, Take the Ride of Your Life or From Trucks to Bucks to a local troop.

For more information about Girl Scouts of the USA’s automotive programming, e-mail Lesley Williams at lwilliams@girlscouts.org. To order NADA’s career videos, visit www.nada.org/mecatalog.

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Survey of NADA Members Shows Commitment to Community

Even as U.S. auto sales continue to drop, dealers across the country are still highly supportive of charitable events in their local communities. A March 2008 survey of NADA dealers indicated that 82 percent of the 479 respondents sponsor charitable golf tournaments by offering hole-in-one prizes, most often a new vehicle.

NADA’s hole-in-one insurance program, ACECO, scored well on the survey. It was cited as being one of the least expensive and most convenient programs available. NADA's hole-in-one insurance program is available only to NADA members. As spring arrives, there is no better time to generate greater community awareness and new sales. Go to www.acecoinsurance.com to obtain a free quote.

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NADA to Members: Beware of Subpoena Email Scam

NADA is warning its members to be aware of a recent e-mail "phishing" scam that involves an email with an official-looking subpoena sent from subpoena@uscourts.com requesting your appearance in front of a grand jury. This is not a legitimate message and should not be opened. Once opened, it asks the recipient to click a link and download the case history and associated information. DO NOT CLICK ON SUCH LINKS. If you do, you will have downloaded "malware" which may crash your computer and do untold amounts of damage to your system both now and potentially in the future. Be advised that federal courts do not effect service of subpoenas via e-mail. If you have any doubts about a subpoena, call the clerk of court or an attorney.

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Dell Deals Available to NADA Members for Limited Time
Dell is offering NADA members discounts from 17 percent to 40 percent on select desktops, laptops and printers, and most include free shipping. These discounts will be available for a limited time only. Call 1-888-506-3355 or go to www.nada.org/ProductsServices/PC+Purchase+Program (member login required) and click on the Dell link to take advantage of this offer. NOTE: To receive the NADA discount you MUST call 1-888-506-3355.
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Quotable
 
“With rising fuel prices, a softening economy and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities."

    -- Troy Clarke, president of G.M.’s North American operations, referring to its decision to slash pickup truck and SUV production, which will result in layoffs, The New York Times, April 29


"The new rules don't and probably can't resolve a key criticism of fuel economy standards: Automakers can build plenty of fuel-efficient vehicles. But persuading American consumers to buy the vehicles — especially if they cost hundreds or thousands of dollars more — is another matter entirely."


    -- Automotive News, (Opinion), April 28
Video Reports
 
Students Learn About Automotive Careers at the DC Auto Show. 

 Students learn about automotive careers. 

 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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