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Wednesday, April 30, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
EPA Hands in Calif. Emissions Documents
Dealer Groups Struggle to Offset New Car Slump
Axle Strike Doesn't Hurt Supply
GMAC Posts Loss of $598M
Daimler Lowers Book Value of Remaining Stake in Chrysler
NADA Update
New Seminar Focuses on Tax Issues Affecting Dealers
Automotive Careers Online Offers Job Postings at a Discount
IRS to Issue Guidance on Special 50-Percent Depreciation Allowance
Girl Scouts Promote Automotive Careers
Survey of NADA Members Shows Commitment to Community
Dell Deals Available to NADA Members for Limited Time
Top Stories
EPA Hands in Calif. Emissions Documents

WASHINGTON -- The Environmental Protection Agency has turned over documents detailing contacts between the agency and the White House over its decision to deny California and 16 other states the right to set their own stringent emissions standards. On April 9, the House Oversight Committee subpoenaed documents from the EPA to determine if the White House had a role in EPA Administrator Stephen Johnson's decision to deny California and other states a waiver under the Clean Air Act to impose their own standards. The EPA sent a letter last Tuesday to committee chairman Henry Waxman turning over 16 additional documents and making 18 available for staff review following an agreement that was reached with the White House Counsel's Office, the EPA and Waxman's staff. "EPA has been responsive of the committee's demands, having provided over 7,000 documents in response," said the April 22 letter from EPA associate administrator Christopher Bliley, which was obtained by The Detroit News. Automakers say the waiver would cost billions and force them to stop selling most vehicles in those states. The California standards would set fuel efficiency requirements of 43.7 miles per gallon for passenger cars and 26.6 mpg for most light trucks.
Source:  The Detroit News

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Dealer Groups Struggle to Offset New Car Slump

DETROIT -- Major U.S. auto retail groups on Tuesday posted quarterly results that underscore their mixed success in offsetting pressure from slumping new vehicle sales through sales of used cars, financing and service operations. Penske Automotive Group Inc., the No. 2 U.S. dealership group by unit sales, and Group 1 Automotive Inc., the No. 4 dealership group, both reported earnings above analysts' expectations, sending their shares higher. Sonic Automotive Inc., the No. 3 U.S. auto retailer, posted an earnings decline and kept intact a previously lowered full-year earnings forecast. Its shares slipped 1 percent. All three dealership groups reported a drop in new vehicle sales in line with a slumping U.S. auto industry, which was hit hard in the first three months of 2008 by declining consumer confidence, rising gas prices and a slumping housing market. All three auto retailers said they were focused on offsetting weak demand for new vehicles by stepping up sales of higher-margin used cars, providing financing and offering repairs and service.
Source:  Automotive News (Subscription required.)

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Axle Strike Doesn't Hurt Supply

So far, the UAW strike at key American Axle & Manufacturing Holdings Inc. has not hurt the supply of pickups and SUVs for dealers who sell General Motors Corp. brands, but some are worried about pending orders and struggling to get popular crossover vehicles. Dealer Gregory Jackson said he had a significant inventory of pickups and SUVs when the strike at American Axle began, but now as he is placing orders, he is worried that some vehicles will not arrive. "We are starting to get short on certain inventories," said Jackson, president and owner of Prestige Automotive, a group that includes seven GM dealerships in Michigan and Florida. "So I am quite nervous right now." When automakers report April U.S. light vehicle sales on Thursday, analysts expect it to be the fourth straight month in which sales will run below a 15.5 million-vehicle annual pace. They also expect that large trucks -- pickups and SUVs -- will slow even more than they have so far this year. Credit Suisse auto analyst Christopher Ceraso forecast drops in GM sales in the range of 14 to 16 percent from the same month a year ago. Still, GM's crossover vehicles and its Chevrolet Malibu are moving off the lots quickly, and availability is threatened by strikes and strike warnings at GM plants.
Source:  The Detroit Free Press

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GMAC Posts Loss of $598M

General Motors Corp. will take a $288 million hit in the first quarter from mounting losses at GMAC LLC, the finance company still part-owned by the automaker, according to GMAC financial results released Tuesday. The Detroit-based financial firm lost $589 million in the first three months of the year -- nearly twice the loss from the same time period a year ago -- as continuing red ink in its mortgage unit swallowed profits from auto loans and insurance. GM, which retained a 49 percent stake in GMAC after selling 51 percent of the company to Cerberus Capital Management LP in 2006, will absorb half that loss. "Falling home prices in the U.S. and tight mortgage liquidity around the world" are weighing heavily on GMAC's Residential Capital LLC mortgage unit, GMAC Chief Financial Officer Robert Hull said during a conference call.
Source:  The Detroit News

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Daimler Lowers Book Value of Remaining Stake in Chrysler

DETROIT – Daimler AG has cut by nearly two-thirds the book value of its 19.9 percent stake in Chrysler LLC, a sign its former U.S. unit continues to weigh on the German auto maker. The step is reflected in Daimler's first-quarter earnings report. When Cerberus Capital Management LP acquired an 80.1 percent stake in Chrysler in August, Daimler assigned its remaining stake a value of €1.4 billion ($2.19 billion). At the end of 2007, Daimler lowered that to €916 million to reflect the impact of losses Chrysler ran up after the deal. At the end of the first quarter, Daimler reduced the book value to €547 million, again reflecting continuing losses by Chrysler, the company confirmed. If Chrysler begins making money, Daimler could increase the book value of the stake. Chrysler's negative impact on Daimler was also evident the company's pretax profits. Daimler said its pretax profit was reduced by €340 million because of its share of losses from its Chrysler stake.
Source:  The Wall Street Journal (Subscription required.)

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NADA Update
New Seminar Focuses on Tax Issues Affecting Dealers

Online discussion offers rare opportunity to hear directly from the IRS

NADA is offering dealers an opportunity to get up-to-the-minute, practical information on IRS issues affecting the retail business through a Web-based seminar addressing breaking news on dealer tax issues.

“This is a rare opportunity to learn directly from the IRS about dealer-specific tax developments that have occurred even since our last IRS seminar held in February at the NADA Convention,” said Paul Metrey, NADA director of regulatory affairs, who will moderate the online discussion.

Terri Harris, IRS motor vehicle technical adviser, will present information on breaking tax developments applicable to dealers—including the latest on UNICAP, the new Vehicle Pool Method for LIFO accounting, recent IRS tool and equipment plan enforcement, and just-released technical guidance on cost segregation studies.

Dealers, CFOs, controllers, CPAs, and others involved in tax planning for auto dealerships are encouraged to participate in the seminar from 1 p.m. to 3 p.m. (ET) on Thursday, May 8. About half the time will be set aside for dealer-related tax questions from participants.

Cost of the seminar is only $199 per computer connection. An unlimited number of attendees may participate in the seminar using a single computer connection. Registrants will have access to the seminar recording for up to six months.

Register online at www.nada.org/seminars or call 800-248-6232, ext. 7273.

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Automotive Careers Online Offers Job Postings at a Discount

Automotive Careers Online is NADA’s dedicated job board—and the automobile retailing industry’s exclusive resource for online employment connections.

Just launched, Automotive Careers Online is a brand new benefit of NADA membership. Only NADA members may post jobs—for a fraction of the cost of commercial boards and newspapers that don’t necessarily reach the dealership audience.

Job posting packages start as low as $200 for a 30-day listing. Email alerts advise you when candidates matching your skills criteria post their resumes.

The job board is open to all job seekers, who can post their resumes and search available jobs absolutely free. Since this is a dedicated service, candidates are looking specifically for dealership jobs and are likely to be highly qualified.

To learn more, post jobs, and search listings, visit www.automotivecareersonline.com.

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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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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
 
"We are starting to get short on certain inventories. So I am quite nervous right now."

    --  Gregory Jackson, president and owner of Prestige Automotive, said of the effect of the American Axle Strike on some GM inventory, The Detroit Free Press, April 29
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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