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At a Glance...
Top Stories
Knollenberg Proposes $1.2B Aid for Big 3
GM Posts Loss of $3.3B on Weak US Auto Market, Charges
GM Still Sees 2nd-half U.S. Recovery, but Weaker One
Strike Proves Positive for GM
Nissan's Ghosn Sees Prolonged U.S. Car Market Slump
Siphoning Off Corn to Fuel Our Cars
Kerkorian's Nose for Deal Knows One Motive: Profit
Opinion: A Question of Character: How Car Dealers Act When Nobody's Watching
NADA Update
NADA to Provide Members with Free Red Flags Educational Guide
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
Dell Deals Available to NADA Members for Limited Time
STAR Answers Dealers' Questions
Top Stories
Knollenberg Proposes $1.2B Aid for Big 3

WASHINGTON -- U.S. Rep. Joe Knollenberg proposed spending more than $1.2 billion over five years to aid domestic automakers as they spend billions themselves to comply with new fuel economy standards. He also proposed a rewrite of the tax code that could be worth as much as $3.5 billion to Detroit's Big Three automakers in annual tax rebates. Knollenberg, R-Bloomfield Township, introduced the "Bridging Industry and Government/Through Hi-Tech Research on Energy Efficiency Act," or Big Three Act, at a press conference Tuesday in Troy. The proposal is needed, Knollenberg said, because new fuel efficiency rules have placed unfunded mandates on a "struggling industry." "It's like kicking someone when he's down, like throwing an anvil at somebody who's drowning," Knollenberg said. Last week, the National Highway Traffic Safety Administration proposed increasing fuel economy standards by 4.5 percent per year from the 2011 model year through the 2015 model year to a combined fleet-wide average of 31.6 miles per gallon. The proposal would cost automakers $47 billion, NHTSA says, including about $30 billion for domestic automakers.
Source:  The Detroit News

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GM Posts Loss of $3.3B on Weak US Auto Market, Charges

DETROIT -- General Motors Corp. struggled to a $3.3 billion first-quarter loss, due in part to a weak U.S. market, a strike at a major supplier and plummeting sales of sport utility vehicles and pickups. The loss reported Wednesday for the January-March period amounted to $5.74 per share and also reflected one-time charges. Without the charges, it appeared GM's adjusted results beat Wall Street expectations. GM said a two-month strike at American Axle and Manufacturing Holdings Inc. has cost it $800 million and 100,000 vehicles. Ray Young, GM's executive vice president and chief financial officer, said analysts may be underestimating GM's overseas growth. He also said GM is making progress in cutting costs in North America. "The North American turnaround is occurring," he said. "We continue to leverage our global product portfolio to take advantage of tremendous growth in key emerging markets, while at the same time taking the appropriate actions to deal with the challenging economic conditions in the U.S.," GM Chairman and Chief Executive Officer Rick Wagoner said in a statement.
Source:  The Associated Press

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GM Still Sees 2nd-half U.S. Recovery, but Weaker One

DETROIT -- General Motors Corp. forecast a second-half recovery in U.S. auto sales but with less "robust" improvement than the automaker had expected at the start of the year, the company's chief financial officer said on Wednesday. GM CFO Ray Young said the second-quarter was probably going to be "tough" for industry-wide sales in the United States after sales declined some 8 percent in the first quarter. "We still believe there is going to be a second-half recovery, but probably not as robust as what we had thought at the beginning of the year," Young told reporters at GM headquarters. GM cut its forecast for industry-wide auto sales to the mid- to high 15-million vehicle range for 2008 on Wednesday in reporting first quarter results. The automaker had previously expected overall sales above 16 million units.
Source:  Reuters

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Strike Proves Positive for GM

DETROIT — The strike at American Axle that has shut down or reduced production at 30 of General Motors' plants is actually helping the automaker weather a downturn in the economy. GM ... entered 2008 with a backlog of trucks and SUVs going unsold as gas prices shot up. The 2-month-old strike at the parts supplier resulted in GM producing 100,000 fewer vehicles than planned, mostly trucks and SUVs. "We didn't plan on this strike, but it happened, and we're taking advantage of it to get our inventories in line," said GM President Fritz Henderson on a conference call Wednesday to discuss earnings. GM's $3.3 billion net loss amounted to $350 million, much better than analysts had predicted, after special charges, the largest of which was related to the value of its stake in finance operation GMAC.
Source:  USA Today

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Nissan's Ghosn Sees Prolonged U.S. Car Market Slump

The U.S. car market, the world's largest, won't recover before 2011, Nissan Motor Co. Chief Executive Officer Carlos Ghosn said. "The U.S. is slumping in 2008," Ghosn said today at a news conference in Portugal. "At best, in 2009 and 2010 we'll see a stabilization." Like larger Japanese rivals Toyota Motor Corp. and Honda Motor Co., Nissan depends on North America for more than one-third of sales. Honda leads the pack with a 54 percent contribution last year. An increase in the value of the yen against the dollar has also hurt Japanese automakers by reducing the value of U.S. sales converted back into yen. Nissan will seek more product-specific partnerships of the kind announced with Chrysler LLC last month, the CEO said. Under that agreement, the third-largest U.S. carmaker will supply large pickups to Nissan in exchange for compact cars, saving development costs for both companies.
Source:  Bloomberg News

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Siphoning Off Corn to Fuel Our Cars

As farmers feed ethanol plants, a costly link is forged between food and oil
Erwin Johnson picks up a clump of the dark, rich soil that he has farmed for 35 years, like his father and grandfather before him. In a few months, this flat expanse of northern Iowa will be crowded with corn ready to be trucked to market. Instead of sending his corn to a barge company to be shipped down the Mississippi River for export, Johnson now loads it into an open truck and sends it two miles up the gravel road to a hulking new ethanol distillery that he can see from his field. The plant is paying him $5.50 or more a bushel, more than twice as much as Johnson could get just a couple of years ago. Across the country, ethanol plants are swallowing more and more of the nation's corn crop. This year, about a quarter of U.S. corn will go to feeding ethanol plants instead of poultry or livestock. That has helped farmers like Johnson, but it has boosted demand -- and prices -- for corn at the same time global grain demand is growing. And it has linked food and fuel prices just as oil is rising to new records, pulling up the price of anything that can be poured into a gasoline tank. "The price of grain is now directly tied to the price of oil," says Lester Brown, president of Earth Policy Institute, a Washington research group. "We used to have a grain economy and a fuel economy. But now they're beginning to fuse."
Source:  The Washington Post

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Kerkorian's Nose for Deal Knows One Motive: Profit

As the reclusive Las Vegas billionaire makes yet another run at a Detroit automaker, his biography and his record suggest he plunges in wherever he spots a potential score, as he apparently sees at Ford Motor Co. "Kirk drives into weakness," says Gerald Meyers, former chairman of American Motors and a business professor at University of Michigan. "When he sees weakness, he sees dollar signs." David Cole, chairman of the Center for Automotive Research in Ann Arbor, agreed. Ford's low stock price and its promise of a recovery have enticed Kerkorian into one more dance with Detroit metal. "I think what he senses is this is an inexpensive asset that's on the verge of a turnaround and there's going to be a lot more value at Ford not too far down the road," Cole said. "Kerkorian's a money man," Meyers said. "He can't stand standing on the sidelines when there's a possibility of making a killing." He has made scores aplenty over the past half-century. Forbes magazine estimates Kerkorian's fortune at $18 billion, ranking him seventh on Forbes' list of richest Americans.
Source:  The Detroit Free Press

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Opinion: A Question of Character: How Car Dealers Act When Nobody's Watching
by Ed Wallace

I just can’t think of anything worse for a young child than not receiving any gift at all at Christmas; in Dallas Fort Worth a respectable number of well-known and successful car dealers try to make at least that one small difference in as many of these children’s lives as we can. Most of my friends in the automobile industry quietly go out of their way to make Dallas Fort Worth a better place to live; because they are doing it for the right reasons, not to make a big show of how decent they are, they don’t publicize their good deeds. John Chase and his son Chad at Autobahn Motorcars often are the No. 1 supporters of Big Brothers and Sisters of the Metroplex and participate year after year. Over at Meador Chrysler Jeep, General Manager Mike Biggers has long been a driving force for New Day Services in Tarrant County. To help young children in trouble in our court system, New Day provides a full-time pastor. My friend Carl Sewell also puts aside monies in his dealerships with the sole intent of helping fund local community activities and charitable events. And, in the tradition set by their great-grandfather, Frank Kent, and carried on by their mother Wendy, Will and Corrie Churchill always seem to surprise me. They’re the newest Dodge dealer in town; yet, when their first Dodge Challenger comes in ... Will and Corrie have decided to simply give the car away to the Fort Worth Symphony Orchestra to use in its charitable fundraising. So often in this column I write about things that aren’t right and the people responsible. But now you know why, when people write me to say that everyone in the auto industry is in some way less than honest, it gets nowhere with me.
Source:  The Fort Worth Star-Telegram

[Editor's Note:  Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism, given by the Anderson School of Business at UCLA, and is a member of the American Historical Society. He reviews new cars every Friday morning at 7:15 on Fox Four’s Good Day, contributes articles to BusinessWeek Online and hosts the talk show, Wheels, 8 a.m. to 1 p.m. Saturdays on 570 KLIF in Fort Worth.]

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NADA Update
NADA to Provide Members with Free Red Flags Educational Guide

Dealers and other creditors and financial institutions must comply with the FTC Red Flags Rule by Nov. 1, 2008.  To assist dealers with this new requirement, NADA will mail to its members a free educational guide by August 1, 2008 that will explain dealers' responsibilities under the new rule and provide a template to assist dealers in preparing the required written Identity Theft Prevention Program. Additional information will be available from fee-based webinars that NADA will conduct from 1 - 3 p.m. EST on August 26, 2008 and Sept. 23, 2008 (registration information will be announced soon).

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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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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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STAR Answers Dealers' Questions
Standards for Technology in Automotive Retail (STAR) has developed new guidelines to help dealers evaluate Internet Content Filtering. To learn what is recommended for general maintenance of a hardware based system, click here. To download STAR's Dealer Infrastructure Guidelines (DIG), click here.
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Quotable
 
The proposal is needed because new fuel efficiency rules have placed unfunded mandates on a "struggling industry. It's like kicking someone when he's down, like throwing an anvil at somebody who's drowning."

    -- U.S. Rep. Joe Knollenberg, referring to his proposal to spend more than $1.2 billion over five years to aid domestic automakers as they spend billions themselves to comply with new fuel economy standards, The Detroit News, April 30


Most of my friends in the automobile industry quietly go out of their way to make Dallas Fort Worth a better place to live; because they are doing it for the right reasons, not to make a big show of how decent they are, they don’t publicize their good deeds. 

   
-- Ed Wallace, journalist and talk show host, The Fort Worth Star Telegram, April 27


"The price of grain is now directly tied to the price of oil. We used to have a grain economy and a fuel economy. But now they're beginning to fuse."  

    -- Lester Brown, president of Earth Policy Institute, a Washington research group, The Washington Post, April 30


"We didn't plan on this strike, but it happened, and we're taking advantage of it to get our inventories in line."

    --
GM President Fritz Henderson discussing the company's earnings.
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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