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Tuesday, May 6, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Alliance to Make Fuel-economy Appeal
Greenhouse Gas Regulations Will Increase the Cost of Vehicles, Economist Says
Ford Domestic Dealer Count Dips Below 4,000
UAW Strike Hits GM's Popular Chevy Malibu
Buy a Chrysler, Pay $2.99 for Gas for Three Years
Honda to Some Dealers: Upgrade or Else
Start-ups Race to Produce 'Green' Cars
Dealer Rebounds From Contract Mess
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
Alliance to Make Fuel-economy Appeal

Schwarzenegger to hear of difficulties
Officials with several U.S. automakers ... are to meet Thursday with California Gov. Arnold Schwarzenegger, who told Detroit last year to "get off your butt" and hit California's fuel-economy standards. The meeting between Schwarzenegger and the Alliance of Automobile Manufacturers comes as 17 states have passed or are considering adopting California's rules for cutting greenhouse gases from vehicles... The president of the alliance, former Democratic congressman Dave McCurdy, has been lobbying governors and other state officials around the country in recent months over the standards, contending that the fuel-economy standard of 35 m.p.g. by 2020 will produce major reductions in gases linked to global warming. Congress and the Bush administration set the standard last year. The meeting "is part of our effort to acknowledge concerns about greenhouse-gas emissions and fuel economy, while at the same time, tout the energy bill and its aggressive fuel-economy increases" and carbon dioxide reductions, said Alliance spokesman Charles Territo. Industry executives said they don't expect one meeting to change Schwarzenegger's position, but they want the opportunity to talk about how difficult the 35 m.p.g. target will be. Federal officials estimated last month that Detroit automakers would have to spend $30.5 billion by 2015 to meet interim targets. California's rules would set a target of roughly 40.5 m.p.g. for most cars and some trucks by 2016, and California officials have begun work on raising the standards through 2020. In a rare united front, all major automakers and dealer groups oppose California's rules, saying they're unrealistic, would set state-by-state standards and could force them to limit sales of many models. Automakers have sued in California and other states to block the rules.
Source:  The Detroit Free Press

Greenhouse Gas Regulations Will Increase the Cost of Vehicles, Economist Says

PHOENIX -- Proposed new rules to regulate greenhouse gases on new vehicles may cause some motorists to hang on to their older, more polluting cars longer, a new report says. Allen Malanowski, an economist for the Governor's Regulatory Review Council (GRRC), said the new standards being pushed by Gov. Janet Napolitano and the Arizona Department of Environmental Quality (ADEQ) will increase the cost of cars and trucks that have to meet them. Even the ADEQ itself admits the price tag could increase by $1,000 or more when the regulation is fully implemented. Malanowski, however, is recommending the council approve the regulations anyway. He said higher cost factors have to be weighed against the increased fuel efficiency of these new vehicles which will lower operating costs. Malanowski said the council also needs to consider the effects of being able to reduce greenhouse gas emissions and "long term probable benefits to the health and safety of society." But Bobbi Sparrow, president of the Arizona Automobile Dealers Association, said the conclusions are based on erroneous information. She said making cars that meet the lowered emission standards, which do not exist now, is likely to add $3,000 to the cost of new vehicles. That price differential, she said, will simply encourage people to hold on to their older -- and more polluting -- vehicles. That, Sparrow said, goes to the central flaw in the proposal. She said there are studies that show the oldest 5 percent of vehicles on the road cause 75 percent of the pollution.
Source:  The Yuma Sun

Ford Domestic Dealer Count Dips Below 4,000

DETROIT — Ford Motor Co.'s U.S. dealership count has dropped beneath 4,000 stores for the first time in decades. During the first four months of 2008, several dozen of Ford's domestic brand stores closed to put the automaker below that mark, said Mark Fields, Ford's president of the Americas. Ford isn't providing the exact dealership count, but the company had 4,056 domestic brand stores at the end of 2007. The current count is closer to 4,000 than 3,900, a Ford official said. Dealership profitability and sales per store are going up in markets where consolidation has taken place, Fields said last week.
Source: Automotive News (Subscription required.)

UAW Strike Hits GM's Popular Chevy Malibu

DETROIT — A local strike on Monday at General Motors' Fairfax plant near Kansas City threatens production of one of GM's hottest-selling vehicles, the Chevrolet Malibu... Sales of the Malibu were up 40 percent in April compared with a year ago, and transaction prices on the cars are up 30 percent, the automaker says. Disrupting production of a strong-selling, profitable model at a time of collapsing auto sales is "stupidity of the highest order" on the part of the United Auto Workers union, says David Cole, chairman of the Center for Automotive Research. It is the second GM plant making popular vehicles to be struck by the UAW recently over issues not covered in the national contract ratified last year. The Fairfax plant, which employs about 2,200 workers, makes the Saturn Aura sedan and is one of two plants making the Malibu. GM's Orion Township, Mich., factory also builds Malibus.
Source:  USA Today

Buy a Chrysler, Pay $2.99 for Gas for Three Years

Chrysler LLC is offering customers guaranteed gas prices below $3 a gallon for three years in an attention-grabbing sales pitch aimed at braking a double-digit sales slide. Called "Let's Refuel America," the incentive plan allows buyers of most Chrysler, Dodge and Jeep vehicles to sign up for a gas card that will reduce the price they pay to $2.99 a gallon at the pump. While other automakers have in the past offered consumers cards and other ways to pay for fuel, Chrysler's plan is much wider in scope. It is national and covers most of the lineup. "One of the things that weighs heavily on people's minds is the volatility of fuel prices," Chrysler Vice Chairman Jim Press said on a teleconference Monday. "We think it's appropriate to give our customers more peace of mind." Chrysler's new program begins Wednesday and covers leases, as well as purchases. It is available at 3,521 Chrysler, Jeep and Dodge dealerships across the country through June 2. It provides an annual allotment based on the vehicle's mileage and 12,000 miles' driving for each of the three years. Customers who are not interested in the plan can opt for traditional incentives.
Source:  The Detroit News

Honda to Some Dealers: Upgrade or Else

Retailers must improve, expand stores by 2010
LOS ANGELES — Some Honda dealers are fuming over letters they have received from the automaker telling them to upgrade their stores or risk losing their franchises. The letters, sent in late March, tell dealers they have until May 31 to lay out their plans to make improvements and until January 2010 to comply. The letters point out that Honda Division sales grew 52 percent from 1998 through 2007 and that the company's future sales goals "are aggressive." Honda says it is delivering new products, and dealers must do their part by providing adequate sales and service. "The letter is going out to dealers who are undersized for the units of operation in their market," says Honda's dealer council chairman, Bill Smith, of Houston.
Source: Automotive News (Subscription required.)

Start-ups Race to Produce 'Green' Cars

Spurred by the belief that the market for fuel-efficient vehicles is about to take off, a slew of tiny car companies is springing up in Europe and the U.S. They are racing to produce the next "green" car, betting that soaring demand will allow them to survive alongside the giants of Detroit, Stuttgart and Tokyo. Most of the upstarts were founded in the last 12 months and have financial backing from venture-capital firms. They are headed by former top engineers and designers from the likes of Germany's Volkswagen AG and storied U.K. racecar builder McLaren. Responding to soaring gasoline prices and a tightening noose of emissions regulations in Europe and the U.S., the companies are working on a new generation of hybrid and electric vehicles. One problem: Competition from the industry giants is real. Daimler AG, Toyota Motor Corp., General Motors Corp., Renault SA and Mitsubishi Corp. are all developing new-generation electric vehicles. The upstarts are entering a notoriously tough market. But analysts say shrinking research-and-development budgets at the big auto makers -- and their interest in outside help to develop key technology -- may have opened up the road for smaller players.
Source:  The Wall Street Journal (Subscription required.)

Dealer Rebounds From Contract Mess

Texas retailer Ramsay Gillman honors failed vendor's service agreements
When Automotive Professionals Inc. filed for bankruptcy in April 2007, the vendor stopped paying claims on the 250,000 vehicle service contracts it had sold. Customers of Texas dealer Ramsay Gillman owned more than 15,000 of them. Gillman's dealership group — the nation's 60th largest, according to an Automotive News ranking — wasn't legally liable for honoring the failed vendor's contracts. But because the contracts bore Gillman's name, he resolved to cover repair claims on the contracts sold through Gillman Cos. dealerships. So far, Gillman said, he has paid out more than $500,000. About 1,000 dealers sold the bankrupt company's contracts. Gillman's company is among several large dealership groups that have reached settlements. Gillman said most of the Automotive Professionals contracts his dealerships sold were for five years. Because he stopped selling the contracts two years ago, Gilman figures he will be paying claims for about three more years. Gillman continues to sell independent service contracts under his company's name. But he advises other dealers who work with third-party vendors to "make sure you have got someone with plenty of good upfront insurance and really good reinsurance in case something happens."
Source: Automotive News (Subscription required.)

[Editor's Note: Ramsay Gillman served as president of the National Automobile Dealers Association in 1997.]

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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.)

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 1-3 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.

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.

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.

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.

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 meeting "is part of our effort to acknowledge concerns about greenhouse-gas emissions and fuel economy, while at the same time, tout the energy bill and its aggressive fuel-economy increases" and carbon dioxide reductions.

    -- Charles Territo, spokesman for the Alliance of Automobile Manufacturers, referring to a meeting this week with California Governor Arnold Schwarzenegger, The Detroit Free Press, May 6

"My kids asked how long I was going to do this, because I could run out of money. I said I would do it as long as I have to. It would be a horrible public relations move and unjust to those consumers to not honor those contracts."

   
-- Texas dealer Ramsay Gillman paid out more than $500,000 to cover repair claims on service contracts sold by the failed Automotive Professionals Inc., Automotive News, May 5. Gillman served as NADA president in 1997.

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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