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At a Glance...
Top Stories
Industry Slows Tide of State CO2 Rules
Gas Prices May Spur Revision of Mpg Plan
Bush Says Saudi Oil Boost Doesn't Solve US Problem
GM: Live Green or Die
End to Axle Strike Erases Some Doubts at GM
So You Think Gas Costs a Lot?
Used Truck Price Drop Hurts New Pickups
Daimler, BMW Discuss Linkup on Components
Nissan, NEC to Make Lithium-ion Batteries
NADA Update
Director Nominations Mailed to NADA Members
Looking for a Competitive Edge? Check Out NADA's Used-Vehicle Seminar
Save on HP Desktops and Printers
Top Stories
Industry Slows Tide of State CO2 Rules

In the past three weeks, lawmakers in Florida and Arizona have voted against adopting California-style greenhouse gas rules for cars and trucks. In Minnesota, a bill to impose such rules appeared dead in the state Legislature late last week. Utah and Montana also have backed off their plans to impose rules. Automakers and their allies are claiming victories in their stepped-up efforts to convince states that a tough national fuel economy standard is better than state-by-state regulation. Environmental groups disagree with the automakers' analysis, but the state actions signal that tough battles remain to be fought over what has become the biggest and most contentious public policy issue facing the industry. California's standard effectively requires vehicles to average more than 40 mpg by 2020. A new federal law requires an average of at least 35 mpg by then. The Bush administration has blocked all state rules. But last week, Dave McCurdy, president of the Alliance of Automobile Manufacturers, hinted at a possible compromise. McCurdy said the early days of the next administration will provide a window of opportunity for a comprehensive solution. Such a compromise could allow California to continue its traditional role as a laboratory for emissions controls, said McCurdy, whose group represents the Detroit 3, Toyota and six other automakers. But Mary Nichols, chairwoman of the California Air Resources Board, told reporters she would not support a California-only plan. Said Nichols: "We do not want to negotiate away other states' rights."
Source:  Automotive News (Subscription required.)

Gas Prices May Spur Revision of Mpg Plan

WASHINGTON -- U.S. Transportation Secretary Mary Peters said Friday the final regulation increasing fuel efficiency standards could be tougher than the department's initial proposal. Last month, Peters unveiled the department's proposal to increase fuel efficiency of the nation's cars and trucks to 31.6 miles per gallon by 2015 -- a 4.5 percent annual increase, and faster than what Congress ordered in December when it called for the first rewrite of passenger car fuel efficiency standards since 1975. Peters noted the proposal assumed the price of gasoline at about $2.26 a gallon in 2015 rising to $2.51 by 2030. But the price of gasoline was already above that when the measure was passed in April. Prices have jumped 22 cents a gallon since the announcement to a national average of $3.72, according to the U.S. Department of Energy. "As we look toward the finalization of the rule and look again what the average fuel costs are then, I think we're going to make more progress on the miles per gallon at a lower overall cost," Peters said. The energy bill required the National Highway Traffic Safety Administration to set the standards starting with the 2010 model year at the "maximum feasible" level. Higher gas prices make tougher standards more feasible. Peters also said she was concerned that as the prices of vehicles increased, some drivers would keep older less fuel-efficient vehicles on the roads. "Especially those in the lower income brackets may hang on to an older car longer," Peters said, noting that newer cars are safer and have more technological advances. "Unfortunately (the prices) are going to go up." Automakers and Michigan legislators have offered measured praise of the NHTSA proposal.
Source: The Detroit News

Bush Says Saudi Oil Boost Doesn't Solve US Problem

SHARM EL-SHEIK, Egypt -- President Bush said Saturday that the Saudis' modest increase in oil production "doesn't solve our problem," and that the United States must act itself to help bring down soaring gas prices. "We've got to do more at home," the president said ... Speaking after a private meeting ... [Bush] mentioned moves that have long been part of his agenda but stymied in Congress, such as developing alternate fuels, improving conservation and expanding domestic exploration. Bush said he told Saudi King Abdullah during talks Friday that the kingdom should be concerned that high energy prices are hurting ... the United States. He asked Abdullah for an injection of oil supply to help ease the pain. "High energy prices are going to cause countries like mine to accelerate our move to alternative energy," he said he told the king. But Saudi oil minister ... said Friday it had decided a week before Bush's visit to raise production by 300,000 barrels a day to 9.45 million barrels a day and didn't see any need to do more. Energy analysts called the boost a token - it represents just 3 percent of the total - and it was seen as a rebuff, if a gentle one, of Bush by Abdullah.
Source: Associated Press

GM: Live Green or Die

The lumbering, money-losing giant finally sees that gas engines are a losing bet. But is it too late?
In April of 2005, General Motors Chairman and Chief Executive G. Richard Wagoner Jr. convened his management team for a monthly strategy session ... Meetings [encourage] attendees ... to pose new ideas and stray from the agenda. That's when Vice-Chairman Robert A. Lutz spoke up. Lutz ... told GM's brain trust, it was time to build another electric car—one that would use a giant version of the lithium ion batteries that power cell phones and laptops. It was a provocative suggestion—and Lutz knew it. Two years earlier, General Motors had killed its experimental EV1 electric car and set off a public relations furor.  By the time Lutz revisited the issue in 2005, Toyota Motor's quirky Prius hybrid had turned the Japanese automaker into a poster boy for the environmental movement and cast a greenish halo over the entire company. By contrast, GM ... was still making gasoline hogs like the Hummer and fighting congressional efforts to boost fuel economy. GM executives were furious Toyota was winning green cred despite making its own fuel suckers. But no one at the meeting wanted to hear about electric cars. "We lost $1 billion on the last one. Do you want to lose $1 billion on the next one?'" Lutz recalls one executive saying. "It died right there."  And yet 20 months after the meeting, in January, 2007, Wagoner stood on a stage at the Detroit auto show and surprised the world with a vow to start developing [an] ... electric car called the Chevrolet Volt.  After years of avoiding the future, [Wagoner] finally understood oil prices were not going to return to earth, global warming was a de facto political reality, and Washington was serious about imposing tougher fuel economy rules on his industry. Now Wagoner is racing the clock.
Source: BusinessWeek

End to Axle Strike Erases Some Doubts at GM

DETROIT -- Several General Motors Corp. plants are set to ramp up production this week after key supplier American Axle & Manufacturing Holdings Inc. and the United Auto Workers reached a tentative agreement ending an 11-week strike. The strike had all but crippled GM's ability to produce large pickup trucks and sport-utility vehicles, which generate hefty margins for the auto maker, and slammed its North American profit in the first quarter. The end of the strike brightens GM's prospects for the second quarter, and removes one element of uncertainty from its business. The company's liquidity has come under scrutiny lately because of the Axle strike, as well as continuing trouble at lending giant GMAC LLC and former parts unit Delphi Corp., which is under bankruptcy protection.
Source:  The Wall Street Journal (Subscription required.)

So You Think Gas Costs a Lot?

Increasing its longstanding appeal to mileage-conscious drivers, diesel fuel has for years cost less than gasoline, and even as recently as last summer the two were no worse than equal in price. Since then, a gallon of diesel has become more expensive than unleaded regular — now 16 percent more and poised to go higher still. Shifting to diesel engines had been promoted as one way to save oil and meet coming fuel economy standards... But while they may have a big edge in fuel efficiency, their cost efficiency, in cents a mile, is shrinking. The shift in fuel prices is coming just as automakers, after years of work to make diesel engines cleaner, are preparing to sell diesel-powered passenger vehicles. The strategy now looks iffy because diesel models cost more than the equivalent gasoline vehicles. Automakers understand that high costs will make the vehicles harder to sell. “In the marketplace, the consumer has to have a compelling economic reason to put a premium on fuel economy, or any particular engine technology,” Greg Martin, a General Motors spokesman, said. So is it a good idea to buy a diesel? “It’s a very good question when you consider the current price of diesel,” he said. For a car shopper to buy a diesel model, he said, the perceived benefit must always equal or exceed the cost. “Right now that would be problematic.”
Source:  The New York Times

Used Truck Price Drop Hurts New Pickups

Rising fuel prices and a collapsing housing industry have sent used truck prices into a nosedive that could threaten the launches of the new Ford F-150 and Dodge Ram pickups. The same market forces have been eroding new pickup sales for a couple of years, and the accelerating decline in used pickup prices is putting additional pressure on a vehicle segment already under stress. Used pickup prices plummeted nearly 13 percent year over year in April, according to Manheim Consulting, which tracks used vehicle sales across the United States. It was the biggest drop on record. Prices for full-size light-duty pickups dropped nearly 16 percent, but the real shock came in the full-size heavy-duty segment, where prices fell almost 20 percent. "This represents a significant threat to this summer's Dodge Ram and Ford F-150 new vehicle launches," said analyst Peter Nesvold of Bear Stearns. "Consumers will be less able to use their current used vehicle as currency to lower their monthly payments on a new purchase; and the new vehicles will be less price competitive on the market compared with used." The credit crunch only compounds the problem. More customers will find themselves owing more on their old trucks than they are worth. In the past, lenders were more than happy to roll the difference over into a new loan, but not in today's tight credit market. Dealers are looking to the automakers to provide a solution in the form of incentive programs when the new pickups launch later this summer.
Source:  The Detroit News

Daimler, BMW Discuss Linkup on Components

BMW AG and Daimler AG's Mercedes-Benz Cars division are in talks to explore teaming up in developing, producing and purchasing car components, according to people familiar with the matter. The move marks a recognition by Germany's archrival luxury car makers that they may need bigger economies of scale to bolster profits. Executives and engineers from the car divisions of BMW and Daimler "from the top, right down to the middle management" are discussing how the companies could jointly buy car parts, including seat frames and air-conditioning modules, said one person familiar with the talks. The two sides are also exploring possible cooperation, on a project-by-project basis, in developing and producing components, including engines, according to another person familiar with the matter. Spokesmen for both Daimler and BMW said the two companies are exploring further cooperation on components, but declined to reveal specifics.
Source:  The Wall Street Journal (Subscription required.)

Nissan, NEC to Make Lithium-ion Batteries

TOKYO -- Nissan's joint venture with electronics maker NEC Corp. will invest 12 billion yen, or $115 million, to start mass-producing lithium-ion batteries -- a technology widely viewed as key for next-generation "green" cars. Nissan Motor Co. Executive Vice President Carlos Tavares told reporters Monday the Japanese automaker wants to be a global leader in "zero-emission vehicles." The new batteries will be more powerful than -- and half the size of -- nickel-metal hydride batteries that are now commonly used in ecological cars today, Nissan officials said. Nissan's joint venture called Automotive Energy Supply Corp. plans to make advanced lithium-ion batteries for electric vehicles, hybrids and fuel cells -- all important technology to reduce pollution as well as gases linked to global warming. "Nissan firmly believes the ultimate solution for sustainable mobility lies in zero-emission vehicles," Tavares said at a Tokyo hotel.
Source: Associated Press

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NADA Update
Director Nominations Mailed to NADA Members

Ballots for nominating members to serve as NADA directors have been mailed to members in Arizona, Northern California, Southern California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Iowa, Massachusetts, Minnesota, Mississippi, Metropolitan New York, New York State, Ohio, Eastern Pennsylvania, South Carolina, South Dakota, Metropolitan Washington, DC and West Virginia. All ballots should be returned postmarked by May 30. If two or more nominees receive at least 10 percent of the votes and agree to seek election, ballots will be mailed June 27 to be returned postmarked by July 18. Directors elected will take office on Jan. 27, 2009 at the convention in New Orleans.

Looking for a Competitive Edge? Check Out NADA's Used-Vehicle Seminar

NADA 20 Group consultant Steve Emery will present "Used-Vehicle Department Profit Accelerator," held May 21–22 in St. Louis, Mo. The seminar will explain the crucial elements of running a profitable used-vehicle operation, such as purchasing and managing inventory, reconditioning, financing, marketing and advertising, maintaining a business plan and more.

The 1½-day seminar will be held at the Hilton Ballpark Hotel. For more information, including member and non-member fees, visit www.nada.org/seminars. Dealers, general managers, used-vehicle managers and sales managers are encouraged to attend.

Want to log on from your own dealership? Take a look at NADA's upcoming Web-based seminars:

  • How to Drive Traffic in a Tough Market (Ron Wheeler, May 22)
  • Using All the Tools in Your F&I Toolbox (Ron Reahard, June 3)
  • Totally Trucks: Best Practices in Cost and Expense Management and Reduction (ATD) (Keith Ely, June 11)
  • Increasing Collision Repair Sales (Robert Rick, June 12)
  • Managing Fixed Operations from the General Manager's Desk (Randy Brenckman, June 24)

The fee for each virtual seminar is $199 per computer connection. Additional attendees can participate from the same connection at no additional cost.

For more information on upcoming seminars, visit www.nada.org/seminars or call 1-800-248-6232, ext. 7061.

Save on HP Desktops and Printers

HP is offering NADA members a free 17-inch diagonal wide screen flat panel monitor with select PC desktops. Members can save $200 instantly on HP Color LaserJet CP4005n and Color LaserJet CP4005dn. This special ends May 31, 2008. To take advantage of these savings, go to www.nada.org/ProductsServices/Technology, click on "PC Purchase Program," then click www.hp.com/go/promos/nad1 (member login required).

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Quotable
 
"High energy prices are going to cause countries like mine to accelerate our move to alternative energy."

    -- President Bush told Saudi King Abdullah that the kingdom should be concerned that high energy prices are hurting some of its biggest customers, including the United States, and asked for an injection of oil to help ease the pain, Associated Press, May 17


"Nissan firmly believes the ultimate solution for sustainable mobility lies in zero-emission vehicles." 

   -- Nissan Motor Co. Executive Vice President Carlos Tavares, Associated Press, May 19


"We're making history. Fifty years from now, people will remember [the] Volt—like they remember a '53 Corvette." 

   
-- Robert A. Kruse, GM's chief of hybrids and electric cars, says despite the tight schedule, the Volt's batteries will be ready by 2010, BusinessWeek, May 15


"In the marketplace, the consumer has to have a compelling economic reason to put a premium on fuel economy, or any particular engine technology. For a car shopper to buy a diesel model, the perceived benefit must always equal or exceed the cost. Right now that would be problematic."

   
-- Greg Martin, a General Motors spokesman, referring to the possible impact of high diesel prices on sales of diesel models, The New York Times, May 19
Video Reports
 
NADA Chief Economist Paul Taylor's 2008 Sales Forecast.

 Paul Taylor delivers '08 sales forecast 

 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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