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At a Glance...
Top Stories
Industry Study: 2008 Will be One of Toughest Years Yet
As Market Shifts, Ford Sees Profit Fleeing
American Axle Workers OK Contract, Ending Long Strike
Vehicle Repos in High Gear
Wagoner: GM Brand Diversity Gives it Best Position
Report: Toyota Building Green-car Battery Plants
NADA Update
NADA Director Sought to Represent Georgia
NADA Insurance Announces Partnership for Hole-in-One Program
NADA Provides Guidance on Reaching Subprime Customers
NADA's Consulting Tosses Dealers a Lifeline
STAR Answers Dealers' Questions on Safeguarding Customer Information
Save on HP Desktops and Printers
Top Stories
Industry Study: 2008 Will be One of Toughest Years Yet

DETROIT -- Rising raw material costs, a weak dollar and slow sales will prompt the first significant downturn in unit sales for the North American automotive industry in 17 years. That’s according to a new study by AlixPartners LLP, a suburban Detroit turnaround specialist and business advisory firm. The study predicts sales will drop by about 1 million units, which could wipe out gains automakers may have made in the last two years. “We all thought times were already pretty difficult in this industry,” John Hoffecker, an AlixPartners director, said in a statement today. “But 2008 is shaping up to be one of the toughest years yet.” “The combination of unprecedented raw materials spikes, the weak dollar and slowing economies around the world is going to make this a year that separates the strong from the weak. The impact can already be seen in Toyota’s first-quarter results and their downward forecast for the remainder of the year.”
Source:  Automotive News (Subscription required.)

As Market Shifts, Ford Sees Profit Fleeing

DETROIT -- The budding turnaround at the Ford Motor Company has stalled amid rising gas prices and falling truck sales. Less than a month after reporting a surprising first-quarter profit, Ford said Thursday that it would drastically scale back production and step up cost-cutting efforts in response to a sharp drop in sales of pickups and sport utility vehicles. Ford executives also retreated from their pledge of delivering a full-year profit for 2009. Ford is now forecasting that industry demand for cars and light trucks will be 14.7 million to 15.1 million vehicles — the lowest point in more than a decade. The biggest losers in the market are the big pickups and SUVs... “We saw a real change in the industry demand in pickups and SUVs in the first two weeks of May,” Ford’s chief executive, Alan R. Mulally, said Thursday. “It seems to us we reached a tipping point.” Mr. Mulally said the striking shift by consumers from trucks and SUVs into smaller cars and crossovers now appears to be “structural in nature” rather than a short-term reaction to gas prices. While pickup and SUV production will be substantially reduced, the automaker said it would increase its output of more fuel-efficient models like the Focus and Fusion passenger cars and the Edge crossover vehicle.
Source:  The New York Times

American Axle Workers OK Contract, Ending Long Strike

UAW workers at American Axle & Manufacturing Inc. ratified a contract between the union and the company Thursday, union officials said, ending a 12-week strike against the Detroit supplier that rippled through the auto industry. The deal ends a strike that forced General Motors Corp. to shut or cut output at more than 30 plants, forcing the automaker — and as a result, several suppliers — to lay off thousands of workers. The automaker offered $218 million to help settle the strike.
Source: Detroit Free Press

Vehicle Repos in High Gear

Loan defaults up sharply in throes of sluggish economy
LOS ANGELES -- Just as home foreclosures have become a national crisis, prompting the U.S. House to pass a $300 billion bailout bill recently, auto loans have become the other shoe to drop. With car repossessions up 10 percent to 15 percent so far this year, on top of similar increases last year, auction yards are filled across the country as consumers are forced to choose between their homes and their cars —and often are unable to pay for either, according to economists with auction firms and other experts. Delinquencies in car-dealer loans reached a historic high in the final quarter last year, 3.13 percent, according to the American Bankers Association, which has tracked such data since 1990. Such dealer-arranged loans make up 90 percent of banks' automobile loans; the group does not track loans extended by auto manufacturers, a spokeswoman said. Last year's 1.51 million repossessions marked one of the biggest increases in a decade, 10 percent, and the growth is projected to continue this year, to 1.6 million, said economist Tom Webb of wholesale car auctioneer Manheim Consulting. "They weren't making a lot of bad loans. It's just that the market has turned," Webb said. "You can almost guarantee that repossessions will be down in 2009 because the tightening of lending standards has been very severe."
Source:  The Chicago Tribune

Wagoner: GM Brand Diversity Gives it Best Position

General Motors’ different brands give the company the best position in the marketplace, CEO Rick Wagoner told a meeting of dealers. “Our Opel/Vauxhall, Saab, Chevrolet, Cadillac, Corvette and Hummer brands complement each other perfectly, and represent a clear and consistent market orientation unmatched by any other automaker,” Wagoner told a conference in Cologne, Germany. He said the multibrand strategy would help dealers and strengthen GM’s financial performance. Around 6,000 employees and dealers at the event heard Wagoner stress how important GM Europe was to the rest of the group. “Thanks to great cars, innovative, affordable technology, and high levels of commitment from all GME employees, we enjoy excellent market recognition in Europe, which is reflected in our sales,” Wagoner said.
Source:  Automotive News (Subscription required.)

Report: Toyota Building Green-car Battery Plants

TOKYO -- Toyota Motor Corp. plans to build two plants in Japan to produce batteries for environmentally friendly gas-electric hybrid vehicles, a news report said Friday. The joint venture that Toyota has with Matsushita Electric Industrial Co., the electronics company that makes Panasonic brand products, will set up the battery plants, The Nikkei business daily reported without citing its sources. One plant will produce nickel-metal hydride batteries while another will produce lithium-ion batteries, which are planned for future ecological cars, the report said. Japan's top automaker, which leads the industry in gas-electric hybrids with its hit Prius, has said it will rev up hybrid sales to 1 million a year sometime after 2010. Toyota's Prius, which has been on sale for more than a decade, recently reached cumulative sales of 1 million vehicles. The world's other major automakers are also working on environmentally friendly cars, and the race is on to produce the best batteries to power them.
Source: Associated Press

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NADA Update
NADA Director Sought to Represent Georgia

Ballots for nominating dealers to serve as the NADA director from Georgia have been mailed to members in that state. Current director Martin NeSmith has resigned, effective immediately. Nomination ballots must be returned postmarked by Friday, June 13. If two or more nominees receive at least 10 percent of the votes and agree to seek election, ballots will be mailed Friday, July 11 to be returned postmarked by Friday, August 1. The candidate elected will take office immediately to serve the remaining portion of NeSmith’s term, which expires February 2010.

NADA Insurance Announces Partnership for Hole-in-One Program

NADA Insurance has announced that it has formed a partnership with the Pennsylvania Automotive Association (PAA) to be the exclusive provider of hole-in-one insurance for that group. About 1,200 PAA dealer members will obtain their insurance through ACECO, NADA Insurance’s hole-in-one program.

"At PAA, we are always looking for ways to enhance our benefits," said PAA Vice President Chief Operating Officer John Devlin. "ACECO offers our members affordable and convenient hole-in-one insurance, so the decision to go with them was easy."

NADA Insurance Vice President Lin Peacock said, "This partnership is a win-win for both parties. We look forward to servicing PAA with the same high level of service that we provide to NADA members."

Dealer groups and state auto associations interested in partnering with NADA for their hole-in-one insurance are encouraged to contact Peacock at lpeacock@nada.org.

NADA Provides Guidance on Reaching Subprime Customers

Damaged credit can happen to anyone. As many as three out of five auto consumers suffer from damaged credit. Dealers could be leaving a great deal of money on the table—perhaps hundreds of thousands of dollars a year in additional gross profit—if they ignore the subprime market.
 
That’s where a special finance operation comes in. Call it subprime, non-prime, secondary or special finance—this large and growing segment of the market needs dealers who are prepared to sell credit-challenged customers the vehicles they need at prices they can afford.

NADA Management Education’s new DVD, Creating a Special Finance Operation: Doing it Right, shows dealers how to be prepared. The four-segment training video, plus an information-packed study guide, is available for $169. Go to www.nada.org/specialfinance to see a preview, log in and order.

NADA's Consulting Tosses Dealers a Lifeline

NADA’s Lifeline Dealership Consulting provides dealers with an objective evaluation and advice on operations and performance. NADA 20 Group and NADA Dealer Academy consultants work with dealership management personnel to achieve specific goals determined by a telephone interview or a site visit.

On site, a NADA consultant would meet with department managers to develop remedial action plans. The consultant also provides managers with various tools to assist performance measurement and tracking, and develops a written report with recommendations for improvement.

"We consider NADA’s Lifeline Dealership Consulting an investment in our dealership," said Frankie Korschun, general manager of Frema Motors Inc. in Goldsboro, N.C. "I would highly recommend the program to anyone who needs an outside point of view." For more information, call NADA's Lifeline Dealership Consulting at 1-800-248-6232, ext. 4745.

STAR Answers Dealers' Questions on Safeguarding Customer Information

 

Standards for Technology in Automotive Retail (STAR) has developed new guidelines to help dealers with Safeguarding Customer Information. Visit STAR's Dealer Infrastructure Guidelines (DIG) publication for more information. To learn what is recommended for Safeguarding Customer Information, click here.

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
 
"We saw a real change in the industry demand in pickups and SUV's in the first two weeks of May. It seems to us we reached a tipping point."

    -- Ford’s Chief Executive, Alan R. Mulally, The New York Times, May 23, announcing the automaker would increase output of more fuel-efficient models like the Focus and Fusion passenger cars and the Edge crossover vehicle.


"They weren't making a lot of bad loans. It's just that the market has turned."

    -- Manheim Consulting Economist Tom Webb said of the increase in car reposessions, The Chicago Tribune, May 22


"Our Opel/Vauxhall, Saab, Chevrolet, Cadillac, Corvette and Hummer brands complement each other perfectly, and represent a clear and consistent market orientation unmatched by any other automaker."

    -- GM CEO Rick Wagoner told about 6,000 employees and dealers at a conference in Germany how important GM Europe was to the rest of the group, Automotive News, May 22. Wagoner said the multibrand strategy would help dealers and strengthen GM's financial performance.

Video Reports
 
Field of Dreams:  Auto Dealers Show Their Commitment to New Orleans

 NADA Foundation Donates $400,000 to Lusher School 

 NADA/USA Today Innovation Award Goes to "Green" Dealership in Vermont.
 
NADA Convention Heads to New Orleans in 2009.
 NADA Chief Economist Paul Taylor Delivers '08 Sales Forecast. 
 
2008 Convention Highlights

 
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