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At a Glance...
Top Stories
GM to Close Plants, Rush to Cars as Gasoline Rises
Ford CEO Says Shift to Small Cars Here to Stay
Chrysler Faces Tricky Dealer Mergers
Oregon-based Car Sales Giant Lithia Motors Will Cut Staff and Stores...
Mulally Unsure of When Ford Will Return to Profitability
Senate Votes to Begin Global Warming Debate
White House Slams Climate Bill
Gas Offer Not Pumping Sales
Cerberus Denies Report That it Sold Stakes in Chrysler and GMAC
Opinion: Time for Plan B
NADA Update
Shop the NADA Expo Floor - Online
Ballots for New NADA Director from Georgia due June 13
STAR Answers Dealers' Questions on Safeguarding Customer Information
Lenovo ThinkPad Notebooks Start at Just $459
Top Stories
GM to Close Plants, Rush to Cars as Gasoline Rises

WILMINGTON, Delaware -- General Motors Corp. on Tuesday announced a series of steps to cut jobs, costs and its exposure to slow-selling trucks and SUVs in response to a rise in gasoline prices that the automaker now sees as permanent. Chief Executive Rick Wagoner, speaking to reporters after a restructuring plan was approved by the automaker's board, said GM would close four North American truck plants and add shifts at two plants making more popular car models. In addition, Wagoner said GM was reviewing the Hummer brand and could sell the military-derived SUV brand, which has become synonymous for gas-guzzling excess. "U.S. economic and market conditions have become significantly more difficult," Wagoner said, adding higher gasoline prices have caused consumers to swap out of trucks and SUVs faster than the automaker had expected. In a related shift, Wagoner also said GM's board had approved funding for a next-generation compact model for the Chevrolet brand as well as a new subcompact Chevy Aveo, expected to go on sale in the U.S. market in 2010. GM's board also allocated production funding to the Chevy Volt, a heavily touted, all-electric vehicle that GM expects to have in showrooms by 2010, Wagoner said.
Source:  Reuters

Ford CEO Says Shift to Small Cars Here to Stay

Americans' switch to buying smaller, more fuel-efficient vehicles is permanent, not a temporary shunning of big SUVs while they wait for record fuel prices to drop, Ford Motor CEO Alan Mulally says. Mulally says the stampede is a "structural change" and if, as Ford predicts, fuel prices stay up, "That shift to small and medium-size cars and utilities … is going to be permanent." The first four months of the year, sales of the smallest, least-expensive cars — typically the most fuel-efficient — exploded 33 percent in an overall market down about 8 percent. Small cars of all types were up 8 percent, and sales of midsize cars were about even with last year. All other vehicle sales were down, according to industry tracker Autodata, which will report May sales Tuesday. Cars could make up 60 percent of sales by 2009, up from 47 percent now, says Rebecca Lindland, analyst at Global Insight. She had forecast that would happen in 2010 but has moved up the date because of the sudden shift toward vehicles that use less fuel. She predicts, though, that "most Americans will miss the functionality of an SUV," and go back to them if SUV mileage improves.
Source:  USA Today

Chrysler Faces Tricky Dealer Mergers

In February, Chrysler announced it was renaming its Alpha program Project Genesis. The new program has ratcheted up pressure on dealers to buy or sell their stores. Chrysler now wants most dealers to sell all three brands under one roof and is trimming clone models that compete with one another. With auto sales tumbling and tight credit, dealers are wary of investing in store improvements. To further complicate matters, Chrysler says it is not offering financial aid to help dealers sitting on the fence. Chrysler also says dealers combining under Genesis must sign exclusivity agreements barring them from selling other brands at their Chrysler stores. With the industry in turmoil and Chrysler's future uncertain, that can be a tough sell. Steven Landry, executive vice president of North America sales, says 25 to 30 Genesis deals have been completed since the program was announced. Chrysler cites St. Louis and Tulsa, Okla., as markets where the Genesis project is nearly completed. Chrysler wants metro-area stores, now averaging fewer than 500 units, to sell 1,000 or more annually. "We have been operating very fast," Landry says. Roughly 100 other Genesis discussions are under way. Landry says many dealers are eager to get deals done sooner rather than later.
Source:  Automotive News (Subscription required.)

Oregon-based Car Sales Giant Lithia Motors Will Cut Staff and Stores...

Dealers find themselves long on SUVs and trucks as high gas prices send buyers to more economical rides
The toll of prolonged high gas prices continues to reach beyond consumers at the pumps. Now, it's forcing dealership operators ... to trim their budgets and change their habits, too. Medford-based Lithia Motors Inc. -- the eighth-largest U.S. auto group -- aims to overhaul its inventory mix, sell up to 15 of its 110 stores and cut an unspecified number of its 5,800 jobs. The inventory mix on Lithia's lots does not match customers' sudden change of heart. A slowing U.S. economy and rising gas prices have led many buyers to cheaper, more fuel-efficient and smaller vehicles over the past several months, dealers say. "You want to have an adequate supply to offer the customer choice," said Paul Taylor, chief economist for the National Automobile Dealers Association. "But you don't want to carry the cost of too many vehicles." The current rate is 111 days for trucks and SUVs -- nearly twice the target of 60 days for all vehicles. Small cars are closer to 51 days, he said, meaning there are too few of the more sought-after models on dealers' lots.
Source:  The Oregonian

Mulally Unsure of When Ford Will Return to Profitability

WASHINGTON -- Ford Motor Co. Chief Executive Alan Mulally said Monday night that he is still unsure when the auto maker will return to profitability after the company abandoned its earlier pledge to return to black ink in 2009. "I don't know. It's so volatile right now," Mr. Mulally said at an event here to showcase the MKS, the new luxury sedan Ford's Lincoln brand is launching this year. "You don't want to get ahead of yourself." Jim Farley, Ford's group vice president of marketing and communications, said Monday night that monthly sales numbers scheduled to be released Tuesday continue to show the similar trends as April – an increase in sales for small, fuel efficient passenger cars and a decrease for gas-hungry trucks and sport-utility vehicles. Mr. Farley said it was very possible that Ford F-150 pickup could be overtaken by Toyota Camry for the first time as the top-selling U.S. model. In several parts of the country, the Camry already outsells the F-150, according to Mr. Farley.
Source:  The Wall Street Journal (Subscription required.)

Senate Votes to Begin Global Warming Debate

WASHINGTON -- The Senate began what is expected to be a weeklong, contentious debate Monday over legislation to combat global warming by mandatory reductions in carbon dioxide and other greenhouse gases. Senators voted 74-14 to proceed to the bill, but immediately it became clear Republican opponents were not going to make it easy. A request by Democrats to begin considering substantive changes in the bill was blocked by GOP opponents until Wednesday at the earliest. Senate Majority Leader Harry Reid of Nevada promised a thorough debate that will probably last through the week, if not longer. He said it's clear that "global warming is real" and Congress must act. But supporters of the bill acknowledged it will be difficult -- perhaps impossible -- to overcome a certain GOP filibuster threat against the legislation, meaning congressional action on global warming will probably be decided in the next Congress and by the next president. The Senate measure, which has wide Democratic and some Republican support, would cap U.S. emissions of carbon dioxide and other greenhouse gases, cutting them by 18 percent by 2020 and by two-thirds by mid-century. It would specifically target refineries, power plants, factories and transportation for 70 percent reductions and make emissions allowances available to be traded in an open market.
Source:  The Associated Press

White House Slams Climate Bill

WASHINGTON -- The White House on Monday slammed legislation the U.S. Senate will consider this week aimed at controlling climate change, arguing it would cut economic growth and lead to soaring gasoline prices. "As you can imagine, our opposition to this will be quite strong and we'll be making these points throughout the week," Keith Hennessey, director of President George W. Bush's National Economic Council, said at a White House forum on the economy and taxes. U.S. gross domestic product could be reduced by as much as 7 percent in the year 2050 and gasoline prices -- already at record highs in the United States-- could soar by as much as 53 cents a gallon by 2030, he said. The Bush administration has consistently opposed an across-the-board cap-and-trade program for carbon dioxide, a greenhouse gas emitted by fossil-fueled vehicles and coal-fired industries, as well as by natural sources including human breath.
Source:  Reuters

Gas Offer Not Pumping Sales

Chrysler expected to sell 18 percent fewer vehicles despite $2.99 deal
Even the lure of $2.99-a-gallon gas for three years didn't bolster Chrysler LLC's sagging sales in May, automotive analysts predict. While Chrysler's Gas Guarantee promotion -- introduced May 5 -- has attracted more customers to its showrooms, that interest is not translating into a sales turnaround for the Auburn Hills automaker. Analysts say Chrysler's lineup is too heavy on trucks and SUVS and void of the hybrids and compact cars consumers are buying to offset $4-a-gallon gas. Automakers officially release their May sales today... In a glimmer of positive news, the number of cars and trucks sold by Detroit's Big Three Automakers and the industry as a whole will rebound slightly from the 1.25 million units sold in April, analysts say. Chrysler officials, however, said the gas-price promotion has been successful, increasing showroom and Internet traffic. The automaker has extended the offer until July 7. "Dealers are very bullish on the customer appeal of the $2.99 Gas Guarantee program and have told us they want to continue to focus on our marketing messages in June on the program," [Chrysler spokesman Stuart Schorr] said. "The program continues to be embraced most by our customers of our most fuel-efficient vehicles and in places like New York and California."
Source:  The Detroit News

Cerberus Denies Report That it Sold Stakes in Chrysler and GMAC

Cerberus Capital Management hasn’t sold any new stakes in Chrysler LLC or GMAC LLC, the investment company said [yesterday] afternoon. The Financial Times [yesterday] morning reported that the private equity firm had sold more than half of its stake in Chrysler and GMAC to about 90 investors for as much as $1 billion for stakes in one or both companies. People familiar with the original Chrysler and GMAC deals tell the Free Press that Cerberus used co-investors in the deals’ financing and that nothing has changed in either case. “Cerberus has not reduced or made any changes to its equity stakes in GMAC or Chrysler since the closing of either transaction. Cerberus continues to have voting control over both investments,” Cerberus said in a statement. “Our commitment to these companies has not changed,” the firm added. A group of investors led by Cerberus acquired 51 percent of GMAC for about $14 billion in 2006. Last year, Cerberus acquired 80.1 percent of Chrysler and invested $7.4 billion in the automaker.
Source:  The Detroit Free Press

Opinion: Time for Plan B
by Jerry Flint, Forbes

We’ve had a taste of $4-a-gallon gasoline, and the world has not come to an end. We may cut back on things such as restaurants, Ben & Jerry’s and other treats – but we can get by. It’s a good thing, too, because auto makers can’t do anything about fuel prices. Neither can Saudi Arabia. But that’s “we” meaning consumers. If Detroit is going to get by, it needs a Plan B. Here’s what it needs to do:

  1. It needs to get back into the luxury-car business, where the profits are. 
  2. Detroit needs to export.
  3. There’s no question Detroit needs attractive new small cars that get high mileage.

Alas, it isn’t about getting a 25 percent improvement on a 16-mpg pickup. Sure, that makes a great report at an SAE meeting, but it’s tough to get Joe Consumer to pay $10,000 extra for a pickup that gets 20 mpg instead of 16 mpg. The trick is to excite buyers, make them say “wow.” Make them brag to neighbors about their mileage and make the neighbors so jealous they visit a showroom. You don’t do that with 20 mpg. Now, 50 mpg is exciting. It’s the 38DD of fuel economy. We sit up and take notice of sexy numbers like 50 mpg. Detroit has attacked the fuel economy issue like engineers rather than salesmen. These auto makers need leaders who not only understand the business, and the customer, but who also are salesmen at heart.
Source:  Ward's Auto.com

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NADA Update
Shop the NADA Expo Floor - Online

The 2008 NADA Convention & Expo is over, but the virtual exhibit floor is open 24/7 with our new online exhibit directory. Browse more than 700 exhibitors and search by company name or category of interest. Click here for direct access to the 2008 NADA Exhibit Directory.

Ballots for New NADA Director from Georgia due June 13

Ballots for nominating dealers to serve as the NADA director from Georgia have been mailed to members in that state. 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 term which expires February 2010.

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.

Lenovo ThinkPad Notebooks Start at Just $459

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Visit www.nada.org/ProductsServices/Technology and click on "PC Purchase Program" (member log-in required), click www.lenovo.com/shop/deals/nada or call 800-426-7235, Option 1, Ext. 4838 to take advantage of these savings. Enter eCoupon USXDADSGRADS at checkout. Free ground shipping is available on all Web orders. This offer ends June 16, 2008. Visit the Web site often for special limited-time eCoupons.

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Quotable
 
"U.S. economic and market conditions have become significantly more difficult." 

    -- GM CEO Rick Wagoner, adding that higher gas prices have caused consumers to swap out of trucks and SUVs faster than the automaker had expected, Reuters, June 3


The stampede [toward smaller, more fuel-efficient cars] is a "structural change" and if, as Ford predicts, fuel prices stay up, "That shift to small and medium-size cars and utilities … is going to be permanent."

    -- Ford CEO Alan Mulally, USA Today, June 3


One step GM has resisted is ramping up sales incentives as it did during the bounce back from the last recession in 2001. That could change with industry-wide sales on pace to slip to 15.5 million units or below this year. "I think we'll see more incentives."

    -- NADA Chief Economist Paul Taylor, referring to GM's growing inventory of large trucks, Reuters, June 3


"Dealers are very bullish on the customer appeal of the $2.99 Gas Guarantee program and have told us they want to continue to focus on our marketing messages in June on the program."

    -- Chrysler spokesman Stuart Schorr, The Detroit News, June 3 

Video Reports
 
NADA's Annual Industry Relations' Symposium Brings Dealers and Automakers Together
NADA's 2008 Industry Relations Symposium.
Field of Dreams: Auto dealers show their commitment to New Orleans.  NADA Chief Economist Paul Taylor delivers '08 sales forecast. 

NADA returns to New Orleans for its 92nd annual convention.  

Click here for more NADA TV video reports.
 
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