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Tuesday, July 15, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
GM to Cut Salaried Workers, Production, Dividend
Crossover Vehicles in U.S. Hit Slump
Detroit 3 Losing Buyers to Rivals
With No New Vehicles Planned, Mercury's Future is Bleak
Volvo Denies Report of U.S. Dealer Cuts
The Vanishing Minority Dealer
Hyundai Motor Will Raise Prices on Materials Costs
Auto Dealers Invited to SEMA Show to Learn about $38 Billion Accessory Market
Colorado Dealers Elect First Female Chair
NADA Director Receives Award from Minority Dealer Association
NADA Update
NADA Hole-in-One Insurance Boosts Dealership Visibility at Low Costs
Applications for NADA's Executive Education Program due Wednesday
Nomination Ballots for NADA Director from Kansas due Friday
Lenovo Offers NADA Members Savings on ThinkPad Notebooks
Top Stories
GM to Cut Salaried Workers, Production, Dividend

DETROIT -- General Motors Corp. said [today] it will lay off salaried workers, cut truck production, suspend its dividend and borrow $2 billion to $3 billion to weather a severe downturn in the U.S. market. GM said the moves will raise $15 billion to help cover losses and turn around its North American operations. "In short, our plan is not a plan to survive. It is a plan to win," GM Chairman and CEO Rick Wagoner said in a broadcast to employees. Chief Operating Officer Fritz Henderson said GM wants to reduce its total salaried costs in the U.S. and Canada by 20 percent. A large chunk of the reduction ... would come from cutting health care benefits for salaried retirees. Several thousand jobs will be cut through normal attrition and retirements, and through early retirement and buyout offers, Henderson said. The company could resort to involuntary layoffs but does not want to, he said. GM has 40,000 salaried employees in the U.S. and Canada. Henderson said the company intends to reduce its truck production capacity by 300,000 units, 150,000 more than it announced at its annual meeting in June. GM said it will suspend its $1 annual dividend immediately, which will improve liquidity by $800 million through 2009. It's the first time the company has suspended its dividend since 1922. The company also plans to raise $2 billion to $4 billion through the sale of assets, including its Hummer brand.
Source: Associated Press

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Crossover Vehicles in U.S. Hit Slump

DETROIT -- When Ford Motor Co. came out with its new Edge crossover in 2006, the company hoped the truck-like vehicle built on a car frame would attract longtime Ford buyers trading in their inefficient sport utility vehicles. For a while, it worked well. But last month, sales of the Edge and nearly all crossover vehicles dropped dramatically, causing another worry for automakers struggling with the dramatic shift by U.S. auto buyers from trucks to cars. Automakers and some industry analysts say it's temporary, due to a combination of economic worries, sliding SUV values that prevent people from trading them in, and the lingering shock of $4 per gallon gas. But if the trend continues, it's another blow to the profits at Ford, General Motors Corp. and Chrysler LLC, all of which have developed crossovers to capture their traditional SUV and truck buyers. The crossover market as a whole peaked this year in March, with all automakers selling 222,055, according to Autodata Corp. Sales dropped in April, rebounded in May and then slid in June to 184,871, down nearly 17 percent from March. Midsize SUVs, on average, lost 28.7 percent of their value, from $15,577 in March 2005 to $11,096 at the end of June, according to wholesale auction data from the National Automobile Dealers Association.
Source:  Associated Press

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Detroit 3 Losing Buyers to Rivals

Sales declines reflect shift toward more fuel-efficient cars
Barely more than two out of every five new cars and trucks bought by Americans from April to June -- 41.2 percent, to be exact -- were made and sold by Detroit's automakers. That's according to the latest retail market share estimates provided exclusively to the Free Press by the Power Information Network, a subsidiary of J.D. Power and Associates. Just two years ago, almost half -- 49.8 percent -- of the cars and trucks purchased by American consumers in dealer showrooms were made by Detroit's automakers. The decline that has followed, of nearly 9 percentage points, largely reflects the massive consumer shift from big pickups and SUVs to fuel-efficient cars in the wake of a sour U.S. economy and gas prices over $4 a gallon. "It's startling. It's major," Tom Libby, senior director of industry analysis at the Power Information Network, told the Free Press in an interview Monday. "They have to deal with this, and in the short term, we're not going to see a lot because you can't turn it around overnight."
Source:  Detroit Free Press

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With No New Vehicles Planned, Mercury's Future is Bleak

DETROIT -- Life doesn't look promising at Mercury. No new vehicles are apparent on the horizon, and Ford Motor Co. executives are vague about the brand's future. Asked earlier this year about Mercury's survival, Ford Americas President Mark Fields said any good business always evaluates its portfolio. "Who knows what could happen?" he added. The automaker is updating the Mercury Mariner crossover for the 2009 model year and the Milan sedan for the 2010 model year. A hybrid Milan also is scheduled for the 2010 model year. But no major product investment is apparent for Mercury beyond next year. Dealers are concerned the brand will be killed.
Source:  Automotive News (Subscription required.)

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Volvo Denies Report of U.S. Dealer Cuts

A spokesman for Volvo Cars of North America denied [Monday] reports that Volvo plans to close 30 percent of its U.S. dealerships. Geno Effler, vice president for public affairs at Volvo's North American arm, told Automotive News today that Volvo is sticking to previous plans to persuade some struggling dealers to voluntarily give up their franchises. He said quotes attributed to Volvo Germany spokesman Olaf Meidt by Automotive News' German language affiliate, Automobilwoche, were inaccurate. Automotive News published a translated version of the report on its Web site Friday, July 11, and in print editions today.
Source: Automotive News (Subscription required.)

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The Vanishing Minority Dealer

Domestic manufacturers' efforts to reduce their dealer bodies coupled with plummeting auto sales along with a lack of access to much-needed capital threaten the existence of many minority-owned dealerships. NAMAD (National Association of Minority Automobile Dealers) and other minority dealer organizations are pushing for solutions that include investment from private equity groups; a reworking of the Small Business Admin.'s definition of a small business; and a revolving $500 million line of credit established by the government. [The] existence [of minority dealers] is in such danger NADA and NAMAD held a panel during the NADA convention in February to highlight the problem and potential solutions. ... since 2002, the overall number of minority-owned dealerships has decreased, according NAMAD data, from 1,264 in 2002 to 1,194 in 2007... The decline mostly has been fueled by a downturn in the number of African-American-owned dealerships — from 532 in 2002 to 391 in 2007. The challenge lies not only in adding new minority dealers, it's making sure the ones in place today survive. Dealership numbers overall are declining. Some experts believe market conditions this year will force many dealerships out of business, perhaps as many as 1,500 between 2008 and 2009. E. Dale Early, owner of Deerbrook Forest Chrysler-Jeep, Kingwood, Texas, a member of NADA's board of directors and a vice president of Chrysler's minority dealer association, says these are “interesting” times for all dealers, and dealer counts likely will drop across the board.
Source:  Ward's Dealer Business

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Hyundai Motor Will Raise Prices on Materials Costs

Hyundai Motor Co., South Korea's largest automaker, will raise vehicle prices an average of about 2 percent worldwide after the cost of steel jumped more than 60 percent this year. "We can't hold off any longer,'' the Seoul-based automaker said in a statement today. The increases will come into effect next month. Hyundai joins General Motors Corp. and Toyota Motor Corp. in boosting vehicle prices to cover rising materials costs even as greater job insecurity and slower economic growth damps demand in major markets. Industrywide sales in the U.S., the world's largest auto market, dropped 10 percent in the first half. Hyundai's increase "isn't enough to cover the higher costs, but it's hard for them to boost prices more without crimping sales," said Mike Oh, a Seoul-based analyst at Nomura Securities Co. "The environment has turned so negative for carmakers."
Source:  Bloomberg

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Auto Dealers Invited to SEMA Show to Learn about $38 Billion Accessory Market

DIAMOND BAR, Calif. -- While the nation’s new-car and -truck dealers continue to make major investments in their dealerships to improve sales and customer satisfaction, one area of potential new business has remained relatively untapped—the $38 billion accessory market. That’s why Phil Brady, president of the National Automobile Dealers Association (NADA), and Chris Kersting, president and CEO of the Specialty Equipment Market Association (SEMA), announced [last week] a first-of-its-kind, comprehensive “Dealer Day” program designed exclusively for NADA members at the 2008 SEMA Show. “Dealer Day” is designed to give dealer principals several ideas, tools and resources on how to integrate a strong and successful accessory program at their dealerships. The half-day program is scheduled for Wednesday, Nov. 5 at the Las Vegas Convention Center. It’s the first time the SEMA Show will dedicate an exclusive program just for NADA members. There is no cost to attend “Dealer Day. “At a time when many dealers are looking for new ways to generate additional revenue and sales, this program will provide dealers with new ideas and strategies to help improve their bottom-line performance by creating profitable accessory programs,” says Brady. “Through a series of activities and presentations, dealers will learn about what’s happening in the specialty industry and discover how profitable an accessory program can be, and they will learn how to successfully incorporate such a program at their dealerships,” Kersting says. As an added feature, participating dealers will have an opportunity to meet directly with proven experts who will share real-world case studies. To register or receive more information about the program, e-mail dealerlink@sema.org.
Source:  NADA Newswire

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Colorado Dealers Elect First Female Chair

Nancy Ariano of Durango was elected the first chairwoman in the 75-year history of the Colorado Automobile Dealers Association, [the association] reported Monday. Ariano owns New Country Auto Center in Durango, New Country Cortez in Cortez and several other companies. She previously served as CADA vice chair and in other volunteer positions with the organization. CADA was founded in 1933. The association represents 260 new-car and -truck dealers throughout Colorado.
Source:  Denver Business Journal

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NADA Director Receives Award from Minority Dealer Association

LA JOLLA, Calif. -- Dale Early was the recipient of the Jesse Jones Visionary Award presented by the National Association of Minority Automobile Dealers. Early is a director at-large of the National Automobile Dealers Association.

The award, which recognizes an individual’s vision, vigilance and work initiatives that have increased opportunities for ethic minorities, was presented to Early at the 2008 NAMAD Annual Membership Conference held July 9-12 in La Jolla, Calif.

“I am honored to receive this award because Jesse Jones was my first dealer role model,” said Early, owner of Deerbrook Forest Chrysler Jeep in Kingwood, Texas, and chairman of NADA’s public affairs committee. “To be honored with an award that bears his name as well as the principles he stood for is extremely special.”

NAMAD also recognized three longtime members with Lifetime Achievement Awards. The winners were Nathan Conyers, Mel Farr and William Shack. The award recognizes individuals for a lifetime of significant contributions to the automotive industry and to the spirit of diversity and inclusion.

“These three pioneers—who founded NAMAD—together have created opportunities for all minority dealers,” said Damon Lester, NAMAD president. “Today, we are the beneficiaries of their achievements and foresight.”

“They committed their resources to building an institution dedicated to creating opportunities for minorities especially in the automobile industry but not limited to this industry,” Lester added.

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NADA Update
NADA Hole-in-One Insurance Boosts Dealership Visibility at Low Costs

NADA Insurance announced that its hole-in-one insurance program, ACECO, continues to experience strong financial growth, despite the downturn in the automotive industry. The trend indicates that U.S. auto dealers are continuing to support charitable and invitational golf tournaments in their local communities. And, with the average hole-in-one insurance premium being just a few hundred dollars, golf tournament sponsorship is a very cost-effective way for a dealership to advertise.

"Many of our dealers are finding that golf sponsorship is a very effective advertising medium," said NADA Insurance Vice President Lin Peacock. "While wanting to scale back expenses, our dealers still want to continue to be a prominent part of their local business communities. ACECO hole-in-one insurance offers NADA dealers a way to sponsor highly visible golf tournaments — with zero risk and at very little cost."

To help dealers gain even more exposure, ACECO will provide any policyholder with a free press release template that can be filled out and sent to the local media to announce the dealership's support of the tournament. Visit www.nadainsurance.com today or call 888-828-8540 to obtain a quote for your next tournament sponsorship.

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Applications for NADA's Executive Education Program due Wednesday

NADA is now accepting applications for the new Dealer Executive Education class scheduled to begin in September at Babson College. Applications must be submitted by July 16.

Babson is the leading provider of entrepreneurial executive education training in the U.S. It has been ranked No. 1 in entrepreneurship for 13 consecutive years by U.S. News & World Report. The customized six-module program focuses on leadership, management and entrepreneurship for the retail side of the automotive and truck industry. All six week-long classes are being held on campus at the Babson Executive Education Center in Wellesley, Mass., over a 16-month period.

Click here to enroll and find out more about the program or contact Dealer Academy Director Allan Jones at (703) 821-7210 or ajones@nada.org.

Click here to see why NADA's executive leadership program is No. 1 for executive education.

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Nomination Ballots for NADA Director from Kansas due Friday

Ballots for nominating members to serve as the NADA director from Kansas have been mailed to members in that state. Current director Dale Willey will be leaving the board effective Jan. 26, 2009. Nomination ballots must be returned postmarked by Friday, July 18. The newly-elected director, who takes office Jan. 27, will be announced at the 2009 NADA Convention & Exposition in New Orleans.

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Lenovo Offers NADA Members Savings on ThinkPad Notebooks

 

NADA members can save up to $650 on ThinkPad notebooks by using the eCoupon USXSUMMERHEAT at checkout until July 29. To take advantage of the discount, visit NADA's PC Purchase Program Web site (member login required), then click on the link for Lenovo or call 1-800-426-7235, Option 1, Ext. 4838. Enter eCoupon USXSUMMERHEAT at checkout. Free ground shipping is available on all Web orders.

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Iowa Dealership Endures Extensive Flood Damage

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Quotable
 
"In short, our plan is not a plan to survive. It is a plan to win."

   
-- GM Chairman and CEO Rick Wagoner said in a broadcast to employees today concerning the company's restructuring efforts, Associated Press, July 15


"It's startling. It's major. They have to deal with this, and in the short term, we're not going to see a lot because you can't turn it around overnight."

    -- Tom Libby, senior director of industry analysis at the Power Information Network, referring to the massive consumer shift from big pickups and SUVs to fuel-efficient cars in the wake of a sour U.S. economy and gas prices over $4 a gallon, Detroit Free Press, July 15


"The environment has turned so negative for carmakers."

   
-- Mike Oh, a Seoul-based analyst at Nomura Securities Co., responding to Hyundai's announcement that will raise vehicle prices an average of about 2 percent worldwide after the cost of steel jumped more than 60 percent this year, Bloomberg, July 15


"We missed that, but I think us and 99.999 percent of the rest of the people in the world did too."

   
-- GM Chairman and CEO Rick Wagoner says they never could have predicted how quickly the U.S. market would shift away from trucks and SUVs as oil prices doubled in the last year. GM believes the trend is permanent and that the company is responding with 18 cars or crossovers in development, Associated Press, July 14
Video Highlights
 
 

Click Here to see why NADA's executive leadership program is No. 1 for executive education.


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