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Top Stories
Bush Approves $25 Billion Loan Package for Auto Makers
Auto Dealer Closings Could Add to Detroit Auto Maker Woes
U.S. Auto Makers Seek Bailout for Bad Car Loans
Auto Trade Group Urges Passage of Bailout Bill
Crisis Felt Unevenly on Main Street
Honda's Hybrid Will Take on Prius
Committed to Community: Auto Dealers CARing for Kids Foundation Kicks-Off Driving Away the Cold Month
NADA Update
Time is Running Out for NADA-SEMA Dealer Day Registration
ALERT: Be Sure to Work with NADA-Approved Convention Vendors
Two New Legal Compliance Publications Now Available Online
STAR Answers Dealers' Questions About Internet Access Methods
Save Up to $760 on Select ThinkPad Notebooks
Top Stories
Bush Approves $25 Billion Loan Package for Auto Makers

WASHINGTON -- President George W. Bush on Tuesday signed into law a mammoth spending bill to keep the government running until early March 2009 that includes a $25 billion loan package for troubled automakers. The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help General Motors Corp, Ford Motor Co and Chrysler LLC produce more fuel-efficient cars and trucks. U.S. automakers have said the taxpayer-backed loan package would give them access to capital at a time when credit markets are shut and they are being driven to invest in new technologies to meet tough new federal fuel economy standards. The $25 billion loan package, the biggest federal subsidy for the auto industry since the 1980 bailout of Chrysler, cleared Congress last weekend when the focus was on the debate over the $700 billion financial rescue package. Both presidential candidates, Democrat Barack Obama and Republican John McCain, backed the auto loan package, which had strong support in battleground election states like Michigan and Ohio.
Source:  Reuters

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Auto Dealer Closings Could Add to Detroit Auto Maker Woes

DETROIT -- Hundreds of auto dealers are being forced out of business by lagging auto sales and a credit squeeze making vehicle loans ever harder to come by. Detroit's auto makers have been looking to downsize their bloated retail networks, but the sudden loss of dealers threatens to create more turmoil for the struggling companies. Nearly 600 auto dealerships have closed so far this year, and as many as 750 will likely shut down by year's end, Paul Taylor, chief economist for the National Automobile Dealers Association, said Tuesday. Up to 300 or so new dealerships will open this year, amounting to a net loss of 300 to 600 dealerships. Most years see a much smaller reduction of 75 to 200 dealers. Across the U.S., there are about 20,700 auto dealerships, according to NADA. Dealers are being forced to close as economic woes and the meltdown on Wall Street slam their business on several fronts. Meantime, dealers' cost of business is climbing as rates climb on low-interest loans typically extended by auto financing companies so they can purchase inventory on dealer lots.
Source:  Dow Jones

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U.S. Auto Makers Seek Bailout for Bad Car Loans

Relief Plan, Part of Original Wall Street Rescue Package, Could Free Up Loans for Car Dealers as Well as Their Customers
As Congress revises a bailout plan for Wall Street, U.S. auto companies hope the new package will stem a growing credit crisis that threatens to further crimp their industry. The original $700 billion Wall Street deal, which was rejected by the House on Monday, included a substantial bailout for auto lenders. These companies hold a stable of bad auto loans that could shrink in value and hurt both the lenders and the vehicle makers. A Washington bailout of bad car loans could loosen the flow of financing for potential car buyers and spark demand for new cars and trucks. John Bergstrom, owner of the Bergstrom Automotive Group dealership chain in Wisconsin, said the buyers having the most trouble are those who are trading in a car they have owned for just a few years. Because they don't have much equity in their vehicle, or may even owe more on the loan than the car is worth, banks increasingly are requiring these buyers to produce hefty down payments. "The challenge is affordability," Mr. Bergstrom said. "People's bills are getting higher, and then they're squeezed on gasoline and they're squeezed on milk and so forth. When they look at a car, they say they can't really afford them." The tightening also has hit dealers as the car makers' finance arms raise the cost of the "floor plan" credit they offer dealers to buy cars for their inventory. Dealers typically repay lenders for these loans as each vehicle is sold.
Source:  The Wall Street Journal (Subscription required.)

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Auto Trade Group Urges Passage of Bailout Bill

WASHINGTON -- The trade association representing Detroit's Big Three automakers and seven other companies urged Congress today to pass a Wall Street bailout before week's end. Automakers noted that more than 90 percent of new vehicles are financed with credit. "It is crucial to our industry's survival that consumers have the ability to borrow money," said Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, the trade group representing General Motors Corp, Ford Motor Co., Chrysler LLC, Toyota Motor Corp., Daimler AG, Volkswagen AG and four other automakers. The U.S. House voted down a $700 billion package on Monday that would have allowed the U.S. Treasury to buy a range of distressed assets including auto loans. "The financial crisis not only compromises the vitality of our companies but also, and more importantly, the one-in-10 Americans whose jobs are supported by the auto industry, including suppliers, dealers and small businesses. Immediate action is imperative," McCurdy said.
Source:  The Detroit News

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Crisis Felt Unevenly on Main Street

Some Firms Can Still Tap Credit; Others Strain
A wide range of companies that depend on loans and services from financial institutions such as Wachovia are worried about their dwindling access to credit and are putting pressure on lawmakers to act. Among them are cash-strapped small businesses, the ailing auto-dealership industry and franchise owners of chain restaurants ... who are suddenly struggling to get loans as their traditional lenders, such as GE Capital and Bank of America, face problems of their own. "Our concern is with what would happen without the rescue plan, if capital does tighten up and continues to be hard to come by," said John McEleney, who runs two dealerships in Iowa and is the incoming chairman of the National Automobile Dealers Association. "The auto financing model could struggle, whether it's customers financing the vehicle or dealers financing their inventory." Auto dealerships are facing rising interest rates because they heavily relied on Wachovia and other big Wall Street institutions to borrow money to refresh their inventories of vehicles. Their borrowing costs are set on the international financial market. Libor, or the London interbank offered rate, which is the rate that banks worldwide are charging each other for short-term loans, has spiraled with the financial crisis. "My rates are floating rates for floor financing. As Libor goes up, those rates go up," said Jack Fitzgerald, owner of Fitzgerald Auto Malls, which operates a dozen locations, mostly in Maryland.
Source:  The Washington Post

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Honda's Hybrid Will Take on Prius

Global auto makers are rushing to challenge the dominance of Toyota Motor Corp.'s Prius hybrid with a slew of ecofriendly vehicles. But Honda Motor Co. is likely to pose the most formidable threat to Toyota when it unveils its new Insight hybrid car Thursday at the Paris Auto Show. Honda is betting that the five-passenger hatchback, set to go on sale next spring, will steal away Prius buyers by delivering greenness for fewer greenbacks. Honda has yet to disclose many details about the car or its cost, and it calls the car to be shown in Paris a concept, but it says Insight "will be priced significantly lower than hybrids available today." Analysts expect the model will cost less than $20,000, undercutting the current $22,000 starting price of the Prius. "It will be the first affordable hybrid for everyone," says Tatsuo Yoshida, an analyst for UBS Securities Research in Tokyo.
Source:  The Wall Street Journal (Subscription required.)

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Committed to Community: Auto Dealers CARing for Kids Foundation Kicks-Off Driving Away the Cold Month

E. NORRITON, Pa. -- The Auto Dealers CARing for Kids Foundation, along with approximately 115 of its dealer members, will host its first-ever Driving Away the Cold month this October. The program was developed to help the thousands of less fortunate children that are living in the Greater Philadelphia area without daily essentials like a warm winter coat. Driving Away the Cold is a signature program of the Foundation and Operation Warm, an organization that provides coats to underprivileged children throughout Pennsylvania, as well as nationwide. “When we first learned about Operation Warm and what it was doing in Pennsylvania, we knew we wanted to get involved immediately,” said Kevin Mazzucola, executive director of the Foundation and Automobile Dealers Association of Greater Philadelphia. “Therefore, we donated 10,000 coats on behalf of the entire Foundation earlier this year and then created a sub-program for our dealers to participate in because they wanted to get involved on a grassroots level and continue the giving.”
Source:  The Auto Channel

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NADA Update
Time is Running Out for NADA-SEMA Dealer Day Registration

Pre-registration for the inaugural NADA-SEMA "Dealer Day" program has been extended until Friday, Oct. 3. The event is being held in conjunction with the 2008 SEMA Show on Nov. 5 from 11 a.m. to 7 p.m. at the Las Vegas Convention Center. It will include a lively and informative panel discussion on four highly effective accessory sales profit models, a luncheon and four roundtable discussion lead by industry experts. A "Dealer Day" reception sponsored by NADA, SEMA and Automotive News will cap off the day.

Dealers can also take part in an optional SEMA Show tour from 8:45 to 10:45 a.m. The tour will depart from the Harley-Davidson store, located in the North Hall Lobby. Pre-registration is required for this event. To register visit www.sema.org/DealerDayReg or call (909) 396-0289 Ext. 158.

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ALERT: Be Sure to Work with NADA-Approved Convention Vendors

Both exhibitors and attendees planning to attend the 2009 NADA Convention & Exposition in New Orleans may receive email solicitations, phone calls, direct mail or other forms of communications from vendors and contractors claiming to be endorsed or approved by NADA, which many are not. Be on the lookout for these types of solicitations.

HERE IS A LIST OF OFFICIAL NADA VENDORS AND CONTRACTORS:              

  • Freeman (Service Contractor)
  • PSAV Presentation Services (Audio/Visual)
  • CCR Events (Computer Rental)
  • National Plant & Floral, Inc.
  • Experient (Lead Retrieval)
  • HMI – Holiday Models, Inc.
  • Oscar Einzig (Photography)
  • Marshall Robinson & Associates (Security)
  • Experient (Housing – Exhibitor & Attendee)
  • NADA's AutoExec Department (Advertising/Sponsorships)

Please use caution when dealing with any solicitations from companies that are not on this list. Contact NADA conventions at (703) 821-7141 if you have any questions.

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Two New Legal Compliance Publications Now Available Online

NADA has finalized two new publications aimed at helping dealers comply with several new federal legal requirements. All members will receive a free printed copy of A Dealer Guide to the FTC Affiliate Marketing Rule (L51) and Electronic Disclosure Rules for Dealership Online Commerce (L52) via mail. However, because the Oct. 1 compliance deadline for each of these new rules is approaching, NADA Management Education is making these two publications available immediately, in PDF form, free to members upon request.

The FTC’s Affiliate Marketing Rule specifies when certain credit-related information received from a company’s affiliates may be used for marketing purposes. The guide covering this new rule defines key terms, explains the new rule’s relationship to existing information-sharing restrictions under the Fair Credit Reporting Act, and provides examples of the notices required under the new rule.

The Federal Reserve Board’s Electronic Disclosure Rules affect dealers who currently engage in certain online activities (such as advertising leases online, advertising credit online, or providing access to/accepting online credit applications), or envision doing so in the future. This publication explains the rules, discusses amendments to certain regulations—including Regulations B, M, and Z—and provides context and compliance considerations.

Members may obtain a free PDF copy of each publication by sending an email to me@nada.org with their requests and member identification numbers.

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STAR Answers Dealers' Questions About Internet Access Methods

 

Standards for Technology in Automotive Retail (STAR) has developed new guidelines to to help dealers evaluate their Internet Access Methods. Visit STAR's Dealer Infrastructure Guidelines (DIG) publication for more information. To answer the question "How do I make sure I get a business-grade connection?" click here.

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Save Up to $760 on Select ThinkPad Notebooks

NADA members can save in three ways:

  • Instant savings with discounted Web pricing
  • Save even more with your NADA discount
  • Enter eCoupon USXFALLSAVINGS at checkout

To take advantage of this offer, visit www.nada.org/Technology/PCPurchaseProgram/ (member login required), click www.lenovo.com/shop/deals/nada, then click "Special Offers," or call (800) 426-7235, Option 1, Ext. 4838. Enter eCoupon USXFALLSAVINGS at checkout. Free ground shipping is available on all Web orders.

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Featured Video
 
 
NADA-TV Reports on the Launch of the 'Green Checkup' Campaign. Pictured above is NADA Chairman Annette Sykora with Colorado Gov. Bill Ritter at a news conference in Denver.


More Video Highlights

Quotable
 
"Our concern is with what would happen without the rescue plan, if capital does tighten up and continues to be hard to come by."

    -- John McEleney, owner of two dealerships in Iowa and incoming NADA chairman, explaining the credit strain on vehicle sales, The Washington Post, Oct. 1


"The challenge is affordability. People's bills are getting higher, and then they're squeezed on gasoline and they're squeezed on milk and so forth. When they look at a car, they say they can't really afford them."

    -- John Bergstrom, owner of the Bergstrom Automotive Group in Wisconsin, explaining how the credit strain is affecting consumers' buying power, The Wall Street Journal, Oct. 1


"It is crucial to our industry's survival that consumers have the ability to borrow money. The financial crisis not only compromises the vitality of our companies but also, and more importantly, the one-in-10 Americans whose jobs are supported by the auto industry, including suppliers, dealers and small businesses. Immediate action is imperative."

    -- Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, urging passage of the bailout bill, The Detroit News, Oct. 1

Video Highlights
 
  
Registration for the NADA convention in New Orleans Jan. 24-27 is now open. Click here to see just how much progress New Orleans has made since Katrina.


NADA's New Orleans Project: Lusher Charter School
NADA's Return to New Orleans
NADA and 'SeeMore's Playhouse' Promote Child Passenger Safety Month in September


Click here for more NADA-TV reports.

 
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