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Top Stories
Detroit Ills Symptomatic of a Manufacturing Plague
Toyota Boss: Credit Isn't at Fault for Poor Sales
Opinion: There Is No Auto Credit Crisis
Opinion: The Auto Credit Crisis: It's Real
GM, Lender Write Fewer Longer-Term Loans
GM Is Said to Offer 1% Dealer Payments on 2009 Models
Cash-Strapped Drivers Scrimp Despite Cheaper Gas
NADA Update
Coming Up: Another Virtual Seminar on the Red Flags Rule
Player Slots for Pre-Convention Charity Golf Tournament Filling Up
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
Detroit Ills Symptomatic of a Manufacturing Plague

Concern that tightening credit and an overall economic downturn will lead fewer people to buy new cars sent General Motors' stock price plunging 31 percent Thursday to close at $4.76, the lowest since 1950. Ford Motor fell 21 percent, closing at $2.08. Thursday's automobile stock sell-offs sparked new concern among economists and investors that the U.S. manufacturing sector, which had been slowly constricting, may be squeezed to an unimagined degree by the turmoil on Wall Street, posing a serious new economic threat at a time when the nation is already struggling with a financial sector collapse. In an economic downturn, automobile companies are often the first to feel the pinch as consumers postpone expensive purchases. Industry sales dropped last month to levels not seen in almost 20 years. Michael C. DiGiovanni, GM's director of global industry analysis, said the automaker is flying as blind as anyone else amid a credit crisis far more severe than anticipated. "We're in uncharted waters," DiGiovanni said. "Right now there's so much uncertainty, plans are being revised constantly." "I think there's a light at the end of the tunnel," Annette Sykora, chairman of the National Automobile Dealers Association, told a gathering this week at the Detroit Athletic Club. "I just don't know how long the tunnel is."
Source:  The Washington Post

 

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Toyota Boss: Credit Isn't at Fault for Poor Sales

Firm's U.S. sales chief claims consumers' lack of confidence has led some with good scores to wait
YORK TOWNSHIP -- Toyota Motor Corp.'s U.S. sales chief said credit is not to blame for the decline in Toyota's sales and that the U.S. is headed for a recession if the current crisis is not resolved quickly. "The vast majority of our customers are able to get approved for loans," Jim Lentz told reporters after the ribbon was cut on the company's new research-and-development center south of Saline Thursday. "In our case, credit is not the biggest challenge. Our biggest challenge is consumer confidence." Lentz said a record number of consumers are postponing new car purchases. Many mistakenly believe they can no longer get car loans because of the dramatic reports from Wall Street that suggest even those with excellent credit are being turned away by lenders.
Source:  The Detroit News

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Opinion: There Is No Auto Credit Crisis
by Ed Wallace

Auto sales are down. But it's not because Americans can't get financing. It's because they aren't shopping for cars
September's new car sales were horrendous, but this wasn't primarily because any credit lockup was keeping people with moderate or better credit ratings from obtaining loans. On dealerships closing their doors for lack of available credit, such as Bill Heard's 14-store General Motors chain in Georgia and many other local dealers, the media led the public to believe that, if only more credit had been available, those dealers might have remained in business. Wrong! It's time for a lesson in Automotive Retailing 101. Yes, the credit crunch did hurt sales last month, just not in the way the media portrayed it: When news organizations started reporting on the potential for the next Great Depression, along with the political battle over the $700 billion Wall Street bailout plan, a great many A Tier customers quit going into car dealerships.
Source:  BusinessWeek

[Editor's Note:  Ed Wallace hosts the top-rated talk show "Wheels" on KLIF AM in Dallas, Texas.]

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Opinion: The Auto Credit Crisis: It's Real
by Marc Cannon

AutoNation disputes the claim that there is no credit crisis. Dealers and consumers across the country are feeling it every day
While Ed Wallace claims in his Oct. 8 column that there is no auto credit crisis (BusinessWeek.com, 10/7/08), I invite him to actually talk with any of the thousands of customers who couldn't secure adequate financing on a new vehicle purchase this past month. The credit crunch is real, it's pervasive, and it's directly affecting all auto retailers. Worse still, it cuts across all areas of the business, affecting not only people with shaky credit to begin with, but also people who would normally be virtually guaranteed financing. Back in 2007, for example, we were qualifying 90% of our Tier 1 shoppers. Today, we're lucky to qualify 60%.
Source:  BusinessWeek

[Editor's Note:  Marc Cannon is the senior vice-president for communications at Fort Lauderdale-based AutoNation.]

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GM, Lender Write Fewer Longer-Term Loans

Amid a virtual freeze on consumer credit, General Motors is emphasizing cash transactions over long loans, the company’s sales chief said today. “We’ve been writing fewer 72-month loans,” Mark LaNeve, GM’s vice president of North American sales, service and marketing, told Automotive News. “In September and October, we did a much higher percentage of cash -- meaning non-lease or non-APR, than we did in decades.” This week, GMAC Financial Services restricted some borrowers to loans of no more than 60 months. The new restriction affects a “small percentage” of GMAC’s loan volume, said company spokesman Sue Mallino. Mallino would not speculate on whether GMAC will expand the 60-month ceiling to more borrowers.
Source:  Automotive News (Subscription required.)

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GM Is Said to Offer 1% Dealer Payments on 2009 Models

General Motors Corp., trying a new tactic to stem its sales decline, is offering U.S. dealers a cash incentive of 1 percent on each 2009 vehicle they sell, according to 3 people with knowledge of the strategy. The so-called marketing stimulus payments will be made six months after a vehicle is sold and will be computed from the base-model invoice price, said the people, who didn't want to be identified because the plan hasn't been made public. The program will run to the end of this year, they said. "GM seems to be trying to get dealers to try to order more vehicles and give them an incentive to really sell more between now and the first payment," said Troy Ontko, president of AISrebates.com in Ann Arbor, Michigan, which tracks auto offers.
Source:  Bloomberg

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Cash-Strapped Drivers Scrimp Despite Cheaper Gas

KANSAS CITY, Mo. -- Gasoline prices here have tumbled even more than in most places, to less than $3 a gallon, but drivers say they still aren't filling up their tanks and zooming down the highways. Instead, the sour economy is prompting them to stick to their new fuel-efficient ways, a pattern that is likely to hold across the country even if gas gets cheaper. "There's been a sea change in people's attitudes in terms of gasoline consumption," said Michael Right, a spokesman for the auto club AAA in Missouri. "The economic situation is not conducive to spending more money on energy."
Source:  The Wall Street Journal (Subscription required.)

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NADA Update
Coming Up: Another Virtual Seminar on the Red Flags Rule

Due to the unprecedented demand—so far, more than 1,100 individuals and dealer groups have logged on to NADA’s Red Flags seminars—we are offering another virtual seminar on what you need to do by Nov. 1, 2008 to comply with the new FTC Red Flags Rule. The seminar will be repeated on Monday, Oct. 20 from 1-3 p.m. EST.

Like past sessions, the seminar will be presented live and online, and invite participation by attendees. Participants are encouraged to ask questions, which will be answered by presenters, Bert Rasmussen, author of NADA’s A Dealer Guide to the FTC Red Flags and Address Discrepancy Rules: Protecting Against Identity Theft, and Paul Metrey, NADA director of regulatory affairs. The seminar will address what you need to do by Nov. 1, 2008 to comply with the Red Flags Rule, such as:

  • Preliminary risk assessment
  • Construction of a written Identity Theft Prevention program
  • Knowing the indicators of identity theft (Red Flags) and how to detect and respond to them
  • Training requirements
  • Service provider oversight
  • Involvement of dealership’s board of directors

Dealers, general managers, CFOs, controllers, finance managers, sales managers, IT managers and outside compliance professionals are encouraged to attend. The fee is $199 per computer connection. Be sure to have your copy of A Dealer Guide to the FTC Red Flags and Address Discrepancy Rules: Protecting Against Identity Theft at hand during the seminar. To register online, go to www.nada.org/seminars, or call (800) 248-6232, Ext. 7273. To order A Dealer Guide to the FTC Red Flags and Address Discrepancy Rules: Protecting Against Identity Theft, go to www.nada.org/RedFlags.

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Player Slots for Pre-Convention Charity Golf Tournament Filling Up

Registrations for the "Dealers for Charity" golf tournament in New Orleans are starting to roll in, reports Lin Peacock, vice president of NADA Insurance. The tournament, hosted by NADA’s hole-in-one insurance partner, ACECO, is slated for Friday, Jan. 23, 2009 before the opening of the NADA Convention and Exposition. Proceeds from the event will benefit the Brees Dream Foundation, a charitable organization founded by New Orleans Saints quarterback Drew Brees. The tournament will be held at TPC Louisiana, the only PGA Tour course in the state. The event is open exclusively to NADA members. Registration fees are $300 per player. Participation is limited to the first 144 golfers who sign up. The registration deadline is Nov. 9. Visit www.ACECOinsurance.com and click on the "Dealers for Charity" logo to sign up.

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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. NADA Management Education is also 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
 

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.
More Video Highlights
Quotable
 
"I think there's a light at the end of the tunnel. I just don't know how long the tunnel is."

    -- NADA Chairman Annette Sykora referring to the current state of the auto industry, The Washington Post, Oct. 10


"The credit crunch is real, it's pervasive, and it's directly affecting all auto retailers."

    -- Marc Cannon, AutoNation, BusinessWeek, Oct. 9


"In our case, credit is not the biggest challenge. Our biggest challenge is consumer confidence."

   
-- Jim Lentz, Toyota Motor's sales chief, explaining that news reports are leading consumers to mistakenly believe they can no longer get car loans, The Detroit News, Oct. 10

NADA Convention 2009
 
  
Convention Workshops Keyed to Today’s Economy

Now more than ever, dealers need to meet, talk and learn how to survive and thrive in tough times. In that spirit, workshops planned for NADA’s upcoming convention in New Orleans will focus on recession-proof business operations. NADA Headlines will spotlight three convention workshops each week.

(1) Selling Up in a Down Economy
(2) Survive or Thrive in the Used-Car Superstore Era
(3) Exposing the Myths of Automotive Internet Sales

Selling Up will feature Mark Walsh, veteran car salesman and manager, who will present a recession-busting blueprint to jump-start sales and revenues.

Survive speaker Dale Pollak, chairman of vAuto, Inc., will reveal how to use superstore techniques to realize your profit potential.

The Internet Sales Myths workshop will feature Howard Polirer of AutoTrader.com and Joe Lescota of Northwood University. They will show you how to turn online vehicle shoppers into buyers.

Join us in New Orleans at the 2009 NADA Convention and Exposition Jan. 24-27. Click here to register.

Video Highlights
 


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.


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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