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Top Stories
GM Said to Ask for U.S. Aid in Chrysler Merger Talks
Bankruptcy Fears Rise as Chrysler, GM Seek Federal Aid
Chrysler Dealers Under GM? States Would Rule
Chrysler Cuts May Help Deal
McCain Cautious on Auto Industry Bailout
The Scramble for Credit
Lots of Woe: Car Dealers in Crisis
Credit Crunch Hits Buyers of Detroit 3
COMMENT: Names Familiar? NADA Leadership is a Family Affair
NADA Update
NADA Insurance Announces New Plan to Protect Dealerships from Identity Theft Liability
Red Flags Enforcement Delayed Six Months
NADA to Eliminate Duplicate Versions of NADA Headlines on Oct. 28
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
HP Offers NADA Members Small Business 'Smart Deals'
Top Stories
GM Said to Ask for U.S. Aid in Chrysler Merger Talks

General Motors Corp., the largest U.S. automaker, has asked the Treasury Department for financial aid to help complete a merger with Cerberus Capital Management LP's Chrysler LLC, two people with knowledge of the matter said. Treasury Secretary Henry Paulson would prefer any funding come from the $25 billion in low-interest loans approved last month for the auto industry to build more-efficient vehicles, not the $700 billion banking-system rescue, said the people, who asked not to be identified because the talks are private. GM executives have asked Treasury to consider taking a stake in the Detroit-based company... Federal aid may boost cash for the money-losing automakers while they await merger savings that analysts have said may take months to realize. The U.S. auto market may shrink this year to the smallest since 1993 as the credit crunch and a slowing economy crimp demand.
Source:  Bloomberg

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Bankruptcy Fears Rise as Chrysler, GM Seek Federal Aid

As talks between General Motors Corp. and long-time rival Chrysler LLC continued over the weekend, a harsh reality has emerged: Without a merger and possibly an assist from the federal government, two of Detroit's Big Three auto makers could run out of cash within a year. Though GM and Chrysler dismiss the notion, analysts and investors have begun to question whether one of the companies -- locked out of the credit markets and burning cash rapidly -- might have to seek bankruptcy protection. Such a filing could set off a chain reaction across the U.S. auto industry, choking off parts supplies to healthier Asian and European car makers and slamming thousands of local car dealers.
Source:  The Wall Street Journal (Subscription required.)

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Chrysler Dealers Under GM? States Would Rule

If General Motors acquires Chrysler LLC, state franchise laws would impose tight limits on GM's ability to kill brands or dump large numbers of dealers. Under those laws, GM would have to honor Chrysler's dealer agreements and support its brands, franchise lawyers say. And if GM were to eliminate the Chrysler, Dodge or Jeep brands, the lawyers add, it would have to pay dealers for their investments. One more if: Should Chrysler declare bankruptcy as part of merger proceedings, franchise lawyers say, GM would have more freedom to trim Chrysler's dealership network. "Dealership franchise agreements cannot be terminated at whim under the state franchise laws," says Mike Charapp, president of the National Association of Dealer Counsel, a trade group for lawyers who work with dealers. Jim Moors, a franchise attorney with the National Automobile Dealers Association, says franchise laws in several states address the discontinuation of brands.
Source:  Automotive News (Subscription required.)

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Chrysler Cuts May Help Deal

Trimming 5,000 salaried jobs may make it more attractive to GM or other potential suitors
Chrysler LLC said Friday that it will cut almost a third of its white-collar work force, raising questions about whether the move is in response to difficult market conditions or a step toward preparing the struggling automaker for a possible sale. David Cole, chairman of the Center for Automotive Research in Ann Arbor, said it was unclear whether the cuts are only a reaction to the dramatic decline in vehicle demand, or a move to make Chrysler leaner and more attractive for a potential sale or merger. "It's hard to tell, but they would be consistent with a merger," he said. Whether or not a deal is reached, Chrysler Chairman and CEO Robert Nardelli described conditions in the market as "truly unimaginable times for our industry," in a letter to workers announcing the cuts. "We cannot operate as we have in the past," Nardelli wrote in the letter, and he gave the strongest indication yet that significant changes are coming at Chrysler. "In the near future, we will be making organizational announcements as a result of restructuring actions reflecting the need to find new ways to operate."
Source:  The Detroit News

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McCain Cautious on Auto Industry Bailout

WASHINGTON -- Republican presidential candidate John McCain on Sunday declined to embrace the idea of $15 billion more in government aid for the struggling U.S. automobile industry but did not rule it out. In an interview on NBC's "Meet the Press," McCain was asked about a suggestion by a Michigan economist that the government provide $15 billion cash to help the U.S. auto industry survive the financial crisis. McCain noted the U.S. Congress recently authorized $25 billion in low-interest loans to help the industry retool to produce more fuel-efficient vehicles. Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, told the Detroit Free Press last week that a $15 billion cash bailout, with no restrictions except that the money be spent in the United States, is needed to help General Motors Corp., Ford Motor Co. and Chrysler LLC survive the current crisis. "Let's get the $25 billion to them to start with and see how that goes," McCain said.
Source:  Reuters

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The Scramble for Credit

Survey:  Worried Dealers Flee GMAC
General Motors dealers are fleeing GMAC Financial Services — the nation's No. 2 auto lender — as a source of inventory financing and consumer loans. Dealers seek to replace GMAC as their floorplan lender in the wake of new restrictions imposed by the company, according to an Automotive News survey of more than 500 GM dealers. Leaders of some state dealer associations warn that scores of dealerships could fail because of GMAC's new policies.
Source:  Automotive News (Subscription required.)

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Lots of Woe: Car Dealers in Crisis

Ten percent of U.S. showrooms could be gone by late 2009
WAL-Mart might not have difficulty selling Hot Wheels this year, but auto dealers are struggling to move the real thing. Just ask Gary Bell Sr., whose family has been selling cars for 85 years. That is, until December, when the Leonardtown, Md., business will end for the Bells, thanks to the slumping economy and credit crunch. With sales less than half what they were at the beginning of the decade, Bell could no longer make a go of the General Motors dealership his grandfather cofounded. "It's very emotional," says Bell, 42. These are days of despair for car dealers.
Source:  Newsweek

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Credit Crunch Hits Buyers of Detroit 3

Just 42% of U.S. consumers who bought a new car or truck during the past three months chose one made by Detroit companies, down from 47% a year ago -- a rapid decline that might have been aggravated not just by the suffering economy but also by the lower income levels of U.S.-brand customers. "I think the credit situation is impacting the domestics more than the Asians," said Tom Libby, senior director of industry analysis at the Power Information Network, a subsidiary of J.D. Power and Associates. Libby called the weak lending environment yet "another headwind" for Detroit's automakers, which first saw their retail share of the U.S. market fall under the 50% mark in the second quarter of 2006, as gas prices started to rise and consumers began rejecting the big SUVs and pickups for which Detroit has been best known.
Source:  Detroit Free Press

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COMMENT: Names Familiar? NADA Leadership is a Family Affair
by Edward Lapham

Despite the era of consolidation, the rise of public dealership groups and the looming specter of another oppressive death tax, many dealers still bring their children into the business to become the family's second, third or even fourth generation to run a dealership. Now the pattern has spread to the National Automobile Dealers Association. Starting next January at the NADA convention in New Orleans, the dealer group will have two consecutive chairmen whose dealer fathers also led the organization. The association's board elected John McEleney of Iowa as chairman for 2009. His father, Warren McEleney, headed NADA in 1971... NADA's directors also elected Ed Tonkin of Oregon as next year's vice chairman, which means he'll be chairman in 2010. His father, Ron Tonkin, was NADA president in 1989. Now before you start muttering about nepotism, remember that you can't just stroll into NADA headquarters in McLean, Va., and expect to be anointed. But it's not just about fathers, sons and good old boys anymore. This year's chairman — Annette Sykora, a third-generation dealer in Texas — is the first female to lead the group. Her husband, Patrick, is a second-generation dealer, and their teenage daughter already is learning the business.
Source:  Automotive News (Subscription required.)

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NADA Update
NADA Insurance Announces New Plan to Protect Dealerships from Identity Theft Liability

NADA Insurance is offering a new Identity Theft Insurance Plan to NADA members. The plan will provide dealers and its employees with the financial resources needed in case they are implicated in an identity theft incident. The wide use of data processing, electronic loan origination, e-signature and Web-based transactions has dramatically increased the incidence of identity theft. Since 2005, more than 88 million Americans have been victims of identity theft. “Identity theft is one of the fastest growing crimes in America,” says Lin Peacock, vice president of NADA Insurance. The insurance plan covers the following identity theft expenses:

• Legal Liability
• Regulatory Action Expenses
• Notification Costs
• Identity Theft Recovery Services
• Defense Costs
• Crisis Expenses

“An identity theft case could cost your dealership hundreds of thousands of dollars and negatively impact your dealership’s reputation,” Peacock added. The new plan also protects dealers and employees individually in case a customer files a civil suit against specific employees. The plan’s coverage ranges from $100,000 to $5 million. For more information or to apply for coverage, contact NADA Insurance at (888) 302-4342 or go to www.nada.insurance.com.

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Red Flags Enforcement Delayed Six Months

The FTC has announced a six-month “delay of enforcement” of the Red Flags rule. Dealers and other creditors now have until May 1, 2009 to develop and implement a written identity theft prevention program (“ITPP”). This does not affect the address discrepancy rule, which continues to have an effective date of Nov. 1, 2008.

Dealers who have already drafted and implemented their ITPP are not required to do anything. NADA encourages those dealers who have not yet finalized their ITPP to complete their work as soon as possible in advance of the new deadline. 

All NADA members received a copy of A Dealer Guide to the Red Flags and Address Discrepancy Rules: Protecting Against Identity Theft (http://eseries.nada.org/scriptcontent/ProductDetail.cfm?pc=MEDPRL50E) in August 2008. For more information, see http://ftc.gov/opa/2008/10/redflags.shtm and http://ftc.gov/os/2008/10/081022idtheftredflagsrule.pdf.

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NADA to Eliminate Duplicate Versions of NADA Headlines on Oct. 28

Members are urged to subscribe to e-newsletter and cancel printed versions.
If you are currently receiving NADA Headlines in both the weekly fax and the daily e-mail formats, you will no longer get the fax version after Oct. 28. NADA Headlines fax version is more condensed than the daily e-mail and also does not offer the top industry news stories or NADA-TV video reports found in the e-mail version. This move will help cut paper waste as well as fax costs for NADA and its members. To cancel your fax or mail subscription, contact NADA Membership at membership@nada.org.

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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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HP Offers NADA Members Small Business 'Smart Deals'

NADA members can save up to 30 percent on HP's dc5750 desktop PCs or $791 on HP's Compaq 2710p. This offer is valid on call-in orders only. To take advantage of this offer, call (800) 888-0365 and mention passcode "NAD1." To see more "Smart Deals," visit NADA's PC Purchase Program online at www.nada.org/Technology/PCpurchaseprogram (member login required), then click on www.hp.com/go/promos/nad1 then "Smart Deals" on left navigation bar.

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Featured Video
 

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


More Video Highlights

Quotable
 
"We cannot operate as we have in the past. In the near future, we will be making organizational announcements ... reflecting the need to find new ways to operate."

    -- Chrysler Chairman and CEO Robert Nardelli in a letter to workers announcing job cuts, The Detroit News, Oct. 27
NADA Convention 2009 
 
  
Convention Workshops Keyed to Today’s Economy

Now more than ever, dealers need to meet, talk and learn how to survive 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) The Credit Crisis: Implications and Opportunities for Your Business
(2) Leveraging the Social Web: Build Your Brand, Grow Your Business
(3) Lifeline to Profit$

Credit Crisis speaker Erin Kerrigan of AutoStar will update dealers on the credit crisis and help them understand it. She will discuss how to manage through the crisis, explaining the implications of limited credit and the corresponding business model changes required for survival. She will also address opportunities for auto retailing.

Social Web will feature Jared Hamilton of DrivingSales.com, who will explain which social networking mediums can affect dealers’ businesses and provide actual case studies. Attendees will learn how to use social networking to build their brands, amplify their messages and increase sales.

Lifeline will reveal how to increase profitability in all departments, taking a candid look at each. Presenting the workshop will be Randy Brenckman of NADA Dealer Academy and Brad Lawson and Mark Rogers of NADA 20 Group. Participants will develop action plans so they can better prepare to guide their management teams. Lifeline will cover cash flow, absorption, inventory management, and operational drivers of fixed and variable departments.

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


Click here for more NADA-TV reports.

 
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NADA For more information on NADA, visit www.nada.org or contact NADA, 8400 Westpark Drive, McLean, VA 22102. This email may contain an advertisement of NADA products and services. Any opinions or statements contained herein do not necessarily reflect the views of NADA. Factual errors are the responsibility of the listed publication. If you are a franchised new-car or -truck dealer and would like to become a member of NADA, please visit the Join NADA section of www.nada.org. Questions or comments concerning NADA Headlines content may be directed to media@nada.org.