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Tuesday, Oct. 28, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
GM, Chrysler Request $10 Billion in Aid
White House Explores Aid for Auto Deal
GM Chief Wagoner Is Said to Personally Lobby for Federal Aid
GMAC Wants to be Part of Federal Rescue Program
More Car Dealers Shut Down
Vehicle Transaction Prices Continue Falling
Tax Credits Push Plug-in Vehicles
SUV Sales Stuck in First Gear
Honda Ups Output on Small Car Demand
Volkswagen Overtakes Exxon as Most Valuable Company
NADA Update
NADA Insurance Offers New Plan to Protect Dealerships from Identity Theft Liability
Red Flags Enforcement Delayed Six Months
Player Slots for Pre-Convention Charity Golf Tournament Filling Up
STAR Answers Dealers' Questions About Internet Access Methods
HP Offers NADA Members Small Business 'Smart Deals'
Top Stories
GM, Chrysler Request $10 Billion in Aid

NEW YORK/DETROIT -- General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday. The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday. In addition to its equity stake, the U.S. government is also being asked to provide support for the GM-Chrysler merger by taking over some $3 billion in pension obligations under the terms of a proposal now before the government for review, the first source said. The final component of the proposed support package would be a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity, the person said.
Source:  Reuters

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White House Explores Aid for Auto Deal

WASHINGTON — The Bush administration is examining a range of options for providing emergency financial help to spur a merger between General Motors and Chrysler, according to government officials. People familiar with the discussions said the administration wanted to provide financial assistance to the deeply troubled Big Three Detroit automakers, possibly by using the Treasury Department’s wide-ranging authority under the $700 billion bailout program that Congress approved this month. Another option under consideration is to tap a $25 billion loan program that Congress just created to help the auto companies modernize their plants. A third option would involve going back to Congress, immediately after the Nov. 4 election, for authority to spend funds aimed specifically at the auto industry. On Monday, White House officials said the car companies might well be eligible for some sort of help under the broader financial rescue program, known as the Troubled Assets Relief Program, or TARP. “It’s clear that the automakers are dealing with a very serious situation, they have for some time,” Dana Perino, the White House press secretary, told reporters on Monday.
Source:  The New York Times

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GM Chief Wagoner Is Said to Personally Lobby for Federal Aid

General Motors Corp. Chief Executive Officer Rick Wagoner is personally leading a lobbying push for federal aid as the biggest U.S. automaker seeks to merge with Chrysler LLC, people close to the discussions said. His involvement includes attending meetings, such as one with Treasury Department officials last week in Washington, said the people, who asked not to be identified because the talks are private. GM has asked for government funds to help combine with Cerberus Capital Management LP's Chrysler, people have said.
Source:  Bloomberg

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GMAC Wants to be Part of Federal Rescue Program

WASHINGTON -- GMAC Financial Services wants to be part of the federal government's $700 billion rescue of the nation's financial system, the company said today. "GMAC has been in discussions with the government on a multidimensional level," said GMAC spokeswoman Toni Simonetti. "We are interested in exploring options that are available to us through the federal government's tool kit that was implemented under the new legislation."
Source:  Automotive News (Subscription required.)

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More Car Dealers Shut Down

Auto Sellers Turn Off Lights as Sales Slump, Credit Tightens
With credit drying up and new-vehicle sales slumping to a 25-year low, car dealerships from New Jersey to California are going out of business at an accelerating pace, threatening greater economic pain for communities around the country. That is a heavy blow to a key piece of the U.S. economy. The country's 20,700 dealerships accounted for $693 billion in sales last year, or 18% of all retail sales, according to NADA. Dealership wages and salaries make up 13% of the nation's retail payroll. The rapid disappearance of dealers could also complicate the challenges facing General Motors Corp., Chrysler LLC and Ford Motor Co.
Source:  The Wall Street Journal (Subscription required.)

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Vehicle Transaction Prices Continue Falling

Revenue dips for 10th straight month
New vehicle transaction prices in the United States declined for the 10th consecutive month in October -- after 44 months of increases from May 2004 to December 2007. The Power Information Network, a subsidiary of J.D. Power and Associates, on Monday reported the finding in its industry newsletter, PIN Insights. The industrywide decline means that automakers are bringing in less revenue and are likely to be less profitable when they report third-quarter earnings. "They have to reduce costs as quickly as they can to minimize this," Tom Libby, senior director of industry analysis at PIN, told the Free Press. "It's a serious situation," he said. "It does have enormous implications." PIN attributes the decline largely to the soft environment: tight credit, low consumer confidence and relatively high gas prices. However, the market shift from large SUVs and other trucks to less-expensive, fuel-efficient small cars is also a factor.
Source:  Detroit Free Press

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Tax Credits Push Plug-in Vehicles

They'll go until industry sells 250,000
WASHINGTON -- Plug-in electric vehicles from General Motors and Toyota are not expected to hit showrooms for more than a year, but the first buyers will be eligible for a tax credit that could reach $7,500. The tax incentives, which received scant attention in the $700-billion bailout of the financial industry, are aimed at making the green vehicles more affordable. Plug-ins are expected to be more expensive than conventional hybrids, and the tax breaks will give dealers a better sales pitch when carmakers begin production during the next five years.
Source:  Associated Press

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SUV Sales Stuck in First Gear

The previously high gas prices hammered the automotive industry’s sales of gas-guzzling vehicles, with sales of all cars in the U.S. off by 12.8 percent for the year through September. Sales of large sedans are off 28.7 percent and SUV sales are down 36.1 percent, according to the National Automobile Dealers Association. Raymond Ciccolo, president of the Village Automotive Group dealership chain in Massachusetts, said he doesn’t see the sales woes ending until the financial markets calm down. He said there’s a “misperception” that auto loans aren’t available. Paul Taylor, NADA’s chief economist, said housing prices are key. Many consumers used to buy cars with home-equity loans, but the housing market collapse has taken down sales of cars with it, he said. Not all car dealers are hurting. The NADA reports that sales of compact cars are up about 6.2 percent nationwide through September -- and would have been higher if there were more fuel-efficient compacts in inventories.
Source:  Boston Herald

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Honda Ups Output on Small Car Demand

Honda Motor Co., Japan's second-largest carmaker, increased global production in September to meet demand for small cars in the U.S. and emerging markets. Output rose 9.6 percent to 360,453 vehicles last month, the company said in a statement released Monday. "Honda has a very focused strategy" emphasizing small cars over larger vehicles, said Hirofumi Yokoi, a Tokyo-based analyst at auto-consulting company CSM Worldwide. "That leaves them in pretty good shape right now."
Source:  Bloomberg

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Volkswagen Overtakes Exxon as Most Valuable Company

Volkswagen AG became the world's biggest company by market value after Porsche SE announced plans to raise its stake in the German carmaker to 75 percent, triggering demand from short-sellers. Volkswagen rose as much as 485.01 euros, or 93 percent, to 1,005.01 euros and was up 55 percent as of 11:10 a.m. in Frankfurt trading. Wolfsburg, Germany-based Volkswagen has risen more than fivefold this year and at its intraday peak was valued at 296 billion euros ($370 billion), more than Exxon Mobil Corp.'s $343 billion market value at yesterday's closing price in New York, according to data compiled by Bloomberg.
Source:  Bloomberg

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NADA Update
NADA Insurance Offers 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.nadainsurance.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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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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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
 
"...there's a misperception that auto loans aren’t available."

   
-- Raymond Ciccolo, president of the Village Automotive Group dealership chain in Massachusetts, making the point that credit is available, The Boston Herald, Oct. 28


"It's clear that the automakers are dealing with a very serious situation, they have for some time."

   
-- Dana Perino, White House press secretary, responding to reports that the Bush administration may provide financial assistance to the Detroit 3 automakers, The New York Times, Oct. 28"


"[Falling vehicle transaction prices] have enormous implications."
 

    -- Tom Libby, senior director of industry analysis at Power Information Network, Detroit Free Press, Oct. 28
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.