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Top Stories
Deals Are Plentiful (but Bring Good Credit)
Dealers Say Credit Crunch Isn't Affecting Car Loans
GM and Chrysler Clear Major Deal Issues
Hurdles Emerge For GM, Chrysler
Fraud Alert: Bogus Treasury Notes, Bonds and Vendor Account Numbers Being Used at Dealerships
Opinion: Ask for Options on Financing When Buying a Car
Committed to Community: Cerritos College Foundation Receives Donations for Automotive Partners Building
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
Scam Alert: Spark Plug Orders
STAR Answers Dealers' Questions About Internet Access Methods
HP Offers NADA Members Small Business 'Smart Deals'
Top Stories
Deals Are Plentiful (but Bring Good Credit)

Car dealerships have been lonely places this fall, with many customers driven away by the economic tsunami of 2008. Sales have plummeted, and no one knows when these customers will be back. “Because of all the uncertainty, consumers are understandably reluctant about plunging into a big-ticket purchase right now,” said Greg McBride, senior financial analyst at Bankrate.com. At Valencia Acura in Valencia, Calif., Cheri Fleming, the owner, has witnessed something she has never seen before because of that fear. Customers come in, negotiate a price and even get so far as to allow the dealer to help procure a loan, and then “a lot of times, they just get up and leave.” “Consumer confidence is crushed,” Ms. Fleming said. Showrooms are not completely empty, of course. Now is a good time to buy a car — there are plenty of bargains around, as dealers make way for the 2009 models by offering rebates and other incentives to move the 2008 models off the lots. Still, it is not all gloom and doom out there for car buyers looking for loans. General Motors, in an effort to reach customers who cannot qualify for a GMAC loan, is reminding them in a new advertising campaign that they can obtain loans from other lenders through G.M. dealers. Meanwhile, other lenders are more upbeat about their prospects. George Borst, chief executive of Toyota Financial Services, said: “In this market, we have actually been able to expand our lending to buyers. We have been very active in leasing, and our approval rate on prime customers remains well over 90 percent.” Car buyers who are financing through a credit union are also on good footing, according to Steven W. Rick, senior economist for the Credit Union National Association...
Source:  The New York Times

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Dealers Say Credit Crunch Isn't Affecting Car Loans

Everything from hikes in fuel prices to the mortgage crisis have been blamed for the ongoing decline in car sales, but one Valley auto dealer has a different take on what’s contributing to the problem. According to Gary Faga, head of Ladin Auto Group in Thousand Oaks, the perception that financing is unavailable for would-be car buyers has discouraged consumers from patronizing dealerships. They think, “I can’t get financed,” Faga said. “It’s very frustrating.” That’s because the opposite is true, he asserted. “Right now all the media blasting says that it’s impossible to get loans. That doesn’t seem to be the case… There’s no shortage of cash but a shortage of people. The amount of customer flow has been shortchanged because of the media telling people they can’t do anything right now.” Faga acknowledged that financiers are more stringent in structuring deals but insists that financing is available for consumers of all stripes, bad credit and all. Just recently, Ladin sold a car to a customer with a FICA store below 500, he said. While the customer was required to make a higher down payment, she ultimately was able to purchase the vehicle. Ford Motor Credit Co., Hyundai Motor Finance, BMW Finance and Mini Cooper Finance have all been highlighted by area dealers for making financing readily available to customers.
Source:  San Fernando Valley Business Journal

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GM and Chrysler Clear Major Deal Issues

NEW YORK/DETROIT -- General Motors Corp and Cerberus Capital Management have resolved the major issues in a proposed GM-Chrysler merger, but the final form of any deal would depend on the financing and government support available, sources familiar with the talks said on Wednesday. Both sides have agreed that GM Chief Executive Rick Wagoner would lead the combined automaker... A merged GM-Chrysler would be the largest automaker by global sales, but analysts have cautioned it would struggle to turn around the overlapping Detroit-based operations of two companies that have seen mounting losses tied to a global downturn in sales. The sources did not specify on Wednesday what the major issues were. Talks between GM and Cerberus have covered a range of questions, including the stake the private equity firm will retain in the merged automaker, ownership of affiliated finance company, GMAC, and which of Chrysler's assets GM would maintain... GM has been in talks with Cerberus about buying Chrysler since last month, but the biggest hurdle has been the difficulty in securing investment or financing...
Source:  Reuters

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Hurdles Emerge For GM, Chrysler

Federal Money, Union Support Are Key Issues
General Motors' pursuit of a possible merger with Chrysler is running up against several unresolved issues including whether the companies can line up government financing and win union support... But the talks are progressing on other fronts. [GM's chairman and chief executive Rick] Wagoner was in Washington this week to ask the Bush administration for financial assistance with the merger... Analysts said GM would need at least an additional $10 billion to combine operations and eliminate pieces of Chrysler that overlap with GM. Treasury secretary Henry M. Paulson Jr. met with Wagoner, but it was unclear whether the department would put money into the merger. Sources familiar with Treasury officials' thinking said the department is in negotiations to expand the $700 billion rescue plan to include U.S. auto companies. Under a broad interpretation of the law that authorized the financial rescue package, Detroit's Big Three are eligible for aid. But the Treasury has the authority to determine whether any money will be allocated. Meanwhile, GMAC, the financing arm of General Motors, is in talks to become a bank holding company, a shift that would allow it to take advantage of the government's $700 billion financial rescue package...
Source:  The Washington Post

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Fraud Alert: Bogus Treasury Notes, Bonds and Vendor Account Numbers Being Used at Dealerships

The U.S. Department of the Treasury is investigating cases where individuals are using counterfeit documents that appear to be issued by the Treasury Department to purchase or attempt to purchase vehicles from auto dealerships or pay off debts. The Treasury Department was informed in September that an individual attempted to purchase a $67,000 car at a dealership in Phoenix, Ariz. utilizing a bogus promissory note and bond.

In this case, the purported value of the note was $75,000 and the bonds were purported to represent government obligations of $150,000 and in another case, up to $900 million. The types of notes and bonds may or may not be referenced as “U.S. Treasury” bonds or promissory notes. However, they are identified as “personal promissory notes” and/or “private offset bonds,” and often contain the name of the Secretary of the U.S. Treasury—currently Henry Paulson—on the document.

The name of the Treasury Secretary (Henry Paulson) does not appear on any document listed as a private bond or promissory note since these items are not backed or guaranteed by the U.S. Treasury. Moreover, the only type of paper bond issued by the U.S. Treasury that a citizen can purchase today is a U.S. Savings Bond. All other Treasury bonds are electronic transactions and the buyer does not receive an actual hardcopy document. 

A similar scheme was also identified in Indiana. It was reported to the Treasury Department that unauthorized individuals were providing auto dealerships and other retail businesses with bank routing and account numbers to purchase vehicles or other property, and/or to payoff personal debts. They represented these account and routing numbers to be personal grant or bank accounts, and directed the dealerships to electronically debit these accounts to fund payments for their purchases. In the reported case, the account was a Treasury Department account for vendors or businesses to electronically transmit payments.

If you have any information regarding such Treasury-related fraudulent activities, we request that you contact the Department of Treasury, Office of Inspector General (OIG), Office of Investigation’s Hotline at (800) 359-3898 or email Hotline@oig.treas.gov. Car dealerships approached by individuals engaging in these type of activities should consider the potential for fraud. If you suspect fraudulent activity, it is recommended that you contact the OIG Hotline or the local police immediately. Additional information regarding this and other similar fraud schemes can be found at the following Department of Treasury Web site by clicking here.

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Opinion: Ask for Options on Financing When Buying a Car
by Paul A. Eisenstein

I’d seen the ad a dozen times and almost missed the new tagline: “Cadillac dealers,” the announcer intoned, “have access to 100s of banks and lenders” able to provide loans to potential customers. What’s so unusual about that? Until recently, a potential Caddy buyer would have been steered to GMAC for a loan. But the credit crunch has hit this so-called captive finance subsidiary hard, and for the most part, it’s now writing contracts only for those who have near-perfect credit scores of at least 700. If you’re looking for a new vehicle, you might have to dicker over more than just sticker price. But as the Cadillac ad suggests, there are plenty of options available -- if you’re willing to ask. Traditionally, dealers promote the credit arms owned or affiliated with the car brands they sell, like GMAC or Ford Motor Credit. But the typical showroom also has access to other lenders, from local credit unions to national banks. So even if you’ve got a good credit rating, ask about your other options.
Source:  GateHouse News Service

[Editor's Note: Paul A. Eisenstein is an award-winning journalist who has spent more than 30 years covering the global auto industry.]

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Committed to Community: Cerritos College Foundation Receives Donations for Automotive Partners Building

 

Steve Richardson (left) of the Cerritos College Foundation accepts $1,000 from James Willingham, CEO of Boulevard Buick Pontiac GMC, on Oct. 17.

NORWALK, Calif. -- The Cerritos College Foundation received two separate donations last week, totaling $2,500, for the Cerritos College Center for Transportation Technologies. Steve Richardson, executive director of the Cerritos College Foundation was presented with a check for $1,000 from James Willingham, CEO of Boulevard Buick Pontiac GMC in Long Beach Oct. 17. As well as being the CEO of Boulevard and former president of the National Automobile Dealers Association (NADA), Willingham is an Ambassador for the National Automobile Dealers Charitable Foundation (NADCF). The NADCF gives a gift of at least $1,000 in the name of the ambassadors every three years to an organization of the ambassador’s choice. Willingham chose the Cerritos College Foundation to be the recipient of his gift, which totaled $1,500. "We are fortunate to have an organization such as the National Auto Dealers Charitable Foundation that can support worthwhile endeavors, like the Cerritos College Center for Transportation Technologies," said Willingham. "Helping this project get off the ground will ensure future technicians will have the tools necessary to diagnose and repair the cars of tomorrow." Cerritos College has offered automotive technology training since the college began in 1955.
Source:  Los Cerritos Community Newspapers

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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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Scam Alert: Spark Plug Orders

An NADA member has recently reported receiving several fraudulent orders for parts. In this case, multiple orders for 800 spark plugs were placed over the phone and paid with stolen or bogus credit cards. The orders were originally scheduled to be delivered via UPS or FedEx to a U.S. location, but the shipments were later redirected to an address in Nigeria. NADA advises all dealerships’ fulfillment staff to scrutinize all parts orders from unknown clients.

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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 (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 are exploring a number of avenues with government to find a solution to the problem of constrained access to funding." 

    -- GMAC spokeswoman Toni Simonetti referring to its own borrowing costs rising, while its dealers and customers are finding it more difficult to finance inventory and vehicle purchases, The Washington Post, Oct. 30


"It's like swimming across a river that becomes wider and deeper, but the pot of gold is also getting bigger — if you get to the other side."

   
-- David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich., referring to the lack of cash flow hurting the auto industry, but those who survive the credit crisis will reap the rewards, The New York Times, Oct. 30


"We still have people coming in with marginal credit attempting to buy. Some people qualify for car loans, and some don’t, as it was before."

   
-- Chris Sweeney, general sales manager at Vista Ford in Woodland Hills, Calif., San Fernando Valley Business Journal, 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.