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Monday, Nov. 10, 2008 RSSSEND TO A FRIENDPRINT
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Top Stories
NADA Urges Paulson and Bernanke to Help Preserve Dealer Viability
The Options: Bailout Now or Disaster
Reid, Pelosi Urge Treasury to Extend Aid to Automakers
GM, Ford Losses Worse Than Expected, Burning Cash
Why Auto Executives Are Ruling Out Going Bankrupt
Big Banks Back Off Consumer Car Loans
Maine Car Dealers Seek New Third-Party Lenders
Cerberus Still Seeks Takers for Chrysler
Life at 11 Million: Slash, Rethink
Hybrids' Payoff Receeds
NADA Update
STAR Answers Dealers' Questions About Content Filtering Systems
NADA Members Can Save on Lenovo's ThinkPad Notebooks
Top Stories
NADA Urges Paulson and Bernanke to Help Preserve Dealer Viability

Also, NADA is calling on Congress to help jump-start auto sales with second stimulus package
McLEAN, Va. -- The National Automobile Dealers Association (NADA) is urging Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke to help preserve dealer viability as they consider requests for government intervention to support the ailing auto industry. In a letter delivered Friday, NADA explained that auto retailers play a central role in the economic health of the auto industry and that, as a consequence, government intervention to help automakers will not work unless the dealers are part of the fix.

The NADA letter specifically asked Paulson and Bernanke to: (1) ensure that any assistance to automakers helps stabilize dealers and does not create any adverse effects on them; (2) take into account the crucial role that “captive” finance companies play in providing dealers access to credit for both wholesale vehicle purchases and consumer transactions; and (3) include dealer representatives in the current discussions to ensure that all involved understand that auto retailing is an important part of the solution to the current economic downturn. 

"A well capitalized, financially sound dealer network is essential to the success of every auto manufacturer, especially a manufacturer facing economic challenges," NADA Chairman Annette Sykora said. Last week, NADA President Phil Brady presented a separate letter to the White House and congressional leaders calling for a second stimulus package this year to jump-start lagging auto sales and to provide financial assistance for struggling dealerships. To stimulate auto retailing, NADA recommends restoring the deductibility of interest on consumer auto loans; refundable tax credits for vehicle purchases; funding for state “cash for clunkers” programs; and providing tax incentives for business purchases of vehicles.

NADA also recommends giving dealers greater access to working capital through Small Business Administration loan guarantees. Such a program was implemented in 1980 when the nation’s dealers were facing similar financial challenges and successfully helped the industry get back on its feet. NADA officials will meet with the SBA later this week to advance the proposal for the dealer loan guarantee program.
Source:  NADA Newswire

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The Options: Bailout Now or Disaster

Auto bankruptcy would spread pain deep into economy
Without a federal bailout in the next three months or so, General Motors, Ford and Chrysler will face a financial collapse that could drag down suppliers, dealers and even import automakers. Late Friday, Obama said an economic stimulus bill, which could include aid to the auto industry, should be passed “sooner rather than later.” If Congress does not pass the bill during its lame-duck session, Obama said, it will be the first undertaking of his administration. But the stark truth is this: The auto industry simply can’t afford to delay a bailout until Obama takes office Jan. 20. Meanwhile, dealers recommended a variety of rescue proposals. The National Automobile Dealers Association proposed tax credits for car buyers, tax deductions for auto loans, loan guarantees for dealerships and more.
Source:  Automotive News (Subscription required.)

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Reid, Pelosi Urge Treasury to Extend Aid to Automakers

With the nation's automotive industry hemorrhaging cash, congressional leaders called on the Bush administration [Saturday] to offer government assistance to the car companies as part of the Treasury Department's $700 billion emergency rescue program. Unless the government steps in, analysts warned, GM could face bankruptcy, endangering the livelihoods of about 100,000 North American autoworkers and hundreds of thousands of others whose jobs depend on the industry. In a letter to Treasury Secretary Henry M. Paulson Jr., House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry M. Reid (D-Nev.) asked Paulson to "review the feasibility ... of providing temporary assistance to the automobile industry during the current financial crisis." The letter notes that Congress granted Paulson broad discretion to use the bailout money to "restore financial market stability. A healthy automobile manufacturing sector is essential to the restoration of financial market security," the letter continues, as well as to "the overall health of our economy, and the livelihood of the automobile sector's workforce." The Treasury has so far declined to assist the automakers, which have been devastated by the twin shocks of a collapsing credit market and the sharpest drop in auto sales in more than two decades. But as the news from Detroit has grown increasingly grim, lawmakers from both parties, Michigan officials, auto industry executives and labor leaders have stepped up their campaign for federal aid.
Source:  The Washington Post

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GM, Ford Losses Worse Than Expected, Burning Cash

DETROIT -- General Motors Corp and Ford Motor Co reported far deeper-than-expected quarterly losses on Friday and said their rate of cash burn had accelerated, as an extended slump in car sales raised questions about the future of the U.S. auto industry. Chrysler LLC is also burning through cash quickly, sources said. GM also indicated it had set aside consideration of an acquisition of smaller rival Chrysler -- without mentioning the company's name -- saying it was focused on cost-cutting and other steps to free up $20 billion in liquidity through 2009. GM, the largest U.S. automaker, reported a $4.2 billion quarterly loss and said it would cut white-collar jobs and slash next year's capital spending budget by $2.5 billion to try to cope with a sharp sales slowdown. Ford posted a $2.98 billion quarterly operating loss on Friday and told investors that it would look to cut salary expenses by 10 percent, a move that follows a 15 percent cut earlier this year.
Source:  Reuters

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Why Auto Executives Are Ruling Out Going Bankrupt

Slashing of jobs, shredding of benefits still would offer no guarantee of survival
Despite vows by top officials to avoid bankruptcy, fear is high that dwindling cash reserves could push one or more of Detroit's three automakers into court protection within the next several months. Even a hypothetical glimpse of the consequences shows why executives insist bankruptcy is not an option. The fallout would likely range from thousands of jobs cut at factories and offices to the slashing of jobs at suppliers and dealers, the shredding of benefits for workers and losses for investors and pension plans. While a bankruptcy by General Motors, Ford or Chrysler wouldn't approach the size of the $613-billion reorganization that Lehman Bros. filed earlier this year, it would easily become one of the most complex legal fights ever, with thousands of parties scratching for a piece of whatever's left. And with one in 10 U.S. jobs supported by the industry, millions of workers could be affected. "The impact would be devastating," said Kevin Tynan of Argus Research. "The impact of the collapse of GM would be bigger than Lehman Bros."
Source:  Detroit Free Press

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Big Banks Back Off Consumer Car Loans

Despite a $700 billion bailout, the nation's big banks are not in any rush to get back into the automotive lending business... The federal government's bailout of Wall Street was supposed to get America's credit markets moving again, but experts say they have been slow to loosen their purse strings. One Wall Street source told The Detroit News that some banks have decided to remain on the sidelines, waiting to see how the car market shakes out over the next several months -- despite having received billions in taxpayer dollars to get the credit channels moving again.
Source:  The Detroit News

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Maine Car Dealers Seek New Third-Party Lenders

PORTLAND, Maine -- Maine car dealers are turning to credit unions and other sources for third-party loans for their customers as bank financing becomes tighter. Maine-affiliated banks are joining the ranks of national lenders who have cut back on or stopped lending money through automobile dealers, the Maine Sunday Telegram reported. As credit shrinks, dealers are having to turn to other resources. Lee Auto Malls, for one, is providing more in-house financing to car buyers. It's also establishing new relationships with credit unions, which see loan opportunities as banks pull back. "They're my new best friends," said Adam Lee, the company's president. "They want to loan money, they have members who buy cars, and I have a bunch of cars I want to sell."
Source:  Associated Press

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Cerberus Still Seeks Takers for Chrysler

Cerberus Capital Management LP is seeking other options for Chrysler LLC after frontrunner General Motors Corp. suspended its acquisition efforts. Two people familiar with the matter confirmed that Cerberus wants to re-engage the Renault SA-Nissan Motor Co. alliance after those discussions ended last week when it became apparent that Cerberus favored a deal with GM. Hyundai Motor Co. Ltd. is described as one of a number of companies with which Cerberus continues to talk about a strategic partnership or the acquisition of some or all of Chrysler's automotive assets, a source familiar with the situation said.
Source:  The Detroit News

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Life at 11 Million: Slash, Rethink

Suppliers, dealers, retail groups must adjust — or crash
DETROIT — Auto dealers and suppliers are moving heaven and earth to adjust to an annual auto sales rate not seen in a quarter century: fewer than 11 million units. So what will life be like at 11 million? "Dealers have to look at everything — people, buildings, service, inventory and advertising," said Cliff Cummings, owner of Toyota of San Bernardino in California. "Physical plants shrink, and expansions and renovations are put off." Given the decade-long average of 16.9 million sales, could dealers hang on in an 11 million-unit market? "The premise of the question is wrong," said Cummings. "We're already there. Watch for how many dealerships are going to close. A friend of mine let go 32 people yesterday. We've already begun to adjust."
Source:  Automotive News (Subscription required.)

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Hybrids' Payoff Receeds

Despite the steep drop in gasoline prices, hybrid vehicles remain a bright spot in a dismal car market. But when it comes to reaching the promised land of optimal fuel efficiency, some hybrid owners are wondering, "Are we there yet?" Unless it's a gold-standard Toyota Prius, green-minded drivers are finding that the current crop of hybrids offers surprisingly measly mileage. Most of the 2009 models get mileage in the upper 20s to low 30s, according to Environmental Protection Agency ratings, and numbers like that can make them tough to justify financially. The industry says many customers are pleased with their mileage, especially if they are going from a full-size sport-utility vehicle to a hybrid. And if gasoline hits $4 a gallon, as it may when the economy rebounds, the math works more in hybrids' favor, especially as models from Ford, General Motors, Chrysler and Nissan may be eligible for tax credits of up to $3,000.
Source:  The Wall Street Journal (Subscription required.)

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NADA Update
STAR Answers Dealers' Questions About Content Filtering Systems

Standards for Technology in Automotive Retail (STAR) has developed new guidelines to help dealers evaluate their Dealership Security. Visit STAR's Dealer Infrastructure Guidelines (DIG) publication for more information. To learn if you should choose a hardware or software content filtering system click here.

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NADA Members Can Save on Lenovo's ThinkPad Notebooks

Lenovo's ThinkPad SL notebook built for small businesses with legendary ThinkPad reliability, plus advanced wireless and multimedia features, starts at only $450 with eCoupon USXTHANKSGIVING for a limited time. To take advantage of these savings, visit NADA's PC Purchase Program online (member log-in required), click www.lenovo.com/shop/deals/nada, then click Special Offers, or call (800) 426-7235, Option 1, Ext. 4838. Enter eCoupon USXTHANKSGIVING 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 open. Click here to see just how much progress New Orleans has made since Katrina.


More Video Highlights

Quotable
 
"A well capitalized, financially sound dealer network is essential to the success of every auto manufacturer, especially a manufacturer facing economic challenges."

   
-- NADA Chairman Annette Sykora said in a letter delivered last Friday to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke, NADA Newswire, Nov. 10


"A healthy automobile manufacturing sector is essential to the restoration of financial market security, as well as to the overall health of our economy, and the livelihood of the automobile sector's workforce."

   
-- House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) said in a letter to Treasury Secretary Henry Paulson urging aid to automakers, The Washington Post, Nov. 7


"The impact of the collapse of GM would be bigger than Lehman Bros." 

    -- Kevin Tynan of Argus Research referring to effect a GM collapse would have nationwide, Detroit Free Press, Nov. 10


"Dealers have to look at everything — people, buildings, service, inventory and advertising."

   
-- Cliff Cummings, owner of Toyota of San Bernardino in California, referring to the adjustments dealers are making in order to survive the economic downturn, Automotive News, Nov. 10
NADA Convention 2009 
 
  
Convention Workshops Keyed to Today’s Economy

Now more than ever, dealers need to learn how to survive in tough times. In that spirit, workshops planned for the NADA Convention & Exposition in New Orleans Jan. 24-27 will focus on recession-proof business operations. NADA Headlines will spotlight three convention workshops each week.

(1) The ABCs of Privacy and Data Security Rules Affecting Dealers

(2) Managing for Profitability: Tracking and Measuring Media Value in the Online Age

(3) "On Board": Hire the Right Employees and Create an Orientation Process to Keep Them

ABC's of Privacy speaker Kathryn Ratté of the Federal Trade Commission (FTC) will discuss the requirements of the Privacy Rule and Safeguards Rule, and how the FTC enforces them. She will also provide an overview of dealers' responsibilities outlined under the FACT Act, including Red Flags Rule compliance.

Media Value will feature David Kain of Kain Automotive and Dennis Galbraith of Cars.com, discussing how to measure and manage the effectiveness of media dollars in the online age. Participants will learn what they need to track to determine their true media ROI—allowing them to manage their marketing mix for optimal results.

On Board speakers Robert Bekken of the Bekken Law Group and Mike Poskey of ZeroRisk HR, Inc. will analyze each stage of the hiring and orientation process, revealing best practices for hiring professionals, reducing turnover and increasing the productivity of new employees.

Join us in New Orleans at the NADA convention 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.