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At a Glance...
Top Stories
Opinion: The Dealer Network: An Automaker's Greatest Asset
Lawmakers Send Big Three Back Home Empty-Handed
Wagoner: GM Ready with Plan for Survival
Pain in the Auto Industry Extends Beyond Detroit
Auto Failure Could Fuel Credit Crisis
Ford to Merge Dealer Councils Amid Consolidation
GM's Lending Arm Files Paperwork to Become a Bank
Idea to Aid Carmakers: Fee on Sales
Waxman Topples Dingell; House Dems Go Greener
NADA Update
NADA to Host Virtual Seminar on Changes to Telemarketing Rules
STAR Answers Dealers' Questions About Content Filtering Systems
Lenovo Extends Employee Pricing to NADA Members
Top Stories
Opinion: The Dealer Network: An Automaker's Greatest Asset
by Annette Sykora

Here is a Letter to the Editor submitted today to The Washington Post in response to a statement made about the "dealership network" in the Nov. 20 editorial "Detroit at the Brink." The NADA letter contains a number of strong arguments in defense of the dealer.

NADA Letter
The Nov. 20 editorial “Detroit at the Brink” makes some good points about the Detroit Three’s current predicament. But to group the dealership network in the same sentence as executive salaries and labor costs is just plain wrong. It is not the number of dealerships that General Motors, Ford or Chrysler has that is forcing them to seek government loans to weather the current global credit crisis.

What’s not widely known is that dealers are independent business men and women who invest millions of dollars of their own money in land, buildings, improvements, personnel and advanced tech equipment to sell and service vehicles. It is the dealer who buys the vehicles and the parts from an automaker in the first place. Without the revenue that dealers provide to their automakers, the factory assembly lines would screech to a halt. Dealers pay their manufacturer for just about everything, even including the signs out in front of their stores.

Moreover, we should not be too quick to want to arbitrarily lower the number of dealers that any manufacturer has. Beyond creating good jobs for over a million Americans – jobs that cannot be sent overseas – dealers also provide great value to consumers in terms of competition and convenience, not to mention their charitable and other contributions to the community. If there is an overabundance of dealers, the market will address it, as it has over the past 60 years when we have seen market forces reduce the number of dealers from 50,000 to the 19,700 we have today. 

So, the question is not whether the domestic dealer network is overgrown. The question is whether dealers are a cost center to the automakers. And they are not. In fact, the dealer network is the manufacturers’ greatest asset, providing customers with convenient and competitive sales, service and financing. And this is all done at minimal cost to the manufacturers. Dealers represent almost 20% of all retail sales in this country.  It is their recovery – not their demise – that is essential to the survival of the overall U.S. economy.

ANNETTE SYKORA
Chairman
National Automobile Dealers Association
McLean, Va.

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Lawmakers Send Big Three Back Home Empty-Handed

The Big Three are on their own for now. Congressional efforts to rescue Detroit's auto makers collapsed Thursday, with lawmakers saying the industry lacked credible plans to return to profitability. The decision came after two days in which leaders of three of America's largest corporations pleaded for a taxpayer-financed rescue from lawmakers in front of a national television audience. The spurning of their pleas leaves in question the future of companies that have been synonymous with American industry for decades and together employ 239,000 people in the U.S. Democrats in Congress offered only a glimmer of hope, saying they would reconsider a rescue if General Motors Corp., Ford Motor Co. and Chrysler LLC submit convincing turnaround plans by Dec. 2. "Until they show us the plan, we cannot show them the money," said Speaker Nancy Pelosi, the California Democrat.
Source:  The Wall Street Journal (Subscription required.)

[Editor's Note: The NADA Legislative Office on Thursday issued the Legislative Bulletin: AUTOMOTIVE STABILIZATION VOTE DELAYED. NADA encourages dealers and employees to contact their U.S. representatives and senators and urge them to:

  • Find a resolution that allows bridge loans to be provided to the automobile manufacturers; and
  • Cosponsor and pass legislation (S. 3684/H.R. 7273) to provide tax incentives for automobile purchases by consumers.

Click here for the Legislative Bulletin on the delayed vote of the automotive stabilization plan. It was sent to all dealers.

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Wagoner: GM Ready with Plan for Survival

DETROIT -- General Motors Corp. CEO Rick Wagoner declined to say Thursday whether the automaker has retained bankruptcy counsel and denied receiving assurances from U.S. Treasury Secretary Henry Paulson that GM could receive short-term funding in anticipation of a larger loan. "I didn't get any wink or a nod from anybody," Wagoner, 55, said during an interview with The Detroit News. There had been speculation on Capitol Hill and among the automakers that Paulson was helping craft a potential short-term loan for GM until more funds could be obtained as part of a broader federal aid program for automakers. Wagoner said Wednesday that bankruptcy is not an option because revenues would dry up and GM likely would have to liquidate. Wagoner spoke Thursday hours after congressional leaders asked Detroit's Big Three automakers to present a plan by Dec. 2 for restructuring their businesses and how they would spend $25 billion in government loans. GM is ready to respond with detailed plans that will address congressional concerns about the automaker's viability and show the company can survive and pay back taxpayer-funded loans, Wagoner said. We've got the plans and are ready to go," Wagoner said. "We're not starting from ground zero here."
Source:  The Detroit News

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Pain in the Auto Industry Extends Beyond Detroit

While U.S. auto executives return home from Washington after making their case for financial aid, car makers around the world are paring their work forces and curbing production. Mazda Motor Corp. and Isuzu Motors Ltd. said Thursday that they will reduce their temporary work forces in Japan by a combined 2,700 jobs. Japanese car makers are faring better than their counterparts in Detroit during the economic slowdown, but the sharp decline in sales in the U.S. -- their key market -- has forced many to scale back production at their plants in Japan. In a rare bright spot, Honda Motor Co. might expand production of its hot-selling Fit subcompact to the U.S. to meet demand. At the same time, though, Honda announced more production cuts in North America, to trim output by 18,000 by the end of its fiscal year.
Source:  The Wall Street Journal (Subscription required.)

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Auto Failure Could Fuel Credit Crisis

Carmakers Steeped In Bond Market
With lawmakers weighing the possibility of allowing one of the nation's automakers to fail, some on Wall Street and in Detroit are arguing that the consequences of failure could reach far beyond the industry and into the broader economy. Perhaps most critically, some analysts now say, failure would deepen the nation's credit crisis. The risk arises in part because so many financial institutions hold bonds issued by the automakers. Moreover, an estimated $290 billion in credit-default swaps, which are contracts that function like insurance policies, have been written on that debt, according to the leading clearinghouse for such trades. In a research note issued yesterday, J.P. Morgan Chase analyst Eric J. Selle suggested the automakers' failure would mark "Credit Crisis Part II," noting that bonds issued by General Motors, Ford and their lending companies make up about 10 percent of the high-yield bond market and that automakers represent one of the largest sectors in finance for banks. Their troubles, Selle said, could have "magnified effects" in the credit-default swaps markets and "pose ramifications" for the ailing credit markets.
Source:  The Washington Post

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Ford to Merge Dealer Councils Amid Consolidation

DETROIT -- Ford Motor Co., in a bid to cut costs as its dealership ranks shrink, plans to merge the national dealer councils for its Ford and Lincoln Mercury brands in 2010. Details are undetermined, but the two councils -- one representing Ford dealers, the other representing Lincoln Mercury dealers -- will start the merger process in the coming months, a Ford spokeswoman said. The move follows the company's decision to blend the Ford and Lincoln Mercury brands within its sales and marketing organization. Ford also is reducing its U.S. dealership count in the wake of lower sales and market share. "Our dealers really face similar issues," said Marisa Bradley, a Ford spokeswoman. "It doesn't make any sense to have two different councils that have to address the same issues for the most part. It just isn't as efficient."
Source:  Automotive News (Subscription required.)

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GM's Lending Arm Files Paperwork to Become a Bank

General Motor's financial arm, GMAC Financial Services, applied to become a bank holding company [Thursday], a move that could allow it to grab a piece of the Treasury Department's $700 billion rescue package and give it access to the Federal Reserve's discount window to receive emergency loans. As a bank holding company, the cash-strapped lender would have "increased flexibility and stability to fulfill its core mission of providing automotive and mortgage financing to consumers and businesses," according to a statement the company issued today. In addition to the access to the $700 billion rescue plan, becoming a bank holding company could more immediately help GMAC by giving the company access to the Fed's discount window for low-interest, short-term emergency loans. Under its application, now under review by the Federal Reserve Board of Governors, GMAC Bank would become a Utah charted Federal Reserve member bank.
Source:  The Washington Post

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Idea to Aid Carmakers: Fee on Sales

LOS ANGELES — Automotive titan Roger Penske thinks he's found a simple answer to bailing out Detroit's automakers — a restructuring fee that would be added to the price of every new car. Instead of government loans to try to bridge General Motors, Ford Motor and Chrysler through their financial crisis, Penske said Thursday that he likes the idea of a fee levied on every foreign or domestic vehicle sold that could raise billions a year for automakers. Proceeds from the fee — he suggested $200 or $500 per car — would help relieve automakers of their health and retirement burdens. It could also go to buying out underperforming auto dealers. Laws in many states prevent automakers from closing dealers outright. "It would level the playing field," said Penske, CEO of one of the nation's largest automotive dealer groups, importer of the Smart microcar and auto racing legend, in an interview at the Los Angeles Auto Show.
Source:  USA TODAY

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Waxman Topples Dingell; House Dems Go Greener

WASHINGTON -- Democrats steered the House toward more aggressively tackling global warming and other environmental problems Thursday, toppling veteran Michigan Rep. John Dingell, a staunch supporter of Detroit automakers, from an important energy panel in favor of California liberal Rep. Henry Waxman. The switch could help President-elect Barack Obama on Capitol Hill with one of his favored issues: trying to curb global warming by limiting greenhouse gas emissions. But Waxman's combative stance on climate change and other issues also could alienate Republicans and moderate Democrats, making it harder to get the bipartisan support Obama will need. The Energy and Commerce panel is one of the most important House committees, with sweeping jurisdiction over energy, the environment, consumer protection, telecommunications and health care programs such as Medicaid and the popular State Children's Health Insurance Program.
Source:  Associated Press

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NADA Update
NADA to Host Virtual Seminar on Changes to Telemarketing Rules

Many new and amended federal telemarketing regulations have been issued since the National Do-Not-Call Rules were established in 2003, and dealers who haven’t kept up risk the possibility of very costly litigation. While not all of these mandates have received widespread press coverage, they deserve dealers’ utmost attention as they affect dealers’ ability to advertise their products and services by phone, fax and email.

To help dealers and managers comply with these regulations, NADA is hosting a virtual seminar next month presented by Erica McMahon, chief of the FCC’s consumer policy division, and moderated by Paul Metrey, NADA’s director of regulatory affairs.

The speakers will highlight many of the well-known and lesser-known telemarketing requirements that have been imposed since the 2003 Do-Not-Call Rules took effect. The seminar will cover regulations governing telephone solicitations, commercial emails and fax advertisements, and will allow time for questions. All dealership personnel and service providers who are involved in marketing to consumers or businesses are encouraged to attend.

Changes in Telemarketing Regulations Since the National Do-Not-Call Rules Took Effect will be held Dec. 9 from 1–3 p.m. EST. The fee for this seminar is $199 per computer connection. Additional attendees can participate on the same connection for no additional cost. For more information on this virtual seminar and other upcoming seminars, visit www.nada.org/seminars or call (800) 252-6232, ext. 2.

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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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Lenovo Extends Employee Pricing to NADA Members

Great savings are available on all ThinkPad notebooks and accessories. Lenovo's ThinkPad SL notebook built for small businesses with legendary ThinkPad reliability, plus advanced wireless and multimedia features, starts at only $449! (Offer ends December 1.)  To take advantage of these savings, visit NADA's PC Purchase Program online  (member login required), click www.lenovo.com/shop/deals/nada, then click "Special Offers," or call (800) 426-7235, Option 1, Ext. 4838. Free ground shipping is available on all Web orders.

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Featured Video
 
 
NADA Chairman Annette Sykora at a press conference with U.S. Sen. Barbara Mikulski. Click here for the NADA-TV report.


More Video Highlights

Quotable
 
"The question is not whether the domestic dealer network is overgrown. The question is whether dealers are a cost center to the automakers. And they are not."

   
-- NADA Chairman Annette Sykora in a letter to the editor submitted today to The Washington Post, Nov. 21


"Until they show us the plan, we cannot show them the money."

    -- House Speaker Nancy Pelosi (D-Calif.) referring to Congress' decision yesterday to withold bailout money until General Motors Corp., Ford Motor Co. and Chrysler LLC submit convincing turnaround plans by Dec. 2, The Wall Street Journal, Nov. 21


"We've got the plans and are ready to go. We're not starting from ground zero here."

    -- General Motors CEO Rick Wagoner responding to congressional leaders about how the Detroit Three plan to restructure their businesses and how they would spend $25 billion in government loans, The Detroit News, Nov. 21
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) Seven Innovative Steps to Hedge Your Bet and Dominate Your Used-Car Market

(2) The Essential Eight Processes for Maximizing Service Profits

(3) The Four Pillars of Online Process: How to Drive Peak Performance and Internet Sales Results

In Seven Steps, speaker Tommy Gibbs of Tommy Gibbs and Associates will demonstrate strategies for creating a focused, profit-driven used-vehicle department. Participants will learn how to stock used vehicles that don’t compete directly with new vehicles, use technology to track inventory, and develop an Internet pricing strategy that will improve gross, volume and turn.

Service Profits speaker Don Reed of DealerPro Training Solutions will cover the vital steps to handling phone calls, meet-and-greets, maintenance training and delivery. Participants will examine eight essential processes for setting goals, measuring performance, increasing service sales and retaining customers.

Internet Sales speaker Ralph Ebersole of Cars.com will teach dealers and managers how to implement successful Internet sales processes and develop online advertising that catches customers’ attention. Participants will learn how to staff a strong Internet sales department, handle leads online and track the performance of sales processes.

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

Video Highlights
 

'NBC Nightly News with Brian Williams' reports: "Demise of a local car dealership leaves a big dent."




 
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.


NADA's New Orleans Project: Lusher Charter School
NADA's Return to New Orleans


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.