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Monday, Nov. 24, 2008 RSSSEND TO A FRIENDPRINT
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Top Stories
NADA Urges Dealers to Tell Congress, 'Protect Local Economies and Main Street'
Auto Help Available, But Depends on Plan
GM Says Board Doesn't See Bankruptcy as Option
Ch. 11 Would Hit Dealers Hard -- Fast
Consumers Cautious About Effect of Auto Bankruptcy
Auto Industry's Troubles May Touch the Financial Sector
Detroit's New Plan: Drive Point to Congress
U.S. Automakers Look to Federal Sales Incentives
Economy Has New-Car Dealers Shifting to Used-Car Focus
More Americans are Delinquent on Car, Truck Loans
Ford Scion Looks Beyond Bailout to Green Agenda
Opinion: It's Time to Put Partisanship Aside; Detroit Needs Help
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
NADA Urges Dealers to Tell Congress, 'Protect Local Economies and Main Street'

Congressional fight is far from over; dealers urged to launch Thanksgiving blitz
WASHINGTON – The Legislative Office of the National Automobile Dealers Association (NADA) has issued a call-to-action saying its dealer network will be an integral part to the success of any industry effort before Congress to support the Detroit Three automakers. Congressional leaders have asked the domestic automakers to provide them with a restructuring plan by Dec. 2 in anticipation of a vote during the week of Dec. 8.  “Congress still needs a better understanding of what is at stake for Main Street if lawmakers fail to act on an automotive stabilization package,” says David Regan, NADA vice president of legislative affairs. “Representatives and senators are at home for a brief recess, so this is the perfect time to engage them on the issues facing our industry.”

The NADA Legislative Alert makes four important points:

1. Failure to act promptly will have a high economic cost. Dealers employ 1.1 million people nationwide, and the demise of an automaker would destroy demand for that company’s vehicles and put dealers out of business. In a recent survey, 80 percent of respondents said they would not purchase a vehicle from a bankrupt automaker. Customers want to know they can count on the company to honor the warranty and produce parts when the car needs to be serviced.

2. Dealers are part of the solution. Dealers are independent entrepreneurs who invest millions of dollars of their own money in land, buildings, improvements, personnel and advanced technology to sell and service vehicles. The dealer buys the vehicles and the parts from an automaker. 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 the signs on the dealer’s lot.

3. Legislation that provides tax incentives will boost auto sales. A spike in sales would help stabilize the industry now. NADA strongly supports legislation (S. 3684/H.R. 7273) to provide temporary tax relief for vehicles purchased through Dec. 31, 2009. The legislation would allow consumers to deduct the interest on their car loans as well as state sales taxes from their personal income taxes. The car loan deduction would be available for the life of the loan.

4. NADA is urging its member dealers to write letters to their local newspapers stressing the above points.
Source:  NADA Newswire

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Auto Help Available, But Depends on Plan

WASHINGTON -- President-elect Barack Obama's advisers said Sunday automakers must convince Congress that they have a plan to return to profitability before they can get $25 billion in emergency bridge loans... "(Obama) said from the beginning that we need to help but we can't give a blank check and I agree with that," Obama adviser David Axelrod told ABC's 'This Week.'  "If they don't do that then there is very little the tax payers can do..." Congress on Thursday postponed voting on a compromise plan brokered by Sens. Carl Levin, D-[Mich.], and Christopher "Kit" Bond, R-Mo., and instead told Detroit's Big Three automakers to return to Congress by Dec. 2 with a detailed plan for how they would use the funds and their plan for viability. Congress is then expected to take up the issue the week of Dec. 8. "Shareholders, business partners and prospective benefactors - the American people - deserve to see a plan that is accountable to taxpayers and that is viable for the long term," House Speaker Nancy Pelosi, D-Calif., and Sen. Majority Leader Harry Reid, D-Nev., wrote Friday. "Taxpayers also deserve to see top automobile executives making significant sacrifices and major changes to their way of doing business."
Source:  The Detroit News

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GM Says Board Doesn't See Bankruptcy as Option

DETROIT -- General Motors Corp.'s board of directors does not consider bankruptcy protection a viable option to solve the company's financial troubles, but it has discussed Chapter 11 because it has a legal duty to do so, a spokesman said Saturday. "The board has a responsibility to keep all options open considering the circumstances," said Vice President of Communications Tony Cervone. "Chapter 11 protection is not a viable option because it doesn't fundamentally address the issues at hand today." The board, which has been meeting regularly by teleconference since the company's finances worsened, agrees with Chairman and CEO Rick Wagoner that bankruptcy would be disastrous for the company, Cervone said. Wagoner has said it would scare away customers who would not make a big-ticket purchase from an automaker that is under court protection. Instead, Cervone said the board supports Wagoner's strategy to seek congressional approval of low-interest government loans, getting the company through its liquidity problems until the U.S. auto market recovers and it can be profitable again, Cervone said.
Source:  Washington Post

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Ch. 11 Would Hit Dealers Hard -- Fast

A bankruptcy filing by a Detroit 3 automaker would kill many of its dealerships quickly even if the company successfully reorganizes, dealers' lawyers predict. Many dealerships that already are struggling with frozen credit and an economic recession would not survive the instant cash crunch if an automaker decides to seek Chapter 11 bankruptcy protection, the lawyers say. At that point, they say, money due to dealerships from the factory for sales incentives, holdbacks and warranty reimbursements would become unsecured debt. A Bankruptcy Court could allow the automaker to pay dealerships just pennies on the dollar and to delay even those payments. Dealers "are selling new vehicles below net cost and counting on factory incentives to make a profit or break even," says Jeff Roberts, a lawyer in Raleigh, N.C. "If the incentives never materialize, it will be a substantial hit to many dealers. Frankly, many will not survive."
Source:  Automotive News (Subscription required.)

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Consumers Cautious About Effect of Auto Bankruptcy

NEW YORK -- Cash-strapped General Motors insists declaring bankruptcy would be disastrous because it would scare away customers. It's unlikely Chevrolet and Cadillac owners would be left with worthless warranties and no replacement parts, but the headlines about the Detroit Three's dire situation may already be keeping buyers away. "If GM is under the imminent threat of bankruptcy or actually declares bankruptcy, I would not consider a GM product," said Kevin Ketels, who might replace his family's 2004 Toyota RAV4 late next year. "I just don't know if the company will be around to fulfill their warranty obligations. Will they be there for me? There are too many unknowns and a car is my second biggest investment next to my house." "Bankruptcy wouldn't discharge your obligations for recalls," said Ray Tyson, spokesman for the National Highway Traffic Safety Administration. "We would go to bankruptcy court and argue that they have a responsibility to use a portion of assets to satisfy whatever consumer issues there might be." But obtaining certain parts would be an issue. Independent collision repair shops get 80 to 90 percent of their parts directly from original equipment sources.
Source: The Detroit News

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Auto Industry's Troubles May Touch the Financial Sector

To the long list of troubles plaguing the financial industry, add three big ones — make that Big Three ones. With Congress balking at a rescue for the auto industry, and Chrysler and General Motors warning that they could face bankruptcy without one, investors are worrying about financial companies’ exposure to the Big Three, as well as to automotive suppliers and dealers. Big banks say that their exposure to the auto industry is relatively small and that in any case most of the loans are secured by vehicles or other assets, which would help minimize any losses. But the true risks are difficult to ascertain because banks do not disclose much about their exposure. Of particular concern is the fate of billions of dollars of bonds that were used to finance the 2007 acquisition of Chrysler by a large private investment fund, Cerberus Capital Management.
Source:  The New York Times

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Detroit's New Plan: Drive Point to Congress

Fuel-efficient caravan would roll to hearing
A plan is taking shape for auto suppliers, dealers and the UAW to participate in a cavalcade of fuel-efficient American-brand vehicles to Washington, D.C., in December, when Congress reconsiders the industry's plea for quick action on low-interest loans. The aim is to put a populist face on the need for the American auto industry's survival and to build grassroots support for federal aid, in the wake of criticism that the Detroit Three chief executive officers and UAW President Ron Gettelfinger did not make a convincing case during two days of congressional hearings last week. "There was so much misinformation in the hearings last week. I'd love to see something come to fruition where people show what this industry means to the country," said Carl Galeana, president of Galeana Automotive Group, which has domestic and import dealerships in Michigan, South Carolina and Florida. "I'll do whatever I can to save this industry," he added.
Source:  Detroit Free Press

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U.S. Automakers Look to Federal Sales Incentives

As executives from the Big Three auto makers prepare to make a second pitch for a federal bailout, concern is rising in Detroit that it will be difficult to show lawmakers how they can return to profitability with sales at their current depressed level. Their solution: Get Washington to help them sell more cars. General Motors Corp., Ford Motor Co. and Chrysler LLC may go back to Washington and urge Congress to take measures to spur consumer demand, in addition to providing the $25 billion in loans the auto companies seek. "There is no way any car company can make money at the current demand level," said a key executive at a Big Three auto maker. "The government has to get credit flowing so that the market goes back to at least 14 million to 15 million [vehicles].... We can figure out how to survive at that level."
Source:  The Wall Street Journal (Subscription required.)

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Economy Has New-Car Dealers Shifting to Used-Car Focus

In the worst new-car market in 25 years – and at a time when most car dealers are cutting way back – Prestige owner Randall Reed is spending $6 million to extensively remodel a portion of his dealership and convert his former new-car operation to a used-car superstore. His project was prompted partly by the rapid deterioration of the new-car business this year. With sales at Prestige now less than half what they were at the dealership's peak eight years ago, Mr. Reed decided he could no longer justify the rent on his 50,000-square-foot facility... "There's not a dealership anywhere that is not struggling some," he said. "But I'm very confident that the tide will change for Ford." So confident, in fact, that he is enlarging the former used-car facility to include a stylish 45,000-square-foot showroom for Ford and Lincoln Mercury, a second floor for office and training facilities, a cafe and a separate sales area for Internet customers. He will convert the former new-car site into a large used-car operation...
Source:  Dallas Morning News

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More Americans are Delinquent on Car, Truck Loans

DETROIT — In yet another bad sign for the auto industry, car loan delinquencies rose again in the third quarter, putting up to $22.9 billion at risk for banks, finance companies and automakers who dole out loans directly to consumers. Melinda Zabritski, director of automotive credit for credit-rating agency Experian's auto group, says a preliminary study of 30-day delinquencies shows an 8.1% increase over a year earlier. That means $22.9 billion worth of loans are 30 days late. Even more striking is the increase in 60-day delinquency rates. Those loans more often turn into repossessions. They are up 12.7%, putting $7 billion at risk of being unpaid. "This is not insignificant," Zabritski says.
Source:  USA TODAY

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Ford Scion Looks Beyond Bailout to Green Agenda

DEARBORN, Mich. — As the Detroit auto companies contend with their worst financial crisis in decades, the most famous American auto executive has stayed largely out of sight. But William C. Ford Jr., the executive chairman and scion of the founding family of the Ford Motor Company, has been preparing for a bigger role in the industry’s plan for survival. While General Motors and Chrysler plead to Congress for a bailout, Mr. Ford has reached out to President-elect Barack Obama in hopes that his company can benefit from the administration’s longer-term strategies for the auto industry. Mr. Ford has been working behind the scenes, meeting one-on-one with Mr. Obama in August, conferring with his senior economic advisers, and teaming up with Gov. Jennifer Granholm of Michigan to push a vision of a leaner, greener auto industry. “We have a plan that is high-tech, product-driven, which is a fuel economy plan,” he said. “And we have kept that plan in place under these tough conditions.”
Source:  The New York Times

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Opinion: It's Time to Put Partisanship Aside; Detroit Needs Help
by Automotive News

It doesn't matter whether Washington's helping hand to the Detroit 3 comes from new funding approved by Congress, is carved out of the $700 billion Wall Street bailout package or emerges from some other pocket. Repurposing the $25 billion in federal loans that are supposed to help automakers develop more fuel-efficient vehicles could be a short-term solution. But if General Motors, Ford Motor Co. and Chrysler LLC don't get loans to bolster their cash reserves, they face the likelihood of an ugly, catastrophic bankruptcy that would torpedo the U.S. economy. Regrettably, the resistance to making bridge loans to the Detroit 3 seems to break down along political party lines. In less than two months, the Obama administration inherits the problem. And if the domestic auto industry hits the fan, it will be a political problem for Democrats. Still, using the fuel economy loans to help the Detroit 3 survive until the new administration can tackle the problem is a reasonable compromise. Despite the partisan nature of government, it frequently forges practical, if inelegant, solutions. This must be one of those times.
Source:  Automotive News (Subscription required.)

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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
 
Dealers "are selling new vehicles below net cost and counting on factory incentives to make a profit or break even. If the incentives never materialize, it will be a substantial hit to many dealers. Frankly, many will not survive."

   
-- Jeff Roberts, a lawyer in Raleigh, N.C., explaining the effect a Detroit 3 bankruptcy would have on dealers, Automotive News, Nov. 24


"I'd love to see something come to fruition where people show what this industry means to the country."

   
-- Carl Galeana, president of Galeana Automotive Group, in support of a caravan of fuel-efficient American-brand vehicles rolling into Washington, D.C. in December when Congress reconsiders the industry's plea for quick action on low-interest loans, Detroit Free Press, Nov. 24


"There's not a dealership anywhere that is not struggling some. But I'm very confident that the tide will change for Ford."

    -- Prestige owner Randall Reed, explaining his recent undertaking to convert his former used-car facility to include a stylish 45,000-sq. ft. showroom for Ford and Lincoln Mercury, and convert the former new-car site into a large used-car operation, Dallas Morning News, Nov. 24


"I think we can make it through this recession, if it doesn't get worse. We believe we have sufficient liquidity to make it through this slowdown."

   
--  Ford Motor Co. CEO Alan Mulally. Ford is believed to be in the best financial position of the Detroit 3, Detroit Free Press, Nov. 24


"Regrettably, the resistance to making bridge loans to the Detroit 3 seems to break down along political party lines. Still, using the fuel economy loans to help the Detroit 3 survive until the new administration can tackle the problem is a reasonable compromise. Despite the partisan nature of government, it frequently forges practical, if inelegant, solutions. This must be one of those times."

    -- Automotive News opinion calling for Congress to put partisanship aside for the sake of saving the Detroit 3 automakers, Nov. 24
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.