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Wednesday, Dec. 3, 2008 RSSSEND TO A FRIENDPRINT
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Top Stories
Auto Giants Ratchet Up Pleas for Aid
Pelosi Says Bankruptcy by Automakers 'Not an Option'
Abysmal November Auto Sales Fall 31% to 47% for Everyone
As Dealerships Sink, Towns Suffer
Government Coffers Feel Drop in Auto Sales
NADA Update
NADA to Members: Verify Contact Information to Stay Informed
NADA to Host Virtual Seminar on Changes to Telemarketing Rules
STAR Answers Dealers' Questions About Hardware Based Systems
Top Stories
Auto Giants Ratchet Up Pleas for Aid

As Sales Hit 25-Year Low, Companies Pledge to Unload Brands and Slash Costs
General Motors, an icon of American manufacturing and the world's largest automaker, yesterday threw itself at the mercy of Congress, saying it needed $4 billion to avert a cash crisis by the end of the month and as much as $18 billion in federal loans over the next year. GM and its U.S. rivals Chrysler and Ford all pleaded for government loans, promising in return to use the opportunity to slash costs, jettison brands, restructure their finances and speed the introduction of fuel-efficient vehicles widely considered crucial to their future. Together the three auto giants sought at least $28 billion and as much as $38 billion in government assistance, more than the $25 billion they requested just two weeks ago. Battered by the lowest car sales in a quarter century and tight credit conditions, the companies said they needed the money just to survive the next year. "There is no plan B," said Fritz Henderson, GM's president and chief operating officer. This year the combination of high fuel prices and the paralysis in the credit markets has brought the U.S. companies to the brink. Chrysler yesterday sought $7 billion by the end of the month. Ford, which is in stronger financial condition, asked Congress to set aside as much as $13 billion to help the company if the economic downturn deepens. GM said it would sell its Saab division and begin discussions with Saturn dealers to fold or sell the brand. It said it would concentrate on four of its brands -- Chevrolet, Cadillac, GMC and Buick. Pontiac will become a niche brand. It also proposed an oversight board to protect taxpayer interests. The restructuring plan would lead to widespread job losses. The company said that by 2012 it would reduce its network of dealers to about 4,700 from 6,450. By 2012, it would also close nine manufacturing facilities and reduce the number of workers by at least 20,000. The United Auto Workers will meet today with delegates of the three automakers "to discuss the auto crisis," UAW spokesman Roger Kerson said. [Ford] also planned to reduce its dealer and supplier base. By the end of the year, the company said it would have 3,790 U.S. dealers, 14 percent fewer than it had at the end of 2005.
Source:  The Washington Post

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Pelosi Says Bankruptcy by Automakers 'Not an Option'

U.S. House Speaker Nancy Pelosi said she believes either Congress or the Bush administration will step in to aid domestic automakers because bankruptcy is “not an option.” “I believe that an intervention will happen,” Pelosi said at a briefing in Washington. “Everybody is disadvantaged by bankruptcy, including our economy, so that’s not an option.” Pelosi said Congress will either approve new loans for the auto industry or the Bush administration will provide funding through the $700 billion financial-markets rescue plan approved by Congress last month. Senate Majority Leader Harry Reid told reporters today that he will have a legislative vehicle on the Senate floor Dec. 8 that can be used as a carmaker bailout measure if an agreement is reached. “We’re looking to make sure we do everything we can to take care of the auto industry, if in fact it’s viable,” Reid said. The domestic automakers were submitting plans to Congress [Tuesday] to explain how they can achieve financial stability. Democratic lawmakers demanded the plans before allowing a vote on aiding the automakers. Lawmakers are divided on whether to aid the automakers and whether the funds should come from the $700 billion bank-rescue fund or Energy Department loans approved in September. Reid, a Nevada Democrat, said he will decide after Dec. 4 and 5 hearings on the issue whether the Senate will vote next week on additional aid to the automakers. “We hope that we can work something out,” Reid told reporters. “We don’t want to throw them a lifeline if the lifeline doesn’t get them to the shore.”
Source:  Bloomberg

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Abysmal November Auto Sales Fall 31% to 47% for Everyone

Auto sales in November plummeted to the lowest monthly total in a quarter century as consumers hold back for better economic times. Sales tallies released by Autodata Tuesday showed a 36.7% drop in car and truck sales overall in November compared with the month last year. The 746,789 total sales marked the first time the industry failed to sell 750,000 vehicles in a single month since January 1982, Autodata said. Every big automaker, foreign and domestic, took a drubbing. General Motors' sales tumbled 41.3%, Ford Motor's fell 30.5%, and Chrysler's were off 47.1%, adding to the deep financial distress on the day their CEOs presented plans to Congress to make their case for a bailout. In contrast to past declines, Japan's three biggest auto brands in the U.S. hit the same trouble. Toyota cratered 33.9%, Honda was whacked 31.6%, and Nissan flattened 42.2%. With only a month left in the year, the auto industry is on track to barely crack the 13-million sales mark for 2008, compared with 16.2 million vehicles sold last year. It would be the lowest-selling year since 13.9 million in 1993.
Source:  USA TODAY

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As Dealerships Sink, Towns Suffer

CBS Evening News: From Jobs Loss To Schools To Little League, A Dealer Closing Doors Reverberates Far
LOS ANGELES -- In 23 years, Bruce Hamlin has never seen the car business crash this hard, this fast. Three years ago he was selling 130 cars a month at his Chevy dealership in Southern California. Now, with business down 50 percent, he barely moves 60, CBS News correspondent Ben Tracy reports. "And it just keeps getting a little bit worse month after month after month," said Hamlin, who owns the dealership. When a dealership closes its doors, it's not just about the jobs lost at the car lot. It's about everything else the community loses along with them. New and used car sales are the single-largest source of sales tax revenue for almost every city, county and state government in the country. In Los Angeles for every $28,000 car sold, the city takes in about $560 in tax revenue - a total of $80 million each year. Now with auto sales dropping, so is the revenue and that means … "Less fire and police protection, less road maintenance, libraries closing. It can be extremely catastrophic," said Laura Chick, Los Angeles' city controller. Car dealers are often the largest source of ad revenue for local TV stations, radios and newspapers. "Not only do they spend a lot of money, they spend it frequently and throughout the year," said media analyst John Rash. But this year, dealer ad spending could drop by $3 billion. And then there's charity - everything from hospital donations to sports teams. A little league stadium in Sanford, Fla., can't be finished because it lost a $50,000 sponsorship from a local Chevy dealer that shut down. "I feel bad for the kids who haven't been able to play baseball for two years," said George Pihakis, the president of the Seminole North Little League.
Source:  CBS Evening News

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Government Coffers Feel Drop in Auto Sales

Purchases are a huge part of sales taxes collected by city, county and state governments.
When Heritage Lincoln Mercury closed in August, the city of Tustin felt the pain. For decades, the dealership had operated out of the Tustin Auto Center -- which has 17 other franchises -- and it was once among the largest Lincoln Mercury dealers in California. It was also a crucial source of revenue for the city, which relies heavily on taxes from automobile sales to keep afloat. Of the city's $20-million annual budget, about $5 million comes from the auto center, said the city's director of finance, Ronald Nault. But with sales of Lincoln and Mercury cars and trucks down by nearly a quarter nationwide through October compared with last year, the dealership was forced to fold. Meanwhile, many of the other dealerships in the auto center, although still in business, are seeing severe sales declines, spelling further reductions in sales taxes. "It has definitely affected us," said Nault, adding that collections from the auto center were on pace to be off 20% for the year. And with industrywide vehicle sales falling even more sharply in recent months, the revenue shortfall could be substantially greater, forcing Nault to consider capital-spending cuts, a freeze on salary increases, reductions in travel and, perhaps for the first time in the city's history, layoffs. "It's pretty frightening," said Nault, who has managed the city's finances for 28 years. "This is a bridge we've never had to cross." As the U.S. auto market marches toward its worst year in decades and dealers close in droves, state and local governments across the country are preparing for serious belt-tightening. Sales of new and used cars, as well as parts and service, are the single largest source of sales tax revenue for almost every state, county and local government, ahead of gasoline sales, restaurants and department stores.
Source:  Los Angeles Times

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NADA Update
NADA to Members: Verify Contact Information to Stay Informed

NADA's Membership Department is urging all association members to verify their contact information through a new online process available at www.nada.org/membership. Members who maintain a current email and mailing address ensure that they will continue to receive important and timely updates from NADA. The new online verification process also allows members to easily change their contact information. Members may also visit www.nada.org/subscribe to manage their subscriptions to NADA's member newsletters, including the daily e-newsletter NADA Headlines.

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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 Hardware Based 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. To learn "What is recommended for general maintenance of hardware based systems?" click here.

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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
 
"I believe that an intervention will happen. Everybody is disadvantaged by bankruptcy, including our economy, so that’s not an option."

    -- U.S. House Speaker Nancy Pelosi at a briefing in Washington, Bloomberg, Dec. 2


"There is no plan B. The plan is intended to achieve what would otherwise be achieved in a bankruptcy filing by a negotiated route."


    -- Fritz Henderson, GM's president and chief operating officer, arguing for federal loans just to survive the next year, The Washington Post, Dec. 3


"We hope that we can work something out. We don't want to throw them a lifeline if the lifeline doesn't get them to the shore."


    -- Senate Majority Leader Harry Reid discussing support for carmakers with reporters, Bloomberg, Dec. 2


"For Ford, government loans would serve as a critical backstop or safeguard against worsening conditions, as we drive transformational change in our company."


    -- Ford chief executive Alan Mulally, The Washington Post, Dec. 3


"This is very bad for states."


    -- Donald Boyd, senior fellow at the Nelson A. Rockefeller Institute of Government, referring to the effect of declining auto sales on sales-tax receipts, Los Angeles Times, Dec. 1. Boyd points out that sales taxes from auto sales are the first or second most-important revenue source in almost every state.
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) Developing Strategies for Innovation and Growth

(2) “Happy Days,” “Family Feud,” or “Survivor”: Which Best Describes Your Estate and Succession?

(3) How to Convert Lost Opportunities and Increase Closing Ratios of Online Leads

Strategies speaker Jay Rao of Babson College will discuss innovation as a key to organic growth within the dealership. Participants will learn how dealers and managers can benefit from sharpening their focus on organizational innovation and the entrepreneurial mindset.

Happy Days speakers Hugh Roberts and Ricci Victorio of The Rawls Group will provide participants with practical solutions for resolving estate and succession-planning issues. Participants will examine actual case histories and learn how to avoid unnecessary tax issues and family disputes.

Online Leads speakers Peter Martin and Irish Carroll of Cactus Sky Communications, Inc. will provide insight on communicating with customers online, responding to leads and inquiries, and increasing and maximizing closing ratios. Participants will learn best practices for establishing online relationships with customers.

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.