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Tuesday, Dec. 16, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Auto Bailout Could be Announced by Wednesday
Treasury Still Studying Auto Rescue
U.S. May Give Car Czar Power to Force Bankruptcies
GMAC Bank Conversion Plan Gains Support
Toyota Delays Mississippi Prius Factory Amid Slump
Global Car Industry Fearful for Detroit
NADA Update
NADA Members Can Now Save on FedEx Shipping
NADA Offers Virtual Seminar to Help Dealers in 'Tough Times'
NADA to Members: Verify Contact Information to Stay Informed
STAR Answers Dealers' Questions About Hardware Based Systems
Lenovo Offers Holiday Savings
Top Stories
Auto Bailout Could be Announced by Wednesday

WASHINGTON -- The Bush administration could act as early as Wednesday to approve an automaker bailout from its bank rescue fund, with conditions likely to reflect at least those approved by the U.S. House of Representatives last week, key lawmakers and other sources said on Monday. A Treasury Department official said the agency and auto company executives continued to review financial and other information, and that no decision had been made. The White House is actively involved in the matter, officials said. Treasury Secretary Henry Paulson said, however, the government would have to be satisfied the industry could survive and compete in order to receive help. "We would have to assure ourselves that this was a step on the path to long-term viability," Paulson told Fox News. House Speaker Nancy Pelosi, a California Democrat, says the administration will likely use part of the $700 billion fund established in October to stabilize the financial services sector, rather than pushing the companies into bankruptcy, as some lawmakers have urged. "That would be my expectation and I think all the signals coming from the White House are that they know that bankruptcy is not an option and that (stabilization) funds are the only recourse that they have," Pelosi said at a news conference.
Source:  Reuters

[Editor's Note: NADA is strongly urging all dealers to contact their Representatives and Senators and ask them to encourage President Bush to take quick action to provide bridge loans to stabilize America’s auto industry. Members of Congress can be reached through the Capitol Switchboard at (202) 224-3121. Click here for the key points to make.]

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Treasury Still Studying Auto Rescue

WASHINGTON – The U.S. Treasury Department said Monday it has made no decisions on how to engineer a rescue effort for U.S. auto makers, while President Bush gave assurances that help is on the way. "An abrupt bankruptcy for autos could be devastating for the economy," Mr. Bush told reporters... "We're now in the process of working with the stakeholders on a way forward. We're not quite ready to announce that yet." Meanwhile, Treasury spokesman Brookly McLaughlin told reporters that department officials, who are working closely with the White House on the issue, are still studying pertinent data. In weighing a much larger rescue effort for U.S. auto makers than originally envisioned, the Bush administration faces a complex set of decisions over what terms to seek -- including whether to push the companies to file for bankruptcy -- and how to raise necessary funds. The administration is trying to determine how much money it will take to help the car companies, and is discussing a rescue totaling $10 billion to $40 billion or more. The Bush administration must also figure out whether, and how, to try to wring concessions from affected parties, including factory workers, dealers and holders of the companies' debt. Without such concessions, the companies are likely to need cash infusions long into the future, congressional critics say. The Bush administration can try to demand concessions upfront as a condition for making initial rescue loans. But it is unlikely Treasury can extract concessions from all the affected parties as part of a loan deal.
Source:  The Wall Street Journal

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U.S. May Give Car Czar Power to Force Bankruptcies

The U.S. Treasury may adopt a plan that would let a car czar or the Treasury secretary force General Motors Corp. and Chrysler LLC into bankruptcy if the automakers don’t show they can survive without government aid, a U.S. senator said. GM and Chrysler would be required to submit viability plans by March 31 or lose any further U.S. support, Carl Levin, a Democrat from Michigan, told reporters in Detroit yesterday. The Treasury plan would resemble a measure passed by the U.S. House last week that was rejected by the Senate. “I expect that the terms would be similar to the ones that were in the House bill,” Levin said. “The power rests in the hands of either the czar or the Secretary of the Treasury to force bankruptcy by March 31.” White House spokesman Tony Fratto declined to speculate on when a plan might be finished, though he said yesterday on Bloomberg Television that the administration wants to make sure taxpayers will get their money back. “Of course there will be conditions to any taxpayer financing,” Fratto said. “There will be rigorous oversight to make sure that these companies are doing what they promised to do, and we want to make sure that everyone is making the concessions that they’re going to have to commit to make.”
Source:  Bloomberg News

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GMAC Bank Conversion Plan Gains Support

More Bondholders Agree to Debt Swap
Investors holding about $10.5 billion of GMAC bonds agreed to sweetened terms of a debt swap, bringing the auto and home lender closer to its goal of becoming a bank and getting a federal bailout. "The committee has unanimously agreed to support the offer," said New York lawyer Andrew Rosenberg. He represents the bondholders, who had balked at a proposed $38 billion debt exchange. The offer was designed to help avert a collapse and pave the way for GMAC to convert to a bank holding company. The switch could give GMAC access to the Treasury's $700 billion rescue fund and allow it to sell bonds backed by the government. If the exchange isn't completed by the end of the year, GMAC said in a filing last month that there is a "significant risk" that it will default on its debt. A bankruptcy by GMAC, the primary lender to General Motors dealers, could put up to 40 percent of GM's U.S. dealerships out of business, Martin NeSmith, a member of GM's National Dealer Council, said last week. "They're shut out of the credit markets right now," said Andrew Harding, chief investment officer for fixed income at Allegiant Asset Management. Becoming a bank "would bring them back in, and at a very favorable rate. It is a very big step." General Motors is letting GMAC defer a $1.5 billion dealer-financing payment until Dec. 30, the automaker said yesterday in a filing with the Securities and Exchange Commission. Normally, GMAC pays GM for a car sent to a dealer on the first business day after the vehicle is shipped. As of last Tuesday, GMAC doesn't have to pay GM until the amount is due from dealers, the filing said.
Source:  Bloomberg News

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Toyota Delays Mississippi Prius Factory Amid Slump

Toyota Motor Corp. has indefinitely delayed a plant in Mississippi that was slated to start making its Prius hybrid sedan in May 2010, the latest sign that even foreign auto makers are scaling back North American operations. Toyota approved the plant in 2007, when sales were booming and foreign makers were racing to expand production to grab market share from the Big Three U.S. car companies. But the recession and plunge in industry sales to crisis levels are forcing even healthier car companies to retreat. "The market turned on Toyota just like it turned on the Big Three," said Rebecca Lindland, an analyst at IHS Global Insight, a forecasting firm. Toyota's Mississippi plant, near Tupelo, was originally supposed to build the Highlander sport-utility vehicle. When gasoline prices soared in the spring, it pushed the start of production to May 2010 from late 2009 and then said the plant would produce the Prius instead. The latest delay means that the Prius will continue to be produced exclusively in Japan. Last month, Toyota reported a 69% drop in net profit globally for its fiscal second quarter and slashed its full-year profit forecast by more than half.
Source: The Wall Street Journal (Subscription required.)

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Global Car Industry Fearful for Detroit

MUNICH — For years, the overseas operations of Ford and General Motors helped buoy Detroit when times were difficult in the United States. But there are growing concerns that the automakers’ problems in the United States will weigh down their more successful units in Europe, Asia and Latin America — even with a short-term lifeline that the Bush administration has signaled it will provide to G.M. and Chrysler, which sells almost exclusively in the United States. Ferdinand Dudenhöffer, director of the Center for Automotive Research in Gelsenkirchen, Germany, warned that the indirect effect of a potential G.M. collapse for American parts makers would be severe. He added that German manufacturers in the United States, like Mercedes and ... BMW cars, would have to rethink not just their American supply chains but their global ones as well. “There would be no winners, only losers,” Mr. Dudenhöffer said. “This would create a huge mess around the world.” Both G.M. and the Ford Motor Company were profitable in Europe last year and in the first half of 2008. But neither of their European operations is large enough to survive on its own, said Graeme Maxton, an economist who has long tracked the car industry. “They’d need a parent of some sort,” Mr. Maxton said. Other automakers may be reluctant to assume that role, given the slack sales of European giants like Renault, Fiat and Daimler. The tight credit markets would also inhibit any large deals. “Two drowning men clinging together don’t make a good swimmer,” Mr. Maxton added. Already, Mr. Dudenhöffer said, the image of Opel, G.M.’s German subsidiary, is suffering among German consumers because of bankruptcy speculation, and suppliers could become nervous if the talk persists.
Source:  The New York Times

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NADA Update
NADA Members Can Now Save on FedEx Shipping

Click here for savingsNADA members are now eligible to receive valuable discounts of up to 29 percent on select FedEx shipping services. There are no costs and no minimum shipping requirements to take advantage of this member benefit. NADA members can save:

• Up to 29 percent on select FedEx Express services
• Up to 25 percent on select FedEx Express international services
• Up to 20 percent on select FedEx Ground services
• Up to 10 percent on select FedEx Home Delivery services

For more information or to enroll in the FedEx Advantage Program, click here or call 1-800-MEMBERS (1-800-636-2377, 8 a.m.–6 p.m. EST, M-F).

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NADA Offers Virtual Seminar to Help Dealers in 'Tough Times'

In response to the challenges facing dealers during these uncertain times, NADA is offering a presentation featuring two speakers who can explain the options and detail the steps dealers need to take to protect their businesses. Tough Times, Tougher Dealers: Saving Your Dealership’s Assets will be offered as a virtual seminar in December and January and as a workshop at the 2009 NADA Convention & Exposition in New Orleans. Tough Times, Tougher Dealers, presented by Michael Charapp, Esq., of Charapp & Weiss, LLP and Bradley Nicklin, CPA, of Beers + Cutler, discusses the tough issues facing almost every dealer today. It is intended to help dealers and managers understand the steps required to protect their dealerships’ assets during these tough economic times.

In this presentation, participants will learn valuable information on cash management, expense control, and franchise rights issues. They will also learn how to deal with bankruptcy—both at the manufacturer and dealership level—as well as franchise terminations, brand terminations, and the legal ramifications of reducing a workforce. Additionally, the speakers will present other practical considerations for surviving this tough environment, both legally and financially.

The virtual seminar will be offered twice—on Dec. 18 from 1–3 p.m. EST and Jan. 13 from 1–3 p.m. EST. The registration fee is only $50 per computer connection. For more information or to register, visit www.nada.org/seminars. The convention workshop will also be offered twice—on Saturday, Jan. 24 at 11 a.m. CST and Monday, Jan. 26 at 8:30 a.m. CST.

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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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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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Lenovo Offers Holiday Savings

Lenovo is offering NADA members savings of up to 35 percent 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 -- is available at a discount with eCoupon USXHOLIDAY. This offer ends Dec. 31. To take advantage of these savings, visit NADA's Online PC Purchase program (log-in required), click www.lenovo.com/shop/deals/nada, then "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
 
"An abrupt bankruptcy for autos could be devastating for the economy."  

   
-- President George W. Bush told reporters Monday aboard Air Force One during a surprise trip to Iraq and Afghanistan. He said they were "now in the process of working with the stakeholders on a way forward," Associated Press, Dec. 16


"... I think all the signals coming from the White House are that they know that bankruptcy is not an option and that (stabilization) funds are the only recourse that they have."

   
-- House Speaker Nancy Pelosi, a California Democrat, says the Bush administration will likely use part of the $700 billion fund established in October to stabilize the financial services sector, Reuters, Dec. 16


"The market turned on Toyota just like it turned on the Big Three."

   
-- Rebecca Lindland, an analyst at IHS Global Insight, on Toyota's plans to delay a plant in Mississippi that was slated to start making its Prius hybrid sedan in May 2010, The Wall Street Journal, Dec. 16


"The U.S. auto industry is highly interdependent and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs."

   
-- Ford Motor Co., which isn't seeking short-term U.S. aid, said in a statement it "fully supports and appreciates" the Bush administration's effort to aid automakers, Bloomberg News, Dec. 16 


"We didn't have the right products, we didn't have the right capacity. We had the same issues as the U.S. industry does now. But we were able to accelerate development of the right products and get capacity in line with demand."

   
-- John Fleming, chief executive of Ford in Europe, referring to the early years in the decade, when Ford lost billions in Europe, The New York Times, Dec. 16
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) What You Should Know About Dealership Federal Income Tax Issues

(2) Lean Management - Unleash Your True Potential

(3) Improve Profitability and Customer Retention in Your Service and Parts Operations

Tax Issues speaker Terri Harris of the Internal Revenue Service will discuss Federal Income Tax issues relevant to automobile dealerships, including the latest on dealership UNICAP and LIFO pooling issues. Additionally, this workshop will cover the latest in dealership-specific court cases and other issues of current concern to the IRS.

Lean Management speaker David Summers of Lexus will teach dealers and managers how they can unleash the latent potential in their most valuable resource—their people—through effective lean management. Participants will learn how to create a culture of engaged associates in dealerships of all sizes.

Profitability speaker Robert Atwood of NADA Dealer Academy will teach participants the critical variables of the service department and how the parts department supports them. Attendees will learn how to manage their time to achieve consistent results.

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.