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Monday, Dec. 22, 2008 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Federal Reserve Approves NADA-Backed Initiative Aimed at Increasing Inventory Financing
Aid in Hand, Clock Ticks for Detroit
Will Dealers Get Paid for Pain?
What Help for Automakers Means for Workers, Consumers
Consumer Confidence is Key for Big 3
Toyota Projects Operating Loss for Year Amid Slump
NADA Convention: The Big (Take It) Easy
NADA Update
NADA Extends Online Registration for its Convention to Jan. 5
NADA Convention to Focus on Future of the Industry
NADA Offers Virtual Seminar to Help Dealers in 'Tough Times'
STAR Answers Dealers' Questions About Hardware Based Systems
Lenovo Offers Holiday Savings
Top Stories
Federal Reserve Approves NADA-Backed Initiative Aimed at Increasing Inventory Financing

WASHINGTON – Following President Bush's announcement Friday to provide $17.4 billion in bridge loans to General Motors and Chrysler, the Federal Reserve Board, in a related action, addressed a key request from the National Automobile Dealers Association by including floorplan securitizations in a new $200 billion credit facility the Federal Reserve is establishing. On Friday afternoon, the Federal Reserve clarified the eligibility requirements under the new Term Asset-Backed Securities Loan Facility (TALF) and, in doing so, for the first time included loans for dealer inventory financing as a qualifying asset class.

"This move meets a key need that NADA had identified for greater liquidity in the auto retailing marketplace," said Andy Koblenz, NADA vice president of legal and regulatory affairs. The U.S. Department of the Treasury announced Nov. 25 that the Fed would be establishing the TALF credit facility, a $200 billion program designed to facilitate the issuance and sale of securitized auto loans. However, at the time the TALF was announced, it was unclear whether it would include loans for dealers at the wholesale level. That uncertainty has now been resolved. 

In addition to confirming the eligibility of floorplans loans, the Federal Reserve also extended the term of TALF loans from one to three years and provided that TALF loans could have fixed or floating interest rates. These changes will make it easier for auto finance companies to use the TALF to issue floorplan securitizations.
 
“NADA’s goal all along was to restore liquidity in the credit markets for all dealers and their customers,” Koblenz added. “By working with the Federal Reserve and the Department of Treasury to ensure that floorplanning loans were included, NADA was able to give creditors confidence to once again make loans available to dealers to finance the inventory on their lots. This will, in turn, help ensure that dealers have at their dealerships the selection of vehicles that consumers want to buy.”
Source:  NADA Newswire

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Aid in Hand, Clock Ticks for Detroit

With $17.4 Billion, a Mandate: Restructure by March or Go Bankrupt
President Bush put the government into the daunting role of industrial oversight yesterday by grudgingly throwing a $17.4 billion lifeline to General Motors and Chrysler, a politically sensitive mission that President-elect Barack Obama will soon inherit. The emergency loans mark the first time the administration has extended its bailout to companies outside the financial sector and will head off imminent bankruptcy for the ailing Detroit automakers, which have said they lack enough cash to make major payments due to suppliers by the beginning of January. But while Bush demanded deep cuts in union wages and benefits and broad corporate restructuring as conditions for the loans, analysts say that the overhaul of the auto industry will require more negotiations, more time and more federal money. "The auto bailout saga does not end here," Itay Michaeli, a Citigroup analyst, said in a report. The administration yesterday said it would give GM and Chrysler $13.4 billion immediately and another $4 billion in February if Congress approves and the companies meet targets for extracting concessions from unions and bondholders. The federal assistance will come from the $700 billion Troubled Asset Relief Program and could be exchanged later by the government for as much as a 20 percent stake in the companies. Bush said the federal loans, which will carry an interest rate of 3 percent above a standard interbank lending rate, were necessary to avoid a "disorderly" collapse of an industry that supports hundreds of thousands of jobs. He also said they were designed to give the companies "a brief window" to restructure "outside of bankruptcy" and prove they are financially viable. If that is not done by March 31, Bush said, the government will call its loans and let the companies declare bankruptcy or fail. The deadline and other restrictions "send a clear signal to everyone involved," he said. "The time to make the hard decisions to become viable is now -- or the only option will be bankruptcy." Automobile dealership groups said that the White House plan, though providing only short-term relief, will help bring reluctant consumers back to car lots. "Dealers and our customers have been living in a period of uncertainty, and that hasn't done anything to help the economy when consumer confidence was already at an all-time low," said Annette Sykora, the chairwoman of the National Automobile Dealers Association and owner of two Ford dealerships in west Texas. Sykora said that fears that GM or Chrysler could go bankrupt had discouraged consumers worried about obtaining spare parts and fulfilling warranties in the future. That, she added, contributed to weak sales last month, the worst in 26 years.
Source:  The Washington Post

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Will Dealers Get Paid for Pain?

Car dealers could throw a wrench into efforts by General Motors and Chrysler LLC to restructure by trimming marginal brands and dealerships. To cut costs, GM has said it wants to sell Hummer, and it might sell or close Saturn, too. All this is part of GM's effort to focus its limited marketing and product development resources on its other brands. The White House blessed that effort Friday when it noted that employees, suppliers and dealers would have to share the cost-cutting burden. But there's a catch: Dealers are independent entrepreneurs, and no one has the power to negotiate on their behalf. By contrast, one man, UAW President Ron Gettelfinger, can negotiate most concessions on behalf of hourly workers and retirees. Likewise, a relatively small group of creditors can agree to negotiate debt relief. But the dealers? Not so fast. Jim Appleton, a lawyer and president of the New Jersey Coalition of Automotive Retailers, advises dealers to hire a lawyer to protect their interests. If an automaker eliminates franchises, state laws require the company to pay for vehicle inventories, parts, signs and special tools, Appleton said. Now that GM is reconsidering the future of its Saturn, Hummer and Saab brands, dealers may have to invoke those state laws. ... longtime Houston dealer Ramsay Gillman is trying to break the logjam by proposing that dealers get a representative on GM's board of directors if they make sacrifices part of the federal bailout. Gillman, who was president of the National Automobile Dealers Association in 1997, says a seat on the board would give dealers input on product and marketing decisions. Today the Detroit 3 limit the dealers to advisory roles on their dealer councils. "This is an opportune time to be heard," said Gillman who owns 16 stores in southeast Texas. "They need our input."
Source:  Automotive News (subscription required.)

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What Help for Automakers Means for Workers, Consumers

The impacts of the loan program for U.S. automakers will be felt far from Detroit. As General Motors and Chrysler work to show they are restructuring to be "viable" long term, as required by the plan, it may mean changes for everyone involved with the car business — workers, creditors, shareholders, suppliers, dealers and customers. President Bush's plan includes targets for United Auto Workers' wages to be brought in line with what foreign companies pay their non-unionized workers in their U.S. plants and to have similar, more flexible work rules. Foreign makers can move workers from plant to plant and give them different duties or more responsibilities. Many union plants have thick manuals regulating what a worker can be asked to do. The tough economy already was running hundreds of dealers out of business this year. More may now be saved, but their problems remain. One issue is inability to qualify customers for credit. Chrysler said lack of consumer loans is dampening sales by up to 25% as it announced the shutdown of all its factories for much of January. "Trying to run an auto business without credit is like running the airline industry without jet fuel," says CEO Mike Jackson of dealer chain AutoNation. "Showroom traffic is dwindling because banks have a new marketing campaign: 'Just say no.'" Dealers also have suffered from doubts about the automakers' survival. "We have a lot of people who are just holding back because they don't know what the future of GM will be," says Dale Willey, who owns a GM dealership in Lawrence, Kan. "We've been sitting here for eight weeks with the threat of bankruptcy over our heads." What's next: The next administration will be pressed to do more to loosen consumer credit.
Source:  USA TODAY

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Consumer Confidence is Key for Big 3

Automakers plan to slash costs while hoping Obama's stimulus plan spurs economy, sales.
With $17.4 billion in loans finally coming their way, General Motors Corp. and Chrysler LLC can breathe easier for the next few weeks -- but their relief could be short-lived. Unless consumer demand for cars and trucks starts to recover from 26-year lows, short-term loans and cost-cutting are unlikely to put Detroit's automakers on a path to recovery. Yet most forecasters predict auto sales will be even weaker in 2009 than they have been this year. To ensure that the chief executives of Detroit's Big Three don't end up back in Washington soon, requesting more cash, the industry and the government both have to take aggressive action, economic and industry experts say. Automakers must adjust their staffing levels and costs to take into account an unusually anemic auto market, while the government must adopt measures to underpin fragile consumer demand. Dealers say their showrooms are filled with attractive and attractively priced vehicles. "They have wonderful products and it's as competitive a market as I've ever seen," said Joe Serra, president of Grand Blanc-based Serra Automotive Inc., a chain of dealerships. But, he said, people are in no mood to buy. "Ultimately, it comes down to consumer confidence." The government has enacted measures to encourage banks to lend more, but financial experts say more action, such as the massive stimulus program proposed by President-elect Barack Obama, will be needed to reassure consumers panicked by one of the worst downturns in decades. The head of the National Automobile Dealers Association, Annette Sykora, welcomed President George W. Bush's decision Friday to extend $17.4 billion in loans to GM and Chrysler, the most cash-strapped automakers. (Ford Motor Co. had asked for a line of credit but said it did not expect it tap it in the near future.) "This is the first step toward restoring consumer confidence," Sykora said. "When you have the government declaring its confidence and commitment to U.S. auto manufacturers, it helps reassure the American public that domestic automakers will be around for the long term."
Source:  The Detroit News

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Toyota Projects Operating Loss for Year Amid Slump

Toyota Motor Corp. projected its first-ever operating loss since it began such reports, acknowledging Monday that its nine-year stretch of global vehicle-sales growth had stalled. Crashing auto demand, especially in its key U.S. market, and the profit erosion from a surging yen proved too much for Japan's top automaker, which had been booming on the success of its fuel-efficient models, including the Camry sedan and Prius gas-electric hybrid. Gloom dominated the annual news conference by Toyota's president, who in recent years had outlined ambitious expansion plans. This year, Toyota President Katsuaki Watanabe even refused to give a worldwide vehicle sales goal for 2009. "The tough times are hitting us far faster, wider and deeper than expected," he told reporters at Toyota's Nagoya office. "This is an unprecedented crisis requiring urgent action." Watanabe also blamed the strong yen, which has risen to 13-year highs against the dollar to about 90 yen recently. Toyota lowered its net profit forecast to just ... $555 million for the year through March 2009 — a tiny fraction of the 1.7 trillion yen it earned the previous fiscal year.
Source:  Associated Press

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NADA Convention: The Big (Take It) Easy

More chicken salad. Less champagne. That's the atmosphere shaping up for the National Automobile Dealers Association convention and exhibition Jan. 24-27 in New Orleans. Automakers that entertained dealers with lavish evening receptions are eliminating the events or converting them to luncheons. The trend is most noticeable among the Detroit 3, which are avoiding any appearance of extravagance after being swatted by Congress when their top executives flew to Washington in corporate jets to ask for bailout money. We're not having any parties," says GM spokeswoman Susan Garontakos. Ford Motor Co. spokeswoman Marisa Bradley says Ford has canceled its usual Sunday evening reception. The company will have a luncheon for dealers after its combined make meeting, allowing executives to talk informally with dealers... Chrysler LLC says it will cancel a dinner for minority dealers and scale back a larger dinner for all dealers.
Source:  Automotive News (Subscription required.)

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NADA Update
NADA Extends Online Registration for its Convention to Jan. 5

Convention to host 21 automaker franchise meetings at critical time for the industry
McLean, Va. -- Now that U.S. automakers will receive emergency bridge loans, attention has shifted to the National Automobile Dealers Association Convention in New Orleans next month when dealers will have an opportunity to meet face-to-face with the top leadership of the auto manufacturers. NADA’s Industry Relations Group has announced that 21 separate manufacturer franchise meetings have been confirmed at the convention. To handle what is expected to be a renewed interest in the convention, NADA has extended online registration until 3 p.m. on Monday, Jan. 5.

“NADA is pleased that nearly all of the automakers’ CEOs and presidents plan to attend these important meetings,” said Annette Sykora, NADA chairman. General Motors’ Rick Wagoner, Toyota’s Jim Lentz, Chrysler’s Jim Press and Ford’s Alan Mulally are all planning to attend. Mulally will deliver the keynote industry address at the convention’s opening session on Saturday, Jan. 24. “There could not be a more important time for a dealer to attend an NADA convention and hear directly from their manufacturer,” Sykora added. “Franchise meetings offer dealers the opportunity to hear from NADA, dealer councils and the automaker’s leadership, as well as ask questions of their manufacturers directly."

“These meetings come at a critical time,” Sykora said. “Automotive retailing is going through historic changes, and there is no better place for dealers to meet and discuss the future of their industry than at the NADA convention." Pre-registration and housing for the 2009 NADA Convention & Exposition Jan. 24-27 can be completed—online only—until 3 p.m. EST, Monday, Jan. 5.  (All registrations and housing reservations must be processed online. Fax registrations will not be accepted. After Jan. 5, dealers will have to register on site in New Orleans. If changes need to be made to hotel reservations, Experient can be contacted until Jan. 5 at (800) 974-3084. After Jan. 12, dealers will have to contact hotels directly to make changes.) Information, registration and a complete list of scheduled franchise meetings can be found by visiting www.nada.org/convention.
Source:  NADA Newswire

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NADA Convention to Focus on Future of the Industry

Now is the time to attend the industry event of the year and ensure your dealership’s success
McLean, Va. -- Economic turmoil and uncertainty form the backdrop to the National Automobile Dealers Association (NADA) convention in New Orleans next month. "This is a must-attend convention if there ever was one," says Steve Pitt, NADA vice president of conventions and expositions. “The fate of the industry is hanging in the balance. All of the top manufacturer executives will be there, and dealer franchise meetings are more important than ever. We're also providing new ideas and information and a series of workshops designed to help dealers get through these tough times."
 
The 2009 NADA Convention & Exposition, which runs Jan. 24-27, is offering more than 40 workshops, many of which are designed to tackle today’s tough economic issues head-on, such as maintaining dealer profitability, improving cash flow, surviving the credit crunch and driving customers back to dealerships. “Convention participants will learn what they need to do back home at their dealerships for the good of their businesses,” Pitt added. “The convention will help dealers prepare for an upcoming year of uncertainty.”

For the first time ever at a NADA convention, two former U.S. presidents will take center stage. Former presidents George H.W. Bush and Bill Clinton will deliver remarks during the general session. Ford Motor Co. President and CEO Alan Mulally will deliver the industry keynote address. Inspirational speakers Archie Manning, former quarterback of the New Orleans Saints and the NFL’s Most Valuable Player in 1978, and Christopher Gardner, the inspiration for the movie “The Pursuit of Happyness” will offer motivational talks.

“This is our 92nd convention and, in many ways, it’s the most important one ever,” says Pitt. “If you’re a dealer, you have to be there.”

Pre-registration and housing for the convention has been extended to 3 p.m. EST, Monday, Jan. 5. Take a moment to register online now. Many hotel rooms are still available. Airline flights to and from New Orleans have been added, and airfares have been reduced.
Source:  NADA Newswire

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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 new seminar on dealership survival, Tough Times, Tougher Dealers: Saving Your Dealership’s Assets. The seminar will be offered as a workshop at the 2009 NADA Convention & Exposition in New Orleans, and will also be presented online as a virtual seminar in January.

This seminar, 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 workshop, 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 Jan. 13 from 1–3 p.m. The registration fee is only $50 per computer connection. For more information or to register, visit www.nada.org/seminars.

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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
 
"When you have the government declaring its confidence and commitment to U.S. auto manufacturers, it helps reassure the American public that domestic automakers will be around for the long term. This sends a clear message: Consumers can now consider any car from any manufacturer with confidence."

    -- Annette Sykora, NADA chairman, Los Angeles Times, Dec. 20


"If we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers. Under ordinary economic circumstances, I would say this is the price that failed companies must pay -- and I would not favor intervening to prevent the automakers from going out of business. But these are not ordinary circumstances. In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action."
  

    -- President George Bush said Friday in a televised message from the White House, The Washington Post, Dec. 20


"There are going to be some painful steps that have to be taken. I just want to make sure that when we see a final restructuring package that it's not just the workers who are bearing the brunt of that restructuring."
       

    -- President-elect Barack Obama at a news conference Friday in Chicago called Bush's action a "necessary step ... to help avoid a collapse of our auto industry that would have had devastating consequences for our economy and our workers," The Washington Post, Dec. 20


"Dealers and our customers have been living in a period of uncertainty, and that hasn't done anything to help the economy when consumer confidence was already at an all-time low."

   
-- Annette Sykora, NADA chairman, says that the White House plan, though providing only short-term relief, will help bring reluctant consumers back to car lots, The Washington Post, Dec. 20


"There's no doubt that the dealer body needs to resize. But it should be through market forces and not through the heavy-handed actions of a carmaker or government."


    -- Jim Appleton, a lawyer and president of the New Jersey Coalition of Automotive Retailers, Automotive News, Dec. 22


"We don't need a haircut. We need vehicle manufacturers that can stay in business."


    -- Steve Snyder, dealer and regional vice president of the California New Car Dealers Association, says he knows dealers are under scrutiny now that "equality of sacrifice" has become a catch phrase in the rescue debate, Automotive News, Dec. 22


"The change that has hit the world economy is of a critical scale that comes once in a hundred years." 

    -- Toyota President Katsuaki Watanabe, Associated Press, Dec. 22
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) How Smart Dealers are Changing the Way they Advertise

(2) Creating Superstar Salespeople

(3) Maximize Service Advisor Performance: Four Easy Steps to Enhance Performance

Smart Dealers speaker Dorthy Miller Shore of the Miller Agency will present a 360-degree approach to advertising that integrates all forms of media to drive business. Participants will learn a new media model that applies in today’s Internet world.

Superstar Salespeople speaker Mark Tewart of Tewart Enterprises, Inc. will give specific examples of sales skills, people skills, life skills, and marketing skills that can transform average sales performance to great performance.

Service Advisor speaker Jim Phillips of NADA will present dealers with a clear-cut plan for improving the performance of service advisors. Participants will learn the best approaches to the appointment process, the pre-work process (including homework), the walk-around and write-up, and interactive delivery.

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.