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Monday, Jan. 5, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
For Bailout Money, GMAC Agrees to End Deal with GM
GM Concession Talks Begin
Chrysler Gets $4 Billion
Clinton, Iowa, Car Dealer Takes the Wheel of National Association
Auto Sales for '08 May Have Plunged 3M Vehicles
Japan Auto Executives Hope for US Recovery
Europeans Raise Pressure on Detroit
The Trials of the Auto Dealer
Opinion: Better Get Used to the Fishbowl
NADA Update
Online Registration for NADA Convention Ends Today
NADA Convention Features Former U.S. Presidents and Industry Leaders
Carville and Matalin to Headline AFSA's Vehicle Finance Conference in New Orleans
NADA Convention to Focus on Future of the Industry
Understanding the TALF
NADA Offers Virtual Seminar to Help Dealers in 'Tough Times'
STAR Answers Dealers' Questions About Hardware Based Systems
Top Stories
For Bailout Money, GMAC Agrees to End Deal with GM

The auto financing giant GMAC relinquished its exclusive right to provide financing to people buying General Motors vehicles in exchange for up to $6 billion in federal aid. The deal abruptly ends a 10-year contract between GM and GMAC, according to the lender's filing with the Securities and Exchange Commission yesterday. In the past, whenever GM offered vehicle financing and leasing specials, such as below-market interest rates, it did so through GMAC. Now, over the next two years, the automaker can offer incentive programs through other lenders under certain requirements, the filing said. After that period, the terms will gradually loosen until 2013, when GM will have the right to offer programs through any lender -- including GMAC -- without any restrictions or limitations. "I don't see anything negative in this new arrangement, as long as GMAC is still supportive of GM's effort to sell cars," said Jack Fitzgerald, owner of Bethesda-based Fitzgerald Auto Malls. The changes, effective Monday, follow the Federal Reserve's approval of GMAC to become a bank holding company, making the lender eligible for a slice of the Treasury Department's $700 billion financial rescue package.
Source:  The Washington Post

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GM Concession Talks Begin

UAW, dealers to address demands of fed bailout; Chrysler discussions expected this week also
In a series of historic talks expected to be tense and sweeping at times, General Motors Corp. will launch formal negotiations this week with the United Auto Workers, bondholders, dealers and others to transform the automaker into a smaller, viable company. GM has pledged to revamp labor contracts, reduce debt and shrink the number and type of vehicles it produces to satisfy conditions imposed after the federal government granted the automaker and Chrysler LLC $17.4 billion in emergency federal loans. The loans will ensure the companies survive through March, but each automaker must develop plans by Feb. 17 to ensure long-term viability. GM needs financial concessions to implement a restructuring plan unveiled last month that includes eliminating up to 31,000 jobs, shutting nine plants and renegotiating its 2007 labor contract with the UAW. GM also wants to close 1,750 dealerships, possibly eliminate Saturn and convince banks and bondholders to swap some of the company's debt for equity.
Source:  The Detroit News

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Chrysler Gets $4 Billion

Auburn Hills-based automaker gets its first installment of government cash for restructuring
Troubled Chrysler LLC late Friday received an initial $4 billion loan from the U.S. Treasury Department, part of the $17.4 billion it and General Motors Corp. had sought to help the companies stay afloat. Chief Executive Robert Nardelli said the loan will allow the automaker to continue its restructuring and pursue "our vision to build the fuel-efficient, high-quality cars and trucks people want to buy, will enjoy driving and will want to buy again." "We recognize the magnitude of the effort by the Treasury Department to complete the multiple financial arrangements and appreciate their confidence in Chrysler," Nardelli said. "We would like to thank the many constituents who worked with us to meet the loan requirements. This initial loan will allow the company to continue an orderly restructuring."
Source:  The Detroit News

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Clinton, Iowa, Car Dealer Takes the Wheel of National Association

John McEleney’s family has been in the auto business for more than 90 years, beginning in 1914. Challenges have come and gone, but now McEleney faces bigger challenges and a bigger role as the 2009 chairman of the National Automobile Dealers Association, or NADA. McEleney has represented the state of Iowa in NADA, founded in 1917, since 2003. An estimated 92 percent of U.S. dealers belong to the organization. His new position will be a job of travel, diplomacy and public relations, he said, between dealing with the media, government and manufacturers and the industry. McEleney, who is president of his family operation, previously served a term as vice-chair of the national organization. Edward Tonkin of Portland, Ore., will serve as his vice-chairman for 2009. As he settles into his new role, one of McEleney’s top priorities is giving hope to consumers about credit access. “I think there’s a misconception that credit is not available for customers,” he said, explaining that it is dealer loans, not consumer loans, that are the cause for concern. “The fact is local dealers have access to multiple sources of financing, including many community banks and credit unions.” In addition to appealing financial opportunities, McEleney added that many new cars come with better fuel economy and safety features, making the choices broader and better for consumers. “I would say — and this might sound self-promoting — it is really a good time to buy a car. When business is slow, incentives are high,” he said.
Source:  Quad-City Times (Davenport, Iowa)

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Auto Sales for '08 May Have Plunged 3M Vehicles

DEARBORN, Mich. — Auto sales likely dropped a breathtaking 3 million vehicles in 2008, the largest decline since 1974, said Ford Motor's head of sales analysis Friday. The 2008 forecast Friday from George Pipas, manager of sales analysis for Ford Motor, comes just days before the auto industry is set to release December sales figures that will close out a disappointing, and sometimes shocking, year. Sales ended 2007 at 16.7 million, and many in the industry had projected the first half of 2008 would be slow and the second half would improve. Instead, sales in the first half of the year now look positively rosy. Although gas prices constrained SUV and pickup sales, it wasn't until the banking crisis hit this fall when auto sales really fell off. Monthly sales in the fall didn't even hit 1 million, which hadn't happened since 1992. "We are not looking for first-quarter overall U.S. sales to be much different than the fourth quarter," said Pipas, speaking to reporters... But dealer showroom traffic went up dramatically in the last week of the month... Dealers said they did 40% of their business during the last week of the month thanks to an influx of customers.
Source:  USA TODAY

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Japan Auto Executives Hope for US Recovery

TOKYO -- Japan auto executives gathered for an annual New Year's party Monday expressed hopes for a U.S. turnaround and a strengthening dollar to fix the faltering global market. Japan's export-dependent automakers have been battered by the slowdown in the U.S. set off by the financial crisis last year. The rising yen has also hurt the companies. The dollar, which had cost 113 yen a year ago, is trading at about 90 yen lately, a 13-year low. Takeo Fukui, president and chief executive of Japan's No. 2 automaker, Honda Motor Co., said he hoped the global economy had bottomed out. "We tried to create a business that can withstand currency fluctuations, but the latest changes have been too much," said Toyota President Katsuaki Watanabe. Toyota's Honorary Chairman, Shoichiro Toyoda, a member of the company's founding family, stressed the importance of an American recovery. "We are all in trouble without an American recovery," he told The Associated Press. "The American economy has a big impact on the world."
Source:  Associated Press

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Europeans Raise Pressure on Detroit

With the 'Big Three' Weakened, VW and BMW Aim to Expand Their Shares of U.S. Auto Market
Struggling Big Three auto makers, accustomed to intense competition from their Japanese rivals, face a new challenge from European auto makers. Sensing opportunity in Detroit's weakness, Volkswagen AG and BMW AG of Germany are gearing up to expand market share in the U.S. in the next few years. VW is investing in its first U.S. factory in two decades and expects to triple U.S. sales to one million vehicles by 2018. BMW is introducing a new small car and expanding its distribution network. "The U.S. will be the growth engine of the future," Jim O'Donnell, BMW's U.S. chief, said in a recent interview. "This is where we will continue to focus our efforts."
Source:  The Wall Street Journal (Subscription required.)

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The Trials of the Auto Dealer

Long a Road to Wealth in Towns Across America, Selling Cars Has Turned Into a Struggle to Survive, Not Always Successful
LONDON, Ky. -- Neither Johnny Watkins nor Elmer Gambrel had much growing up in southeastern Kentucky. But both had a knack for selling cars, and both eventually built thriving dealerships... That's where their business careers diverged. Today, Mr. Watkins's two dealerships, selling vehicles from General Motors Corp. and Chrysler LLC, are closed, his condo is gone and his house, now owned by a bank, has yellow-and-red "For Sale" signs out front. But the Toyota dealership that was started by Mr. Gambrel, who died in 1991, continues to provide a good living for his four children. For decades, selling cars from Detroit paved a path to wealth for businesspeople in cities and towns all across the country. Even if the auto makers were hurting, the dealers typically did all right because sales incentives financed by the makers supported sales. But the American auto industry has never before faced the kind of forces now slowing sales to a crawl. They include tight credit, rising unemployment, home foreclosures and a widespread public mood of hunkering down and spending less.
Source:  The Wall Street Journal (Subscription required.)

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Opinion: Better Get Used to the Fishbowl
by Keith Crain

Everyone in this business will be in a fishbowl in 2009, and the world will be watching. We had better get used to it. All the challenges of the past year are still with us. New issues this year will make the auto business even tougher. Dealers must become global financial wizards to compete and survive. They will have to learn to act like used-car dealers and live with a vastly smaller new-car volume. Amid fierce competition, treating the customer well — earning his or her loyalty — has never been more important. Dealers must reduce inventories, both vehicles and parts. Suppliers must continue to scramble to develop new relationships around the world. General Motors and Chrysler LLC have effectively become government-controlled; the more money they require from the government, the more control they will lose. Consumers get no vote. Austerity is the new mantra. The global manufacturers are no more comfortable. The challenges are everywhere. It's going to be a tough year. Batten down the hatches.
Source:  Automotive News (Subscription required.)

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NADA Update
Online Registration for NADA Convention Ends Today

Convention to host 21 automaker franchise meetings at critical time for the industry
Now that U.S. automakers will receive bridge loans, attention has shifted to the NADA Convention & Exposition in New Orleans Jan. 24-27 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. today, 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 NADA convention can be completed—online only—until 3 p.m. today. (All registrations and housing reservations must be processed online. Fax registrations will not be accepted. After today, dealers will have to register on site in New Orleans. If changes need to be made to hotel reservations, Experient can be contacted 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 Features Former U.S. Presidents and Industry Leaders

The National Automobile Dealers Association (NADA) has assembled a lineup of leading political figures and inspirational speakers—including former U.S. presidents George H.W. Bush and Bill Clinton—to deliver remarks at its 92nd annual Convention & Exposition in New Orleans Jan. 24-27. “This year’s lineup is one of the most impressive in NADA’s history,” said Convention Chairman and auto dealer Jeff Carlson. “In line with NADA’s convention theme of ‘Committed to Community,’ former U.S. presidents George H.W. Bush and Bill Clinton join us in highlighting nationwide efforts to give back to the New Orleans community.” Last year, the NADA Charitable Foundation made a $400,000 contribution to the Brees Dream Foundation—founded by New Orleans Saints quarterback Drew Brees and wife, Brittany—to help rebuild the athletic fields at the largest public high school in New Orleans. Ford Motor Co. President and CEO Alan Mulally will deliver the keynote address during the General Assembly on Saturday, Jan. 24, following NADA Chairman Annette Sykora. Archie Manning, former Saints quarterback and NFL Most Valuable Player, and Christopher Gardner, the inspiration for the movie “The Pursuit of Happyness,” will offer motivational talks. Incoming NADA Chairman John P. McEleney will outline his priorities Sunday, Jan. 25 for the coming year.
Source: NADA Newswire

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Carville and Matalin to Headline AFSA's Vehicle Finance Conference in New Orleans

Political commentators James Carville and Mary Matalin will give the keynote presentation at the American Financial Services Association’s (AFSA) 13th Vehicle Finance Conference and Exposition scheduled Jan. 21-23 at The Sheraton New Orleans. The husband and wife duo, who have sharply different political views, will discuss the new presidential administration during a presentation on Friday, Jan. 23. The vehicle finance conference, held just prior to the National Automobile Dealers Association (NADA) annual convention, also will feature a panel of top industry leaders who will share their views about the current market environment as well as the traditional “Straight Talk with Dealers” session featuring the NADA leadership: John McEleney, incoming chairman; Ed Tonkin, incoming vice chairman; and Mike Martin, director from Virginia. Michael Brown from the Atlantic Auto Group will also speak. Additional sessions and round tables will focus on Risk Management, Legal and Legislative Issues, Maximizing Human Capital, the New Generation of Auto Finance Companies, Profitability Management Analytics and Operational Effectiveness and Dealing with Fraud. To register for AFSA’s meeting, visit www.vehiclefinanceconference.com.
Source:  AFSA

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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
Economic turmoil and uncertainty form the backdrop to the National Automobile Dealers Association (NADA) convention in New Orleans. "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 today. 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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Understanding the TALF

A new Web page on nada.org explains in greater detail what the Federal Reserve Board's Term Asset-Backed Securities Loan Facility (TALF) program means to dealers and how they will benefit from the action taken on Dec. 19 to include securities backed by dealer floorplan loans as a qualifying asset class. The information is helpful in explaining this action to dealers and the media. Click here for "Understanding the TALF."
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 is being presented both as a virtual seminar and as a convention workshop at the 2009 NADA Convention & Exposition in New Orleans.

The first virtual seminar, held Dec. 18, drew more than 200 participants and lasted more than an hour, followed by a lively and informative Q & A session. As participants were not identified by name or dealership, discussion was extremely candid. NADA is offering only one more virtual seminar to be held Jan. 13 from 1–3 p.m. EST. The registration fee is only $50 per computer connection. Don't miss out! Register now at www.nada.org/seminars.

This seminar, presented by Michael Charapp, Esq. of Charapp & Weiss, LLP and Bradley Nicklin, CPA of Beers + Cutler, discusses the tough issues facing dealers today. It is intended to help dealers and managers understand the steps required to protect their dealerships’ assets during tough economic times.

In Tough Times, 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 the tough environment, both legally and financially.

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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
 
GMAC's new lending policy, lowering minimum credit scores from 700 to 621, is designed to "further increase consumer confidence at this critical time in the auto industry." 

    -- NADA Chairman Annette Sykora, The Courier-Journal, Jan. 3


"... when this is all done, there will be GM, Ford and Chrysler. It may be smaller, but they’re going to adapt to the available market. They've done a lot of good things to become competitive. They just got hit with this lack of capital all at once."

   
-- John McEleney, incoming NADA chairman, says the stigma attached to the Detroit Three has been unfortunate because the companies are well-run and have instituted changes that will take place in 2010, Quad-City Times, Jan. 3


"This initial loan will allow the company to continue an orderly restructuring." 

    -- Chrysler Chief Executive Robert Nardelli says the loan will allow the automaker to continue its restructuring and build fuel-efficient, high-quality cars and trucks people want to buy, The Detroit News, Jan. 3


"GM has been and will continue with efforts on streamlining its dealer network through channeling, consolidation and natural attrition." 

    -- GM spokeswoman Susan Garontakos, referring to concession talks that address demands of emergency bridge loans, The Detroit News, Jan. 5


"We are all in trouble without an American recovery."

   
-- Toyota's Honorary Chairman, Shoichiro Toyoda, and member of the company's founding family, Associated Press, Jan. 5


"The U.S. will be the growth engine of the future. This is where we will continue to focus our efforts."

   
-- Jim O'Donnell, BMW's U.S. chief, The Wall Street Journal, Jan. 5
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.