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Monday, Jan. 26, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Auto Dealers Feel Strains Amid Declining Sales
Dealers Asked to Buy More Chryslers to Aid Company
Auto Dealers' Economist Sees Lower 2009 Sales
Obama Targets Greenhouse Gases, Fuel Efficiency
Dealers Urge Obama to Examine State Auto Emissions Rules for Unintended Consequences
Ford Does Not Need U.S. Government Loans
GM Says Tight Credit Is 'Biggest Issue' for Dealers
Car Dealers Try to Survive as Economy, Sales Drop
NADA Update
Chrysler and Dealers Team Up to Build Playground in New Orleans
NADA Convention to Feature Former U.S. Presidents
NADA Study Finds Double Regulating Fuel Economy by States Harmful to Struggling Auto Industry
NADA, SBA and NAMAD Launch Campaign on Dealer Eligibility for SBA Guaranteed Loans
Understanding the TALF
Top Stories
Auto Dealers Feel Strains Amid Declining Sales

NEW ORLEANS -- About 1,000 General Motors Corp., Ford Motor Co. and Chrysler LLC auto dealers went out of business last year, a loss deeper than anticipated amid a crippling decline in auto sales. The rate of decline has been so swift and deep that GM and Chrysler have backed off once-aggressive efforts to strategically downsize their vast dealer networks, sized for a time when Detroit's Big Three commanded more than 75% of the U.S. market. While many dealers consolidated stores or voluntarily bowed out of the auto business, many left under duress. "You can't explain how depressing it is to drive past an abandoned dealership every day, how it leaves you with an empty feeling," Annette Sykora, chairwoman of the National Automobile Dealer Association said Saturday in a speech at the group's annual convention. "What is happening to the business I grew up in?" "Auto makers have had these plans to reduce dealers, but the cost of implementing those schemes is intensive," Paul Melville, a Grant Thornton expert on dealer restructuring, said. "Now market conditions are forcing dealers to consolidate." The strain is evident as thousands of dealers and their spouses convene for a scaled down convention with fewer posh parties and more sessions coaching how to stay afloat in tough times. Chrysler Vice President Jim Press said Chrysler doesn't have a target for the number of dealers that should close, but that a "Darwinian" process is occurring that will cull the number naturally. GM also is less active in its dealers' affairs, in part because the cash-strapped auto maker doesn't have resources help dealers close or merge... The auto maker has said it plans to cull 750 of 6,450 stores from its dealer network as part of a viability plan presented to the government as part of the loan request. The reduction is not a condition of the deal. Ford said the company's strategy is unchanged. Even more than closed dealerships, Ford worries drastic cost cutting at dealerships threatens the business, said Ken Czubay, Ford's vice president of U.S. sales and marketing. "We're dealing with dealer families that have been in business 100 years," he said. Dealers, who will [met] on Sunday with top auto maker executives, appealed to auto makers and lawmakers to stay out of the fray. "When a manufacturer targets a specific number of dealers to cut, that disturbs me," Ms. Sykora, of the dealer association said. "What's the right number of dealers? The question is irrelevant. (Dealers) have the answers."
Source:  The Wall Street Journal

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Dealers Asked to Buy More Chryslers to Aid Company

NEW ORLEANS -- With Chrysler LLC's U.S. sales down 30 percent last year, an economy mired in recession and the automaker living on government loans, the last thing you'd expect a dealer to do is order more cars and trucks. But that's exactly what Michael Andretta, owner of a Chrysler-Jeep-Dodge dealership in central Pennsylvania, intends to do after being inspired by Vice Chairman Jim Press' presentation at an auto dealers convention in New Orleans.  Chrysler executives asked the dealers each to order a wholesale allocation set by the company that totals 78,000 vehicles for February, and Andretta and other dealers said they have no problem doing it. The company has a total 3,300 dealers nationwide. "A feeling we took away from this meeting is that we're all in this together," Andretta said. "And that we're going to survive together, that we're doing the right things." Before the Chrysler meeting, Andretta said he expected dealers to be negative in their questioning of Press and other Chrysler executives. But he said Press' presentation of the company's viability plan and future products reassured the dealers that the company was going to make it through 2009 and thrive. Most dealers were positive after the meeting even though Press told them they would be asked to make sacrifices with all other Chrysler stakeholders including employees, the United Auto Workers and bondholders. For dealers, that includes the request to order 78,000 vehicles, which Executive Vice President for Sales and Marketing Steven Landry said is still 12 percent fewer than February of last year. Other sacrifices include a one-year freeze on labor rate increases for repairs that dealers make under warranty, and Chrysler stopping its reimbursement for gasoline in cars moving off dealer lots, dealers and executives said. Press wouldn't reveal what concessions he will ask dealers to make other than ordering more cars. He said dealers understand the need for everyone to "put some skin in the game," to help Chrysler to survive.
Source:  Associated Press

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Auto Dealers' Economist Sees Lower 2009 Sales

NEW ORLEANS -- U.S. sales of cars and light trucks will rebound in 2009 from dismal levels in last year's fourth quarter, but they still won't match 2008's full-year sales, the chief economist for the National Automobile Dealers Association predicted Sunday. Economist Paul Taylor said sales in the first half of the year will remain slow, but slight economic improvement starting in the third quarter should push sales to at least 12.7 million vehicles for the year. That's still 3.8 percent shy of last year's 13.2 million in sales, but better than the 10.3 million annual selling rate in December. Other analysts and automakers have predicted sales as low as 10.5 million for the entire year in 2009. Taylor said auto sales are tied to the fall in real estate values, and in order for vehicle sales to recover in 22 states, housing values must stabilize. The states generally are along both coasts, in the Northeast and around the Great Lakes. He predicted stronger car and truck sales in 2010 as more young people reach car-buying age and get jobs.
Source:  Associated Press

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Obama Targets Greenhouse Gases, Fuel Efficiency

WASHINGTON -- President Barack Obama took aim Monday at the lofty but long elusive goal of making the nation more energy independent, ordering reviews that could lead to tougher auto emission standards in states and higher pressure on automakers to produce more fuel-efficient cars. Attacking a Bush administration policy, Obama directed the Environmental Protection Agency to re-examine whether California and other states should be allowed to have tougher auto emission standards to combat a build up of greenhouse gases. Obama also directed his administration to get moving on new fuel-efficiency guidelines for the auto industry in time to cover 2011 model-year cars. "For the sake of our security, our economy and our planet, we must have the courage and commitment to change," Obama said in his first formal event in the ornate East Room of the White House. "It will be the policy of my administration," he said, "to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs." California and at least a dozen other states have tried to come up with tougher emission standards than those imposed by the federal government, but Obama said that "Washington stood in their way." The president wants the EPA to take a second look at a decision denying California - and the other states that want to follow its model - permission to set tougher tailpipe emission standards. Obama on Monday directed the EPA to re-examine the decision. That does not yet overturn anything. But still, the states' wanting their own power considered it a victory. "Let me be clear: Our goal is not to further burden an already struggling industry," Obama said. "It is to help America's automakers prepare for the future."
Source:  Associated Press

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Dealers Urge Obama to Examine State Auto Emissions Rules for Unintended Consequences

WASHINGTON — As President Obama today pushed the Environmental Protection Agency (EPA) to review state efforts to regulate vehicle emissions, the National Automobile Dealers Association (NADA) urged the administration to closely examine how those rules would actually be implemented.  “We welcome a close examination of the California Air Resources Board’s (CARB) rule to regulate fuel economy, which is in competition with the federal CAFE program. “With almost 1,000 auto dealerships closing last year at a cost of over 50,000 jobs, we are hopeful the President and the EPA Administrator will realize that a single national fuel-economy standard set by his Administration is smarter than a patchwork of state regulations that further endanger the struggling auto industry. Today’s announcement provides the President a much-needed opportunity to discuss the unintended consequences of permitting a patchwork of state fuel economy rules. Last week, NADA released a comprehensive report, entitled “Patchwork Proven …,” on the numerous unintended consequences that will cause economic harm and provide little or no environmental benefit over standards by allowing individual states to regulate fuel economy.  The analysis clearly shows that the exemptions, loopholes and unforeseen outcomes will come at a high price and not reduce greenhouse gases (GHGs) nationally.  The report can be found at www.NADA.org/patchwork
Source:  NADA Newswire

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Ford Does Not Need U.S. Government Loans

NEW ORLEANS -- Ford Motor Co has enough liquidity to fund its restructuring plan and despite the deep downturn in auto sales still sees no need to ask for government loans, Chief Executive Alan Mulally said on Saturday. "We don't want to borrow any more money. We have sufficient liquidity to fund our transformation plan, which means our business is in a relatively good shape," Mulally told reporters on the sidelines of the National Automobile Dealers Association convention. Ford expects an economic stimulus package being pushed by new President Barack Obama to drive a recovery in auto sales starting in the second half and maintains its forecast of U.S. auto sales at 12 million to 12.5 million units, he added. "Right now, I think with everything planned in the fiscal and monetary policy, I am very comfortable that we are going to start to turn things around through the second half of the year," Mulally said.
Source:  Reuters

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GM Says Tight Credit Is 'Biggest Issue' for Dealers

General Motors Corp., the world’s second-largest automaker, said a tight credit market is the most difficult hurdle for its network of about 6,375 U.S. auto showrooms. “Credit is the biggest issue we’re hearing about from the dealers,” Mark LaNeve, GM’s head of sales, told reporters in New Orleans at the National Automobile Dealers Association. Tight credit restrictions make it difficult for consumers to get loans to buy cars as well as for dealers to finance their own operations, LaNeve said. Credit is constrained even after the federal government gave GMAC LLC, the lender affiliated with GM, and Chrysler Financial, the credit arm of Chrsyler LLC, $6 billion and $1.5 billion, respectively, in loans. GM, Ford Motor Co., and Chrysler are meeting with dealers this weekend to discuss how to survive amid the credit turmoil, the lowest auto sales in decades, and the possible sale or consolidation of brands. All three of the automakers said they expect more dealer closures and consolidations this year.
Source:  Bloomberg

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Car Dealers Try to Survive as Economy, Sales Drop

At this year's version of the National Automobile Dealers Association convention, survival has passed maximizing profits as the focus of the annual event. So as thousands of dealers from across the U.S. gathered Saturday in New Orleans, they were greeted by workshops entitled "Selling up in a down economy: Taking the bull by the horns" and "Tough times, tougher dealers: Saving your dealership's assets." By almost all accounts, 2009 will be among the toughest years ever faced by the roughly 20,000 new car dealerships in the U.S., with sales of cars and lightweight trucks projected to shrink by as much as 6 million vehicles from the 16.1 million sold as recently as 2007. Sales last year were 13.2 million, down 18 percent from 2007, and December sales ran at an annual rate of around 10 million. Last year's sales were the worst in 26 years. The workshops, said convention Chairman Jeff Carlson, are designed to help dealers cope with 2009 and make it to the day when the auto market bounces back. "It's our charge to serve the dealers and to help them do everything that they can to remain viable," said Carlson, who runs two Ford Motor Co. dealerships in Colorado. At the convention, where attendance likely will be down at least 15 percent from the 10,000 dealers and spouses who went last year, the workshops will teach dealers how to get lean and focus on areas where they're making money, Carlson said.
Source:  Associated Press

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NADA Update
Chrysler and Dealers Team Up to Build Playground in New Orleans

NEW ORLEANS – Before the sun set Thursday, the more than 500 children who come to The Knowledge Garden Child Development Center in New Orleans got a great new place to play. The new playground, which was fully assembled from scratch in less than eight hours, was built with the help of more than 200 volunteers from The Chrysler Foundation, Orleans Dodge in New Orleans, Riverland Chrysler in LaPlace, La., Operation REACH, organizers from KaBOOM! and residents of the local community. Throughout the day, volunteers hauled 53,500 sq. ft. of mulch and mixed about 20,000 pounds of concrete and assembled brightly colored playground equipment to bring the new play area to life. Planning for the playground began at a design day event held in November. Local children and community leaders met with organizers from KaBOOM! and Chrysler to design their “dream” playground. The children's drawings were used to create the final playground design. “The playground will provide a safe, clean place for the children of the neighborhood to play,” said Operation REACH CEO Dr. Kyshun Webster. The project is the 24th playground to be built across the country by KaBOOM!, The Chrysler Foundation, and Chrysler, Jeep and Dodge dealers.
Source:  Chrysler LLC

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NADA Convention to Feature Former U.S. Presidents

NADA has assembled a lineup of leading political figures, industry 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 spoke during the General Assembly on Saturday, following NADA Chairman Annette Sykora. Incoming NADA Chairman John McEleney will outline his priorities today for the coming year.
Source: NADA Newswire

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NADA Study Finds Double Regulating Fuel Economy by States Harmful to Struggling Auto Industry

Industry Needs Single National Standard, Not Patchwork of State Regulations
WASHINGTON — A comprehensive analysis released today by the National Automobile Dealers Association (NADA) on a California Air Resources Board’s (CARB) rule that would allow individual states to regulate  fuel economy standards finds numerous unintended consequences that will cause economic harm and provide little or no environmental benefit over the proposed federal standards. “With new national fuel economy standards expected to be finalized by the Obama administration by April 1, complying with the additional state standards would create a regulatory patchwork that would undermine the national fuel economy program at a time when the auto industry needs regulatory certainty and stability,” says David Regan, NADA vice president of legislative affairs. “Separate and apart from the stringency of standards set by the federal government or California, the establishment of 13 state-based fuel economy regimes would cause irreparable harm to an already struggling automobile industry.” Regan added that a major slump in auto sales forced 900 dealerships to close their doors in 2008 and put the domestic automakers in the difficult position of needing billions in bridge loans from the federal government to prevent bankruptcy.  GM and Chrysler have already received $17.4 billion in loans. Ford has yet to ask for assistance.  “It makes no sense for the federal government to aid the auto industry with one hand, and then burden it with a duplicative rule that regulates fuel economy completely differently than the federal government,” Regan continued. Click here for the report, "Patchwork Proven: Why A Single National Fuel Economy Standard Is Better for America Than A Patchwork of State Regulations."
Source:  NADA Newswire

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NADA, SBA and NAMAD Launch Campaign on Dealer Eligibility for SBA Guaranteed Loans

NADA, the National Association of Minority Automobile Dealers (NAMAD), and the Small Business Administration (SBA) have developed a joint Motor Vehicle Dealer Loan Guaranty Campaign to inform small new-car and -truck dealers about their eligibility for SBA 7(a) guaranteed loans. Small dealers who’ve been affected by recent economic conditions may benefit from the program. The SBA guarantees loans made by local lenders for small business applicants who cannot obtain credit on a conventional basis. SBA staff will be available at NADA’s Federal Regulatory Outreach Pavilion at the NADA Convention to answer dealers’ questions about the program. Questions may also be directed to the NADA Hotline at (888) 672-5147 between 8:30 a.m. and 4:30 p.m. EST, Monday through Friday. When calling, mention that you are seeking assistance in applying for or obtaining a SBA-guaranteed loan. Click here for the campaign fact sheet.
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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Featured Video
 
  
Click here to see why New Orleans is still America's premier convention city.



More Video Highlights

Quotable
 
"You can't explain how depressing it is to drive past an abandoned dealership every day, how it leaves you with an empty feeling. What is happening to the business I grew up in?"

   
-- Annette Sykora, NADA chairwoman and Texas dealer said Saturday in a speech at the group's annual convention, The Wall Street Journal, Jan. 25


"It's our charge to serve the dealers and to help them do everything that they can to remain viable."

   
-- NADA Convention Chairman Jeff Carlson, who runs two Ford Motor Co. dealerships in Colorado, said convention workshops are designed to help dealers cope with 2009 and make it to the day when the auto market bounces back, Associated Press, Jan. 25


"I'm going to go back and I'm going to order cars that I don't need. A feeling we took away from this meeting is that we're all in this together. And that we're going to survive together, that we're doing the right things."

    -- Michael Andretta, a Chrysler dealer is in Beaver Springs, Pa., said after being inspired by Chrysler Vice Chairman Jim Press' presentation Sunday at the NADA convention in New Orleans, Associated Press, Jan. 25
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 Powerful Principles to Reshape Your Strengths in Service

(2) How to Instantly get High Survey Scores, High Customer Retention, and Outstanding Product

(3) Blueprint for Hiring Top Performers

Powerful Principles speaker Ted Ings of Auto University will identify principles for strengthening service and delivering a superior customer experience. Participants will learn timely, easy-to-implement processes, best management practices and real-world solutions for boosting service profits under all retail conditions.

Survey Scores speaker Jeff Cowan of Jeff Cowan’s Pro Talk, Inc. will teach dealership personnel how to build rapport and establish long-lasting relationships with customers. Attendees will learn what product benefits interest customers most, when and how to present these benefits to them and what type of close works best.

Blueprint speaker Ricky Wolfe of EFG Companies will cover the behavioral traits of top performers in the retail automotive industry and outline a 7-step system to identify, recruit, hire and retain top performers.

Register onsite for the 2009 NADA Convention & Exposition.

Video Highlights
 
 
'NBC Nightly News with Brian Williams' reports: "Demise of a local car dealership leaves a big dent."



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.