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Tuesday, Jan. 27, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Bush, Clinton Offer Hope to Auto Dealers
Green Car Rules Give Auto Industry a New Challenge
McEleney Blasts State-by-State Emissions Regs
Auto Dealerships Prepare for a Major Shakeout
Car Dealers Scaling Back to Survive Downturn
Chrysler Eases Push to Shed Dealerships
Lower Gas Prices Send Buyers After Big Cars Again
NADA Update
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 TALF
Top Stories
Bush, Clinton Offer Hope to Auto Dealers

Economic trials are compared to Katrina aftermath
Former presidents Bill Clinton and George H.W. Bush, who were in New Orleans on Monday to speak to members of the National Automobile Dealers Association, tried to assure one of the nation's most troubled industries that it would survive an economic maelstrom that has swallowed more than 2.5 million jobs in the past year. But survival will not come without sacrifice, they said. Clinton and Bush evoked the image of Hurricane Katrina to describe the level of perseverance they said will be needed to carry the nation through a recession that has been widely compared with the Great Depression. Citizens must pitch in to help one another as they did after Katrina, when countless volunteers descended upon New Orleans to help rebuild and donated millions of dollars to a relief fund headed by Clinton and Bush, the former presidents said. Clinton called the economic situation "mind-numbingly complicated, " with no easy answers about how to create jobs and restore faith in the financial markets. No one knows that better than the automobile industry. Sales were down 35 percent nationwide last year, and nearly 1,000 dealerships closed. Bush urged the auto dealers o "fight for your business and the free enterprise system." "Hang in there, and continue to do the job you're doing, " he said. Clinton and Bush sat down for a casual chat with outgoing association Chairwoman Annette Sykora, who quizzed them about their victories and regrets in office.
Source:  The Times-Picayune

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Green Car Rules Give Auto Industry a New Challenge

WASHINGTON — President Barack Obama wants automakers to make greener cars at a time when General Motors and Chrysler are hanging by the thread of a massive government loan and auto sales have plummeted to their lowest levels in more than two decades. Obama's plans could bring smaller cars, more hybrids and advanced fuel-saving technologies to showrooms, but car shoppers will probably pay more upfront because the new rules are expected to cost the hamstrung industry billions of dollars. "The consumer needs to understand that they will see significant increases in the cost of vehicles," said Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight. Her firm estimated the upgrades could add $2,000 to $10,000 to the price of a vehicle. Obama on Monday directed the Environmental Protection Agency to review whether California and more than a dozen states should be allowed to impose tougher auto emission standards on carmakers to fight greenhouse gas emissions. The Bush administration had blocked the efforts by the states, which account for about half of the nation's auto sales. Obama set in motion a new regulatory process at a time when the nation is coping with an economic recession and auto sales have fallen to their lowest pace since 1982. Underscoring the hardships, GM said Monday it would slash 2,000 jobs at plants in Michigan and Ohio. Industry officials anticipate the costs of the federal standards could surpass $100 billion by 2020 and California's rules could cost even more. David Regan, vice president of legislative affairs for the National Automobile Dealers Association, said it could lead to a state-by-state "patchwork" that would burden the industry and force dealers to limit their sales of larger cars and trucks. "We are in the midst of unprecedented economic challenges in our industry," said Regan, whose group ended a four-day convention in New Orleans on [Tuesday]. "All of these factors need to be weighed as the Obama administration goes forward."
Source:  Associated Press

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McEleney Blasts State-by-State Emissions Regs

John McEleney, the incoming chairman of NADA, urged Congress to hold hearings to assess how many jobs would be lost if vehicle emissions were regulated state by state. "We hope that the president and the EPA administrator realize that a single national fuel economy standard is smarter than a patchwork of state regulations that will only further endanger our industry," McEleney told dealers at the general session of the convention today. The industry lost almost 1,000 dealerships last year at the cost of more than 50,000 jobs, he said. McEleney urged dealers to tell state and local officials "again and again" how important dealerships are in terms of taxes, jobs and community organizations. Dealers must protect their businesses so that when the business cycle turns "we are in the position to thrive," he said. McEleney added: "Let me assure you, I'm absolutely committed to protecting the franchise story and our way of business."
Source:  Automotive News

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Auto Dealerships Prepare for a Major Shakeout

As Sales Plunge and Big Three Face an Uncertain Future, Closures and Consolidation Loom for Many Franchisees
The nation's car dealers are bracing for the biggest shakeout in U.S. franchising history. Thousands of dealer-franchisees are threatened with losing their businesses in coming months amid falling sales and uncertainty over the future of Detroit's Big Three auto makers and their many brands. Auditing firm Grant Thornton LLP's Detroit office predicts that 3,800 of all of the country's 20,000 dealerships would need to close to maintain sales per dealer at last year's level. Because the economic consequences for those franchisees could be catastrophic, some dealers' attorneys aren't waiting for what one called a "tsunami" to hit. Instead, they're urging clients to review their franchise contracts to better understand what options they might have should their franchiser-manufacturer decide to drop a brand, merge with another company or simply go out of business. Another issue is a dealership's goodwill -- what a business is worth beyond its physical assets. There's no single formula for determining that value. Jim Moors, director of franchising and state laws for the National Automobile Dealers Association, says his trade organization is "working very hard to keep dealers in existence. They didn't create the financial situation hampering these companies."
Source:  The Wall Street Journal

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Car Dealers Scaling Back to Survive Downturn

NEW ORLEANS -- A prolonged slump in U.S. auto sales has left many of the country's 20,000 new car and truck dealers hanging on by their fingertips. And the government bailout of General Motors Corp and Cerberus Capital Management LP's Chrysler LLC in December doesn't mean the end to the plight of dealers -- whose revenue collectively represents 20 percent of U.S. retail sales. With the world's single largest car market expected to shrink further in 2009 amid fragile consumer confidence and tight credit, more than 10 percent of dealerships are likely to shut their doors this year, analysts said. Survival, not profitability, topped the agenda as thousands of dealers across the country gathered for the annual National Automobile Dealers Association convention in New Orleans. "People really came here for serious business reasons," said Richard Llewellyn, a Chrysler dealer in Punta Gorda, Florida. "It's about how to survive a different market. We are reducing salaries, getting inventories down and becoming creative on where to cut costs," Llewellyn said.
Source:  Reuters

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Chrysler Eases Push to Shed Dealerships

Consolidation plan on hold to focus on sales
NEW ORLEANS -- Chrysler LLC is not actively pushing its dealer consolidation program and is instead focusing on maintaining whatever retail sales volume it can as the industry struggles with crippling sales declines, a top company executive said Saturday. On the eve of last year's National Automobile Dealers Association annual convention, Chrysler officially announced Project Genesis, a plan to encourage greater dealer consolidation among the company's Chrysler, Dodge and Jeep stores and renew emphasis on getting the automaker's three brands sold at single locations. But troubles in the economy at large have encouraged Chrysler -- which ended 2008 with 3,300 dealers -- to take a step back from that effort. "We're not actively pushing Project Genesis in terms of consolidating because right now, we have to do whatever we can to have our dealers be profitable, regardless of where they are," Steven Landry, Chrysler executive vice president for North American sales, said Saturday -- the first day of NADA's 2009 convention. Landry said Chrysler's ultimate "goal is to still have our consolidated dealers with all three brands under one roof."
Source:  Detroit Free Press

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Lower Gas Prices Send Buyers After Big Cars Again

NEW ORLEANS — Gyrating gas prices are playing havoc on auto industry planners, who've been adding small cars to their lineups, even as customers are showing more interest again in bigger vehicles. The turnabout "shows the fickleness of the market," says [Chrysler President Jim] Press, speaking after a J.D. Power and Associates conference here for auto dealers. Guessing what people want has been just as hard for dealers. The change shows how fuel prices rule the car business. The market is becoming "almost schizophrenic" for big or small car demand, says Tom Libby, analyst for Power Information Network. He cautions against writing off small vehicles.
Source:  USA TODAY

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NADA Update
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 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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Click here to see why New Orleans is still America's premier convention city.



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Quotable
 
"We hope that the president and the EPA administrator realize that a single national fuel economy standard is smarter than a patchwork of state regulations that will only further endanger our industry."

   
-- John McEleney, NADA chairman told dealers Monday at the general session of its convention in New Orleans, Automotive News, Jan. 26


"We are in the midst of unprecedented economic challenges in our industry. All of these factors need to be weighed as the Obama administration goes forward."

   
-- David Regan, NADA vice president of legislative affairs, says a state-by-state "patchwork" of emissions rules would burden the industry and force dealers to limit their sales of larger cars and trucks, Associated Press, Jan. 26


"People really came here for serious business reasons. It's about how to survive a different market. We are reducing salaries, getting inventories down and becoming creative on where to cut costs."

   
-- Richard Llewellyn, a Chrysler dealer in Punta Gorda, Fla., referring to NADA's convention in New Orleans, Reuters, Jan. 26


"A 10 million unit industry is an automotive hurricane."

    -- Ford Motor Co. marketing and sales chief Jim Farley said on the sidelines of the NADA convention being held in a city that still bears the scars from Hurricane Katrina in 2005, Reuters, Jan. 26


"The consumer needs to understand that they will see significant increases in the cost of vehicles." 

    -- Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight, estimating that vehicle upgrades resulting from new emission standards could add $2,000 to $10,000 to the price of a vehicle, Associated Press, Jan. 26
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.