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Wednesday, Feb. 4, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Senate Approves Tax Break for Auto Loan Interest
Senate Lacks Votes to Pass Stimulus
Sales Skid; Dealers Seek Aid
Auto Sales Start 2009 at an Abysmal Pace
Hyundai Defies U.S. Slump as Asians Grab Record Share
Mazda, Mitsubishi Motors Swing to Quarterly Losses
GM Beefs Up Incentives After a Dismal January
Obama Auto Team Taking Shape
Dingell: Don't Write Off the Auto Industry
Committed to Community: Citizen of the Year Finds Resources in Students
NADA Update
FTC Civil Penalties to Increase Feb. 9
Webinar Feb. 12: Shore Up Your Bottom Line by Saving Energy
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
Senate Approves Tax Break for Auto Loan Interest

WASHINGTON -- The U.S. Senate voted [Tuesday] to make loan interest and sales taxes on vehicle purchases deductible from federal income taxes. The proposal, championed by the National Automobile Dealers Association, was added to an economic stimulus bill under debate in the Senate. The vote was 71-26. If the measure passes, taxes on auto loans will be deductible for the first time since 1986. The provision on deductibility of loan interest is the first significant measure aimed at getting consumers back into showrooms and buying vehicles to get action from Congress. NADA says the measure will save consumers about $1,500 on a $25,000 vehicle. Some experts have criticized the provision for not having enough up-front punch. Too many worried would-be buyers aren't thinking ahead to cutting future tax bills, they argue. But the measure is a significant incentive and NADA had to focus on what could be accomplished politically, an organization spokesman said [Tuesday].
Source: Automotive News

[Editor's Note: While the broader economic stimulus package is expected to pass the Senate this week or next week, differences in the House and Senate versions still need to be worked out in a joint conference committee. NADA's next challenge is to preserve this provision as it moves through conference negotiations. It's important for dealers to thank their senators who voted in favor of this critical amendment.]

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Senate Lacks Votes to Pass Stimulus

Democrats Trying to Trim $900 Billion Plan to Gain GOP Support
Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy. The legislation represents the first major test for President Obama and an expanded Democratic Congress, both of which have made economic recovery the cornerstone of their new political mandate. The stimulus package has now tripled from its post-election estimate of about $300 billion, and in recent days lawmakers in both parties have grown wary of the swelling cost. What Senate leaders cannot predict is which provisions will stay in and which will fall out. The momentum to cut spending became apparent in votes on several amendments. But some new spending programs proved too politically attractive to the Senate. In a 71 to 26 vote, the Senate approved a new incentive for car buyers, at an estimated cost of $11 billion over 10 years. According to Sen. Barbara A. Mikulski (D-Md.), the amendment's sponsor, buyers could deduct the cost of sales tax for new cars purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 would qualify.
Source: The Washington Post

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Sales Skid; Dealers Seek Aid

Auto retailers, suppliers seek more than $10B in fed money
Desperate auto dealers and parts suppliers pleaded for government aid on Tuesday, as the industry reported the 15th consecutive monthly drop in U.S. auto sales to the weakest level in 27 years. Auto dealers are seeking at least $10 billion from the $700 billion Wall Street bailout fund, and suppliers are requesting several billion before the end of the month to prevent a spate of collapses. ... looking for federal aid is the National Automobile Dealers Association. The group is seeking billions in loans for its members from the $700 billion fund created to bail out Wall Street. Auto dealers have about $100 billion in outstanding loans to finance vehicle purchases, and may have trouble repaying $10 billion or more. Almost 1,000 dealerships closed in 2008, and some 50,000 jobs were eliminated nationwide. "This program would be designed to buck up the commercial lenders," said Andrew D. Koblenz, NADA's vice president and general counsel. He said several regional banks, such as Fifth Third, Regents Bank and Sovereign Bank, had stopped lending to dealers. "Other lenders are hesitant to add any dealers," said John P. McEleney, an Iowa dealer who is the chairman of NADA. "This issue is critical. Without a floor plan loan, even a prosperous dealer cannot operate for more than a matter of days," he said. [Koblenz] said he had spoken with more than 40 dealers in the last six weeks. "They say, 'I'm making my payments. I'm current on everything ... but because my balance sheet has been hit by circumstances or there's concern about my (manufacturer) ... they're pulling' financing," Koblenz said.
Source: The Detroit News

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Auto Sales Start 2009 at an Abysmal Pace

DETROIT — New-vehicle sales in the United States fell 37 percent in January to one of the lowest levels in half a century, and though automakers said the market was unlikely to get much worse, they were bracing for most of 2009 to be just as bad. It was the industry’s worst month since June 1982, and the worst January since 1963. Tight credit markets and the economic recession, now in its 14th month, are still keeping many customers away from dealerships and preventing some potential buyers from getting the vehicles they want. Sales fell 55 percent at Chrysler and 49 percent at G.M., providing an ominous backdrop as they rush to finish the revamping plans that are due at the Treasury Department in two weeks. At Ford, which says it does not need government aid, sales dropped 40 percent. Together, the three Detroit automakers sold 279,531 cars and trucks, about the same number that G.M. alone sold in September ...  “Our business is based on credit more than any other industry, and if you can’t get credit, you can’t sell vehicles,” said Michael C. DiGiovanni, G.M.’s chief sales analyst. “Dealers are telling us there are buyers out there,” said Steven Landry, Chrysler’s vice president for sales. “They are in the showroom, but it’s very, very difficult to get them approved.”
Source: The New York Times

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Hyundai Defies U.S. Slump as Asians Grab Record Share

Hyundai Motor Co. and Kia Motors Corp., South Korea’s largest carmakers, defied lower U.S. demand in January to help Asian brands grab record market share and outsell U.S.-based competitors. Hyundai’s U.S. sales gained 14 percent after it began a program to let customers who lose jobs return cars. Toyota Motor Corp., the world’s biggest automaker, posted a 32 percent decline, Honda Motor Co. fell 28 percent and Nissan Motor Co. fell 30 percent. “Toyota and Honda may be feeling some pressure from smaller brands, particularly Hyundai with its buyback program,” said Jesse Toprak, director of analysis for auto-research firm Edmunds.com in Santa Monica, California. “Hyundai’s program seems to have really dealt with a core issue of making consumers feel more secure about a purchase.” Japanese and South Korean brands held a combined 49.5 percent share of the market last month, their highest ever, as U.S.-based competitors fell to a record low 42.5 percent, according to Woodcliff, New Jersey-based Autodata. Asian brands first overtook U.S. automakers in market share in June 2008. Subaru, the automotive unit of Tokyo-based Fuji Heavy Industries Ltd., joined Hyundai and Kia in bucking the market’s overall declining, reporting an 8 percent increase in sales of its sedans, wagons and sport-utility vehicles. Toyota owns 16.5 percent of Fuji Heavy.
Source: Bloomberg News

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Mazda, Mitsubishi Motors Swing to Quarterly Losses

Auto Makers Expect to Fall Into the Red for Full Fiscal Year
TOKYO -- Mazda Motor Corp. said Wednesday that it now expects its first loss in eight years for this fiscal year due to damage sustained from a strong yen and a sharp downturn in consumer sentiment. The company, now 13% owned by the U.S.'s Ford Motor Co., also swung into a net loss in the October-December quarter. The Hiroshima-based company now expects a net loss of ¥13 billion ($145.7 million) for the current fiscal year through March, compared with its previous forecast for a ¥50 billion profit. Separately, Mitsubishi Motors Corp. said Wednesday that it now expects to be dragged into the red this fiscal year as the yen's surge and collapsing auto demand knocks the once-recovering auto maker back to the ground again. The Japanese firm anticipates a net loss of ¥60 billion for the current fiscal year through March, reversing its previous outlook of a net profit of ¥20 billion. The latest forecast will mark the company's first net loss in three years.
Source: The Wall Street Journal

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GM Beefs Up Incentives After a Dismal January

DETROIT -- Coming off a January in which sales collapsed 49 percent, General Motors today announced a new round of incentives that includes 0 percent financing and more cash on the fenders. Starting today and running through March 2, GM's Presidents Day Sale includes many of its best-selling vehicles, such as the Chevrolet Malibu and some versions of the Chevy Silverado pickup, Buick Enclave and Cadillac CTS. Consumers can choose 0 percent financing for up to 60 months, 1.9 percent loans for 72 months or an additional cashback that ranges from $1,000 to $2,000 in addition to existing incentives.
Source: Automotive News

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Obama Auto Team Taking Shape

White House narrows list for auto czar; ex-GM consultant is a top candidate to oversee auto reform.
WASHINGTON -- Stephen Girsky, a longtime auto-industry analyst who heads the private-equity firm Centerbridge Industrial Partners, is a leading candidate to become a member of President Barack Obama's auto restructuring team, people familiar with the matter said Tuesday. Girsky, a former General Motors Corp. consultant who has recently advised the United Auto Workers on issues including the union's efforts to obtain federal loans, is not expected to be named auto czar. Instead, he is likely to become the No. 2 official or as a member of a board overseeing the restructuring of GM and Chrysler LLC. Another private-equity figure, Steven Rattner, a partner at the Quadrangle Group in New York, is still a leading candidate to be auto czar. Obama last week ordered the EPA to revisit whether California and 13 other states should be able to impose a 30 percent reduction in tailpipe emissions standards by 2016. The administration also has said it wants to include in the stimulus bill $2 billion in funding for advanced battery research to help speed development of plug-in hybrid and all-electric vehicles.
Source: The Detroit News

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Dingell: Don't Write Off the Auto Industry

WASHINGTON -- U.S. Rep. John Dingell, longtime congressional champion for U.S. automakers, warns people to not write off the industry -- or him -- just yet. "Don't give up on this 82-year-old Polish lawyer," said Dingell, D-Mich. Dingell, who becomes the longest serving U.S. lawmaker ever on Feb. 11, said he's ready to fight for industry interests in critical legislation likely to be undertaken in this session of Congress. Dingell's remarks came at a Washington Auto Show event, where he received the first lifetime achievement award for public service presented by show sponsors, the Washington Area New Automobile Dealers Association. On the issues, Dingell said Congress must enact stimulus legislation to revive the nation's economy, make sure international trade is conducted fairly and craft climate change legislation that doesn't wreck the industry. "Our automakers will survive and thrive," Dingell said.
Source: Automotive News

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Committed to Community: Citizen of the Year Finds Resources in Students

Carroll Smith has written his own success story in the automotive industry as president of Monument Chevrolet. But that wasn’t the only reason he commanded attention last Thursday evening at the Pasadena Independent School District Administration Building. Smith was recognized as the 2008 Distinguished Citizen Award, held annually by Pasadena ISD to honor those individuals who have made an impact on young students locally. Smith has been a primary driving force behind the Automotive Youth Education Systems. Offered as part of the district’s Career and Technical Education program, AYES recruits high school students to intern in the automotive industry, with the goal of providing them a pathway into a career in the business. “It’s an honor to me to be recognized, but the thanks really goes to all the members of the school team that have done the education and my folks who have been so involved in working with kids,” he said. “I’m just very proud to accept the award on behalf of those who have been responsible for making it happen.” “The program to us has been its own reward,” said Smith. “Every car dealer is out to out-satisfy his competition because that’s the way we get our business. We think that if people really are our resources, we need to participate in building those folks.”
Source: The Pasadena Citizen

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NADA Update
FTC Civil Penalties to Increase Feb. 9

The FTC has announced an increase in civil monetary penalty amounts effective Feb. 9, 2009.  The adjustments are based on the increase in the Consumer Price Index (CPI), and include an increase in the maximum penalties per knowing violation of the Fair Credit Reporting Act (examples of which would include the Red Flags, Address Discrepancy, and Affiliate Sharing Rules) from $2,500 to $3,500. In addition, the maximum statutory penalty per violation for certain FTC rules that are enforced under the FTC Act will also increase from $11,000 to $16,000. Under the FTC Act, when a rule (such as the GLB Safeguards Rule, Privacy Rule, or the Red Flags and Address Discrepancy Rules) continues to be violated despite an order to comply with a rule, the FTC can file a lawsuit in federal court seeking $16,000 for each violation of that rule as well as equitable relief. For more information, click here.

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Webinar Feb. 12: Shore Up Your Bottom Line by Saving Energy

In uncertain economic times, every dollar counts. And the money dealers spend on energy is a controllable expense. To learn how to begin reducing your dealership’s energy bills, the EPA’s ENERGY STAR program is hosting a free Webinar, “Energy Savings 101,” on Thursday, Feb. 12 at 11:30 a.m. EST. The Webinar covers ENERGY STAR guidelines for energy management, including general and dealership-specific upgrade opportunities. Participants will also learn about the importance of benchmarking. The Webinar will demonstrate what energy savings can mean for your dealership, your customers and your bottom line. NADA and ENERGY STAR are entering their third year of an Energy Stewardship Initiative that challenges dealers to cut their energy expenses by at least 10 percent. If all dealers reduced energy consumption by about 10 percent, they would save more than $190 million a year and “green” their stores. Click here to register for the free “Energy Savings 101” Webinar. It lasts one hour and includes time for Q&A. For more information about NADA’s partnership with ENERGY STAR, go to www.nada.org/energystar.

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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 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
 

"The next two months are critical to the future of our industry as we know it," says NADA Chairman John McEleney, addressing a crowd of about 5,000 at the general session of the NADA convention in New Orleans.


More Video Highlights

Quotable
 
"It's a market incentive and it gets them in the showroom. Not a nickel will be spent unless you go buy a car. We’re not throwing money out of a helicopter."

   
-- Sen. Barbara Mikulski (D-Md.), the chief proponent of an $11 billion tax break for customers buying new cars and light trucks in 2009. Her amendment sailed through the Senate Tuesday by a vote of 71-26, overwhelming bipartisan opposition from top tax writers, Politico, Feb. 3


"This issue is critical. Without a floor plan loan, even a prosperous dealer cannot operate for more than a matter of days." 

    -- John McEleney, an Iowa dealer and NADA chairman, is calling for a program from the $700 billion fund created to bail out Wall Street that guarantees floor plan loans for dealers, The Detroit News, Feb. 4


"Our business is based on credit more than any other industry, and if you can't get credit, you can’t sell vehicles."

    -- Michael C. DiGiovanni, General Motors' chief sales analyst, The New York Times, Feb. 3


"Dealers are telling us there are buyers out there. They are in the showroom, but it's very, very difficult to get them approved."

   
-- Steven Landry, Chrysler’s vice president for sales, The New York Times, Feb. 3


"The market could be below 10 million. We need to recalibrate from a standpoint of where the market is and quit dreaming about pent-up demand." 

    -- Chrysler Vice Chairman Jim Press, looking at the jobless rate, the weak economy and the credit crunch, says there's not much "reason to think the industry is going to have a lot of growth for the foreseeable future for this year," The Detroit News, Feb. 4
Video Highlights
 
 
'NBC Nightly News with Brian Williams' reports: "Demise of a local car dealership leaves a big dent."



2009 Convention in New Orleans
NADA Tackles Industry Crisis


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.