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At a Glance...
Top Stories
Fed Leaders Issue Bleak Forecast
Cash for Automakers Going Fast
Chrysler, GM Dealerships to Share Pain of Cutbacks
Dealers: Aid Pleas Were Justified Given Reeling Economy
Sales of New Cars, Trucks Continue to Fall
GM May Sell Saab, Opel Stake
NADA Update
Union Legislation Addressed in New Virtual Seminar
Seminar Takes 'Deeper Dive' into FTC Red Flags Rule
2010 Convention Workshop Proposals Now Being Accepted
Top Stories
Fed Leaders Issue Bleak Forecast

Policymakers Project High Unemployment Through 2011, Vow Aggressive Action
It could take years for the nation to fully bounce back from the recession, according to new projections by leaders of the Federal Reserve, who indicated that even once the economy starts expanding again, it will be an "unusually gradual and prolonged" recovery. The unemployment rate will remain elevated through at least 2011, according to the policymakers' official forecast, released yesterday, and the economy this year could shrink by 1.3 percent. That would mark the sharpest contraction in 27 years. The bleak outlook suggested a deep sense of gloom among the top policymakers at the central bank and offered insight into why they have moved aggressively to bolster the financial system and soften the recession's blow. Fed leaders agreed that unemployment would remain high for the next three years, "even absent further economic shocks," according to the minutes of the Fed's late January policymaking meeting. "A few [members] indicated that more than five to six years would be needed for the economy to converge to a longer-run path" of growth. Fed Chairman Ben S. Bernanke appears not to be among that highly pessimistic group. After a speech yesterday, he told reporters that although the unemployment rate is "very likely" to rise from its current 7.6 percent level to "above 8," government action can contain the damage. "If we can take strong and aggressive action, including the Fed's actions, to try to improve credit markets, I think we can break the back of this thing and that we will begin to see improvements in 2009," Bernanke said. But he warned, "If we fail to take adequate actions, the situation would continue to deteriorate."
Source: The Washington Post

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Cash for Automakers Going Fast

General Motors and Chrysler have said they need another multibillion-dollar cash infusion, but the source of money that funded their initial government bailout is drying up. The companies previously borrowed $17.4 billion from the Treasury's financial rescue plan, known as the Troubled Assets Relief Program, or TARP. More than $160 billion remains in that fund, but many analysts say the pot isn't big enough to address current plans to fix the financial system, let alone prop up the auto industry. The ball is now the Obama administration's court. The president's task force is reviewing the automakers' restructuring plans this week and must decide whether to provide further help to the companies. As long as the government wants to see the companies survive, it will likely have to provide financing to the companies whether or not they file for bankruptcy protection because private sector lending is practically nonexistent. GM and Chrysler told the government that it would be far cheaper to finance their operations outside the court-managed bankruptcy process than in it, which can be a long, costly process. Chrysler estimates that it would need $24 billion in government financing to work its way through the bankruptcy reorganization process ... GM presented three different bankruptcy scenarios. The government would have to contribute $36 billion to $103 billion to finance its Chapter 11 restructuring.
Source: The Washington Post

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Chrysler, GM Dealerships to Share Pain of Cutbacks

Restructuring plans that affect hourly workers, plant managers and suppliers also will hit dealers.
Auto dealers received a yin-yang punch this week: good news about tax goodies embedded in the stimulus package for new car buyers and bad news that dealers could face costly concessions under the massive bailout plans being proposed by Chrysler and General Motors. During a conference call with Chrysler executives Tuesday night, dealers in Minnesota and around the country learned more about those plans -- and that they would share in the pain as Chrysler plans to lay off 3,000 more workers, shut down an unspecified production line and cut dealer margins. Chrysler said this week that it would cut 3,000 union jobs. Managers lost 401(k) matches, incentive bonuses and merit pay. Retirees lost their life insurance. Now it's time for dealers to give something too, Deneau said, adding that no one was surprised by this.
Source: The Star Tribune (Minneapolis)

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Dealers: Aid Pleas Were Justified Given Reeling Economy

General Motors and Chrysler LLC made reasonable requests for additional federal aid, dealers say, considering the macroeconomic conditions plaguing the auto industry. The low sales rate has strained dealerships that sell import brands, including some Honda dealerships that have always made profits, said Chuck Eddy, owner of Bob and Chuck Eddy Chrysler-Dodge-Jeep in Austintown, Ohio. "If Honda, Nissan and Toyota are struggling and their dealerships are ballooned, it only stands to reason that Ford, General Motors and Chrysler have those issues," Eddy said. "It's not a reflection on them so much as it's a reflection on the entire economy." The automakers' requests pale when compared with the $787 billion stimulus package, said Eddy, who is the Chrysler-Dodge-Jeep dealer council representative to the National Automobile Dealers Association. If the credit crisis ends for dealers and consumers, Eddy said, sales rates could jump to 12 or 13 million units from their level around 10 million. "Can you imagine the pent up demand?" he said. "This whole thing will open up."
Source: Automotive News

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Sales of New Cars, Trucks Continue to Fall

The February sales pace through the first half of the month appears to be at an annualized rate of fewer than 9 million. "Data collected from dealers suggests sub-9 million SAAR for February," says Jeff Schuster, forecasting chief for auto consultant J.D. Power and Associates. SAAR stands for seasonally adjusted annual rate, or total new vehicles sales if that month's pace held for a year. That's well off January's 9.6 million pace, which had been considered about as bad as things could get. It was the first month with an annualized rate below 10 million since August 1982, says sales tracker Autodata. The last time consecutive months were that low was June-August 1982. Schuster says Power's latest forecast for all of 2009 expects an upturn later, for total sales of 10.3 million. But that's a "revised downward scenario" from the prior forecast, which itself was a drop from Power's original 2009 projection of 11.4 million.
Source: USA Today

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GM May Sell Saab, Opel Stake

Automaker seeks $1.2B in European labor savings, on top of existing measures.
General Motors Corp., facing the biggest crisis in its 100-year history, may sell a stake in its German carmaker Adam Opel and could abandon its sporty Swedish brand Saab in an effort to slash costs abroad as well as at home. The German government has offered to provide up to $2 billion in loan guarantees for the GM subsidiary. According to European media reports, GM is seeking more aid but Chancellor Angela Merkel said Wednesday that she wanted to see a restructuring plan for Opel from GM. Opel employs 26,000 workers at four plants in Germany. GM also is seeking $1 billion in support from Sweden for Saab. GM President Frederick Henderson did not detail GM's proposal to the Swedish government in a call Wednesday with financial analysts. But he said if GM did not reach a deal with the Swedish authorities, "we could very well find we would need to have the Swedish business file for reorganization, perhaps as soon as this month."
Source: The Detroit News

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NADA Update
Union Legislation Addressed in New Virtual Seminar

The so-called Employee Free Choice Act (EFCA) could become law in 2009 and usher in the most dramatic pro-union shift in federal labor law in U.S. history. The EFCA would eliminate the secret ballot in union representation elections, escalating labor union membership, returning traditional labor issues to the forefront—and forcing dealerships to bargain with unions.

To help dealerships understand the issues and meet the challenges they present, NADA has asked D. Gerald Coker, a partner in the law firm Ford & Harrison LLP, to conduct a virtual seminar on March 12 from 1 to 2:30 p.m. EST. In “Responding to Organized Labor: Defending Workplace Democracy,” Coker will discuss the current and proposed federal labor legislation, analyze how the EFCA would affect union organizing strategies at dealerships and present a 10-Point Strategic Action Plan for dealerships to reduce potential vulnerability and improve employee relations. Participants’ questions will be addressed during the final 15 minutes of the seminar.

The fee for this important virtual seminar is $199 per computer connection. To register, visit www.nada.org/seminars or call (800) 252-6232, ext. 2.

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Seminar Takes 'Deeper Dive' into FTC Red Flags Rule

Attorneys from the FTC’s Division of Privacy and Identity Protection—which drafted and enforces the Red Flags Rule—will present a virtual seminar “A Deeper Dive into the FTC Red Flags Rule” on March 26 from 1 to 3 p.m. EST.

With the revised May 1 enforcement date approaching, dealers should ensure that their required Identity Theft Prevention Programs incorporate all of their covered accounts, include all relevant Red Flags, contain effective response and detection procedures, address all the Rule’s other requirements, and are tailored to their particular operations. It's a daunting task in view of the Rule’s general provisions that encompass all types of financial institutions and creditors.

To assist dealers in understanding how the Rule applies to dealership operations, FTC attorneys will join NADA Regulatory Affairs Director Paul Metrey to recap the required elements of the Red Flags and Address Discrepancy Rules and examine implementation considerations for dealers—and then, we’ll open the phone lines so dealers can present their questions directly to the FTC attorneys. Dealers should consider attending the “Deeper Dive” seminar even if they attended one of the previous Red Flags Rule virtual seminars. If you still have any questions, now is the time to ask. We’ll have a great team to answer your questions. And be sure to bring your copy of NADA's A Dealer Guide to the FTC Red Flags and Address Discrepancy Rules.

The fee for this important virtual seminar is $199 per computer connection. To register, visit www.nada.org/seminars or call (800) 252-6232, ext. 2.

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2010 Convention Workshop Proposals Now Being Accepted

Proposals are now being accepted for speakers who are interested in presenting a workshop at the 2010 NADA Convention & Exposition in Orlando, Fla., Feb. 13-16. Topics that are applicable to the current state of the U.S. automobile industry are strongly preferred. To download the proposal, go to www.nada.org/workshops. Completed proposals should be postmarked by midnight, April 30, 2009. For more information, contact NADA Management Education at (703) 821-7227 or workshops@nada.org.

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Featured Video
 
 

 NADA Tackles Industry Crisis


More Video Highlights

Quotable
 
"If we can take strong and aggressive action, including the Fed's actions, to try to improve credit markets, I think we can break the back of this thing and that we will begin to see improvements in 2009. If we fail to take adequate actions, the situation would continue to deteriorate."

   
-- Fed Chairman Ben S. Bernanke, referring to government action aimed at containing the economic damage, The Washington Post, Feb. 19


"I have faith in their viability plans and shudder to think of the shock that their bankruptcies would cause the nation's already severely weakened economy."

    -- Rep. John Dingell (D-Mich.), in a statement about GM and Chrysler, The Washington Post, Feb. 19


"Our plan is not to access government money. Right now, with everything I see, we have sufficient liquidity to continue our transformation of Ford."

   
-- Ford CEO Alan Mulally, speaking to Detroit News columnist Daniel Howes one day after GM and Chrysler submitted requests for a combined $21.6 billion in new federal loans and credit lines, The Detroit News, Feb. 19
Member Products & Services
 

Save Big with Lenovo
Lenovo is offering NADA members up to $815 off select ThinkPad notebooks. Great savings are available on all ThinkPad and IdeaPad notebooks along with all computing accessories. Free ground shipping is available on all Web orders. This is a limited-time offer. To take advantage of these savings, visit NADA's PC Purchase Program online (login required), click the "Lenovo" link, then "Special Offers," or call (800) 426-7235, Option 1, Ext. 4838.
Video Highlights
 
  

 
"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.

NBC: "Demise of local car dealerships leaves big dent."
2009 Convention in New Orleans
NADA on the Front Lines


Click here for more NADA-TV reports.

 

 

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