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At a Glance...
Top Stories
NADA Committees Briefed on Government Activities, Visit Hill
GM Posts Loss of $30.9B for 2008
Chrysler Takes Revamp Plan to Washington
Trouble on the Assembly Line
Nissan to Ease Output Cuts in March
Lexus Tops Jaguar, Regains Crown for Dealership Service
Opinion: Obama May Throttle, Not Retool, Family Cars
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
NADA Committees Briefed on Government Activities, Visit Hill

WASHINGTON – Dealers of NADA’s regulatory affairs and government relations committees received reports from staff this week on the association’s vigorous efforts before Congress and the Obama administration on the industry crisis. 

Floorplan lending was on the top of both meeting agendas. NADA has been working closely with Congress, the White House, Treasury and the Federal Reserve to explain the critical need for dealers to have access to inventory financing. 

NADA has proposed government floor plan loan guarantees as a cost-effective and efficient way to return confidence to the securitization loan markets. Following the meetings, many dealers met with their representatives and senators to give them first hand accounts of dealer difficulties with accessing floorplan loans and other issues. 

Committee members also received an in-depth briefing on the state-based fuel economy debate, which is heating up as President Barack Obama has ordered the EPA to reconsider California’s effort to impose its own fuel economy rules.

NADA Chairman John McEleney is slated to testify next week before the EPA on how these rules would actually be implemented, outlining the ‘patchwork’ problem and how the rules would adversely impact auto dealers.

Tax issues were also at the forefront—and Iowa Sen. Chuck Grassley—the top Republican on the Senate’s tax writing committee, told the assembled dealers that Congress understands the urgency to come up with a permanent solution to the estate tax. 

Sen. Grassley did say while full repeal of the tax was unrealistic, he would be working with his colleagues to come up with a solution that would help provide certainty to dealers who plan to pass their dealerships onto family members.

Dealers also strongly reiterated their opposition to LIFO repeal, which is likely to be considered as a revenue raiser in the next Congress. For more information on NADA’s legislative and regulatory issues, visit www.nada.org.
Source: NADA Newswire

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GM Posts Loss of $30.9B for 2008

General Motors this morning posted a loss of $30.9 billion for 2008, burning through more than $6 billion in cash as the global economic slump pushed auto sales and consumer confidence to new lows. As GM waits for the government to assess its request for additional aid, "we thought it was prudent to provide this discloser," said chief financial officer Ray Young. Chief executive G. Richard Wagoner Jr. and chief operating officer Frederick A. Henderson are meeting today with members of the Obama administration's auto task force to discuss the company's restructuring plan and request for additional aid. Wagoner said he expects "challenging conditions will continue through 2009, and so we are accelerating our restructuring actions." This is GM's second-worst annual performance in the company's history. Just last year, GM lost $38.7 billion but much of that loss was attributed to penalties for unused tax credits. GM spent $19.2 billion of its cash reserves in 2008, leaving it with $14 billion as of Dec. 31, its minimum operating requirement.
Source: The Washington Post

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Chrysler Takes Revamp Plan to Washington

Top executives of Chrysler LLC met Wednesday with President Barack Obama's auto task force in Washington, where they discussed the company's troubled finances, its proposed alliance with Fiat SpA and fuel-efficient vehicle development, said a person familiar with the session. Chrysler Chairman Robert Nardelli, Vice Chairman Tom LaSorda and Chief Financial Office Ron Kolka attended the meeting, said another person familiar with the matter. General Motors Corp. executives are scheduled to meet with the task force [today] ... While the task force will focus much of its attention on evaluating restructuring paths for GM and Chrysler, a key consideration is whether bailing out the struggling duo could further the White House's energy policy, said a person briefed on the matter. The companies could play a role in "what the future auto industry will look like," this person said. The president is relying on the panel to determine whether the auto makers can be sustainable. If not, the government could demand repayment of the $17.4 billion in loans it handed out in December.
Source: The Wall Street Journal

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Trouble on the Assembly Line

As Auto Suppliers Seek Their Own Bailout, Detroit Three Face Pressure From the Ground Up
For months Washington has focused on saving Detroit's automakers. But now the auto industry says it could face a bottom-up collapse if the suppliers supporting these automakers don't receive federal aid starting next week. "We're on the cusp of what could be cataclysmic," said Aaron Bragman, an auto analyst with IHS Global Insight. What now looks like a house of cards was built with a complicated trade credit system. Automakers pay their suppliers 45 to 60 days after the car parts are delivered. And these suppliers delay payments to their subcontractors for up to a year. This system worked until credit markets froze and consumer confidence took a nosedive last fall. When people stopped buying cars, the automakers nearly halted vehicle production in December and January. As a result, not only are auto parts suppliers losing work from the carmakers, which include foreign and domestic companies, they will be receiving much smaller paychecks starting March 1. This month cash-strapped suppliers have been struggling to replenish their raw material inventories and meet operating expenses. In the past, suppliers have been able to put their billings, or receivables, up as collateral for loans. But, with bankruptcy still a strong possibility for General Motors and Chrysler, many suppliers have not been able to use those receivables as collateral. It's unclear now whether the Treasury Department will help the suppliers. To better understand the problem, the Obama administration's auto task force met with top procurement executives from GM, Ford and Chrysler on Monday, said people familiar with the meeting who spoke on condition of anonymity because the talks are private. The group has also met with the Motor & Equipment Manufacturers Association, which submitted a proposal for its own federal rescue on Feb. 13.
Source: The Washington Post

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Nissan to Ease Output Cuts in March

TOKYO -- Nissan Motor Co. said Thursday that inventory levels have dropped low enough to ease domestic production cuts in March. Facing plunging sales, Nissan said earlier this month that shift elimination, work stoppages and shorter working hours will help reduce global production by 20 percent, or 787,000 vehicles, from its initial plan by the end of this fiscal year through March. It also aimed to reduce inventory by 20 percent to 480,000 vehicles from 630,000 in March 2008. The tighter inventory management is now "bearing fruit," said Nissan spokeswoman Pauline Kee. Kee declined to provide specific production goals for the month or which factories would be affected. Still, a complete recovery in production is unlikely to materialize anytime soon as economies around the world continue to deteriorate and consumers hold off on buying new cars.
Source: The Detroit News

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Lexus Tops Jaguar, Regains Crown for Dealership Service

Lexus overtook Jaguar to regain its title as the brand that does the best job of pleasing customers in the service department. Toyota Motor Corp.'s luxury division ranked atop the J.D. Power and Associates 2009 Customer Service Index Study released today. No. 2 Jaguar, sold by Ford Motor Co. last year to India's Tata Motors, topped Lexus in 2007 and held onto the crown in 2008. BMW, Cadillac and Acura rounded out the top five for 2009. Dealerships with the happiest service customers have a better chance of retaining them after vehicle warranties expire, J.D. Power said. Dealer networks of the highest-ranking brands pocket about 80 percent of customers' service dollars. The figure is less than 60 percent for the brands with the lowest scores. J.D. Power based its study on responses from 106,059 owners and lesees of vehicles from the 2004 through 2008 model years. The customers were surveyed in the final quarter of last year.
Source: Automotive News

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Opinion: Obama May Throttle, Not Retool, Family Cars
By Bill Noack

President Barack Obama's recent action to "help America's automakers prepare for the future" just might jeopardize the last vestiges of excitement and interest that have attracted customers to dealer showrooms for generations. On Tuesday night, the president made the reassuring statement that "we are committed to the goal of a retooled, reimagined auto industry that can compete and win." But his order for the Environmental Protection Agency to review, in effect, whether 13 states can adopt their own stringent fuel economy rules proposed by California would add enormous costs for companies already reeling from the recession. It also would push the industry a step closer to eliminating the American family vehicle and others people depend on. Some auto people hope the Obama team will see how the cost and complexity of a patchwork of fuel economy standards among the states would damage companies and consumers alike. They point out that the tough federal standard signed into law in late 2007 -- calling for a 35 miles-per-gallon average to be phased in by 2020 -- will result in less carbon dioxide than the California standard. But is anyone from the new administration listening?
Source: The Detroit News

[Editor's Note: Bill Noack, an automotive consultant, formerly was in charge of General Motors' public policy communications office in Washington, D.C.]

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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
 
"2008 was an extremely difficult year for the U.S. and global auto markets, especially the second half. The conditions led us to take further aggressive and difficult measures to restructure our business. We expect these challenging conditions will continue through 2009, and so we are accelerating our restructuring actions."

   
-- GM’s chief executive, Rick Wagoner, is scheduled to meet today with members of the auto industry task force created this month by President Barack Obama, The New York Times, Feb. 26


"We're on the cusp of what could be cataclysmic." 

    -- Aaron Bragman, an auto analyst with IHS Global Insight, referring to the possibility that the auto industry could face a bottom-up collapse if the suppliers supporting automakers do not receive federal aid, The Washington Post, Feb. 26


"... some auto people hope the Obama team will see how the cost and complexity of a patchwork of fuel economy standards among the states would damage companies and consumers alike."

   
-- Bill Noack, an auto consultant and former GM public policy communications officer, The Detroit News, Feb. 26


"... the tough federal [fuel economy] standard signed into law in late 2007 -- calling for a 35 miles-per-gallon average to be phased in by 2020 -- will result in less carbon dioxide than the California standard."

   
-- Bill Noack, an auto consultant, says allowing 13 states to adopt their own stringent fuel economy rules proposed by California would add enormous costs for companies already reeling from the recession, The Detroit News, Feb. 26
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.



NADA Used Car Guide Unveils Used-Vehicle Appraisal Product for Dealers
NADA Used Car Guide is introducing a unique and affordable new appraisal product called NADA AppraisalPRO, which provides a complete picture of the used-vehicle market in one location. The online tool provides dealers with the flexibility to define the market area and customize each appraisal by making adjustments to determine the best number for each and every trade-in. NADA AppraisalPRO will be available beginning March 2 at a low introductory monthly subscription rate of $150 for unlimited lookups per location. For more information, visit www.nada.com/appraisal. To place an order, call (866) 974-6232.

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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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.