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Tuesday, March 17, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Obama to Avoid Auto Bankruptcies
Small-Business Lending Gets a Boost
Opinion: Deny Emissions Waivers
Chrysler Values Deal With Fiat at $10 Billion
Hybrid Car Sales: From 60 to 0 at Breakneck Speed
Toyota May Cut Price of Prius Hybrid to Match Honda's Insight
Auto Dealer Drives His Point Home
NADA Update
New NADA Training Video Helps Dealers Find Additional Profits
COBRA Subsidy Compliance Addressed in New Virtual Seminar
Seminar Takes 'Deeper Dive' into FTC Red Flags Rule
Top Stories
Obama to Avoid Auto Bankruptcies

Task Force Seeks GM, Chrysler Changes Outside Court; Loans Unlikely to Be Recalled Early
The leaders of President Barack Obama's auto task force are focused on restructuring General Motors Corp. and Chrysler LLC outside of bankruptcy court, despite suggestions from some experts that a Chapter 11 filing would be the best way to revamp their troubled operations. Steven Rattner, a private-equity executive leading the team, said Monday that "I don't think that bankruptcy is necessarily a better place for any company. It sometimes becomes a necessary place for some companies, but it's certainly not a desired place and it is certainly not our goal to see these companies in bankruptcy, particularly considering the consumer-facing nature of their businesses," Mr. Rattner said in an interview. Administration officials also said the team doesn't plan to recall early the $17.4 billion in government loans given to GM and Chrysler -- something allowed under the loans' terms if the companies don't prove by March 31 that they can be viable long term. By the end of the month, the government plans to lay out its view on the companies' viability and what the industry should look like in future years, Mr. Rattner said. However, those plans won't include a comprehensive fix for the two companies. That, he said, will largely be left to the stakeholders, such as unions, management and investors.
Source: The Wall Street Journal

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Small-Business Lending Gets a Boost

The Obama administration yesterday unveiled a series of measures to help the nation's small businesses, saying it would spend up to $15 billion to help them get the loans they need to weather the economic crisis. "Small businesses are the heart of the American economy," Obama said in announcing the measures. Under the administration's plan, the government will buy the small-business loans that are clogging the books of community banks and other lenders, allowing the institutions to start lending again. The government will also increase its guarantee of the Small Business Administration's primary loan program, reducing the amount of money lenders can lose if borrowers default on loans. The administration will pay for the initiatives with funds from the $700 billion financial rescue program.
Source: The Washington Post

[Editor’s Note: NADA believes that these new executive branch measures should help the many dealers currently seeking loans guaranteed by the SBA under its 7(a) program. Critical new measures include a temporary increase in guarantees up to 90 percent (from 75 percent) for loans greater than $150,000; the temporary elimination of loan fees (typically up to 3.75 percent for larger loans); the expeditious processing of loan applications; the direct purchase of loans in the secondary market by Treasury; and lender accountability for making loans to small business. Meanwhile, NADA continues to work on expanding dealer eligibility to apply for guaranteed loans and on elimination of the prohibition against using loan proceeds for floor planning. For general information about SBA's 7(a) loan program, click here.]

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Opinion: Deny Emissions Waivers
By Darrell Issa

A single strategy beats a patchwork of state standards
Last week, the U.S. Environmental Protection Agency began the process of reconsidering its previous denial of California's request to institute and enforce its own vehicle emissions standards. Across the ideological spectrum, there is widespread agreement that we must work to increase fuel-economy standards and reduce greenhouse-gas emissions. A responsible strategy to provide for our nation's future energy needs would certainly account for this. However, changing course and approving a waiver for California and 13 other states would only seek to undermine what must be a national effort to adopt a uniform national standard to regulate emissions standards. Uniformity would be vastly superior to having a patchwork of state standards. Granting the California waiver would put in place duplicative fuel-economy regulations that inevitably would increase costs for automobile manufacturers and adversely affect the national economy. Completely ignored in all of this is the substantial impact that this policy would have on auto dealers. In California alone, the waiver threatens to jeopardize 200,000 auto-related jobs and $3.3 billion in wages. The loss in sales could cause dealers on the edge of solvency to shutdown. In 2008, 125 California dealerships closed their doors. Given the deteriorating state of the economy and lack of solvency in our state's finances, this is hardly the time to enact policies that almost certainly would result in losses of tax revenue and jobs. Even more puzzling is the fact that regulations proposed in the state's regulatory scheme provide a competitive advantage to foreign automobile manufacturers. The California rules arbitrarily exempt Hyundai, Ferrari, Jaguar, Land Rover, Suzuki, Mitsubishi and others from compliance, so long as the manufacturer delivers for sale fewer than 60,000 vehicles per year, on average, for three years. The California fuel-economy and greenhouse-gas regulations are not efficient, and they impose unnecessary and costly burdens on automobile manufacturers and dealers as well as consumers in California states. Accordingly, the EPA should affirm the denial of the California waiver.
Source: The Press-Enterprise (Riverside, Calif.)

[Editor's Note: Darrell Issa represents the 49th Congressional District of California and is the ranking member of the House Committee on Oversight and Government Reform.]

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Chrysler Values Deal With Fiat at $10 Billion

Chrysler's proposed partnership with Fiat could be worth as much as $10 billion to the struggling automaker by giving it a jump on developing new vehicles, Chrysler chief executive Robert L. Nardelli said in an e-mail to employees yesterday. "This is equal to or greater than the total amount of loans we have requested from the U.S. government," he wrote. "Even more importantly, Chrysler would save three to five years in development time, giving us a major competitive advantage." Nardelli's e-mail comes as his company tries to persuade President Obama's auto task force to grant it an additional $5 billion in federal loans by the end of the month. Nardelli said the deal hinges on Chrysler meeting terms that mirror those required for keeping its Treasury Department loans. Chrysler must negotiate concessions from bondholders and the United Auto Workers, such as cutting hourly wages and its cash obligation to a union-run trust for retiree health care. "It is critical we meet all of our government requirements as the first step in finalizing the alliance with Fiat," Nardelli wrote. Chrysler said it aims to finish negotiations by the March 31 deadline.
Source: The Washington Post

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Hybrid Car Sales: From 60 to 0 at Breakneck Speed

Gas-electric vehicles pile up on dealers' lots as angst over gasoline prices evaporates. Nevertheless, more hybrid models are on the way
The Ford and Honda hybrids due out this month are among dozens planned for the coming years as automakers try to meet new fuel-efficiency standards and please politicians overseeing the industry's multibillion-dollar bailout. Unfortunately for the automakers, hybrids are a tough sell these days. Americans have cut back on buying vehicles of all types as the economy continues its slide. But the slowdown has been particularly brutal for hybrids, which use electricity as well as gasoline as power sources. Yet automakers feel they have little choice but to make more hybrids. Though car buyers are losing interest, politicians are pushing them as key to reducing U.S. dependence on foreign oil and limiting the global-warming gases that cars emit into the atmosphere. "The automakers are in the situation of needing to pacify politicians that are in the position to bail them out with expensive fuel-efficient cars," said Rebecca Lindland, auto analyst with IHS Global Insight. "But shouldn't it be more about satisfying the needs of the American consumer?"
Source: Chicago Tribune

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Toyota May Cut Price of Prius Hybrid to Match Honda's Insight

Toyota Motor Corp., the world’s largest automaker, may cut the price of its Prius gasoline- electric hybrid car in Japan to match Honda Motor Co.’s Insight. Toyota spokesman Yuta Kaga declined to confirm or deny a Nikkei newspaper report today that said the starting price of the Prius will be cut to 1.89 million yen ($19,250) from 2.33 million yen. The Insight hybrid, which went on sale in Japan last month, starts at 1.89 million yen. Toyota later this year plans to introduce a revamped Prius with higher mileage and more power than the current model and the Insight. Both automakers are betting on fuel-efficient models as governments worldwide tighten emission standards.
Source: Bloomberg

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Auto Dealer Drives His Point Home

$6m renovation anticipates economy's turnaround
PORTSMOUTH, N.H. -- Jim Boyle race walks through the cavernous Toyota showroom he has under construction, pausing to inspect newly framed metal studs as workers install wallboard nearby. "We'll have a 256-foot-long showroom," he boasted. "Selling cars in New England is only an outdoor sport for a couple of months." Boyle has sunk $6 million in borrowed money into this massive renovation project at a former vocational school along Route 1. He's about six weeks away from opening in the midst of the worst economic downturn since the Great Depression. The pressure is on. "The only way out of this is selling cars," Boyle said, sounding upbeat. "And you have to sell them one at a time." Boyle, 50, said he's one of the lucky ones. Toyota, while feeling the strain, has been outselling rival brands, and his Toyota of Portsmouth dealership has a prime location on New Hampshire's affluent coast. Boyle's other dealership, in Hudson, Mass., sells GMC trucks to commercial customers, a tougher market, but because owners are keeping their trucks longer, his service business has been strong. While the weight of the slumping economy is bearing down on Boyle, who recently took over as president of the Massachusetts State Automobile Dealers Association, many of his own challenges are unusual. He bought the sprawling former New Hampshire Vocational Technical School, which included an auto shop, back in 2003 and moved his dealership a few miles up Route 1 to a corner of the oddly shaped property. Then he took out a loan for the renovation, and had planned a "grand opening" party this spring. "When the economy comes back, I'll be rocking and rolling," Boyle said. "I wished I had opened this place two years ago."
Source: The Boston Globe

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NADA Update
New NADA Training Video Helps Dealers Find Additional Profits

You can tell a lot about a person by the vehicle he or she drives. For many, a car or truck is more than just a way to get from point “A” to point “B.” It is an extension of the self. It is a way for everyone to express his or her individuality. Accessorizing is as much about passion as it is about product. NADA Management Education’s new training DVD, Accessorizing Your Way to Additional Profits, is designed to help dealers tap into this passion and add dollars to every sale. Dealers and managers can learn how to launch an accessories operation from dealers who have actually done it, examining staffing, displays, marketing, warranties, and more. The Specialty Equipment Market Association (SEMA) estimates that accessories sales top $38 billion, and that dealerships capture just 10–15 percent of this market. If this percentage were to increase significantly, U.S. dealerships as a whole could see billions in additional profits and build customer loyalty. Consumers who accessorize their vehicles spend, on average, up to $3,500 annually on accessories. This training package includes a four-part DVD and a 22-page study guide, complete with an accessories quiz and lists of established parts vendors. To order, visit www.nada.org/accessorizing or call (800) 252-6232, ext. 2. Order online to watch a free video preview!

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COBRA Subsidy Compliance Addressed in New Virtual Seminar

Dealers with former employees and certain beneficiaries eligible for continuing health insurance coverage may need to issue a new COBRA notice indicating that they may be eligible for a 65 percent reduction in premiums. The American Recovery and Reinvestment Act of 2009 (ARRA) provides temporary, taxpayer-funded premium relief for people otherwise eligible to elect to continue an employer's health plan coverage under the Consolidated Budget Reconciliation Act of 1985, known as COBRA.

As of Feb. 17, 2009, the ARRA program applies to people who become eligible for COBRA between Sept. 1, 2008 and Dec. 31, 2009. Those who choose to continue coverage may receive a 65 percent plan continuation premium discount. In other words, employees who normally would pay 100 percent of their COBRA plan premiums may need to pay only 35 percent, with employers or the health plan picking up the difference.

To help dealerships comply with the Act, NADA has asked Penny Wofford, an employment law specialist and partner in the law firm Ford & Harrison, LLP, to conduct a virtual seminar on Thursday, March 19, from 1-2:30 p.m. EST. In “Employer Requirements for New COBRA Subsidy,” Wofford will discuss Assistance-Eligible Individuals (AEIs), employer notices and their timing and the payroll tax credit. She will outline the steps dealerships need to take to comply and to coordinate the subsidy administration with COBRA administrators, insurers and other service providers. Participants’ questions will be addressed during the final 15 minutes of the seminar.

The fee for this timely virtual seminar is $50 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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Quotable
 
"... it is certainly not our goal to see these companies in bankruptcy, particularly considering the consumer-facing nature of their businesses."

    -- Steven Rattner, a private-equity executive leading President Barack Obama's auto task force, on the restructuring of GM and Chrysler, The Wall Street Journal, March 17

Video Highlights
 
 

NADA-TV: McEleney Says Meeting With Obama Auto Task Force Was Productive

 

NADA-TV: McEleney Testifies at EPA Hearing on Fuel Economy Rules

 NADA Tackles Industry Crisis


NADA Chairman Speaks at the Convention in New Orleans
NBC: "Demise of Local Dealerships Leaves Big Dent"
2009 Convention in New Orleans
NADA on the Front Lines


Click here for more NADA-TV reports.

Member Products & Services
 

Lenovo Madness Sale

Lenovo is offering all NADA members up to 35 percent off select notebooks. Enter eCoupon USXTHINKMADNESS at checkout. Great savings are available on all ThinkPad and IdeaPad notebooks along with all computing accessories. Free shipping is available on all Web orders. This offer ends March 31. To take advantage of these savings, visit NADA's PC Purchase Program online (login required).

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 is available at a low introductory monthly subscription rate of $150 for unlimited lookups per location. For more details, visit www.nada.com/appraisal. To order, call (866) 974-6232.

 
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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.