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Thursday, March 26, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
Auto Task Force Set to Back More Loans -- With Strings
Auto Task Force May Hold Recommendations Until Next Week
Auto Dealers, Some Buyers Shut Out by Loan Program
Fiat's Marchionne to U.S. Task Force: It's Your Move
Budget Brings LIFO Coalition Roaring Back
Volvo Bidders Talk to Ford; Gephardt Gets a Board Seat
6,000 in UAW Accept Buyouts at GM
NADA Update
Seats Available for Dealer Academy Classes in May and June
COBRA Subsidy Compliance Virtual Seminar to be Repeated March 31
NADA Member Handbook Now Available Online
New NADA Training Video Helps Dealers Find Additional Profits
Top Stories
Auto Task Force Set to Back More Loans -- With Strings

President Barack Obama last month handed his auto-industry team a seemingly impossible task: to engineer the most complicated industrial restructuring ever attempted by the federal government, and to do it fast. Interviews with task-force members indicate that the administration doesn't want to let General Motors Corp. and Chrysler LLC slip into bankruptcy protection, a course advocated by some critics of the industry. Instead, the task force is expected to say that it sees viable futures for both GM and Chrysler, but only if there are sacrifices from their managements, unions and GM's bondholders. The team will also lay out a firm timeline for action. The government is prepared to lend the companies more money. The two companies have requested $22 billion more -- including $9 billion for the second quarter. But the task force may not disburse new aid immediately, choosing instead to preserve that as leverage. Several auto experts who've met with the panel say they've been struck by the group's focus on trying to determine exactly when car sales will rebound. John McEleney owns two Chevy dealerships in Iowa and is chairman of the National Automotive Dealers Association. He flew into Washington March 6 with four other dealers, he says, to instruct the team "on how the dealer model works between the dealers and the car companies." [Former investment banker Ron] Bloom asked the dealers what they saw as the core cause of plunging car sales: low consumer confidence or tight credit? Mr. McEleney said they were equally to blame.
Source: The Wall Street Journal

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Auto Task Force May Hold Recommendations Until Next Week

WASHINGTON -- Sen. Carl Levin said Wednesday the Obama administration may not announce its next step in restructuring the auto industry until next week. "We have an indication it's going to be within the next week," said Levin, D-Detroit. That could push an announcement beyond this week, when the administration's auto task force had been expected to lay out its path forward for General Motors Corp. and Chrysler LLC. President Obama's auto task force plans to lay out some initial assessments of the automakers' likely fortunes, and may set deadlines for further progress and outline conditions for additional assistance. Levin said he expects the task force to make more aid available to the companies, if they take specific steps toward restructuring. "I think it's clear there will be more support, and there will be some conditionality to it," he said.
Source: The Detroit News

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Auto Dealers, Some Buyers Shut Out by Loan Program

A federal program to resuscitate lending is expected to spur more auto loans to the most creditworthy consumers, but its terms leave out consumers with lower qualifications and auto dealers who borrow to buy vehicles for their lots. The first funds from the Term Asset-Backed Securities Loan Facility, or TALF program, [released Wednesday]. But to qualify for the program, the debt must have a AAA credit rating — the highest grade — from two of the three major rating agencies. Consumer and auto dealer trade groups say the restriction locks out Detroit Three dealers, whose main sources of credit have dried up dramatically compared to dealers of foreign brands. "We're a big TALF supporter ... but they need to deal with the fact that a very crucial part of the credit market right now isn't getting AAA ratings," said Andy Koblenz, vice president of legal and regulatory affairs for the National Automobile Dealers Association. The goal of the $1 trillion TALF program is to use loans to entice investors like hedge funds who buy debt backed by auto, credit cards and other loans. The situation for dealers is dire because they can get loans through fewer places than consumers can. Dealers borrow several million dollars at a time, so small banks couldn't take on the debt, Koblenz said. Meanwhile, regional banks exited the floorplan business, leaving even profitable dealers scrambling for new lenders who are turning them away, he added. "This is a dysfunctional credit market," Koblenz said. "And it is forcing viable businesses to the brink of nonoperation." And under the current TALF guidelines, there seems to be little relief in sight for dealers who need loans. The auto dealers association, trade group American Financial Services Association and Chrysler's affiliated finance group are asking for an expansion of TALF's terms.
Source: St. Louis Post-Dispatch

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Fiat's Marchionne to U.S. Task Force: It's Your Move

Fiat Group CEO Sergio Marchionne said he is satisfied with the arguments his company made to the U.S. government regarding plans to form an alliance with Chrysler LLC. "We have done everything we were supposed to do regarding our Chrysler proposal. I flew to the U.S. twice for long talks with the president's automotive task force," Marchionne said. "Now it is up to them (the task force) to decide." In January, Fiat announced a proposed alliance that would have the Italian company take a 35 percent stake in Chrysler and have the chance to increase the holding to 55 percent. Chrysler received $4 billion in U.S. loans at the end of last year to stay alive. The formation of the alliance is contingent on Chrysler getting an additional $5 billion in federal aid to continue operations and carry out its restructuring. If the alliance is formed, Chrysler would get access to Fiat engines, transmissions and small-car platforms worth $8 billion to $10 billion, said Chrysler CEO Bob Nardelli.
Source: Automotive News

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Budget Brings LIFO Coalition Roaring Back

Beer, wine and distilled spirits wholesalers are planning a counteroffensive to a White House budget proposal they claim may retroactively tax their businesses $100 billion or more. The U.S. Chamber of Commerce, the Distilled Sprits Council of the United States, the Wine & Spirits Wholesalers of America and other foes of the administration's budget are dusting off the LIFO Coalition to help beat back President Barack Obama's proposed repeal of 'last in, first out' accounting. LIFO accounting allows liquor dealers and other wholesalers to expense new inventory -- not the oldest -- thereby staving off the bite that inflation takes because newer goods typically are more expensive. "From a financial impact, it's the No. 1 priority for us," Craig Wolf, president and CEO of WSWA, said of Obama's budget proposal to repeal LIFO. Wolf also said that his group will be working through the LIFO Coalition to preserve the accounting practice, educating Members that "it was never meant to be a temporary loophole" and that the repeal would decimate American jobs during a recession. The White House, which hopes to scuttle LIFO by 2012, estimates the repeal will raise $61 billion. LIFO proponents claim Obama's figure potentially will be dwarfed by how much it could cost businesses.
Source: Roll Call

[Editor's Note: NADA regularly engages members of Congress to preserve LIFO, a commonly used accounting method. It is a top priority. NADA is a leading member of a large, broad-based coalition to protect LIFO. Within the week, NADA will be distributing a survey to dealers to gather data on how they use LIFO and how a repeal would impact auto retailers.]

 

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Volvo Bidders Talk to Ford; Gephardt Gets a Board Seat

Ford Motor Co. said Wednesday it has held preliminary discussions with several parties interested in buying Volvo Cars, its money-losing Swedish unit. Ford also said it has added former House Majority Leader Dick Gephardt and DTE Energy Co. Chairman and Chief Executive Anthony Earley to its board of directors, replacing two members who said they no longer could devote the needed time to the ailing auto maker. Among the Volvo bidders are China's Geely Automobile Holdings Ltd. and a Europe-based consortium of investors, according to two individuals close to Geely and a person close to Ford. The person close to Ford said there were "three or more" bidders for Volvo in total. Ford hasn't sought direct government loans as have General Motors Corp. and Chrysler LLC. But Mr. Gephardt said in an interview that "there are lot of places where the auto companies intersect with government today, whether it be EPA regulation, mileage requirements, safety requirements -- lots of places where ... I hope that my service and experience will help the company."
Source: The Wall Street Journal

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6,000 in UAW Accept Buyouts at GM

Chrysler extends deadline for union offers More than 6,000 UAW members have accepted buyout and early retirement packages offered by General Motors Corp., which will allow the struggling automaker to reduce its hourly ranks as part of its restructuring plan, the Free Press has learned. Workers faced a Tuesday deadline to accept one of the incentive packages to leave the company. The packages included $20,000 in cash and a $25,000 new-vehicle voucher. The packages were offered to 62,000 UAW members in February and aimed specifically at GM's 22,000 retirement-eligible workers. On Tuesday, GM also began notifying about 160 white-collar workers they would be laid off April 1. Meanwhile, Chrysler extended for the second time Wednesday the deadline for its latest UAW buyout offers, this time indefinitely, according to company and union sources.
Source: Detroit Free Press

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NADA Update
Seats Available for Dealer Academy Classes in May and June

Seats are still available in the NADA Dealer Academy classes scheduled to begin in May and June. In May, two new classes will begin – one for dealer successors and one for general managers. In June, an additional general manager class will begin. The Academy’s objective is to train dealer successors and managers to profitably operate an automotive dealership in today’s and tomorrow’s challenging economies. The 11-month training program combines six weeks of classroom instruction with about 45 weeks of work experience in the sponsoring dealership. All classes take place at NADA in McLean, Va. The six individual class weeks focus on financial management, parts department, service department, new car sales, used car sales and overall dealership management. For more information, visit www.dealeracademy.org or call Diane Weppner, academy registrar, at (703) 821-7216.

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COBRA Subsidy Compliance Virtual Seminar to be Repeated March 31

NADA's virtual seminar on the new COBRA subsidy will be offered again—still at the low price of $50 per computer connection—so that information can be disseminated to the widest possible audience. There were about 250 registrations for the first seminar.

As you may know, 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 Tuesday, March 31, 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. Douglas Greenhaus, NADA director of environment, health and safety, will facilitate 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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NADA Member Handbook Now Available Online

For the first time, NADA's member handbook is available online at www.nada.org/membership. The handbook includes department information and contacts. NADA has also mailed 2009 member packets to all members. The packets include: An updated leadership brochure, which has contact information for NADA's leadership and board of directors; a database update form for member companies to update their contact information; a NADA/ATD quick-reference benefits card; and a 2009 member window decal. Visit www.nada.org/membership for more information or membership@nada.org.

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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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Quotable
 
"This is a dysfunctional credit market. And it is forcing viable businesses to the brink of nonoperation."

    -- Andy Koblenz, NADA vice president of legal and regulatory affairs, referring to the lack of lenders that provide dealers with credit for their inventory, St. Louis Post-Dispatch, March 25

Video Highlights
 

NADA-TV: New Mexico Dealer Testifies Before Senate Committee About Critical Need for Floorplan Loans

WTNH-TV: Are Banks Turning on American Car Dealers? 
(ABC affiliate, New Haven, Conn.)

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
 
 

Need Some Low-Cost Consulting? NADA's Dealer Hotline is Free

While new-car and truck dealers face unprecedented challenges today, NADA is offering free professional advice to help dealers meet them. NADA is helping members prioritize their dealership's top financial and operational challenges and identify areas of opportunity. Then, NADA will provide recommendations and suggestions for improvement. Free phone consultations are scheduled by appointment only. To schedule an appointment, visit www.nada.org/lifeline.

 
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.