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Monday, March 30, 2009 RSSSEND TO A FRIENDPRINT
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At a Glance...
Top Stories
White House Questions Viability of GM, Chrysler
GM CEO Wagoner Forced Out as Part of Gov't Plan
Credit Crunch: Auto Dealerships Struggle, Close as 'Floorplan' Financing Dries Up
New Fuel Efficiency Standards to Cost Auto Industry $1.5 Billion
NADA Update
Red Flags 'Deeper Dive' Seminar to be Repeated April 2
COBRA Subsidy Compliance Virtual Seminar to be Repeated Tomorrow
Legislative Affairs Section of Web Site Redesigned and Improved
Seats Available for Dealer Academy Classes in May and June
Top Stories
White House Questions Viability of GM, Chrysler

President Barack Obama refused further long-term federal bailouts for General Motors and Chrysler, saying more concessions were needed from unions, creditors and others before they could be approved. He raised the possibility Monday of controlled bankruptcy for one or both of the beleaguered auto giants. At the same time, eager to reassure consumers, Obama announced the federal government would immediately begin backing the warranties that new car buyers receive — a step designed to signal that it is safe to purchase U.S.-made autos and trucks despite the distress of the industry. In a statement read at the White House, Obama said he was "absolutely committed" to the survival of a domestic auto industry that can compete internationally. And yet, "our auto industry is not moving in the right direction fast enough," he added. Even as he pronounced their effort unsatisfactory, the president said the administration will offer General Motors "adequate working capital" over the next 60 days to produce a reorganization plan acceptable to the administration. He also announced several steps to reassure consumers, and improve the chances that U.S. automakers will be able to sell their cars and trucks. The president said the government will now stand behind warrantees issued by the carmakers, a sweeping new guarantee that some in Congress had sought. He also noted that the economic stimulus legislation he recently signed allows the purchasers of new domestic cars to deduct the cost of any sales and excise taxes. Obama said this provision could "save families hundreds of dollars and lead to as many as 100,000 new car sales." He also said funds ticketed for the purchase of new vehicles for government agencies would be spent as quickly as possible.
Source: Associated Press

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GM CEO Wagoner Forced Out as Part of Gov't Plan

Time and time again, General Motors Corp.'s board of directors reaffirmed its support for Chairman and CEO Rick Wagoner, even as the company piled up billions of dollars in losses and begged for government loans to stay alive. But Wagoner is now a high-profile casualty of government intervention, forced out as part of the Obama administration's sweeping last-ditch effort to save the century-old auto giant. Wagoner, 56, who spent 32 years with GM working all over the world, stepped down effective immediately, the company said in a statement early Monday. He was replaced as CEO by Fritz Henderson, the company's vice chairman and chief operating officer. The management shake-up, according to several industry analysts, shows that the administration is serious about forcing GM to change more quickly and dramatically than it did during Wagoner's nearly nine-year tenure as CEO.
Source: Associated Press

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Credit Crunch: Auto Dealerships Struggle, Close as 'Floorplan' Financing Dries Up

Dealers, losing buyers who can't get credit, fight to hold onto their funding with carmakers, financing arms
The advertising jingle is oh-so-familiar to natives of Chicago's far South Side. "If anyone can, O'Connor can." And for three decades, O'Connor did. First as a Ford dealership in Beverly and then as a Chevrolet store in Alsip, the O'Connor family thrived selling All-American cars to working-class Chicagoans. But last spring, the music stopped. Well before the global financial crisis pushed auto sales off a cliff, owner Caryl O'Connor got a letter from GMAC Financial Services informing her that she had 90 days to find a new source of inventory financing for O'Connor Chevrolet and her Hyundai dealership in Oak Lawn. What happened to O'Connor has been repeating itself at showrooms all over the United States as the ongoing crisis on Wall Street chokes off the consumer spending and financing that are the lifeblood of the nation's auto dealers. Five years ago, according to a local dealers' group, the city of Chicago had 53 dealerships. Today, it has just 37 and falling—a 30 percent decline. Closings will only accelerate as General Motors Corp., Chrysler LLC and Ford Motor Co. shrink themselves to survive. Detroit says it needs to do business with a far smaller number of more-profitable dealerships. For America's communities, that means more lost jobs, diminished tax revenue and a lot fewer Little League sponsors. Paul Taylor, NADA's chief economist, said that by the end of 2008, average industry margins had shrunk to just 1 percent of sales, the lowest level in two decades. But even that's deceiving. Auto dealers haven't made money selling new cars for three years, Taylor said. Any profits are coming from the service department and selling used cars.
Source: The Chicago Tribune

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New Fuel Efficiency Standards to Cost Auto Industry $1.5 Billion

WASHINGTON -- The Transportation Department unveiled its 2011 model year fuel efficiency requirements [Friday], saying the 27.3 mpg fleet-wide average would cost automakers nearly $1.5 billion to meet. The Obama administration, in its 857-page final regulation, set the 2011 model year passenger car fuel efficiency standard at 30.2 mpg and the light truck standard at 24.1 mpg. The National Highway Traffic Safety Administration said consumers will face price increases as a result: $64 on average for passenger cars and $126 for light trucks. Buyers of pickups, SUVs and minivans will be repaid in additional fuel savings in an average of 7.7 years. For passenger car buyers, they will be paid back in an average of 4.4 years. ... NHTSA acknowledged that the higher prices will lead to a small reduction in auto sales and estimated that as many as 1,024 auto industry jobs could be lost as a result of the regulation.
Source: The Detroit News

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NADA Update
Red Flags 'Deeper Dive' Seminar to be Repeated April 2

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 Thursday, April 2, from 1-2:30 p.m. EST. As technical difficulties interfered with the ‘Deeper Dive’ seminar held on March 26, all registrants for that seminar will receive a link to log on to the April 2 presentation at no charge. New registrations will be accepted at $199 per computer connection at www.nada.org/seminars.

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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COBRA Subsidy Compliance Virtual Seminar to be Repeated Tomorrow

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 tomorrow, 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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Legislative Affairs Section of Web Site Redesigned and Improved

The newly redesigned Legislative Affairs section of NADA's Web site (www.nada.org/legislativeaffairs) will help dealers and dealer associations keep track of the latest news from Congress and how legislative proposals will affect the industry during challenging times. The Web page includes shortcuts to the latest legislative news items, issue summaries and grassroots resources.

The information available on the site is a key legislative resource to both dealers and lawmakers. Dealer associations are encouraged to provide a link to www.nada.org/legislativeaffairs on their own Web pages and to add the page to their “favorites.”   

Dealer associations are also encouraged to post www.nada.org/patchwork onto their own Web sites. The link to this key issue highlights arguments in favor of a single, national fuel economy standard, rather than a state-by-state "patchwork" approach to fuel economy.

For questions or suggestions about the new legislative section of the Web site, contact NADA’s Legislative Affairs office at legislative@nada.org or (800) 563-1556.

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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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Quotable
 
"I am absolutely committed to working with Congress and the auto companies to meet one goal: the United States of America will lead the world in building the next generation of clean cars. But our auto industry is not moving in the right direction fast enough to succeed."

   
-- President Barack Obama, in a statement read at the White House today about the future of General Motors and Chrysler, March 30
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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