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Tuesday, March 31, 2009 RSSSEND TO A FRIENDPRINT
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Top Stories
Dealers Relieved Government's Role Is Now Clear
Auto Dealers Fight To Stay On The Map
Chrysler Plan Trims Fiat's Stake, Cuts Out Cerberus
Hummer's Decline Puts Dealers at Risk
Enthusiasm Builds for Helping a Shift to Fuel-Efficient Cars
GM, Ford Offer Hyundai-Style Job-Loss Protection Plans
New California Air Board Rule Will Require Auto Shops to Inflate Tires
NADA Update
Red Flags 'Deeper Dive' Seminar to be Repeated April 2
Legislative Affairs Section of Web Site Redesigned and Improved
Seats Available for Dealer Academy Classes in May and June
NADA Seeks Input on LIFO
Top Stories
Dealers Relieved Government's Role Is Now Clear

DETROIT — Auto dealers remain concerned about the future of General Motors Corp. and Chrysler LLC, although they are relieved for now that the Obama administration has at least made clear what role the government will play in seeking a revival of the two companies. David Kelleher, owner of two Chrysler dealerships in the Philadelphia area, said he was encouraged by president’s decisive action. "There’s a collective sigh of relief right now," he said. "I saw our president saying, ‘Hey, we need to fix this, we need our auto industry.’" John McEleney, president of the National Automobile Dealers Association, cautioned dealers not to be too upbeat right now. Among their principal concerns, he said, should be the availability of financing — particularly so-called floor-plan loans for dealerships to purchase inventory and retail lending for costumers — both critical for their survival. “That’s a real problem for the manufacturer,” said Mr. McEleney in an interview Monday. “If the floor plan piece isn’t there,” he said, even healthy dealers will be out of business “in a matter of days.” That would not only undermine the auto makers’ sales, but also erode car buyers’ confidence, he said.
Source: The Wall Street Journal

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Auto Dealers Fight To Stay On The Map

White House Pressures General Motors To Shed Dealers, Who Are Already Hurting Thanks To Recession And Skittish Consumers
President Obama's newly-announced plan for General Motors and Chrysler has again put the spotlight on what the future holds for the floundering companies and an already downtrodden Detroit. Equally uncertain, however, is the fate of the nation's roughly 20,000 auto dealerships, many of whom are already struggling to stay in business. Though President Obama's announcement that he "will not let our auto industry vanish" on Monday was good news for dealers, they were less heartened by his suggestion that he would not be opposed to letting the companies go into bankruptcy. "Bankruptcy, under any circumstances, should not be an option," NADA said in a statement released Monday. "It would further erode consumer confidence and, therefore, our ability to sell at the retail level. Moreover, it would further exacerbate the availability of credit. " Dealers thus now face a landscape in which automakers are being pressured to shed them, competition is fierce, and the few Americans who are looking to buy cars are not having an easy time with financing. In addition, they are losing access to so-called "floorplan" financing, which allows them to buy cars on credit and is deemed essential to their survival; unless something is done to address the floorpplan situation, NADA warns, "the restructuring plan will not work."
Source: CBS News

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Chrysler Plan Trims Fiat's Stake, Cuts Out Cerberus

Treasury Presses Italian Auto Maker to Take 20% Initially, Not 35%; Private-Equity Firm Would Still Control Finance Arm
Cerberus Capital Management LP will likely lose its entire stake in Chrysler LLC under the latest federal bailout offer to the auto maker, people familiar with the matter said ... The Obama administration's weekend ultimatum would also force Italian auto maker Fiat SpA to take a smaller equity stake than planned in the U.S. company, according to a person familiar with the talks. One Obama administration official said Cerberus's 80% equity stake no longer holds value and said the firm's ownership would soon come to an end. The private-equity firm has signaled it will surrender its equity in Chrysler. If Fiat and Chrysler reach a definitive deal within 30 days, the Treasury would be willing to invest $6 billion in Chrysler. Fiat wouldn't be allowed to raise its stake beyond 49% until after the $6 billion is repaid, people with knowledge of the matter said.
Source: The Wall Street Journal

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Hummer's Decline Puts Dealers at Risk

CHESTERFIELD, Mo. — In 2005, Jim Lynch placed a big bet on a big vehicle. He was already a successful Hummer dealer, but he spent $7.5 million on a new 34,000-square-foot showroom in a wealthy suburb of St. Louis. General Motors cheered him on, he says, telling him he could eventually sell as many as 1,300 Hummers a year — which start at more than $30,000 and can cost more than $100,000 ... Sales of Hummers over all have fallen so far — 51 percent last year, the worst drop in the industry — that General Motors is trying to find a buyer for the brand. Without one, the company might close Hummer. An announcement about Hummer’s fate may be made [today]. The demise of Hummer would be cheered by environmentalists, who have relentlessly criticized its model lineup, which gets, on average, less than 10 miles a gallon. For Mr. Lynch and the 379 other Hummer dealers worldwide, however, it would be a sudden end to a brand that once seemed to have a strong future.
Source: The New York Times

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Enthusiasm Builds for Helping a Shift to Fuel-Efficient Cars

WASHINGTON — A concept embraced by President Obama on Monday as part his effort to save General Motors and Chrysler from collapse would provide cash to buyers of new fuel-efficient cars — if they traded in a clunker. Similar incentive programs overseas have lifted automobile sales despite the awful economy. In the United States, the economic stimulus bill adopted in February provides a tax incentive for the purchase of new cars this year, but Mr. Obama said Monday that he supported lawmakers who wanted to take more aggressive steps, offering not just a rebate on the sales tax, but a large cash incentive for trade-ins. American auto dealerships, which have been going out of business steadily in the last six months, were generally supportive of the trade-in incentives. “The Germans started this a few months ago, and it did help stimulate their auto business,” noted Annette Sykora, a past chairwoman of the National Automobile Dealers Association and owner of two dealerships outside Lubbock, Tex.
Source: The New York Times

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GM, Ford Offer Hyundai-Style Job-Loss Protection Plans

General Motors and Ford Motor Co., battling sharp declines in U.S. sales, today followed Asian rival Hyundai Motor and offered to make car payments for buyers who lose their jobs. GM said it would provide payment protection for two years as part of its GM Total Confidence program. The company will cover up to nine vehicle payments of up to $500 a month for new-vehicle buyers. Earlier, Ford unveiled the Ford Advantage Plan, which will cover payments for up to 12 months. GM also said it would offer limited trade-in protection to customers who end up owing more on a vehicle than its current value for a GM trade-in. The offer covers a finance contract up to six years and requires a customer to be halfway through the payments before the trade, GM said. The company also began promoting its 5-year/100,000-mile powertrain warranty as the "best coverage in the industry."
Source: Automotive News

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New California Air Board Rule Will Require Auto Shops to Inflate Tires

The latest target of California's war on global warming: squishy tires. Thursday, the state Air Resources Board voted 8-0 in favor of a rule that requires most automotive service shops to check and inflate tires to the recommended pressure. The measure should prolong tire life and improve fuel efficiency slightly, cutting greenhouse-gas emissions. The tire measure is a small part of California's climate-change strategy, accounting for less than 0.5 percent of the state's 2020 emissions-reduction target. But it's one of the few immediate changes that consumers are likely to notice. Under the rule, auto shops will be required to have on hand a high-accuracy pressure gauge, which costs about $25. Customers are free to decline the pressure check when their cars are being serviced. Drivers won't be penalized for having soft tires.
Source: The Sacramento Bee (Sacramento, Calif.)

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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. eastern time. 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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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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NADA Seeks Input on LIFO

A top priority for NADA is preventing the repeal of the LIFO (last in, first out) method of accounting. President Obama’s budget outline called for the repeal of LIFO. NADA continues to meet with members of the tax-writing committees and key legislators to express opposition to LIFO repeal. As part of those efforts, NADA is gathering data about how widely LIFO is used by our dealers. NADA’s Legislative Office has sent an electronic survey to all NADA and ATAE members. If you have not received the survey in your email, click here to complete it. Survey results will not include private identifiers and participants' privacy will be protected. Please provide your e-mail and phone information, as NADA may want to follow up with questions or provide additional information on the LIFO issue. Please contact the Legislative Office at legislative@nada.org or 1-800-563-1556 if you have any questions.

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Quotable
 
"Bankruptcy, under any circumstances, should not be an option. It would further erode consumer confidence and, therefore, our ability to sell at the retail level. Moreover, it would further exacerbate the availability of credit."

    -- NADA Chairman John McEleney, in a statement, CBS News, March 30

"Anything that excites the public imagination about buying a car is a good thing right now. Certainly the public is very accustomed to 'cash back.'"

    -- Gerard Murphy, president of the Washington (D.C.) Area New Automobile Dealers Association, on President Obama's proposed "fleet modernization" program — also known as "cash for clunkers," USA TODAY, 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
 
 
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.