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Wednesday, April 1, 2009 RSSSEND TO A FRIENDPRINT
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Top Stories
GMAC Expands Auto Lending to More Consumers
U.S. Hopes to Ease G.M. to Bankruptcy
NADA to Dealers: Call Your Senators and Ask Them to Sign 'Shaheen Auto Credit' Letter to Obama by April 3
Dealer Group Applauds Stimulus Pledge; Expresses Concern Over Financing, Bankruptcy
Auto Dealers Hope Incentives Attract Buyers
Rivals' Revamps Vex Ford
GM Delays Hummer Decision, Assesses Bids
In Europe, 'Cash for Clunkers' Drives Sales
ALERT: Be Aware of Misleading Post-Convention Survey
Top Stories
GMAC Expands Auto Lending to More Consumers

General Motors' financing arm said Wednesday it will temporarily waive some dealer fees and make $5 billion available for loans to an expanded pool of potential car buyers in a bid to halt the extended slide in U.S. vehicle sales. Car dealers nationwide have been hammered by low consumer confidence and worries among potential buyers about the future of the U.S. auto industry. A lack of available credit also has left many consumers who might be still looking for a new vehicle without the affordable financing they needed to make a deal. As a result, GMAC said it's eliminating all dealer curtailment payments — which require the repayment of part of a dealer's wholesale loan if a vehicle goes unsold for a certain amount of time — for aging inventory during the month of April. In addition, GMAC, which provides financing to both General Motors Corp. dealers and customers, is waiving through June the fee for posting aging vehicles on its online site. It is also allowing some dealers to postpone wholesale interest charges for two 30-day periods over the next four months. At the same time, the company said it is setting aside $5 billion for consumer loans over the next 60 days and will resume lending to consumers with credit scores below 620. John McEleney, a Clinton, Iowa, auto dealer who serves as chairman of the National Automobile Dealers Association, said the changes will be a big help to the 70 percent of GM dealers who get their financing through GMAC and could keep some of them from closing up shop. McEleney said the addition of customers with lower credit scores could increase the pool of potential car buyers by 30 percent to 35 percent and could be a sign that GMAC is on the rebound from the financial problems that had pushed it to the brink of bankruptcy late last year. "We think this is very positive," he said. "I think it indicates some strength on the part of GMAC, that it's going to be in a position to lend that it hasn't been in for several months."
Source: The Associated Press
 

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U.S. Hopes to Ease G.M. to Bankruptcy

The government may seek to ease General Motors into what it calls a “controlled” bankruptcy, somewhere between a prepackaged bankruptcy and court chaos, by persuading at least some creditors to agree to a plan that would cleave the company into two pieces, according to people briefed on the matter. Instead of signing on every creditor as is typically required in prepackaged deals, administration officials are using as leverage the promise of taxpayer financing. Many regard the government as the only lender willing to step up with money — in bankruptcy or out. “They’re going to have tremendous power,” said Lynn M. LoPucki, a law professor at the University of California, Los Angeles. “They can call off the money and the whole thing fails.” G.M.’s new chief, Fritz Henderson, also said that the pressure from the government pushed the automaker closer to bankruptcy. “By no later than June 1, if we’re not able to accomplish this outside bankruptcy, we’ll be in bankruptcy,” he said at a news conference in Detroit on Tuesday. “It’s pretty clear. The government was unequivocal.” The effort is a new role for the government, which has not pushed companies into bankruptcy in the past as much as it has stepped in when all else fails. Under a plan being worked out by the administration, G.M. would file for prearranged bankruptcy...
Source: The New York Times

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NADA to Dealers: Call Your Senators and Ask Them to Sign 'Shaheen Auto Credit' Letter to Obama by April 3

NADA urges President Obama to fix floorplan problem
WASHINGTON – While a lot of attention has been focused on the restructuring of domestic auto manufacturing, the National Automobile Dealers Association is urging the Obama administration to focus on the severe impact of the credit crisis on dealers and the urgent need for floorplan credit.

To help draw attention to the situation, NADA is working with Sen. Jeanne Shaheen, D-N.H., a member of the Senate Small Business Committee, to have senators sign a letter asking President Obama to expand availability for auto credit and provide specific policy recommendations.

“Call your senators and urge them to sign the ‘Shaheen Auto Credit’ letter,” says David Regan, NADA vice president of legislative affairs. Click here for the letter.

“Tell your story so senators understand the problems with accessing retail credit and credit to purchase inventory from automakers,” Regan added. “Explain the impact on jobs and the community. Explain how dire the situation is and that unless action is taken soon, many more dealers will have to close their doors.”

“Without retail credit and floorplan loans, even well-capitalized dealers can be out of business in a matter of days,” says John McEleney, NADA chairman. “In particular, preserving floorplan lending is essential to keeping dealers in business and purchasing new vehicles. The auto industry cannot recover until the retail credit and floorplan problem is fixed.”

New Mexico dealer Bob Cockerham testified March 19 before the Senate committee on how credit problems are crippling dealers throughout the country. To see NADA-TV coverage of Cockerham’s inspiring testimony, visit www.nada.org/legislativeaffairs.

Senators can be reached through the Capitol Switchboard at (202) 224-3121. The deadline for senators to sign the letter is 12 p.m. EST, Friday, April 3. Senators and their contact information can also be found at www.senate.gov. If you have any further questions, contact NADA’s Legislative Office at (800) 563-1556 or legislative@nada.org.
Source: NADA Newswire

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Dealer Group Applauds Stimulus Pledge; Expresses Concern Over Financing, Bankruptcy

The National Automobile Dealers Assn. is applauding President Obama’s promise to support measures to stimulate new car and truck sales in the U.S., but the group again raises concerns not enough is being done to free up credit and warns against bankruptcy as an option for General Motors Corp. and Chrysler LLC. “Bankruptcy, under any circumstances, should not be an option,” NADA Chairman John McEleney says in a statement. “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.” Obama is promising his office will continue to work with automotive finance companies to increase the flow of credit to both consumers and car and truck dealers in an effort to stimulate the market, but the dealer group remains concerned. “If something is not done in the immediate future to restore the auto dealer’s access to both wholesale vehicle inventory (or floorplan) financing and retail consumer credit, the restructuring plan will not work,” McEleney says.
Source: WardsAuto.com

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Auto Dealers Hope Incentives Attract Buyers

Car lot owners say confidence, financing needed for sales boost
Payment protection for new car owners. Cash vouchers for consumers who "buy American." And government-backing of General Motors Corp. and Chrysler LLC vehicle warranties. These incentives and others unveiled by Detroit's carmakers and the federal government could help inject some much-needed consumer confidence into the nation's ailing auto industry, say dealers and customers browsing Metro Detroit showrooms Tuesday. Right now, the dealerships faces two issues: customers who want to buy new cars but aren't able to secure financing and a lack of confidence in GM warrantees, [said Ronald MacEachern, general manager of Saturn of Troy, Mich.] The government's plans to back those warrantees was like "a big shot in the arm" for soothing consumer jitters, MacEachern said.
Source: The Detroit News

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Rivals' Revamps Vex Ford

Bankruptcy by GM or Chrysler Could Give Them a Leg Up and Disrupt Suppliers
A bankruptcy reorganization by either General Motors Corp. or Chrysler LLC -- as suggested by President Barack Obama this week -- could damage the networks of suppliers and dealers shared by Detroit's three auto makers, throwing uncertainty into Ford's parts deliveries and its retail operation. Moreover, Ford officials are concerned that bankruptcy could allow GM or Chrysler to restructure more fundamentally and exact deeper concessions from unions and bondholders. "The collapse of one of our competitors would have a severe impact on Ford and our transformation plan, because the domestic auto industry is highly interdependent," Ford Chief Executive Alan Mulally warned late last year in testimony before the U.S. Senate.
Source: The Wall Street Journal

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GM Delays Hummer Decision, Assesses Bids

DETROIT -- General Motors is postponing a decision on the fate of its Hummer brand for a "few weeks" as it works to complete a sale. "Our efforts to sell Hummer are proceeding, and there are several parties interested -- and I would say really interested -- in the brand," Troy Clarke, GM's president of North America, said during a call to dealers Monday. "We're still very much in the process, although that process is maturing." Clarke told dealers that GM would have a final announcement on Hummer "in the next few weeks rather than months."
Source: Automotive News

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In Europe, 'Cash for Clunkers' Drives Sales

BRATISLAVA, Slovakia — The economy here may be in free fall, but anxiety about the future did not stop Vilo Hrivnak from driving his 12-year-old green hatchback to the junkyard a few days ago and promptly buying his first new car, a cappuccino-colored Skoda. Slovakia is one of a nearly dozen European countries to unveil a so-called cash for clunkers plan in recent months, but the idea could soon get its biggest test yet in the United States, where President Obama endorsed a similar approach Monday to help beleaguered Detroit automakers. The plan has exceeded expectations. Car sales are now running at an annual rate of more than 13 million because of the subsidies, according to Stuart Pearson of Credit Suisse, well above the 11 million level where they started the year.
Source: The New York Times

[Editor's Note: To date, at least five “Cash for Clunkers” proposals have been introduced in the U.S. House and Senate. These programs would provide consumers between $1,500 and $10,000 towards the purchase of a new vehicle depending on its fuel economy and final assembly point. NADA has not endorsed any of these proposals and is working to secure support for a consensus approach that includes the automakers and recyclers. NADA believes that any program should be voluntary, available to all customers and not unduly favor a particular vehicle manufacturer.]

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ALERT: Be Aware of Misleading Post-Convention Survey

Many dealers who attended the 2009 NADA convention in New Orleans have reported receiving a mailed “Industry Event Survey.” NADA DID NOT AUTHORIZE THIS SURVEY. In fact, the misleading survey was mailed to convention attendees by G&A Marketing in Milford, Ohio. NADA has no affiliation with G&A Marketing. The first paragraph of the survey states, “Thank you for recently attending the 2009 NADA convention in New Orleans, LA. We greatly value your participation...” with instructions to fax the completed survey to a 513 area code.
Source: NADA Newswire

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Quotable
 
The changes will be a big help to the 70 percent of GM dealers who get their financing through GMAC and could keep some of them from closing up shop.

   
-- John McEleney, NADA chairman, referring to GMAC's plans to boost dealer cash flow and expand auto lending to consumers, The Associated Press, April 1


"When I read it to our sales people, you would have thought we just knocked a home run. We've been waiting for this for a long time."

    -- Jack Kain, former NADA chairman and dealer in Versailles, Ky., on Ford's new program that would help buyers in the event of a job loss, The Associated Press, March 31
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.

 
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