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Tuesday, April 28, 2009 RSSSEND TO A FRIENDPRINT
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Top Stories
G.M.'s Latest Plan Envisions a Much Smaller Automaker
GM To Cut 1,000 Low-Rated Dealerships Next Year
GM Dealers Await Word on Deeper Cuts
UAW Leaders Recommend Approval of Chrysler Deal
U.S. Tries to Broker Sale Of Chrysler's Loan Arm
To Shed Dealerships, Experts Say GM Needs Bankruptcy
Preparing for the Worst: Webinar on Bankruptcy Offered to Dealers
Top Stories
G.M.'s Latest Plan Envisions a Much Smaller Automaker

G.M. said it would eliminate another 21,000 factory jobs, close 13 plants, cut its vast network of 6,500 dealers almost in half and shutter its Pontiac division. Many dealers said they were stunned by how quickly G.M. wanted to eliminate more than 2,600 showrooms. “This is just too rapid, and I think it’s going to create a disorderly shutdown of a lot of stores,” said John McEleney, chairman of the National Automobile Dealers Association. “In the short term, they’re likely to lose sales, which is counterproductive to G.M.’s recovery.”
Source: The New York Times

[Editor's Note: NADA questions the timing of GM's drastic reduction of its dealer network. Bondholders and the UAW are clearly cost centers for GM. Dealers are not. In fact, dealers equal revenue for GM. It makes no sense for GM to cut its own revenue source at this time. NADA estimates that if their plan to accelerate dealer cuts goes forward, GM will lose $35 billion in sales revenue. And local communities will lose $1.7 billion in auto sales taxes. Plus, another 137,000 dealership employees will lose their jobs.]

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GM To Cut 1,000 Low-Rated Dealerships Next Year

DETROIT -- General Motors plans to contact owners of about 1,000 dealerships starting in May to notify them that their franchise agreement will not be renewed in 2010, a GM executive says. To determine which dealerships will be retained, [GM's Mark LaNeve, vice president of vehicle sales, service and marketing,] says GM is considering a dealership's sales, customer satisfaction scores, amount of working capital, facility standards rating and whether the dealership is dualed with an unapproved brand.
Source: Automotive News

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GM Dealers Await Word on Deeper Cuts

General Motors Corp.'s move to eliminate the Pontiac and Saturn brands and reduce costs will mean the end of about 42% of its 6,200 U.S. dealers, on average winnowing its dealer ranks by about 130 outlets a month for the next 20 months. The National Automobile Dealers Association estimates the closings will add 6,800 people to unemployment rolls each month, adding to the nation's rising jobless ranks and sinking city and state sales and income tax collections around the country. "It is obviously going to be traumatic for a lot of dealers," said Paul Taylor, NADA's chief economist. "It has always seemed that fewer outlets are likely to mean fewer sales. All the research also suggests that any managed bankruptcy process would decrease sales significantly."
Source: The Wall Street Journal

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UAW Leaders Recommend Approval of Chrysler Deal

STERLING HEIGHTS, Mich. – The United Auto Workers union will own 55 percent of a restructured Chrysler LLC and its retiree health care trust will get a seat on the board if union members vote to approve contract concessions this week. ... Italian automaker Fiat Group SpA eventually will own 35 percent of a restructured Chrysler, with the remaining 10 percent stake divided between the U.S. government and secured lenders, mostly banks and hedge funds.
Source: The Associated Press

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U.S. Tries to Broker Sale Of Chrysler's Loan Arm

Takeover by GMAC is meeting resistance
The Obama administration wants the nation's largest auto-financing company, GMAC, to buy Chrysler Financial, which is the primary source of lending for Chrysler dealerships and car buyers, industry officials said. A collapse of the financing arm could take down many dealers, which rely on short-term loans to buy the cars that sit on their lots. "Chrysler Financial is vital to our success," [Dale Early, owner of Deerbrook Forest Chrysler and Jeep in Kingwood, Tex.] said. "Chrysler needs a captive finance arm to survive."
Source: The Washington Post

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To Shed Dealerships, Experts Say GM Needs Bankruptcy

One estimate says 124,200 jobs to go
Without filing for bankruptcy, General Motors cannot get rid of the 2,600 dealerships the company says must close for it to stay viable, automotive experts say. [The National Automobile Dealers Association] estimates that if 2,641 dealerships are closed in 18 months, 124,200 employees will lose their jobs and GM will lose $51 billion in sales revenue. [Automotive analyst Mark Rikess of the Los Angeles-based Rikess Group] said he doesn't expect GM to move on dealership reductions until a decision is made about bankruptcy, and the federal deadline for that is June 1.
Source: Detroit Free Press

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Preparing for the Worst: Webinar on Bankruptcy Offered to Dealers

“Bankruptcy in the Automobile Industry: It Never Hurts to be Prepared” will be presented by attorneys Michael G. Charapp and Jason Gold on Tuesday, May 12 from 1-3 p.m. Eastern Time. The Webinar will arm dealers with information they’ll need to protect themselves and their dealerships if the troubled manufacturers are unable to restructure without bankruptcy. The Webinar is offered at a discounted fee of $50 per computer connection. Register online or call (800) 252-6232, ext. 2.
Source: NADA Newswire

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Quotable
 
"This is just too rapid, and I think it's going to create a disorderly shutdown of a lot of stores. In the short term, they're likely to lose sales, which is counterproductive to G.M.'s recovery."

   
-- John McEleney, NADA chairman, on GM's plans to cut its network of 6,500 dealers almost in half and shutter its Pontiac division, The New York Times, April 28


"Chrysler Financial is vital to our success. Chrysler needs a captive finance arm to survive."

   
-- Dale Early, owner of Deerbrook Forest Chrysler and Jeep in Kingwood, Texas, on the Obama administration's desire to sell Chrysler's financing arm to save the troubled automaker, The Washington Post, April 28


"It is obviously going to be traumatic for a lot of dealers. It has always seemed that fewer outlets are likely to mean fewer sales. All the research also suggests that any managed bankruptcy process would decrease sales significantly."

   
-- Paul Taylor, NADA's chief economist, on GM's plans to cut 42% of its U.S. dealers, The Wall Street Journal, April 28

Video Highlights
 
 
NADA and the Obama Auto Task Force (PBS)


NADA on Floor Plan Credit (NADA-TV)



GM Bankruptcy Not Inevitable (msnbc.com)


 
Senate Testimony on Floorplan Loans (NADA-TV)


 
Banks Turning on American Car Dealers? (WTNH-TV)


 
EPA Hearing on Fuel Economy (NADA-TV) 


 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 video reports.

 
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