For optimal viewing through your web browser or PDA, click here.

SPONSORED BY
Click Here
NADA.org
Friday, May 1, 2009 RSSSEND TO A FRIENDPRINT
nada.orgAdvocacyAffiliates | Convention | Jobs | Programs | Publications | Services | Training
Top Stories
NADA Praises SBA Action to Expand Loan Eligibility
SBA Expands Eligibility for 7(a) Loans To Spur Recovery Opportunities for Small Businesses
Chrysler Dealers Fear Company May Force Many to Close
Obama Vows Swift Overhaul As Chrysler Enters Bankruptcy
Marchionne to Apply Experience at Fiat to Revive Chrysler
Should You Buy a New Chrysler Today or Wait for Lower Prices?
GMAC Will Finance Chrysler Dealers by Mid-May
Filing Seen as Message to GM Creditors
Toyota's Troubles Slam Japan's Motor City
Top Stories
NADA Praises SBA Action to Expand Loan Eligibility

WASHINGTON – The following is a statement from John McEleney, chairman of the National Automobile Dealer Association, on the expansion of eligibility for a Small Business Administration loan guarantee program designed to help small businesses get access to working capital:

“By significantly expanding the SBA 7(a) loan guarantee program, the President along with SBA Administrator Karen Mills and her staff, have taken a significant step toward unlocking the frozen credit markets that are so critical to the success and continued operation of thousands of small, family-owned auto dealerships across the country. The newly expanded SBA 7(a) program should encourage lenders to assist thousands of additional dealers with the liquidity they need to keep their doors open, make payroll and prevent further layoffs, especially in these difficult economic times.

“NADA, which is encouraged that the SBA has expanded their loan-guarantee program, will continue to work with the Obama administration to lift the existing regulatory prohibition on vehicle inventory financing (floorplanning). Removing this constraint would enable lenders to make floorplan loans to those many small dealers currently finding it difficult to secure the funds they need to purchase new vehicle inventory.

“The nation’s franchised auto dealers—both domestic and international—applaud the Administration for its actions and its understanding that, unless the dealer credit problem is fixed, any effort to revitalize the auto industry simply will not work.”
Source: NADA Newswire

[Editor's Note: NADA Chairman John McEleney, members of NADA’s executive committee and senior staff, along with leaders from the National Association of Minority Automobile Dealers (NAMAD), met several times with SBA since Nov. 2008 to advocate a more inclusive size standard for dealers seeking access to the 7(a) loan program. These meetings led to the SBA action, discussed above. In the American Recovery and Reinvestment Act (ARRA), enacted earlier this year, Congress raised the ceiling on 7(a) loan guarantees to 90 percent and reduced or eliminated borrower fees. This has prompted an increase of 25-plus percent in loan volume and sparked the return of hundreds of lenders to the market. Together, the ARRA and the SBA’s new size standard should enable more dealers to obtain working capital under the 7(a) loan program. NADA is continuing to work with lenders to encourage them to make 7(a) loans to dealers and with the Obama administration to allow proceeds from these loans to be used for floorplan financing.]

[back to top]

SBA Expands Eligibility for 7(a) Loans To Spur Recovery Opportunities for Small Businesses

WASHINGTON – More small businesses will be eligible for U.S. Small Business Administration-backed loans ... as a result of a temporary alternate size standard for the agency's largest lending program. As a result of the temporary change, more than 70,000 additional small businesses – including auto and RV dealerships, auto industry suppliers and others – could be eligible to apply for SBA 7(a) loan. The temporary 7(a) loan size standard will ... allow businesses to qualify based on net worth and average income. The net worth for the company and its affiliates can’t be in excess of $8.5 million and average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years can’t be more than $3 million.
Source: Small Business Administration

[back to top]

Chrysler Dealers Fear Company May Force Many to Close

Many dealers worry [Chrysler] will seek permission from a bankruptcy judge to tear up franchise contracts and force many dealers to close shop. The National Automobile Dealer Association called the bankruptcy filing "especially disappointing" and said it should not be used to slash dealer ranks. "A rapid reduction in dealer numbers would not only do absolutely nothing to improve Chrysler's viability in the short term, but it would actually work against Chrysler's stated objective to increase revenue and cut costs," the group said in a statement.
Source: The Wall Street Journal

[back to top]

Obama Vows Swift Overhaul As Chrysler Enters Bankruptcy

Union and Fiat Gain Major Stakes in Automaker; President Slams Holdout Creditors as 'Speculators'
Now largely under government control, Chrysler will seek in court to strip itself of its overwhelming debts. One of the key aspects of the bankruptcy will be its duration, many analysts said, and administration officials promised a relatively quick one. But some bankruptcy specialists warned that the court process can be unpredictable and difficult to manage in the case of a company as vast as Chrysler. ... The National Automobile Dealers Association, which represents Chrysler dealers, has hired law firm Arnold & Porter to protect dealer investments.
Source: The Washington Post

[back to top]

Marchionne to Apply Experience at Fiat to Revive Chrysler

[Fiat SpA Chief Executive Sergio Marchionne], who is expected to assume broad authority over Chrysler's operations, will be in a race against time to refresh Chrysler's empty product pipeline while the company burns through government loans. In the partnership, Fiat initially will receive a 20% stake in Chrysler but it could rise to 35% if certain targets are met. Chrysler's current CEO, Robert Nardelli, said Thursday he would resign post-bankruptcy, which would pave the way for Mr. Marchionne to formally take the reins. "Our work is just beginning, but together with our new partners at Chrysler we look forward to delivering on the vast potential this alliance holds," Mr. Marchionne said in a statement.
Source: The Wall Street Journal

[back to top]

Should You Buy a New Chrysler Today or Wait for Lower Prices?

Go ahead, buy that Chrysler. That's the consensus of analysts, consumer advisers and consultants, who noted Thursday that Chrysler now is like a government bond, backed by the "full faith and credit of the United States." "Business as usual" at dealerships, promises Chuck Eddy, who represents the 3,200 Chrysler, Jeep and Dodge dealers on the National Automobile Dealers Association's dealer council. "As part of the prepackage (Chapter 11 arrangement), we get treated as if there's not a break in the business. Warranty payments, incentive payments — every Monday, as usual. They're shipping ... whatever we've paid for," says Eddy.
Source: USA TODAY

[back to top]

GMAC Will Finance Chrysler Dealers by Mid-May

Thousands of Chrysler LLC dealers who face the loss of floorplan financing will have an opportunity to sign up with GMAC. A senior GMAC executive said [Thursday] that his company will sign up all Chrysler dealerships that now finance their wholesale vehicle inventories, or floorplans, with Chrysler Financial. The lender also will provide retail loans to customers of Chrysler dealerships. "We will step in and fill the gap," said GMAC President Bill Muir. "It involves a few thousand dealers. It's our expectation we can do that by the middle of May."
Source: Automotive News

[back to top]

Filing Seen as Message to GM Creditors

Chrysler LLC's bankruptcy filing Thursday sent a clear message to GM bondholders that the Obama administration is playing hardball when it comes to restructuring Detroit's auto industry, analysts said. Hours before the announcement, an ad hoc committee of GM bondholders countered General Motors' plan released Monday to restructure bondholder debt. Under their proposal, the bondholders would get 58% of a reconstituted GM -- compared with about 10% under the company's Monday proposal. The ad hoc committee represents about 20% of GM's $27 billion in unsecured debt.
Source: Detroit Free Press

[back to top]

Toyota's Troubles Slam Japan's Motor City

TOYOTA CITY, Japan — For years, Toyota City prospered along with the giant carmaker that shares its name ... Now, the current economic crisis has halted the good times in Japan’s Motor City. Toyota Motor ... has idled factories and slashed production amid its first annual net loss in 59 years. This has pushed Toyota City into its worst slump in memory ... “In the beginning, we used to aspire to be a second Detroit,” said Tatsuya Yoshimura, who owns a camera shop in downtown Toyota City. “Now, that is what we are afraid of becoming.”
Source: The New York Times

[back to top]

 
Quotable
 
"A rapid reduction in dealer numbers would not only do absolutely nothing to improve Chrysler's viability in the short term, but it would actually work against Chrysler's stated objective to increase revenue and cut costs."

    -- NADA Chairman John McEleney, The Wall Street Journal, April 30


"This dramatically expands the universe of qualifying dealers from about 25 percent to about half our membership of 19,700 dealers."

    -- David Hyatt, NADA vice president of public affairs, on the Small Business Administration's new eligibility rules for lower-interest federal loans, Bloomberg, April 30


"In the beginning, we used to aspire to be a second Detroit. Now, that is what we are afraid of becoming."

    -- Tatsuya Yoshimura, who owns a camera shop in downtown Toyota City, which has fallen into a slump amid Toyota's first annual net loss in 59 years, The New York Times, April 30

Video Highlights
 
 

NADA: Legislative Options for Floorplan and Retail Credit (NADA-TV)

  
NADA and the Obama Auto Task Force (PBS)



NADA on Floorplan Credit Crisis (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.

 
Click Here
Search Back Issues | Unsubscribe | Subscribe | Manage your subscription | email us
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.