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Top Stories
Dealers Will Get U.S. Floorplan Guarantees in 15-Month Test
Chrysler's Nardelli Says $2 Billion Fiat Deal Could Close Today
U.S. Will Invest Another $30 Billion into GM as Creditor Offer Sweetens
Crash Diet: GM Getting in Shape for Chapter 11
'Rejected' Chrysler Dealers Move Cars
Ford Pledges Millions to Support Visteon
Economy Sinks at a 5.7 Percent Pace in 1Q
Opinion: Obama's GM Plan Looks Like a Raw Deal
Top Stories
Dealers Will Get U.S. Floorplan Guarantees in 15-Month Test

Dealers struggling to find floorplan financing will get aid from the federal government through a pilot program being launched by the Small Business Administration. Under the pilot program, a 75 percent government guarantee will be available on loans ranging from $500,000 to $2 million with a maximum repayment term of five years. "This is a lifeline thrown out for thousands of dealers throughout the country," said Bob Cockerham, owner of Car World Kia in Santa Fe, N.M. "This could end up saving thousands of dealerships."
Source: Automotive News

[Editor's Note: On behalf of NADA, Cockerham testified before the U.S. Senate Committee on Small Business and Entrepreneurship in March about the difficulties franchised dealers face in securing floorplan financing. And NADA met numerous times with the SBA to urge for greater access to floorplan loans. As a result, the SBA has expanded its 7(a) loan guarantee program to include floorplan loans. Many auto dealers are currently struggling to survive without access to credit to purchase vehicles for their lots. "We worked closely with the SBA for months on this issue. This is the right thing for the SBA to do," said NADA Chairman John McEleney. "It will double the number of dealers eligible for the SBA loan guarantee program." Because this is a loan guarantee program and not an actual loan, NADA will be reaching out to the lending community to give them a better understanding that floorplan loans are typically highly collateralized and have an excellent repayment history. For more information on the pilot program, which begins July 1, 2009, and runs through Sept. 30, 2010, visit www.nada.org/sbaloan.]

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Chrysler's Nardelli Says $2 Billion Fiat Deal Could Close Today

[Robert Nardelli, Chrysler LLC’s chief executive officer,] testified yesterday at a hearing in New York that the company plans for the deal to close today if U.S. Bankruptcy Judge Arthur Gonzalez approves the sale. Chrysler has said it needs to close the sale quickly to preserve business value.
Source: Bloomberg

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U.S. Will Invest Another $30 Billion into GM as Creditor Offer Sweetens

Bankruptcy filing will be 'judgment call,' official says
WASHINGTON -- The Obama administration plans to inject $30 billion into General Motors on top of the $19.4 billion it has already lent as part of a sweetened offer to bondholders, senior administration officials said [Thursday]. At least 35 percent of the bondholders have indicated they will approve the new GM restructuring plan, which calls for them to get a 10 percent equity stake in the new company as well as warrants to buy an additional 15 percent share.
Source: Automotive News

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Crash Diet: GM Getting in Shape for Chapter 11

DETROIT – The speed at which General Motors Corp. exits bankruptcy protection would depend a lot on the shape the company is in when it enters. Bankruptcy experts say the more operational, labor and financial concessions the automaker gets lined up in advance of its likely Chapter 11 reorganization, the faster the ailing automaker can emerge a leaner, stronger company — one that will be nearly three-quarters-owned by taxpayers.
Source: The Associated Press

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'Rejected' Chrysler Dealers Move Cars

DETROIT -- The 789 auto dealers Chrysler LLC plans to drop from its retail network have sold more than half the 44,000 vehicles they had on their lots, a sign the auto maker may face less of an inventory problem from the move than had been feared. The so-called rejected dealers have sold roughly 26,000 vehicles in the past two weeks, a Chrysler spokeswoman said Thursday.
Source: The Wall Street Journal

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Ford Pledges Millions to Support Visteon

Parts maker's biggest customer cites need to sustain production
Ford Motor Co. has pledged millions of dollars to support bankrupt supplier Visteon Corp., and is calling on its other customers to do the same. "Ford's top priority is to ensure we have sufficient parts and material to protect our production," said Tony Brown, Ford's group vice president for global purchasing. Korea's Hyundai-Kia group, which accounts for a quarter of Visteon's business, is its second-largest customer.
Source: The Detroit News

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Economy Sinks at a 5.7 Percent Pace in 1Q

The economy sank at a 5.7 percent pace in the first quarter as the brute force of the recession carried over into this year. However, many analysts believe activity isn't shrinking nearly as much now as the downturn flashes signs of letting up. The Commerce Department's updated reading on gross domestic product, released Friday, showed the economy's contraction from January to March was slightly less deep than the 6.1 percent annualized decline first estimated last month. Economists are hopeful that the economy isn't shrinking nearly as much in the April-to-June quarter as the recession eases its grip. Federal Reserve Chairman Ben Bernanke and ... forecasters say the recession will end later this year, barring any fresh shocks to the economy. Cutbacks in auto production, meanwhile, shaved 1.36 percentage points off first-quarter GDP, underscoring the troubles of this struggling industry.
Source: The Associated Press

[Editor’s Note: The first quarter data on housing shows a sharp trend reversal from declining house prices compared to the fourth quarter of 2008, according to the Federal Home Finance Agency. At the 2009 NADA convention, Paul Taylor, NADA chief economist, predicted that the fourth quarter of 2008 would be the worst for real GDP decline. Today’s GDP release shows this to be the case. A drop of 5.7 percent in the first quarter of 2009 is more moderate than the 6.3 percent decline in the last quarter of 2008. Although houses in the U.S. are still losing value, the decline has slowed. The overall U.S. average for houses under $600,000 moderated to a loss of 7 percent. And 31 states are declining less than 5 percent on a year-over-year basis in the first quarter. As the housing portfolio of the lending institutions stabilize, banks and credit unions in those states will be in a better position to make vehicle loans over the last three quarters of 2009. That, combined with lower new vehicle prices in the coming months, and higher overall consumer confidence in the economy, should help more consumers purchase new cars and trucks.]

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Opinion: Obama's GM Plan Looks Like a Raw Deal
By Ralph Nader and Robert Weissman

Congress, not a secret task force, should decide the company's fate.
Millions of people in communities across the country depend on the government getting the GM rescue right. That's why it is startling -- and mistaken -- for the future of GM to rest with a small, largely unaccountable, ad hoc task force made up of a handful of Wall Street expats.
Source: The Wall Street Journal

[Editor's Note: Ralph Nader is a consumer advocate. Robert Weissman is editor of Multinational Monitor magazine.]

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Quotable
 
"We worked closely with the SBA for months on this issue. This is the right thing for the SBA to do. It will double the number of dealers eligible for the SBA loan guarantee program."

   
-- NADA Chairman John McEleney, referring to the new government-backed SBA pilot program that allows dealer floorplan loans, NADA Newswire, May 29


"This is a lifeline thrown out for thousands of dealers throughout the country. This could end up saving thousands of dealerships."

   
-- Bob Cockerham, owner of Car World Kia in Santa Fe, N.M., on a pilot program being launched by the Small Business Administration to provide "floorplan" loans to dealers, Automotive News, May 28


"When dealers lack the capital to purchase new inventory, it has a ripple effect throughout the entire industry. [This new program] will save jobs and create new jobs."

   
-- Sen. Evan Bayh, D-Ind., in a news release following SBA's announcement it’s launching a program that will—for the first time—provide eligible dealers with government-backed lines of credit to finance their vehicle inventory, May 28

Video Highlights
 
 
Cutting Dealers a Mistake (Fox Business Network)


Vice Chairman Tonkin on Chrysler Closures (Bloomberg)


 
Should Government Decide Dealers' Fate? (CNBC)



The Case Against Closing Dealerships (CNBC)



In-Depth Look - Pent Up Auto Demand (Bloomberg)



NADA on Cash for Clunkers (NADA-TV)



NADA on Floorplan Credit Crisis (NADA-TV)


 Senate Testimony on Floorplan Loans (NADA-TV)
 Banks Turning on American Car Dealers? (WTNH-TV)
 NADA Tackles Industry Crisis (NADA-TV)
 McEleney Speaks at NADA Convention (NADA-TV)
 Demise of Dealerships Leaves Big Dent (NBC)
NADA on the Front Lines  (NADA-TV)


Click here for more video reports.

 

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