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Friday, June 12, 2009 RSSSEND TO A FRIENDPRINT
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Top 10 Stories
NADA Welcomes Congressional Oversight of Dealership Closures
Auto Dealers at Risk Turn to Washington
1,300 GM Dealers Face Decision
House, Senate Teams OK $1B 'Cash for Clunkers' Program
Chrysler's Sale to Fiat Appealed by Dealers to Protect Claims
GM Appears to Close In On a Deal to Sell Saab
Mazda Could Boost Dealer Ranks With Chrysler, GM Refugees
Tax Break for New-Car Buyers Expands to All 50 States
World Auto Sector Set for 2010 Rebound: Study
Opinion: Why is Government Closing Businesses?
Top 10 Stories
NADA Welcomes Congressional Oversight of Dealership Closures

Dealer group acknowledges GM’s improvements to Participation Agreement
WASHINGTON – In an appearance today before the House subcommittee on oversight and investigations, NADA Chairman John McEleney testified against drastic dealer cuts while acknowledging GM’s improvements to its Participation Agreements for dealers in the new GM.

“Everyone agrees that both Chrysler and GM need to decrease costs and increase revenue to survive, but eliminating dealerships does neither. Dealers cost an automaker almost nothing,” McEleney said. “They are independent entrepreneurs who risk millions of dollars to buy the land, build the dealerships and purchase the vehicles and parts from the automaker. Terminating dealerships only cuts into an automakers’ revenue and jeopardizes market share without making either company any stronger.”

McEleney also commented on GM’s Participation and Wind-Down Agreements. During the Senate Commerce Committee hearing last week, NADA voiced serious concerns about the extremely one-sided Participation Agreements delivered to the 4,000 dealers of the new GM.

“General Motors executives responded to these concerns promptly and, after a very frank discussion, made significant improvements to the Participation Agreement. The company also has committed to clarify some of the terms of the Wind-Down Agreements for the terminated dealerships,” he said. “We appreciate GM’s willingness to continue to work with NADA on these crucial matters.”
Source: NADA Newswire

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Auto Dealers at Risk Turn to Washington

WASHINGTON -- With about 2,000 Chrysler and General Motors dealers losing their franchises as the companies retrench, the dealers are pressing Congress to reverse what they see as an unfair process forcing some profitable businesses to close or stop selling new autos, with no explanation from the manufacturers of why they were singled out. As they lobby Congress, angry dealers are finding an increasingly receptive audience in the House and Senate ... Representative Frank M. Kratovil, a Maryland Democrat who has introduced a measure that would restore [state] franchise agreements, portrayed the situation as a “bailout for the big guys, but a force-out for the little guys.”
Source: The New York Times

Editor's Note: The list of Maffei-Kratovil cosponsors has grown to 94. In order for the Auto Task Force to get the message that the franchise rights of dealers should not be trampled, more cosponsors will have to be added to the bill. All dealers are strongly urged to contact their representatives and ask them to cosponsor H.R. 2743, "The Automobile Dealer Economic Rights Restoration Act.”  House members can be reached through the Capitol Switchboard at (202) 225-3121.

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1,300 GM Dealers Face Decision

About 1,300 General Motors dealers face a deadline today to accept wind-down agreements from the automaker or else face being left behind with the old GM without any help. As of Thursday, 81% of the dealers had agreed to the deal, which will help them deal with inventory and end their businesses, the company said. GM wants to whittle its dealer network to 3,600 from 5,900. It's an emotional time for many who have spent their lives in the business and must now face uncertainty.
Source: Detroit Free Press

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House, Senate Teams OK $1B 'Cash for Clunkers' Program

WASHINGTON -- House and Senate negotiators reached agreement late Thursday on a $106 billion wartime spending bill that includes $1 billion for a "cash for clunkers" program to boost auto sales. The program would offer vouchers of up to $4,500 for car buyers who turn in old, gas-guzzling cars and trucks for new, more fuel-efficient models. The House and Senate are expected to pass the compromise version of the spending bill next week.
Source: The Detroit News

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Chrysler's Sale to Fiat Appealed by Dealers to Protect Claims

Chrysler LLC’s sale to Fiat SpA was appealed by auto dealerships seeking to ensure that they can challenge how the deal affects their claims against the bankrupt automaker. Performance Dodge LLC and 20 other dealers want to protect their rights to make administrative or damage claims stemming from the rejection of their Chrysler franchises, Russell McRory, a lawyer representing the group, said yesterday. “The horse is out of the barn in terms of the sale itself,” McRory said. “We want to address certain aspects of the order.”
Source: Bloomberg

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GM Appears to Close In On a Deal to Sell Saab

DETROIT -- A deal to sell General Motors Corp.'s Saab Automobile AB could come as soon as [today], people familiar with the situation said Thursday ... The comments came as Swedish TV station SVT reported that Saab had agreed to be sold to Swedish exclusive sports-car maker Koenigsegg Automobile AB. Along with talks between GM and the potential buyer, the Swedish government would be called on to provide financing.
Source: The Wall Street Journal

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Mazda Could Boost Dealer Ranks With Chrysler, GM Refugees

TOKYO -- Mazda Motor Corp. sees an opportunity to cherry-pick prime retail locations from the ranks of dealers cut loose by Chrysler LLC and General Motors. Executive Vice President Philip Spender said Mazda has been approached by numerous U.S. dealers interested in signing up with the Japanese automaker. "There has been considerable interest," Spender said [Thursday] at the Japan launch of the Mazda3. "Dealers who have left someone else come to us, and then we go to a higher-quality point."
Source: Automotive News

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Tax Break for New-Car Buyers Expands to All 50 States

WASHINGTON -- The U.S. Treasury said [Thursday] that it expanded its offer of a tax break on new car sales to those bought in states without a sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who bought a new vehicle this year were entitled to deduct state or local sales or excise taxes paid on the purchase. "Building on the Recovery Act, the Treasury Department is taking steps to make sure every American, in every state, qualifies for a tax deduction when purchasing a new car," [Neal Wolin, deputy treasury secretary] said in a statement.
Source: Reuters

Editor's Note: Dealers’ grassroots efforts were instrumental in passage of the auto sales tax deduction which was signed into law last April as a part of the President’s economic stimulus package. Due to the lack of this type of levy in several states, NADA urged the IRS to clarify the rules so they apply to all states.

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World Auto Sector Set for 2010 Rebound: Study

PARIS – The world auto sector, after suffering a sharp decline this year, is set for a 5.0 percent sales rebound in 2010, a study forecast Thursday. The IHS Global Insight research group said sales in 2009 were likely to plunge 14 percent, after a 5.0 percent decline in 2007-2008, before rising by 5.0 percent in 2010 and by double digits in 2011.
Source: Agence France-Presse

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Opinion: Why is Government Closing Businesses?
By Erik Paulsen

Auto dealers and communities are being shut out of a process that affects them directly.
The President's Auto Task Force recently allowed the planned elimination of over 3,000 dealerships nationwide. No one seems able to explain how these closings would save GM or Chrysler any money, sell any more cars or save any jobs. It's even more baffling considering that dealers shoulder nearly all operating costs, often through personal investment or financing. The government should not be allowed to pick winners and losers when it comes to local dealerships.
Source: The Star-Tribune (Minneapolis-St. Paul)

Editor's Note: Congressman Erik Paulsen, D-Minn., is a cosponsor of the Automobile Dealer Economic Rights Restoration Act, which seeks to ensure that the bankruptcies of Chrysler and GM do not eviscerate dealers’ rights under state franchise law.

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Quotable
 
"Everyone agrees that both Chrysler and GM need to decrease costs and increase revenue to survive, but eliminating dealerships does neither. Dealers cost an automaker almost nothing."

   
-- NADA Chairman John McEleney, in an appearance before the House subcommittee on oversight and investigations, NADA Newswire, June 12


"The government should not be allowed to pick winners and losers when it comes to local dealerships."

    -- Rep. Erik Paulsen, D-Minn., a cosponsor of the Automobile Dealer Economic Rights Restoration Act, which seeks to ensure that the bankruptcies of Chrysler and GM do not eviscerate dealers’ rights under state franchise law, The Star-Tribune, June 10


"The dealers in these small towns are kind of the heart of the town. They sponsor the Little League; the big guy in town is usually the car dealer. I am worried about it."

    -- Senator Tom Udall, D-N.M., who estimated that 12 GM dealers and six Chrysler dealers in his state received termination letters, The New York Times, June 12

Video Highlights
 
 
Car Dealers Trying to Buy More Time (NBC)

 
John McEleney's Testimony to Senate Committee (CNBC)



Fighting the Dealers' Fight (CNBC)


 
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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