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Top Stories
Car Dealers Bank On Clunkers
Senator Grassley Wades Into GM, Chrysler Dealer Fight
Colorado Joins Other States in Objecting to GM's Plans to Modify Dealership Agreements
Ford Trims Sales Bonuses for Dealers
Small Carmakers Benefit From Detroit's Woes
As Chrysler Moves On, Dealers Wrestle With Fate
A Bright Spot for GM?
GM Liability Plan Challenged
Opinion: Entrepreneurs Will Reinvent GM's Castoffs
Top Stories
Car Dealers Bank On Clunkers

Car dealers and auto makers are laying plans to try to capitalize on the "cash for clunkers" provision in the war-funding bill passed by Congress this week. "This is a great excuse to contact somebody that was in a week ago, six weeks ago, six months ago," and try to sell that person a new car under the program, said John McEleney, who owns three dealerships in eastern Iowa and heads the National Automobile Dealers Association. Even if customers end up not qualifying for the program, dealers say the publicity surrounding cash for clunkers might be enough to get them into a dealership and to think about buying a car -- something that has been lacking in recent months.
Source: The Wall Street Journal

Editor's Note: President Obama has yet to sign the NADA-backed Cash-for-Clunkers legislation into law, and final details on how and when the program will be implemented are not available. From the signing date, the Department of Transportation (DOT) has 30 days to finalize the appropriate guidelines. NADA, which was instrumental in passage of bill in Congress, is now working with DOT to implement a program that makes sense for both dealers and consumers. In the interim period, dealers are encouraged to advise consumers to consult the DOT's website, www.CARS.gov and EPA's www.FuelEconomy.gov. Dealers are advised that “clunker” transactions completed prior to the publication of DOT regulations may not qualify for reimbursement by DOT. Dealers are advised to wait until the final regulations are published sometime in mid-to-late July so they can be certain to comply with the program.

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Senator Grassley Wades Into GM, Chrysler Dealer Fight

Car dealers got a welcome jolt of support Friday, when Republican Sen. Charles Grassley of Iowa announced a separate bill to restore auto dealer rights. It accompanies a nine-day-old House bill that has garnered support from 163 represenatives in the U.S. House. In an email to the Wall Street Journal, Senator Grassley said: “The government has bent over backwards to save the big car companies and take care of the Union leadership. So, we have to make sure the little guys are looked after and their rights are protected.”
Source: The Wall Street Journal (Blog)

Editor's Note: Additional co-sponsor support for the recently-introduced S. 1304 and H.R. 2743 will be critical to the success of the measure. H.R. 2743 now has 170 co-sponsors. Click here for the list. The future of the franchise auto-retail network is at risk because automakers and the government used bankruptcy court to circumvent state franchise laws rights. These bills will reestablish dealers’ rights and will benefit all franchisees. Dealers are strongly urged to contact both their Senators and request they co-sponsor S. 1304 as soon as possible. Dealers should also contact their Representatives and ask them to co-sponsor H.R. 2743. Federal legislators can be reached through the Capitol switchboard at (202) 225-3121.

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Colorado Joins Other States in Objecting to GM's Plans to Modify Dealership Agreements

DENVER — Colorado Attorney General John Suthers is joining other states in objecting to GM's bid to modify its dealership agreements as it works to emerge from bankruptcy proceedings. He filed an objection Thursday in U.S. Bankruptcy Court in New York that argues General Motors Corp. is effectively forcing dealerships to substantially modify their agreements or risk being dropped. Suthers filed the objection on behalf of the Colorado Motor Vehicle Dealer Board. "GM should not force its dealerships here in Colorado to unfairly bear the burden for its past mismanagement," Suthers said Friday.
Source: The Associated Press

Editor's Note: Bloomberg News reports that attorneys general from 10 states -- Connecticut, Kentucky, Missouri, Nebraska, Maryland, Vermont, Minnesota, North Dakota, Ohio and West Virginia -- have objected to GM's sale, saying it would circumvent state laws that protect GM dealers’ contracts.

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Ford Trims Sales Bonuses for Dealers

DETROIT -- Ford Motor Co. is cutting dealership sales bonuses and advertising money as part of its strategy to trim dealer-related costs. Ford's goal was to cut $300 per vehicle from sales and marketing over the next five years. "While these changes may not be fully endorsed by everyone, we recognize the need for shared sacrifice to support the independence and the long-term viability of Ford Motor Co. and the dealer body," said Ken Czubay, Ford vice president of U.S. sales and marketing.
Source: Automotive News

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Small Carmakers Benefit From Detroit's Woes

DETROIT — As if Detroit didn’t have enough worries. In addition to the recession, and the bankruptcies of Chrysler and General Motors, a new threat has appeared in the rearview mirror. Many smaller automakers are gaining a bigger share of the market, most notably Hyundai and Kia. Together, the two Korean brands, which are both owned by Hyundai, hold 7.3 percent of the American market ...
Source: The New York Times

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As Chrysler Moves On, Dealers Wrestle With Fate

Some scrambling to sell assets, while others seek new lines of business
For 46 years, Wade Walker sold Jeeps at his dealership in Montpelier, Vt. Now that dealership is going to have to reinvent itself. As a new Chrysler emerges from the wreckage of the automaker’s bankruptcy filing, Walker is among hundreds of dealers left in limbo. Some are scrambling to sell their assets, or find new lines of business, while a few are contemplating the prospect of complete financial ruin.
Source: MSNBC.com

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A Bright Spot for GM?

A bright spot has surfaced in a sea of negative auto sales statistics for General Motors Corp. The company said Friday it will recall 900 workers and restore the second shift at a factory near Lansing, Mich., because of increased sales of its Buick Enclave, Saturn Outlook and GMC Acadia large crossover vehicles. The company also says it has canceled plans to shut down the Spring Hill, Tenn., plant for an additional week in August because of increased demand for the Chevrolet Traverse crossover.
Source: The Associated Press

Editor's Note: In a related story about demand for trucks in some regions of the country, NADA Chief Economist Paul Taylor was interviewed by NBC Nightly News. The report, "No Dent in Demand for Some U.S. Cars," aired June 19.

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GM Liability Plan Challenged

Eight state attorneys general are opposing a provision in General Motors Corp.'s bankruptcy plan that would free the auto maker from liability for vehicle defects. Attorneys general from Connecticut, Kentucky, Maryland, Minnesota, Missouri, Nebraska, North Dakota and Vermont filed an objection in U.S. Bankruptcy Court in the Southern District of New York Friday, arguing that GM's plan to shed these liabilities would bar accident victims from "key legal rights."
Source: The Wall Street Journal

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Opinion: Entrepreneurs Will Reinvent GM's Castoffs
By Rep. John Campbell

The story of the American automobile and the American entrepreneur is far from over. The automobile has been a symbol of American independence and freedom since Henry Ford first wheeled the Model T off the production line in 1908, and personal transportation is part of the American ethos. The companies will be different, the names will be different, and how cars are powered will be different. But America's love affair with the automobile and its role reinventing it is not over yet.
Source: Investor's Business Daily

Editor's Note: Before entering politics, Congressman John Campbell owned and operated numerous dealerships in Orange County, Calif.

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Quotable
 
"This is a great excuse to contact somebody that was in a week ago, six weeks ago, six months ago [and try to sell that person a new car under the program.]"

    -- NADA Chairman John McEleney, on the "cash for clunkers" provision passed by Congress last week, The Wall Street Journal, June 22


"GM should not force its dealerships here in Colorado to unfairly bear the burden for its past mismanagement."

    -- Colorado Attorney General John Suthers, in an objection to GM's bid to modify its dealership agreements, The Associated Press, June 20


"It’s unprecedented to wind down what are multimillion-dollar businesses in a matter of weeks. The extreme ‘hurry up’ process we’ve seen here has made financial planning very difficult for these dealers, and of course that’s compounded by the loss of their franchises."

   -- Paul Taylor, NADA chief economist, MSNBC.com, June 22


"You get dealt cards in life and they don’t always make you happy, but you have to keep moving forward, otherwise you’re standing still."

    -- Wade Walker, who sold Jeeps at his dealership in Montpelier, Vt., for 46 years until Chrysler cut his franchise last month, MSNBC.com, June 22

Video Highlights
 

Media Coverage on Dealership Closings (NADA-TV)


NADA's new Buy Now PSA, 'No Kidding'



Car Dealers Trying to Buy More Time (NBC)



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)


John McEleney's Testimony to Senate Committee (CNBC)
 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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