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Top Stories
U.S. Consumer Spending Climbs on 'Cash for Clunkers'
Chrysler to Assume Product Liability It Had Shed In Bankruptcy
NADA Chairman Discusses Auto Industry Outlook after 'Cash for Clunkers' on Fox Business
Edmunds: August Was Year's Best Month for Auto Sales
Toyota Closing California Plant It Ran With GM
Opinion: Cash for Clunkers Lasting Impact
Top Stories
U.S. Consumer Spending Climbs on 'Cash for Clunkers'

Consumer spending in the U.S. rose in July as households took advantage of the government’s ‘cash- for-clunkers’ program to buy new cars. The 0.2 percent gain in purchases was in line with forecasts and followed a 0.6 percent increase in June, the Commerce Department said today in Washington. Spending is projected to rise this quarter as auto dealers benefit from the administration’s incentive plan, while retailers such as Kohl’s Corp. and J.C. Penney Co. struggle to lure households shaken by mounting job losses. While economists project that spending will start growing again this quarter, much of the gain will be driven by programs such as the Obama administration’s cash-for-clunkers plan.
Source: Bloomberg

Editor's Note: "With the end of the clunkers program, it's now all about dealer reimbursements," said NADA Chairman John McEleney. "We have to make sure that dealers will not be penalized by a loss of reimbursement for legitimate program sales for reasons outside of their control, such as an inability to access the Transportation Department’s Web site. We are taking President Obama and the Transportation Secretary at their word that dealers will be reimbursed."

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Chrysler to Assume Product Liability It Had Shed In Bankruptcy

WASHINGTON -- Chrysler Group LLC reversed course and agreed to accept product liability claims on vehicles built before the company's good assets exited bankruptcy on June 10. Chrysler had left behind all of its product liability claims in bankruptcy, which drew outrage in Congress, in part because consumers could be involved in an accident with the 31 million Chrysler vehicles built before June that are on the nation's roads and have little recourse. Those claims were left behind in "Old Carco" -- essentially what is left of Chrysler LLC -- and the only alternative consumers had was to file a claim as an unsecured creditor against the few assets Old Carco has, meaning victims were likely to get little or nothing. "We want our customers to feel comfortable and confident buying, driving and enjoying one of our vehicles," John Bozzella, senior vice president for external affairs and public policy, said in a statement late Thursday.
Source: The Detroit News

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NADA Chairman Discusses Auto Industry Outlook after 'Cash for Clunkers' on Fox Business

NADA Chairman John McEleney in an interview Thursday on the Fox Business Network said selling nearly 700,000 vehicles in about four weeks during the "cash for clunkers" program was a remarkable achievement that has renewed consumer confidence and increased auto production, but has been fraught with difficulties and slow dealer reimbursements. "... the government had a short time to pull a complex program together, but a lot of dealers today have real cash flow issues now," he said.

On average, dealers have extended hundreds of thousands of dollars on behalf of the government to customers, McEleney said. "[Dealers] are waiting to get their money back so that's presented a real problem in the near term, but from a sales perspective it was terrific."

McEleney said another positive outcome of the "clunkers" program is that automakers are increasing auto production and running overtime and second shifts to meet the demand for new vehicles. "I think the manufacturers will stay aggressive and keep incentives going to try and capitalize on the momentum of this program," he said. Click here to watch the news segment.
Source: Fox Business Network

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Edmunds: August Was Year's Best Month for Auto Sales

Auto sales in August are likely to hit their highest level yet this year, helped by the wildly popular Cash for Clunkers program, according to the auto research Web site Edmunds.com. Edmunds predicted automakers sold 1.17 million vehicles in August, down 6 percent from last year but up almost 18 percent from July. The Web site projected an annualized selling rate of just over 13 million. The figure, known as SAAR, represents what sales would be if they remained at the same rate all year, adjusted for seasonality. Cash for Clunkers offered a boost to automakers during the month, Edmunds said, but it also caused a great deal of volatility at dealerships.
Source: The Associated Press

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Toyota Closing California Plant It Ran With GM

TOKYO -- Toyota is shutting the California factory it ran with General Motors for 25 years - the first time the Japanese automaker is closing a major auto assembly plant ever. The decision from Toyota Motor Corp., announced Friday, drew fire from U.S. unions, even as company officials and analysts defended it as unavoidable for money-losing Toyota, following General Motors Corp.'s decision in May to withdraw from the 50-50 joint venture. Under the decision, Toyota will stop production at its Fremont, California-based New United Motor Manufacturing Inc., or NUMMI, in March 2010, and will move production to its other plants in the U.S., Canada and Japan.
Source: The Associated Press

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Opinion: Cash for Clunkers Lasting Impact
By Daniel Gross

It was great for car dealers. But was it good for the economy?
Has it been a success? For America's struggling car dealers, it has been a runaway success. And, the most important question of all: How effective has it been as economic stimulus? Through stimulus--tax cuts, government spending, gimmicks, rebates, etc.--the government attempts to purchase economic activity with borrowed money. But not every stimulus works quickly or spurs the same amount of private-sector activity. Many of the transportation-related projects in the stimulus package passed earlier this year, for example, are designed to be funded over a two-year period. They're neither timely nor speedy. Cash for Clunkers, by contrast, has had a much bigger impact. According to Paul Taylor, chief economist at the National Automobile Dealers Association, the average new car sold in the United States so far this year has cost $29,106. Those 625,000 cars [government data reported at press time] sold through Cash for Clunkers, then, probably account for about $18.2 billion of retail sales. They've also spurred a lot of secondary economic activity--taxes paid, dealership advertising, overtime wages for dealership employees. What's more, the sales represent only a portion of the economic impact. Ford, for example, announced that it is increasing production of some models. Of course, it's possible that car sales will simply revert to their pre-Cash for Clunkers numbers in September. But that won't mean the program was a failure. Fiscal stimulus is supposed to be a bridge between a period when people aren't spending to a more prosperous future, when, with a growing economy and (presumably) an improving job market, people will start spending more on their own, without special inducements. In August, the Cash for Clunkers program clearly provided the necessary encouragement for a large number of consumers.
Source: Newsweek

Editor's Note: Daniel Gross is a senior editor at Newsweek.

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Quotable
 

"With the end of the clunkers program, it's now all about dealer reimbursements."

   
-- NADA Chairman John McEleney, NADA Newswire, Aug. 28


"Cash for Clunkers sent the sales rate on a wild roller coaster ride. The SAAR surpassed 19 million in late July, bounced around in the 15 million range early in August and has fallen to around 8 million currently."

   
-- Edmunds.com Senior Analyst Jessica Caldwell said in a statement, The Associated Press, Aug. 27


 "... the government had a short time to pull a complex program together, but a lot of dealers today have real cash flow issues now."

    -- NADA Chairman John McEleney discusses the concern of slow 'clunker' reimbursements in an interview on the Fox Business Network, Aug. 27

Video Highlights
 

Keep or Scrap Cash for Clunkers? 
(CNBC)


Dealers, Detroit Look for Boost From 'Clunkers' (PBS)



Helping Dealers Left Out of New GM (Fox Business)



Media Coverage: The Tragedy of Dealer Closings (NADA-TV)



NADA's New Buy Now Campaign



No Dent in Demand for Some U.S. Cars (NBC)



Cutting Dealers a Mistake (Fox Business)



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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