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Inside this issue
Dealers Pursued Opportunities from the Rubble of '09
Automakers Set Recall Record and Mostly for Basic Issues
What Does Warren Buffett See in Car Dealers?
Ally Earns Profit for Taxpayers as Government Pares Ownership
GM Says General Counsel Michael Millikin to Retire
EPA Plans More Scrutiny of MPG Tests
Porsche Expects to Hit U.S. Sales Goal Early
Opinion: Something New at NADA
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
Dealers Pursued Opportunities from the Rubble of '09

In the five years that have passed since the economic crash of 2009, the auto retailing sector has emerged from the ashes. The transition has been painful. There are fewer car dealers in 2014. Many have been pressed by automakers to invest in new stores. Consumers in some rural areas have to drive greater distances to find a dealership now. And the dealership they visit is probably larger than the older hometown store and possibly owned by a large retail group. But what was a bitter industry shakeout for some in 2009 has led to better times in auto retailing in 2014 for others. "We have fewer dealers, and the throughput is higher," reports John Frith, vice president of the auto retail data firm Urban Science. "The dealers who are still in business are doing better. The industry on average is much healthier than it was then."

Dealers have been flush with robust volumes, and August sales closed at an annualized sales rate of more than 17.5 million vehicles. Urban Science reports that the average dealership in America is projected to sell 904 new vehicles this year, up from 660 in 2008. As of Jan. 1, the number of U.S. new-car dealerships had increased slightly from the year before -- to 17,665 dealerships -- following decades of annual declines, according to the National Automobile Dealers Association.
Source: Automotive News

 
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Automakers Set Recall Record and Mostly for Basic Issues

Automotive recalls have spiked this year in the wake of GM's ignition switch crisis, increased scrutiny from NHTSA, the U.S. Justice Department as well as the growing complexity of cars

With more than two months left, automakers have recalled a record 56 million-plus vehicles so far this year, and a surprising number of them have been for relatively basic technology — ignition switches, alternators, hood latches. The prior record was 55.6 million vehicles in 1999, according to the National Highway Traffic Safety Administration. To put that in perspective, automakers have now recalled more than three times the number of new cars and trucks Americans will buy this year.
Source: Detroit Free Press

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What Does Warren Buffett See in Car Dealers?

When Warren Buffett's Berkshire Hathaway Inc. announced the purchase of the largest privately owned U.S. auto dealership group earlier this month, market watchers and Buffettologists everywhere wondered what was behind the move and whether Buffett and others will buy additional dealerships. After all, like many industries in the U.S., auto dealerships are mostly privately held, and with many of those owners nearing retirement age, other companies could enter the market. New-automobile dealers are growing sales at a healthy rate, and profit margins are relatively thin but consistent over the last several years, according to Sageworks' financial statement analysis.
Source: Forbes
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Ally Earns Profit for Taxpayers as Government Pares Ownership

Unlikely turnaround the product of long, tumultuous trip through the Treasury's bailout program

Almost six years after its near-collapse, Ally Financial Inc. is nearly out from the U.S. government's clutches, and taxpayers are earning a profit of more than $1 billion as the firm heads out the door. The unlikely turnaround of the former financing arm of General Motors Co. is the product of a long, tumultuous trip through the Treasury Department's bailout program, including three financial infusions and other assistance totaling $17.2 billion, the appointment of as many as six government-approved board members, the sale of several business lines and the rocky bankruptcy of its subprime-mortgage arm. The moves helped spruce up a troubled company, allowing the firm to become profitable and pull off an initial public offering that raised $2.3 billion earlier this year.
Source: The Wall Street Journal
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GM Says General Counsel Michael Millikin to Retire

General Motors Co. said Friday that its general counsel, and one of GM CEO Mary Barra's closest advisers, has chosen to retire early next year. The Detroit automaker said it immediately will begin an external search to replace Michael Millikin, who has held the top legal job at GM since 2009. He holds a key position in GM's executive team as the company continues to face legal challenges and investigations in wake of its ignition switch recall crisis this year. GM faces investigations by Justice Department, 45 state attorney general's offices and the U.S. Securities and Exchange Commission.
Source: The Detroit News
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EPA Plans More Scrutiny of MPG Tests

The EPA is preparing to tighten its oversight of fuel economy testing and reporting this year in an effort to align the ratings on vehicles' stickers more closely with their real-world capability. A key area of focus will be the agency's "coast-down" test, which has been the source of mistakes that prompted Hyundai, Kia, Ford and Mercedes-Benz to relabel several models since 2012. By year end, the EPA will issue revised guidelines clarifying how automakers should conduct the testing, said Christopher Grundler, director of the EPA's Office of Transportation and Air Quality. The agency also plans to continue stepped-up audits of the automakers' tests, and may require manufacturers to verify their own preproduction testing results using production models.
Source: Automotive News
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Porsche Expects to Hit U.S. Sales Goal Early

Porsche will meet its goal of selling 50,000 vehicles in the U.S. in 2015 -- three years earlier than originally envisioned, the brand's top U.S. marketing executive said. "We are so close," said Andre Oosthuizen, vice president of marketing for Porsche Cars North America Inc. "We would foresee 2015 would definitely be the year to surpass that threshold." Porsche sold 42,323 vehicles in the U.S. in 2013, a 21 percent gain. Through September, the brand has sold 35,366, up 12 percent, twice the overall light-vehicle market's 6 percent rise. Porsche is seeking sustainable growth, Oosthuizen said.
Source: Automotive News

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Opinion: Something New at NADA
By Keith Crain

In January we're going to add a new wrinkle to the National Automobile Dealers Association convention in San Francisco. Automotive News is hosting its first annual Retail Forum -- a half-day conference focused exclusively on issues that matter to dealers. The Retail Forum will take place Jan. 22 at the InterContinental San Francisco hotel, just before the official opening of the convention. It will bring together some of the most exciting personalities in the world of automotive retailing talking about the most important issues of the day. We have a star-studded lineup of industry leaders who will bring clarity to the very challenging business of running a dealership, sharing the successes and failures of retailing with our audience.
Source: Automotive News

Editor's note: To register for the 2015 NADA Convention and Expo, visit www.nadaconvention.org.
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Quotable
"The industry on average is much healthier than it was then."

    --
John Frith, vice president of the auto retail data firm Urban Science, commenting on the auto industry's recovery from the economic crash of 2009, Automotive News, Oct. 20

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