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Inside this issue
GM Hints at Dealer Bonus Redesign
Editorial: Pinocchios for Warren
Cadillac Dealers Treading Water Until de Nysschen's Vision Materializes
Editorial: Listening to Dealers Should Help Nissan in its Push for Share
Winterkorn Vows to Revamp VW
NADA on Used Sales: 'Spring Effect is Real'
Marchionne Pushes for Consolidation as Carmakers Enjoy Fat Years
Toyota, Mazda Consider Sharing Fuel-Efficient Technologies
Volvo Chooses South Carolina for New $500 Million Auto Plant
GM CEO Mary Barra Gives New Car to Purple Heart Veteran
Click here for more auto industry news at NADAFrontPage.com. .
Top Stories
GM Hints at Dealer Bonus Redesign

Batey: Makeover program ending, but not rewards

General Motors is in the home stretch of what executives call the most extensive makeover of a dealership network in automotive history. Though the requirements of the program rankled many dealers early on, the "multibillion-dollar investment" by GM over the last five years has "changed the face of our brands across the nation," Alan Batey, GM's president of North America since January 2014, told Automotive News last week. "We've gone, in my opinion, from being the worst to being the best in our facilities," said Batey. But the program's scheduled expiration next year raises financial uncertainty for most of GM's dealers, who have come to depend on quarterly bonuses that are tied partly to making store improvements. Those bonuses can earn big-volume stores in excess of $1 million annually. Many are waiting to see how GM tweaks the program for the future.
Source: Automotive News
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Editorial: Pinocchios for Warren

Each of the two U.S. senators from Massachusetts now has won a “Four Pinocchios” award from the Washington Post fact-checker. We’re not celebrating. The most recent award from the checker, Glenn Kessler, came this past week to Elizabeth Warren for mis-stating and overstating the sums earned by auto dealers on loans they arrange for customers. Former U.S. Sen. John Kerry was chastised in March for overstating his role in bringing the question of global warming to the public agenda. “Four Pinocchios,” the maximum, is for “Whoppers.” We hope the attention will make politicians ashamed of, and less prone to, the intellectual dishonesty so rampant in their ranks. (Are you listening, Mr. You-Can-Keep-Your-Doctor?) In a speech on April 15, Warren said “one study” showed “auto dealer markups” on loans they arrange “cost consumers $26 billion a year.” Congress should give the Consumer Financial Protection Bureau (which Warren helped found) authority over those loans, she argued. They’re not really markups and they’re nowhere near $26 billion.
Source: The Boston Herald
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Cadillac Dealers Treading Water Until de Nysschen's Vision Materializes

In one of his first meetings with dealers after getting Cadillac's top job last summer, Johan de Nysschen warned that sales would get worse before they get better. Now, many dealers are getting a glimpse of what "worse" looks like. Some missed out on lucrative incentive cash in the first quarter because they fell short of sales targets under a General Motors incentive program. Dealers in lease-heavy markets such as the Northeast and Midwest were especially hard-hit.
Source: Automotive News
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Editorial: Listening to Dealers Should Help Nissan in its Push for Share

Nissan is further adjusting its sales incentives for dealers, tweaking a program it heavily revamped a year ago. Jose Munoz, Nissan North America chairman, says he is willing to modify the package further. He's working with dealers to address their concerns, always an encouraging sign. It's part of the automaker's drive to boost the Nissan and Infiniti brands to a combined 10 percent U.S. market share by March 2017 from 8.4 percent at the end of 2014.

Last year, Munoz shook up the dealer incentives package to replace Nissan's controversial and aggressive stair-step program. Among other things, the changes included giving dealers more information to help them stock the models needed to meet specific sales goals. The latest tweaks introduced a cash bonus for dealers who outsell rival Toyota and Honda stores in their local markets and added flexibility in reaching sales targets. For example, a dealer can miss a target, make up for it later and receive a "catch-up" bonus. The changes aren't perfect. Some dealers complain the program metrics still aren't flexible enough. Munoz says he'll keep working with the dealer council to iron out differences.

Dealers and Nissan North America benefit if sales rise. But for such an aggressive 2017 sales target, Munoz needs enthusiasm and financial commitment from dealers. Nissan and its dealers deserve praise for cooperating so well so far. They'll need to continue that to achieve their goal.
Source: Automotive News
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Winterkorn Vows to Revamp VW

Volkswagen Group CEO Martin Winterkorn, who last month survived an attempted ouster by his boss, told 5,000 VW managers that he plans to restructure the giant German automaker. Winterkorn said he will unveil the new structure by October at the latest, according to sources cited by sibling publication Automobilwoche. The comments followed a showdown with Ferdinand Piech that led to the former supervisory board chairman's resignation on April 25. "We are preparing the company for the coming 10, 20 years," Winterkorn told 1,000 VW managers last week at a meeting in the company's hometown of Wolfsburg, Germany. Another 4,000 watched a video feed at nearly 60 of the company's operations worldwide.
Source: Automotive News
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NADA on Used Sales: 'Spring Effect is Real'

The “spring effect” is in full effect, and the used-car market continues to churn out high numbers. With close to 3.6 million used-vehicle sales in April, there have now been nearly 10 million used cars sold so far this year, according to the National Automobile Dealers Association. The April used-car sales total represented a 5.3-percent year-over-year gain, while year-to-date sales (which NADA measured as just over 9.98 million through four months) have dipped 1.3 percent. Breaking down that April monthly sales figure, NADA said franchised dealers moved 1.34 million used cars in April, beating the March figure by 39.4 percent.
Source: Auto Remarketing
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Marchionne Pushes for Consolidation as Carmakers Enjoy Fat Years

Sergio Marchionne said he hasn’t given up on his quest to push the auto industry to increase its profitability, even though carmakers are enjoying some of their best sales ever. Last week, the Fiat Chrysler Automobiles NV chief executive officer argued for large automakers to combine and share costs. Analysts largely agreed with him, though his argument has been rejected so far by his fellow CEOs. “We need to find a way to get this done,” he told reporters Saturday at the opening of an Alfa Romeo and Maserati dealership in Oakville, Ontario, a Toronto suburb. “If they think these comments are going to deter me from the objectives, I’ve got news for you: It just reinforced my conviction it needs to happen. I haven’t had a guy tell me it’s not true. Not one.”
Source: Bloomberg
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Toyota, Mazda Consider Sharing Fuel-Efficient Technologies

Move comes as some auto makers turn to partnerships with rivals to reduce development costs

Toyota Motor Corp. and Mazda Motor Corp. are in talks to share certain technologies, a person knowledgeable about the matter said Sunday, as some auto makers turn to tie-ups with rivals to reduce mounting costs of developing fuel-efficient cars. Under consideration is a deal in which Toyota would offer its plug-in hybrid and fuel cell technologies to Mazda. In return, Mazda would provide its fuel-efficient gas and diesel engine technologies to Toyota, said the person who spoke on the condition of anonymity. The new arrangement would expand the scope of the existing partnership between the two Japanese auto companies.
Source: The Wall Street Journal
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Volvo Chooses South Carolina for New $500 Million Auto Plant

Volvo Cars will build a $500 million plant in South Carolina that will eventually employ up to 4,000 people, the company announced Monday. The company said its first American plant about 30 miles from the Port of Charleston is expected to make about 100,000 vehicles a year, initially. The company says it expects to employ about 2,000 people at the Berkeley County plant over the next decade. That could grow to 4,000 workers eventually.
Source: Associated Press
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GM CEO Mary Barra Gives New Car to Purple Heart Veteran

General Motors has handed the keys to new vehicles to five customers around the world to recognize them as the automaker marks a milestone, having made 500 million vehicles over its history. Each of the five patrons distinguished themselves in a particular way. In the U.S., CEO Mary Barra gave a new Chevrolet Malibu to Trent Brining, who won a Purple Heart when he served in the Army. The presentation was made at the Kansas City, Kans., plant where the Malibu is made.
Source: USA Today
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Quotable

"The spring effect is real. For the last three years, we have seen sales pick up significantly in April. Whether it’s the warmer weather or an improving selection of vehicles, April is typically a strong sales month."

    -- NADA Chief Economist Steven Szakaly, commenting on strong used-car sales in April, Auto Remarketing, May 8

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