NADA Headlines (June 1, 2010)
Crunch Time for Auto Dealer Lobbying Firms
Auto dealers are facing the toughest fight yet in their effort to win an exemption from new financial regulations. The dealerships waged a high-stakes battle in the House and won an exemption in December from a new consumer financial protection regulator that is part of much broader financial legislation targeting Wall Street. Auto dealers last week won non-binding support in the Senate for the same carve-out. Republican and Democratic lawmakers have given their backing. The auto dealers are now at a critical juncture. A small group of House and Senate lawmakers are headed into a month-long conference to finalize the legislation and send it to President Barack Obama before the July Fourth recess. The lawmakers making up the conference have not all been named yet, but Democrats in the House and Senate slated to take part in the negotiations are overwhelmingly opposed to the exemption. And the White House is expected to ratchet up its already vocal campaign against the carve-out. “We're not taking our foot off the pedal,” said Bailey Wood, spokesman for the National Automobile Dealers Association (NADA), the powerful lobbying group that has pushed for more than a year for the exemption. “They still have to get this bill back through the House and Senate. There will be an increased amount of White House meddling. The forces are against us,” Wood said. Read more from The Hill.
Editor's note: With Congress home until June 6 for the Memorial Day recess, NADA is encouraging dealers to make a strong effort to meet in person with their Representative and Senators to ask them to urge their colleagues on the conference committee to retain the auto dealer language in the final Wall Street reform bill. (Click here for a list of conferees.) Dealers should explain that the Brownback/Campbell auto dealer language is pro-consumer and keeps auto credit affordable and accessible. Dealer-assisted financing is already effectively regulated and had nothing to do with the financial crisis. For more information visit: www.NADA.org/KeepCreditAffordable.
Some people in Washington still don't get it. Car dealers must be exempt from the new level of needless bureaucratic oversight that could be mandated by the sweeping financial overhaul bill. Our leaders must understand that dealers do not make loans; they only arrange them for their customers. Regrettably, the version of the bill passed by the Senate did not exempt car dealers, though the House bill did. Leaders of the House and Senate now must confer to hammer out all of the differences in the two versions before sending the legislation to the president. At the urging of Sen. Sam Brownback, R-Kan., the Senate last week voted 60-30 to direct its conferees to support provisions in the House bill that exempt dealers. Even that took an effort because of opposition from President Barack Obama, the Pentagon and groups representing military families, consumers, banks and civil rights activists. But the advisory vote may not be enough. Read more from Automotive News.
Chrysler Group and General Motors Co. are getting mixed results from arbitration hearings. Chrysler's Genesis plan for consolidating all its brands in each dealership has swayed most arbitrators, while GM's cost-cutting rationale for eliminating dealerships has developed little traction. Chrysler says it has won 12 cases and lost four since late April, when the first arbitration decision was made involving dealerships terminated during bankruptcy proceedings. GM has lost the three decisions that are publicly known, though the automaker says there are other cases it has won but won't discuss. "GM has been much more inconsistent with its business plan than Chrysler by reinstating a large percentage of the dealers terminated in bankruptcy," said dealer lawyer Richard Sox of Tallahassee, Fla. "This causes GM's business plan to lose credibility in the eyes of an arbitrator." Read more from Automotive News.
By Paul Ingrassia
Today is the first anniversary of one of this country's less-than-crowning milestones: the bankruptcy of General Motors, once the largest and richest company in the country, and indeed the world. Keeping GM alive, albeit in shrunken form, was an expensive undertaking for America's taxpayers: about $65 billion in all, if one counts government aid to the company's former financial arm, formerly GMAC, now renamed Ally Bank. For all that money we, as a country, should take away some lessons from the experience. The following get my vote for the three most important:
• Problems denied and solutions delayed will result in a painful and costly day of reckoning.
• In corporate governance, the right people count more than the right structure.
• Appearances can be deceiving.
Read more from The Wall Street Journal.
Suspending all advertising for a year. Bargaining for 50 percent more air time and print space for the same advertising dollars. Cutting your salary to zero for as long as 18 months. Those are some of the things that dealers who answered an Automotive News online survey said they did to survive the great recession of the past two years. Almost half the 111 dealers who responded to the unscientific survey in early May said they would maintain their cuts. A third said they would restore some cuts but not all. Almost half said they thought they were through the worst, but a third were uncertain. Read more from Automotive News.
There's a good chance pickup sales will go up, again, for May, led by Ford Motor's F-Series trucks. But don't read too much into that, says George Pipas, manager of sales analysis for Ford. This year, pickup sales are up 10.9%, and will likely increase even more in May. But that doesn't neccesarily mean the economy is back on the upswing, Pipas says. It just means Ford is doing well. Overall auto industry sales are up 16.7%, so the increase in the pickup segment isn't even keeping pace with the industry. So while some may see the uptick in sales as a sign of an economic recovery, Pipas says he thinks people simply need new trucks. Read more from USA TODAY.
DETROIT -- Ford Motor Co. plans to kill the 71-year-old Mercury brand slowly by starving it of product, two sources tell Automotive News. Ford leaders plan to propose eliminating Mercury to the board of directors in July. They believe Ford no longer can justify the cost of supporting Mercury in light of the brand's declining volume, the sources say. At the end of 2009, Ford Motor had 1,780 Mercury franchisees, but there were only 292 stand-alone Lincoln-Mercury stores. There are no stand-alone Mercury stores. As of Friday, May 28, Ford had not sent a statement to dealers or arranged a conference call with them to address the issue, which surfaced earlier in the week in news reports. Ford spokesman Mark Truby said Ford's plans for Mercury were unchanged, but he added, "We constantly assess our business portfolio." Read more from Automotive News.
Administrator Karen Mills of the U.S. Small Business Administration has written an open letter to small business owners across the United States explaining immediate benefits available to small businesses as part of the Affordable Care Act. The full letter is available at www.sba.gov/acaletter.