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NADA Headlines (Nov. 30, 2010)

U.S. Auto Sales Seen Holding Above 12 Million Unit Pace

U.S. November auto sales held above 12 million vehicles on an annual basis, a gain of about 10 percent from a year earlier, driven by month-end discounts and a slow return in consumer demand, according to analysts. Auto sales for November, one of the first snapshots of consumer behavior at the holiday shopping season, are due to be released on Wednesday. "The pace of light vehicle sales appears to have remained above the important psychological level of 12 million units in November," Barclays analyst Brian Johnson said in a note to clients last week. Hyundai Motor Co and Ford Motor Co, are expected to have the biggest sales gains, continuing a trend that has seen the two automakers take share from rivals in 2010. Read more from Reuters.

Repeal of Health Law’s 'Onerous' Business-Expenses Rule Fails

The U.S. Senate failed (Monday) to adopt language that would have repealed a rule, created by the health-care overhaul law, requiring businesses to report annual expenses to individual vendors in excess of $600. Eliminating the mandate, known as the 1099 rule after an Internal Revenue Service form used by businesses, would have reduced U.S. tax revenue by more than $19 billion over the next decade. Two amendments that would have repealed the requirement were rejected (Monday); two similar measures failed in September. Senator Max Baucus, a Montana Democrat who is chairman of the tax-writing Finance Committee, and Senator Mike Johanns, a Nebraska Republican, sponsored today’s competing amendments, which would have been attached to a food-safety bill. The U.S. Chamber of Commerce and the National Association of Manufacturers, both based in Washington, and the Nashville- based National Federation of Independent Business supported repeal of the 1099 rule, saying the requirement would be cumbersome for business owners. “This mandate, if not repealed, will force more than 40 million entities, including governments, nonprofits, and both small and large businesses, to comply with onerous data collection and IRS information filing burdens,” Bruce Josten, the chamber’s executive vice president for government affairs, wrote in a letter sent to senators before the vote (Monday). Read more from Bloomberg.

Editor's Note: The co-sponsors of the 1099 repeal, Sens. Max Baucus, D-Mont., and Mike Johanns, R-Neb., are working on compromise legislation but it is unclear if an agreement will be reached before the end of the year. NADA will keep dealers updated as efforts to repeal the burdensome 1099 reporting requirements taking effect Jan. 1, 2012, continue.

Toyota to Fix 650,000 Prius Hybrids for Heat Risk

Toyota Motor Corp will pay to fix about 650,000 Prius models worldwide for a coolant pump glitch that could cause the top-selling hybrid to overheat and lose power, the automaker said. The repair campaign covers Prius cars for the model years 2004 to 2007. The bulk of the cars, or 378,000 units, are in the United States. The Japanese automaker said it had not received any reports of accidents or injuries from problems with the pump, which circulates coolant for the hybrid system. Toyota said the design of the electric water pump let air bubbles enter the system, slowing coolant circulation and allowing the hybrid's components to heat up. The heating up of the components could trigger a warning light. If left unattended, the Prius could overheat and drop into a "fail-safe" mode where engine power would be reduced, Toyota said. Toyota will cover the cost of the repairs, including more than $100 in labour for each Prius fixed at a U.S. dealership. Read more from Reuters.

GM's 2011 Chevy Volt Hopes to Change Game

The first Chevrolet Volts begin arriving in American driveways next month, putting General Motors Co. on the precipice of an electric future. The automaker will mark the occasion today with a celebration at its Detroit-Hamtramck plant, where Volt production started this month. GM CEO Daniel Akerson is slated to attend, along with local officials and other guests. But will the Volt be the game-changer GM envisions? Analysts say yes — and no. With nurturing political forces behind it and U.S. consumers more conscious of the pitfalls of gas-guzzling vehicles, the Volt stands a far better chance of success than its predecessor, GM's all-electric EV1 of the late 1990s. Some industry analysts say the Volt's unique battery-gas engine powertrain will help consumers warm to electric cars by offering the benefits of low-emissions without the worry of getting stranded on the side of the road with a dead battery. "People are going to vote with their choices," said Mark Duvall, a director at the Electric Power Research Institute in Palo Alto, Calif. "We are essentially electing the successor to the Toyota Prius." Read more from The Detroit News.

Explorer '11 Orders Double Forecasts

Ford Motor Co. has about 15,000 orders — about double its projections — for the 2011 Ford Explorer that isn't slated to hit showrooms until the new year. The preorders include about 3,000 retail orders, 7,500 dealer orders and more than 4,500 from companies, Ford officials say. Production of the new Explorer is under way at the Chicago Assembly Plant, which also makes the Taurus and Lincoln MKS. A second shift was added Nov. 1. At an event Wednesday, Ford will mark the start of production that should hit full stride next month. If preorders are any indication, production will be hard-pressed to meet demand in the early months, said Craig Patterson, marketing manager for the Explorer. "There are people with Explorers who want a new one so maybe there is some pent-up demand for what was a popular vehicle," said Stephanie Brinley, analyst with EMC Strategic Communications in Troy. Read more from The Detroit News.

Mazda Prices 2012 Mazda5 from $19,990

LOS ANGELES -- Mazda will sell its six-passenger 2012 Mazda5 van for a base price of $19,990, including shipping, when it goes on sale in January 2011. Mazda increased the base price by $730 compared to the 2010 Mazda5. Mazda did not have a 2011 model year Mazda5, but it sold the 2010 model through this year. Through October, Mazda sold 14,039 Mazda5s in the United States, an 11 percent drop over the same 10 months of 2009. Mazda's total U.S. sales rose 10 percent over the period while industrywide sales increased 11 percent. . Read more from Automotive News.

People Who Give Cars as Gifts Shift Bows to Less-Pricey Models

DETROIT — As the holiday season kicks into gear, Memphis resident Mechelli Campbell often finds herself filled with emotion when watching those ubiquitous commercials showing people giving cars to each other for Christmas. The emotion? Confusion. "I have seen this on commercials many times and wondered, 'Who does this?' " Her family hasn't been hit too hard by the recession, but Campbell says the idea of giving a car for the holidays seems a little crazy to her. But even those buyers are feeling the pinch. Harvey Dyer, general manager of Mercedes-Benz of Austin, says that although he still keeps giant red, silver and white bows in stock, the bows are being used on less-luxurious cars than in the past. "Customers are much more cost-conscious than they were six years ago, even for presents," he says. The present-givers are opting for lower-priced cars and haggling harder on price, he says. Read more from Automotive News.