NADA Chairman Says Next Two Months Are Critical to the Future of Auto Industry

/PRNewswire-USNewswire/ -- With 2009 expected to be one of the toughest years yet for auto retailing, the incoming chairman of the National Automobile Dealers Association issued a call-to-action Monday, urging dealers to make their voices heard in the debate over how to return the industry to economic viability and how new emission standards should be implemented.

"The nation's new car dealers have already made strides in communicating the importance of the franchise network, the need for federal bridge loans and the necessity of stable credit markets, but the work must continue," said 2009 NADA Chairman John McEleney and Iowa dealer.

"The next two months are critical to the future of our industry as we know it - the future of GM and Chrysler, availability of credit and the return of stability to our economy," he said.

"In a 17-million-sales year, it may be enough for us to share that we sponsor Little League teams or that we helped to fund the new wing at the local hospital," McEleney said. "In a 12-million-sales year, we've got to tell how we contribute to our community's bottom line."

-- "Tell how many of our employees' kids we helped send to college."
-- "Tell how many people were able to get healthcare through us."
-- "Tell how many people picked up lifelong skills - technical skills,
people skills and management skills in the time they've worked for
us."


"The unprecedented nature of the times we find ourselves living in has been both a blessing and a curse," he said. "It's drawn the kind of attention to our industry that we haven't encountered in years."

McEleney said some pundits characterized dealers as a drain on the books of automakers and suggested it was time to do away with the franchise system.

"...we had to inform people about the model of our business," he said. "...it's our money we invest in buildings and staff and training, not the manufacturers. It's our investments that are on the line to get their products distributed to buyers."

With much attention being paid to the industry, it's incumbent upon dealers to inform the public about auto retailing's impact on local, state and national economies. Sales taxes collected at auto dealerships nationwide total in the billions of dollars each year. And auto sales make up nearly 20 percent of all retail spending in the U.S.

Today, President Obama directed the Environmental Protection Agency to review whether to authorize state efforts to regulate vehicle emissions. NADA welcomes that review, McEleney said, but is urging the administration to carefully examine how those rules would actually be implemented. That kind of review will reveal that the California Air Resources Board's rule is in direct competition with the federal CAFE program, he said.

"We hope that the president and the EPA administrator will realize that a single national fuel-economy standard is smarter than a patchwork of state regulations that will only further endanger our industry," McEleney said.

With the auto industry undergoing drastic changes, the coming year could be one of the most challenging ever. But the auto industry is cyclical, and dealers will continue to succeed if they focus on things they can control, he said.

"Our job is to protect and strengthen our dealerships so that as the cycle turns upward, we are in a position to thrive," McEleney said.

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NADA Statement on GMAC's Announcement to Expand Retail Auto Financing

/PRNewswire-USNewswire/ -- The National Automobile Dealers Association (NADA) says the actions of the federal government to support GMAC Financial Services will bring stability to consumer and dealer lending and help restore consumer confidence on Main Street.

"Credit is the lifeblood of the auto industry, both for consumers at the retail level and dealers at the wholesale level," says Annette Sykora, NADA chairman and owner of two domestic-brand dealerships near Lubbock, Texas. "Lowering minimum credit scores from 700 to 621 will expand credit availability to thousands of potential car buyers and further increase consumer confidence at this critical time in the auto industry."

GMAC's application to become a bank holding company was approved by the Federal Reserve Board of Governors on Dec. 24. The company received a $6 billion aid package from the U.S. Treasury Department as part of the Troubled Assets Relief Program.

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Federal Reserve Approves NADA-Backed Initiative Aimed at Increasing Inventory Financing

/PRNewswire-USNewswire/ -- Following President Bush's announcement Friday to provide $17.4 billion in bridge loans to General Motors and Chrysler, the Federal Reserve Board, in a related action, addressed a key request from the National Automobile Dealers Association by including floorplan securitizations in a new $200 billion credit facility the Federal Reserve is establishing.

The Federal Reserve on Friday clarified the eligibility requirements under the new Term Asset-Backed Securities Loan Facility (TALF) and, in doing so, for the first time included loans for dealer inventory financing as a qualifying asset class.

"This move meets a key need that NADA had identified for greater liquidity in the auto retailing marketplace," said Andy Koblenz, NADA vice president of legal and regulatory affairs.

The U.S. Department of the Treasury announced Nov. 25 that the Fed would be establishing the TALF credit facility, a $200 billion program designed to facilitate the issuance and sale of securitized auto loans. However, at the time the TALF was announced, it was unclear whether it would include loans for dealers at the wholesale level. That uncertainty has now been resolved.

In addition to confirming the eligibility of floorplans loans, the Federal Reserve also extended the term of TALF loans from one to three years and provided that TALF loans could have fixed or floating interest rates. These changes will make it easier for auto finance companies to use the TALF to issue floorplan securitizations.

"NADA's goal all along was to restore liquidity in the credit markets for all dealers and their customers," Koblenz added. "By working with the Federal Reserve and the Department of Treasury to ensure that floorplanning loans were included, NADA was able to give creditors confidence to once again make loans available to dealers to finance the inventory on their lots. This will, in turn, help ensure that dealers have at their dealerships the selection of vehicles that consumers want to buy."

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