By Ray Scarpelli Sr., Metro Chicago NADA Director
As part of the $17.4 in bridge loans to GM and Chrysler from the Troubled Asset Relief Fund, announced Dec. 19, the automakers will have to submit restructuring plans to the White House, including conditions that were part of the legislation negotiated between the White House and congressional Democrats.
GM and Chrysler must also include in their plans targets for the companies as proposed by Sen. Bob Corker (R-Tenn.). The automakers have a March 31 deadline to provide their financial viability, or they must immediately pay back the government loans.
While the plans do not preempt state franchise laws or mandate the trimming of dealer networks, the NADA will defend those fundamental principles during the restructuring process. The NADA also will continue to educate members of Congress, officials of the executive branch, and the media on the value of the dealer and the role of state franchise laws in maintaining a competitive marketplace. Please stress these points locally with your elected officials and the media.
In a related action on Dec. 19, the Federal Reserve Board issued changes to the Term Asset-Backed Securities Loan Facility (TALF), to explicitly include securities backed by automobile floorplans in that facility. This move addresses a key NADA request for greater liquidity in the market. The NADA actively encouraged the Fed to make this change, including at a Dec. 18 meeting with the Fed.
In addition to confirming the eligibility of securities backed by floorplans, the Fed also extended the term of TALF loans from one year 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.
Praise for Bush
NADA Chairman Annette Sykora said President Bush’s decision to provide domestic automakers with short-term loans gives "the shot in the arm we need to lead the economic recovery."
"This is the first step toward restoring consumer confidence," Sykora said in a Dec. 19 written statement after automakers secured the short-term loans and time to restructure. "When you have the government declaring its confidence and commitment to U.S. auto manufacturers, it helps reassure the American public that domestic automakers will be around for the long-term. This sends a clear message: Consumers can now consider any car from any manufacturer with confidence."
In other legislative news . . .
• New-car and -truck dealers from across the country visited Washington early last month—before the bridge loans were announced on Dec. 19—to meet with members of Congress and urge support for financial assistance for struggling automakers. The dealers helped put a local face on the issue, emphasizing that they are part of the solution, not the problem. While in Washington, dealers called on Congress to pass legislation (S. 3684 and H.R. 7273) to provide tax incentives to boost auto sales and stimulate the economy. "Allowing consumers to deduct the interest on their car loans, as well as state sales taxes, from their personal income taxes would help bring consumers back to the showrooms and get the economy back on track," NADA Chairman Annette Sykora said.
During their visits, dealers also talked with their representatives about supporting an auto dealer loan guarantee initiative that the NADA is working on with the Small Business Administration. Modeled after a program put together under similar economic conditions in 1980, the initiative would give dealers access to the working capital they need to keep their businesses open and their workforces employed.
In NADA news . . .
• In response to the challenges facing dealers, the NADA is offering a presentation featuring two speakers who can explain the options and detail the steps dealers need to take to protect their businesses. "Tough Times, Tougher Dealers: Saving Your Dealership’s Assets" will be offered as a virtual seminar, 1-3 p.m. Jan. 13. It also will be a workshop at the 2009 NADA Convention & Exposition in New Orleans.
The presentation, by attorney Michael Charapp of Charapp & Weiss, LLP; and CPA Bradley Nicklin, of Beers + Cutler, focuses on the issues facing almost every dealer today, such as cash management, expense control, and franchise rights. Participants also will learn how to deal with bankruptcy—both at the manufacturer and dealership levels—as well as franchise terminations, brand terminations, and the legal ramifications of reducing a workforce. The registration fee for the virtual seminar is $50 per computer connection. For more information or to register, visit www.nada.org/seminars.
The "Tough Times, Tougher Dealers" convention workshop will be held twice—11 a.m. Saturday, Jan. 24, and 8:30 a.m. Monday, Jan. 26. In addition, the convention will offer more than 40 other workshops, many of which are designed to tackle today’s tough economic issues head-on, such as maintaining dealer profitability, improving cash flow, surviving the credit crunch and driving customers back to dealerships. For more, visit www.nada.org/convention.
• The NADA membership department urges association members to verify their contact information through a new online process available at
www.nada.org/membership.
Members who maintain a current e-mail and mailing address ensure that they will continue to receive important and timely updates from the NADA. The new online verification process also allows members to easily change contact information. Members also can visit www.nada.org/subscribe to manage their subscriptions to NADA member newsletters, including the daily e-newsletter NADA Headlines.
In regulatory news . . .
• The fall 2008 NADA Regulatory Review is available at
www.nada.org/Publications/Regulatory+Review/default.htm. This issue contains a number of active links so that you can view relevant regulations and other materials just by clicking on them.
Eighteen Chicago area charities will benefit from more than $2 million expected to be raised by a black-tie gala held in conjunction with the 2009 Chicago Auto Show. Now in its 18th year, First Look for Charity is held the evening before the auto show opens to the public.
The coming "First Look" event, on Feb. 12, gives benefactors the chance to see nearly 1,000 new vehicles on display amid an elegance not present when the multitude converge on McCormick Place during the auto show’s 10-day consumer run, Feb. 13-22.
Benefactors in attendance also have the chance to win a 2010 Chevrolet Camaro or a 2009 Kia Borrego.
About 10,000 attendees at the charity gala will be treated to hors d’oeuvres; champagne, wine, beer and soft drinks; and special entertainment presented by the automakers in their displays. First Look for Charity has become one of the special events on the winter schedules of Chicago socialites and car buffs.
"The Chicago Auto Show is uniformly regarded as the finest auto show in the country, but the charitable cause demonstrates that this auto show is about more than just vehicles and accessories," said Mark Scarpelli, chairman of the 2009 show. "It’s also about giving something to the charities of our community."
The 18 organizations participating in this year’s First Look for Charity predominantly are children-oriented. Some operate on a global level; others, locally. The charities receive all the proceeds from the event, and all those proceeds are used in their efforts in the Chicago area, Scarpelli said.
All the benefiting charities involved in this year’s First Look for Charity are listed in the pamphlet included with the print edition of this newsletter and on the Chicago Auto Show Web site, www.chicagoautoshow.com. Benefactors should indicate which charity or charities they want their ticket purchase to benefit.
Tickets are $225 each and can be ordered using the enclosed pamphlet; on the auto show Web site; or by calling 708-237-6444. Of each ticket, $183 is tax-deductible as a charitable contribution.
Favorable tuxedo rental rates have been secured through area Men’s Wearhouse and MW Tux outlets. Prices start at $69.99 for a jacket, shirt, vest and tie, pants, shoes and jewelry. Mention First Look for Charity when ordering.