Feature: June 2009

CRISIS TIMELINE

NADA Fights for Dealer Rights

By Deborah Hopkins, Joan Mooney, and Mary Anne Shreve

Testifying before Congress: (From left) Chrysler president Jim Press, GM CEO Fritz Henderson, and NADA chairman John McEleney

FROM THE start of the economic meltdown last summer, NADA has acted on all fronts—first, to help restore the flow of wholesale and retail credit and to help dealers with critical decisions about their businesses and, second, to help preserve dealer rights under state franchise laws and serve as the chief advocate on behalf of fair and equitable treatment for all dealers.

JUNE 2009

• GM files for bankruptcy. NADA urges bankruptcy court to uphold state franchise laws.
• NADA chairman John McEleney, GM’s Fritz Henderson, and Chrysler’s Jim Press testify before Congress on dealership closings.
• NADA meeting with GM execs on “wind-down” and “participation” agreements reaps GM concessions.
• Supreme Court approves Chrysler bankruptcy; Fiat acquires Chrysler assets.
• “Cash for Clunkers” passes House.

MAY 2009

• NADA handles a record 40 media interviews, emphasizing dealers are part of the solution, not the problem.
• Treasury says government backs Chrysler warranties. Chrysler gets $4.6 billion to pay dealers and suppliers.
• NADA runs ad in major newspapers questioning why president’s auto task force wants drastic dealership cuts.
• NADA meets with Chrysler’s Press, GM’s Mark LaNeve.
• Chrysler announces plans to close 789 dealerships by June 9; GM says it will shut 1,124 by October 2010.
• Treasury will invest another $7.5 billion in GMAC.
• NADA holds press conference urging president to review automakers’ plans to close dealerships so rapidly.
• After NADA’s repeated urging, Small Business Administration (SBA) launches pilot program of government-backed floor-plan credit for dealers.

APRIL 2009

• GM says it will close 42 percent of its dealerships by end of 2010, stop building Saturn, Hummer, and Pontiac in 2010. NADA estimates dealership closings will cost 135,000 jobs and $3.43 billion in lost revenue.
• Obama announces Chrysler bankruptcy, GMAC assumption of Chrysler Financial dealers and their customers.
• NADA chairman McEleney blasts Chrysler for using bankruptcy to cut dealers.

MARCH 2009

• NADA chairman McEleney and other dealers meet with Obama auto task force, urge quick revitalization of asset-backed securities market for wholesale and retail auto loans.
• Obama gives Chrysler and GM extension for restructuring.
• NADA meets with Federal Reserve Bank of New York and three credit ratings agencies to explain floor-planning.
• NADA forms Auto Finance Working Group with major vehicle-financing companies.
• Term Asset-backed securities Loan Facility (TALF) launches, without including floor-plan credit.

FEBRUARY 2009

• NADA meets with Chrysler’s Press and Steve Landry, and with GM’s Rick Wagoner, Troy Clarke, and LaNeve.
• President Obama signs stimulus package with sales tax deduction for new-car purchases.
• GM and Chrysler submit viability plans.

JANUARY 2009

• Ratings agencies downgrade automaker captives, making floor-plan securitization through TALF off-limits.
• NADA announces SBA working-capital loan guarantees for dealers with gross receipts under $29 million.
• NADA directors form Industry Stabilization Task Force.

DECEMBER 2008

• NADA chairman Annette Sykora joins rally for automaker bridge loans; event gets worldwide coverage.
• Dealers lobby for auto rescue package, incentives for buyers; Senate rejects it over lack of union wage concessions.
• NADA chairman Sykora urges President Bush to act on bridge loans.
• White House approves $17.4 billion loans to Chrysler and GM. Federal Reserve extends TALF to cover floor-planning.
• Government loans $1 billion to GM, takes $5 billion stake in GMAC, making GMAC eligible for Troubled Assets Relief Program (TARP) funds.
• GMAC reduces minimum credit score to 620.
• New-car sales down 18 percent from 2007, to 13.2 million.

NOVEMBER 2008

• NADA chairman Sykora urges Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke to preserve dealer viability.
• NADA creates free hotline for struggling dealers.
• GMAC further tightens credit; dealers turn to local credit unions, banks.
• NADA launches TV and radio “Buy Now” ads, which run for free in 350 markets.
• Sen. Barbara Mikulski (D-Md.) intros NADA-backed bill letting new-car buyers deduct sales and excise taxes, car-loan interest.
• NADA runs full-page letter in USA Today urging consumer confidence in auto industry; other papers run ad voluntarily.
• NADA chairman Sykora supports automaker bridge loans before House Financial Services Committee.
• Treasury creates TALF. NADA lobbies for inclusion of floor-plan loans.
• GMAC applies for bailout money.
• White House orders viability plans from Detroit Three.
• November sales fall 34 percent to lowest since 1982.

OCTOBER 2008

• NADA president Phil Brady takes letter to President Bush, requesting tax credits for new-car buys (“Cash for Clunkers”).
• GMAC tightens credit scores to 700.
• GM and Chrysler ask government for $10 billion in loans.
• Bush signs TARP.
• NADA’s “Buy Now” ads run gratis in newspapers nationwide.
• New-car sales sink; SAAR hits 10.6 million units.

SEPTEMBER 2008

• New-car sales are the lowest since 1993.
• Chrysler Financial raises floor-plan rates, requires aged inventory payoff. Customer financing, floor-planning hard to find.
• NADA lobbies for TARP.
• The House rejects $700 billion bank bailout.

AUGUST 2008

• A number of financing sources for dealers dry up.
• August new-car sales fall 15.5 percent, to 1.25 million.

Deborah Hopkins is NADA senior director of communications and marketing. Joan Mooney and Mary Anne Shreve are senior editors of AutoExec.

Note: For the latest updates to this crisis timeline, visit nada.org/Advocacy+Outreach/timeline/.