December 16, 2009

Russ off the Cuff: Global Trade Under Attack . . . Again
AIADA Chairman Russ Darrow writes that international nameplate dealers would be sticking our heads in the sand if we ignored the protectionist movement that is gaining momentum inside of D.C. and around the country. Anti-trade voices, funded by labor unions and given strength by a democratic majority in Congress, say that by limiting trade they can improve the United States' economic outlook. Of course, history has proven them wrong, many times. Global trade doesn't hurt our economy, it helps it grow. Recently, Detroit has lambasted the Japanese government for setting the emissions standards for its own Cash for Clunkers program 'too high,' and excluding most non-Asian-branded vehicles. They ignore the fact that in Japan, the program is meant to achieve both economic and environmental goals. Optimism is all well and good, but dealers must keep their eyes open on this issue. AIADA will continue to keep its dealers up to date on the latest attacks on trade, and on our industry. When prompted, use the association as a resource to contact your legislators and let them know why trade works. Together, we can beat back protectionism. Click here for AIADA Chairman Russ Darrow's full column on the dangers of protectionism. 
 
Japan's Auto Barriers Need to End, Ford Government Affairs Chief Says
Japan's decision to exclude foreign automakers from its Cash for Clunkers program is part of a broader effort by the Japanese government to discourage imports, a Ford Motor Co. executive said in a recent interview. According to Automotive News, Ford's vice president for international governmental affairs, Stephen Biegun, said it is an attitude that the United States cannot tolerate anymore. Ford, General Motors Co. and Chrysler Group sent a letter to U.S. trade officials last week complaining about conditions in Japan's fleet renewal program they say bar U.S. automakers from participating. At issue is how the Japanese government sets its emission standards. Japan's standards address pollution generated at low speeds or in stop-and-go driving, and many Japanese vehicles are designed with this in mind. U.S. and European automakers design vehicles to meet maximum efficiency at highway speeds. As a result, no U.S. vehicles qualify, and only two European-built vehicles qualify, according to The Financial Times. A Japanese embassy official in Washington who handles auto issues has told reporters that any manufacturers who qualify can participate in Japan's clunkers program. Click here for AIADA Chairman Russ Darrow's take on the issue. Click here for more on Ford's objection to Japan's auto market barriers.

Dems Short of Votes for Short-Term Estate Tax Extension
According to CongressDaily, Senate Democratic leaders were scrambling late Tuesday to line up another vote or two to back a two-month extension of the estate tax and avoid the once-unthinkable scenario that Democrats would allow it to expire. The matter was holding up action in the House on must-pass items like the Defense spending bill and an increase in the debt limit, as House leaders waited for instructions on which vehicle could carry the estate tax measure and still garner 60 votes. Votes from senators such as Agriculture Chairwoman Blanche Lincoln (D-Ark.) who supports a more generous version, and Sen. George Voinovich (R-Ohio) who backs a permanent extension of the 2009 estate tax, were in play. Leaders were also eyeing Senate Appropriations ranking member Thad Cochran, who manages the Defense bill for Republicans and has historically supported such measures in bipartisan fashion. On Tuesday, AIADA joined members of the Family Business Estate Tax Coalition in urging Congress to pass permanent estate tax legislation that would provide relief to America's family-owned businesses, which includes international auto dealers. Click here to view letter sent by the coalition to Senate leaders. Click here for the latest on Congressional action to alter estate tax provisions.

Fees for Rejected Dealers Seeking Arbitration Could Top $100,000
Rejected dealerships pursuing arbitration under new legislation will pay at least $12,000 in fees and as much as $100,000, depending on the complexity of their case, dealer attorneys said. According to Automotive News, among the expenses to be incurred by stores seeking reinstatement are fees for filing and for other administrative moves, as well as for arbitrators, lawyers, and expert witnesses, attorney Mike Charapp of McLean, Va., said in a report for Washington-area dealer groups. These payments would be spread out over the six-and-a-half month arbitration process which would be triggered by President Barack Obama's expected signing of the legislation, the attorney said. Not included in this estimate are any payments received from General Motors Co. and Chrysler Group and returned to the automaker, as required by the legislation, should a dealership be successful in arbitration. Recent dealer arbitration legislation gives as many as 2,150 rejected GM and Chrysler dealerships access to neutral arbitration under the American Arbitration Association. The measure, which was part of a $446 billion spending bill, passed the Senate on Sunday after clearing the House last week. Click here for more on the expected costs for dealers looking to halt their closure.

New Small Cars Might Struggle in Market
Ever since fuel prices soared to record highs last year, American consumers have been trading in their gas-guzzling trucks and full-sized cars for smaller, more fuel-efficient vehicles - or, at least that's the conventional wisdom. In fact, while the small car segment of the market has gained some momentum, though, U.S. motorists have remained stubbornly attached to their pickups, SUVs, and larger passenger cars. So can a new generation of compact and subcompact alternatives move the needle? According to MSNBC, the jury is out. The underlying platform for the Ford Fiesta was developed as part of a joint venture with Ford's Japanese affiliate, Mazda. Mazda is using it for a subcompact it's also just launching in the U.S., the Mazda2 - with final engineering done in Europe. Click here for a photo gallery of the Ford Fiesta and other vehicles recently unveiled at the Los Angeles Auto Show. By spreading out development costs and sharing the platform, Ford has been able to improve its economies of scale, allowing it to offer more content for a lower price. That's a strategy that has long been used by the Japanese, with products like the Toyota Yaris and Honda Fit, which currently dominate the subcompact segment. But that latest research suggests that approach might not be enough to shift the market. Click here for more, including statistics and expert analysis, on the hurdles expected in the American small car market.