In February 2008, I began my term as NADA chairman. Mention that year to people in the auto industry, and their facial expressions will reveal the challenges it presented.
Our biggest priority was survival. That summer, gasoline prices rose to more than $4 a gallon.
Dealers were stocked with trucks and SUVs, while consumers demanded smaller, more fuel-efficient vehicles. Automakers struggled to adjust their production quickly, leading to higher inventory expenses for dealers.
In September, the Lehman Brothers financial services firm made the largest bankruptcy filing in U.S. history. Its collapse immediately affected our industry, which is centered on the availability of credit -- to consumers for loans and to dealers for floorplanning.
Dealers faced dramatically increased floorplan costs and reduced credit at the same time. NADA encouraged its members to act. Across the nation, dealers explained to members of Congress that they relied on lines of credit to pay automakers for inventory.
The Treasury Department clearly needed to produce an economic recovery program. On Sept. 26, 2008, NADA endorsed the proposed Troubled Assets Recovery Plan as "essential to restoring certainty, stability, and liquidity to the nation's credit markets."
NADA emphasized the interconnectedness of Main Street and Wall Street: However controversial, TARP's bank bailout would open up the lines of credit necessary for the nation's commerce to continue. Congress approved the bailout in October, but the benefits were not immediate and challenges remained.
As new-vehicle sales declined, NADA urged President George W. Bush to enact specific measures to help auto retailers. We advocated refundable tax credits for the purchase of new cars and trucks, federal aid to create the "cash for clunkers" program, and additional tax incentives for businesses to buy new vehicles.
On Oct. 30, NADA launched a "buy now" campaign, encouraging consumers to purchase new vehicles. To help spur business, the association urged every newspaper in the country to publish ads, at no cost, created for the campaign.
The nationwide campaign expanded to broadcast media. Some 4,500 TV stations and 10,000 radio stations also ran the ads at no charge.
To help dealers struggling with financial and operating issues, NADA launched a free, confidential telephone hotline. NADA consultants and 20-group moderators counseled dealers on topics such as cash flow, concerns about capital and cost-cutting.
Meanwhile, General Motors Acceptance Corp. continued to tighten credit for consumer auto loans. The auto industry needed greater government support.
On Nov. 19, I testified before the House Financial Services Committee, alongside the CEOs of the Detroit 3: Alan Mulally of Ford, Rick Wagoner of GM, and Bob Nardelli of Chrysler.
I emphasized the critical importance of financially sound local auto dealerships to the national economy. If an automaker is in trouble, so are its dealers, and vice versa, I said. I encouraged Congress to pass legislation providing tax assistance for auto ownership.
Six days after my testimony, the Treasury Department announced the creation of a program called Term Asset-Backed Securities Loan Facility. It was designed to promote the securitization of auto loans, student loans and credit-card loans. Whether dealers could use TALF for floorplan loans was unclear.
As I saw it, dealers without floorplan loans would not survive. NADA used its resources to pursue TALF provisions. On Dec. 19, the government approved bridge loans for auto manufacturers, and the Federal Reserve explicitly extended TALF to cover floorplans.
During my turmoil-filled year as chairman, NADA made the right moves to keep the auto industry afloat. But while the bridge loans and TALF coverage helped, they were not cure-alls.
My successor as NADA chairman, John McEleney, had to navigate the bankruptcies of GM and Chrysler. Federal fuel-economy standards -- the focus of my inaugural address early in 2008 -- remain an issue today.
My term as chairman was challenging and unforgettable. I was honored to bear the responsibility of representing new-vehicle dealers across the nation at such an important time.
