WANADA Bulletin #51-02 December 23, 2002

Inside… Press Day Photo Highlights………..…….….p.3 Reminders — Tag & Title Seminar, The Snowball.....…………..……….......…..p.4 HAPPY HOLIDAYS!……………..……………..p.4 (See Economic Summit, page 2)

61st WASHINGTON AUTO SHOW KICKOFF

Press Preview Spotlights Top Speakers, Model Intros Ford VP Jim O’Connor Predicts 17 Million Plus for 2003

A s the keynote speaker at The 2003 Washing-ton Auto Show Press Preview Day luncheon

last Thursday, James G. O'Connor, Ford Motor Company group vice president for North America Marketing, Sales and Service, promised the me-dia, dealers and VIP industry guests in attendance “a 17-pound stocking stuffer.” And he delivered with a prediction that, based on a “big, big De-cember,” car and truck sales “will top 17 million for 2002 in the fourth year in a row.”

Despite the last 15 months, which he described as “one body blow after another – 9/11, recession, weakening dollar, sniper attacks, threat of war,” and the dockworker strike last September, O’Con-nor said, “Santa Claus will bring lots of cars and

(See O’Connor, page 2)

A lthough not quite as optimistic as Ford’s Jim O’Connor, Paul Taylor, chief economist for

NADA, predicted new vehicle sales would hit 16.7 million sales this year and 16.5 million in 2003, still making it the fifth best year ever. Taylor and Chris Rohrs, president of the Tele-vision Bureau of Advertising, were the featured speakers at WANADA’s “2003 Economic Sum-mit,” sponsored by WUSA-TV, Channel 9, and held last week at the Washington Convention Center in conjunction with Press Preview Day for the 2003 Washington Auto Show.

James O’Connor made a dramatic entrance in a Model T to introduce Ford’s 2003 “Centennial” mod-els to commemorate the company’s 100 year anni-versary in June.

Economic Summit Helps Dealers Make Plans for 2003

NADA Chief Economist Paul Taylor (right) and Chris Rohrs, president of the Television Advertis-ing Bureau at WANADA’s “Economic Summit.”

trucks to a lot of smiling customers between now and December 31st.” He predicted a “lights out” annual sales rate for December that could hit 18.5 million, making 2002 the fourth year in a row the industry has topped 17 million.

He credited the “robust” auto market to several strong economic trends: a recent rise in the con-sumer confidence index, low inflation and interest rates, and continuing aggressive marketing

Page 2 December 23, 2002 WANADA Bulletin #51-02

O’Connor (continued from page 1)

incentives. “As a result, the affordability

index is down to 19.9 weeks, the lowest in 24 years,” said O’Con-nor

For 2003, he predicted sales of “at least 16.5 million.” He said “excess global manufacturing capacity” would keep it a buyer’s market, with all automakers fight-ing to outsell each other, clear stock and maintain market share. At Ford Motor Company, the revitalization plan announced about 11 months ago is “on track,” said O’Connor. “Quality is up, recalls are down, we are leaner and more efficient, and we have made progress in reducing cost and divesting non-core assets.”

“Importantly, we have returned to profitability with help from new products. With a strong in-dustry and an improvement in retail share, we ex-pect to continue those profits,” he added. He noted the company’s market share is up to 21.3%, up a half point since first quarter, and J.D. Power surveys show initial quality is up 12%, “the most of any domestic manufacturer.” To have a “lean and fully competitive cost structure,” O’Connor said Ford’s target is to take out $2 billion in cost this year and close five as-sembly plants in North America by the end of the decade. But he also noted the company has $26 billion in cash on hand, “which lets you breath a little easier.” However, Ford’s recovery will be “product led,” said O’Connor, who pointed to the new Ford 500, F-Series pickups, all new Mustang, Ford GT and hybrid Escape which will debut next year. Over the next four years, the Lincoln-Mercury Division will get four new models – a new SUV, minivan and two car models.

On the Blue Oval controversy, O’Connor said a decision was made and broadcast to all Ford and Lincoln-Mercury dealers last week, that “nothing will change for the next two years, and by March 2005, the program will be over for this cash in-centive based plan. We will work up a program

PRESS DAY HIGHLIGHTS (continued from page 1)

Taylor called the last five years “a wonderful time for dealers,” and noted the following 2002 sales and economic trends: • 91% of dealerships now have Websites, vs 67% in 1997, while the share of online sales for buying services has declined from 54% in 1999 to 37% in 2002. • The hot segment was “crossover” vehicles, up 22%. • Sales of certified used vehicles were up 53%, which was very good news for dealers. • Long term trends favoring strong sales are in-creases in vehicles per household and average miles driven as commutes grow longer. • The number of dealerships shows “modest, orderly consolidation,” from over 30,000 in 1970 to slightly less than 22,000 in ‘02. • Customer satisfaction continues to increase, from 76% in 1998 to 78% in 2002. Rohrs cited the recent Automotive News Head-line, “Auto ads end skid; ’03 looks good, too” as evidence that spending was once again on the rise. He pointed out that total automotive ad spending in the U.S. is up from just less than $9 million in 2001 to over $10 million in 2002, with the biggest increases in spot TV advertising, up from 21.2% to 30.1% of the total. He also noted the major differences between national and regional spending patterns. In the Washington area, 61% of ad dollars are spent by automakers, 33% by dealer associations and 6% by individual dealers, compared to national spending patterns of 62%, 19% and 19%, respec-tively. Rohrs made a convincing case for local broad-cast TV advertising, citing “flexibility/targeting, affordability, effectiveness and accountability over other media.” For more information, he rec-ommended visiting the Television Bureau of Ad-vertising’s Website, www.tvb.org.

Summit (continued from page 1)

with the national dealer council on a non-cash based customer satisfaction plan. There’s mixed opinion, but you can’t make everyone happy,” he said.

Jim O’Connor

Clockwise from above, media, dealers and indus-try VIP guests at the Press Day luncheon listen to Auto Show Chairman Chip Lindsay offer highlights of this year’s show. And, appropriately, Lindsay, a Cadillac dealer, added his enthusiasm for the new Escalade ESV, which is making its premiere at The Washington Auto Show. Edward Cohen, Honda vice president for government and industry, ac-cepts the John A. Lynker Memorial Award for Ex-cellence in Responsible Design on behalf of Honda from Washington Automotive Press Asso-ciation President Dan Carney. WANADA Chairman Vince Sheehy introduced Jim O’Connor who showed off five Ford “Centennial” models that are making their na-tional debut in Washington. Lin-coln-Mercury and Ford dealers, Dick Snyder (right) and George Doetsch with O’Connor (center). Clark Bunting, general manager for the Discovery Channel, was also on hand to introduce its “Monster Garage,” slated to be a popular attraction at the Washing-ton Auto Show.

WANADA Bulletin #51-02 December 23, 2002 Page 3

WASHINGTON AUTO SHOW PRESS DAY HIGHLIGHTS

Page 4 December 23, 2002 WANADA Bulletin #51-02

Last Chance to Register for WANADA Tag &Title Seminar, Dec. 30 Added Attraction: Theft and Fraud Presentation

Representatives from the departments of motor vehicles in DC, Maryland and Virginia will

offer an update on the recent and upcoming changes in procedures and services affecting ve-hicle registration in our region at WANADA’s Tag & Title Seminar held in conjunction with The Washington Auto Show, Monday, Dec. 30, from 9:30 a.m. to noon at the Washington Convention Center. An added attraction will be an auto theft and fraud presentation by Police Sgt. Jim Holmes, coordinator of the Metro Area Auto Fraud Task Force. The seminar is $40 per person, and $20 for each additional person from the same company. Continental breakfast and admission to the auto show are included in the registration fee. For more infor-mation, see the flyer enclosed with this Bulletin, or call Darenda Petrolle at WANADA, (202) 237-7200.

Thought for the Season...

A voice cries out: In the desert prepare the way... Make straight in the wasteland a highway... Every valley shall be filled in, every mountain and hill made low. The

rugged land shall be made a plain, the rough country a broad valley.

—The Prophet Isaiah 40:1-5, 9-11

Happy Holidays

The WANADA Staff wishes all members and friends the warmth and blessings of the holiday season, now and throughout the coming year!

Archie Avedisian, Tony Bell, Bill Belew, Nick Champeau, Trish Frisbee, Ellen Hicks, Martha Kowalski, Caroline Mackey, Tom Mann, Giovanna Mezquita, Gerry Murphy, Jackie Murphy,

John O’Donnell, Katy Orme, Darenda Petrolle, Roberta Reardon, & Joyce Roberts

Enclosures: • WANADA Tag & Title Seminar flyer & registration form • In Memoriam: Bernie Mills, Manhattan Auto

Position Wanted: Individual residing in Waldorf, MD with fifteen years experience in dealership sales desires a position as a general manager or a general sales manager. For more information, contact Tom Mann at WANADA, (202) 237-7200.

Snow Ball Gala at the elegant Ritz Carlton, DC this Friday Dec. 27. FBO the Boys & Girls Clubs and to celebrate the Auto Show. See you there!