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Coretalk: Chicago To Host PERA's 62nd Annual Conference September 27-29, 2007

The historic Hilton Palmer House Hotel in Chicago will host the Production Engine Remanufacturers Association (PERA) 62nd Annual Conference Sept. 27-29, 2007

An assortment of professional and technical seminars will be held along with a wide range of social and networking opportunities for engine remanufacturers and their spouses. For more information on this event or to register for the convention, visit www.pera.org.

Recon Launches Plan To Increase Availability and Reduce Delivery Times
Recon Automotive Remanufacturers has announced a new initiative to increase availability and reduce delivery times for its most popular engines, while instituting a comprehensive program to hold down manufacturing costs in order to sustain Recon's very competitive pricing structure.

As part of this new initiative, Recon has established a new warehousing and distribution facility in Texas. A site has been selected, the location will be announced as soon as leasing and staffing negotiations are complete, and the facility will begin shipping engines this summer. This new distribution facility will supplement Recon's existing distribution centers in Philadelphia and Los Angeles, and will shorten delivery times to customers in the South Central and Central areas of the country, according to the company.

In addition, Recon will be relocating the remanufacture of many of its most popular engines to its facility in Aguascalientes, Mexico. The company said it has been adding state-of-the-art machinery and training programs there, and it has now become the company's most efficient remanufacturing facility.

Recon has also completed a comprehensive analysis of inventory and order fill, and has taken steps to add inventory and speed availability of its most popular engines. Recon's product analysts have identified the 20 percent of their part numbers that account for roughly 80 percent of their sales and will be adding inventory of these fast-moving engines in both their east and west-coast distribution centers, as well as stockpiling significant inventory in their soon-to-be opened Texas distribution facility. Overall inventories of selected slower-moving part numbers will be reduced, but Recon will ship these less-popular products from any warehouse where they are in stock, without shipping penalty, in order to accommodate customer needs.

Another element of Recon's initiatives to improve efficiency is the creation of a "Rapid Response Team" at its Philadelphia headquarters. This team is tasked with sourcing cores and providing finished remanufactured engines for any unusual or out-of-stock engine. This team will have extensive flexibility in sourcing any needed item, will have full access to all equipment, parts and technology throughout the Recon system, and will report directly to Recon CEO Vincent Mancini.

"We have been carefully analyzing our sales patterns as the marketplace evolves," said Mancini. "As a result, we are about to open a new warehousing and distribution facility in Texas, and plan to open another such facility before the year is out. We realize that reassigning more engine remanufacturing to our plant in Mexico will necessarily result in reductions in our workforce here. But the realities of a global economy and the needs of our customers dictate that we be cost-competitive along with being able to quickly deliver the highest-quality engines possible, and this series of steps will help assure our continued competitive posture in the engine business.

"As we have done throughout our 30-plus years, we will continue to assess the needs of our customers and adjust our business model whenever necessary to meet the needs of an evolving marketplace. We have always provided the industry's best engines, best customer service and technical support and best warranty protection for our customers. By taking these and other steps now, we will be able to continue to set standards for the engine remanufacturing industry while remaining cost-competitive and assuring our customers attractive profit margins for engine sales and installation."

For more information about Recon Automotive, visit www.reconengines.com.

MAHLE, RIKEN expand Global Cooperation Plan; MAHLE Acquires Mexican Engine Parts Business
MAHLE has signed a Memorandum of Understanding (MOU) with RIKEN Corp. for global cooperation promoting each company's strengths in the areas of piston rings, camshafts and other products. In addition to the expansion of the already existing Allied Ring Corp., a 50-50 North American joint venture manufacturer of piston rings owned by MAHLE and RIKEN, both companies will study and promote global collaborative projects making use of existing resources.

MAHLE and RIKEN will promote joint cooperation in the areas of technical development and manufacturing of piston rings, engine components and systems, camshafts and other products in line with day-by-day advancement of engine technology.

In other MAHLE news, the company has entered into a stock purchase agreement with Grupo Condumex, S.A. de C.V., Mexico to acquire 51 percent of the shares of Promotora de Industrias MecÁnicas, S.A. de C.V. (Promec) which owns Sealed Power Mexicana, S.A. de C.V. and Sealed Power Autopartes, S.A. de C.V. MAHLE previously acquired 49 percent of Promec as a result of its acquisition of Dana's engine products group.

Promec produces cylinder liners and piston rings for passenger car and heavy duty applications for the OE and aftermarket businesses. The agreement includes among others the acquisition of the aftermarket brand "Carpro."

The planned acquisition includes a total of about 1,100 employees in four production plants in Mexico, which are located in Aguascalientes, Naucalpan, Ramos Arizpe and Santa Catarina. In 2006 the business generated sales of $67 million.

Jon Owens To Look At Technology Crossroads At '07 Aftermarket eForum
Drawing from the extensive research activity of Babcox Publications, group publisher Jon Owens will share his observations about the current market landscape and the challenges and rewards facing distributors, stores owners and shops in this technology-enabled environment. His presentation, "Technology at a Crossroads in the Aftermarket," will take place on Tuesday, July 17 during this year's Aftermarket eForum™. Owens will share his candid observations on e-business and technology in the aftermarket and discuss the steps needed to capitalize on the opportunity to reduce costs throughout the supply chain. The talk by Owens, replaces a presentation by Bob Moore, Bob Moore & Partners and Larry Silvey, Advanstar Automotive on "Innovation in WD and Jobber Solutions is Back in Style." "Jon enjoys a unique vantage point over the entire aftermarket," said Scott Luckett, vice president of technology standards and solutions for AAIA and chairman of the Aftermarket eForum Planning Committee. "Jon has 'no horse in the technology race' so we can count on an unbiased and informative assessment."

Owens is publisher of BodyShop Business magazine, aftermarketNews.com and The AAPEX Show Properties in addition to Counterman.

To register for the 2007 Aftermarket eForum™, view the agenda, or download the brochure, visit www.aftermarketeforum.com or contact 301-654-6664.

PRI Show Expected to Welcome 45,000 Buyers To Orlando in December
One million square feet of new racing technology and products will be on display at the 20th Annual Performance Racing Industry Trade Show, in Orlando, December 6-8, 2007.

During these three days, the North/South Building of the Orange County Convention Center will hold the largest racing trade show in the world, attracting 45,000 racing industry members, from over 45 countries.

Returning to Orlando for the third straight year, the 2007 edition of the PRI Trade Show will attract 1,450 exhibiting companies and 4200 booths. Show Hours will be Thursday, Dec. 6: 9:30 a.m.-6 p.m.; Friday, Dec. 7, 9 a.m.-6 p.m.; and Saturday, Dec. 8, 9 a.m.-5 p.m.

While much of the excitement of the PRI Trade Show will occur in the Orange County Convention Center on Thursday through Saturday, the Show has grown to encompass an entire week's worth of special racing industry attractions. Be sure to visit Orlando a few days prior to the start of the Trade Show for valuable business and educational opportunities, such as the Industry Roundtable and the Advanced Engineering Technology Conference. To book hotels and travel, contact the PRI Travel and Housing Department at (949) 499-2044, go to the PRI web site to make an on-line reservation, or e-mail Michelle Gallegos with questions at MichelleG@performanceracing.com.

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Web-Only News For July:

Bosch to Supply Diesel-Hybrid Parts in Europe
Robert Bosch GmbH has a contract to supply diesel-hybrid technology to a European automaker, according to recent Automotive News Europe reports. The German parts maker expects the system to be on the road by 2010, said Rolf Leonhard, Bosch's executive vice president of engineering for diesel systems, during a press event here today. "It would be the benchmark in fuel consumption achieving CO2 emissions below 100 grams per kilometer," said Leonhard. For the diesel-hybrid program, Bosch will supply the electronic controller for the diesel engine, and the electric motor and its controller, a spokesman said. Bosch's contract signals a change in attitude among automakers in Europe. Until recently, automakers and suppliers have said that a diesel hybrid powertrain would be too expensive for the market. But increased pressure by lawmakers to cut carbon dioxide emissions may have helped change attitudes. Automakers are under pressure from the European Union to reduce CO2 emissions to 130g/km by 2012 from a current average about 160g/km. The world's largest supplier and its European customer have a chance to beat PSA/Peugeot-Citroen to market with a diesel-hybrid model. The French automaker has said it wants to launch a diesel-hybrid version of the Peugeot 308 lower-medium car by 2010. Leonhard said Bosch also is bidding to supply its diesel-hybrid technology to the PSA model. The executive declined to name Bosch's customer but he did say that the model will compete in a different vehicle segment than the Peugeot 308. Starting next year, Bosch will supply its gasoline-hybrid technology to models from Volkswagen, Audi and Porsche. Bosch ranks No. 1 on the Automotive News Europe list of top 100 global original equipment suppliers with original equipment sales of $28.40 billion in 2005.

Federal-Mogul Corp. Receives 2007 Group Auto Union International (GAUI) Silver Award
Federal-Mogul Corporation received the prestigious Silver Award from Group Auto Union International (GAUI) at a recent meeting of its shareholders in Paris, France. The GAUI awards are given annually based on a vote of its members across 20 European countries. Federal-Mogul was selected for this recognition from a field of 37 eligible suppliers. GAUI is one of the largest networks of spare parts distributors in Europe and is one of Federal-Mogul's valued aftermarket customers.

GAUI Awards are granted based on key performance criteria, including: service, product performance, representation, technical support and marketing. Federal-Mogul's overall performance rating increased consistently in the past two years, as a result of a continuous focus on product quality and range, marketing, sales efforts and representation.

"We are extremely honored to receive this high level of recognition from GAUI," said Mauro Parisi, Federal-Mogul's vice president, Aftermarket Products and Services, Europe, Middle-East and Africa. "Last year we received the Bronze Award. Achieving the Silver Award is evidence of our relentless pursuit of quality excellence and customer satisfaction. I am proud of the employee dedication and efforts that have made this possible. We look forward to continuing this positive trend in the future."

Parisi accepted the award along with Michael Coullie, general manager sales, Western Europe, Pavel Dusil, general manager sales, Eastern Europe, Gary Sheriff business manager, UK, and Salvatore Nicchi, groups director.

Visit the company's Web site at www.federalmogul.com.

NAPA Offers 12,000 AutoCare Centers Membership in Car Care Professionals Network
The National Automotive Parts Association (NAPA) has agreed to offer its more than 12,000 affiliated NAPA AutoCare Centers membership in Automotive Aftermarket Industry Association's (AAIA) Car Care Professionals Network (CCPN).

CCPN was created to represent, support and improve automotive service centers and provide them with a national platform. The program offers participation in grassroots advocacy in the areas of legislation, training and education, technology, market research and consumer education.

"Ensuring the success of independent repair and maintenance businesses is not only critical to the overall future of the automotive aftermarket, but is equally important in ensuring that the American consumer has a variety of competitive sources from which to choose for their vehicle repair and maintenance needs," said Bob Susor, president of NAPA. "The mission and principles of the Car Care Professionals Network are certainly aligned with those of the NAPA organization and we are pleased to support a group whose formation will serve as an asset to the entire industry."

"NAPA's support of the Car Care Professionals Network is a giant step toward giving the independent service and repair shop owners a long overdue place at the aftermarket table," said Kathleen Schmatz, president and CEO, AAIA.

For more information on the Car Care Professionals Network, visit: http://www.carcarepros.org.

The Small Business and Work Opportunity Tax Act of 2007 Offers Tax Break
President Bush recently signed a wide-ranging law - The Small Business and Work Opportunity Tax Act of 2007 - that increases the federal minimum wage and gives businesses some important tax breaks to help offset the cost. The minimum wage hike and tax provisions were attached to legislation funding the war in Iraq. One lucrative provision in the new law for businesses is an increase in the "Section 179" first-year depreciation allowance for equipment and software. Under this tax break, you can immediately deduct 100 percent of the cost of most new and used business assets other than real estate.

The new law extends the current favorable Section 179 deduction rules through the 2010 tax year and makes some favorable changes as well:

Maximum Deduction Increased to $125,000. For tax years beginning in 2007, the maximum Section 179 deduction is generally increased to $125,000 (up from the $112,000 figure that applied before the new law). For tax years 2008 through 2010, the $125,000 amount will be indexed for inflation.

Liberalized Phase-Out Rules. If a taxpayer adds qualifying property (typically equipment and software) in excess of the annual threshold, the maximum Section 179 deduction for the year gets reduced (phased out). For tax years beginning in 2007, the phase-out threshold is generally increased to $500,000 of qualifying property (up from the $450,000 threshold that applied before the law). The $500,000 amount will be indexed for inflation for tax years 2008 through 2010.

Most Software Qualifies for the Deduction. The provision that allows Section 179 deductions for the cost of most off-the-shelf software products is extended through the 2010 tax year.

Favorable Amended Return Rules Extended. A provision that allows Section 179 elections to be changed or revoked on amended returns is extended through tax years beginning in 2010. Key Point: Unless Congress takes further action the unfavorable "old-law" rules will kick back in starting with tax year 2011. Under the old-law rules, the maximum annual Section 179 deduction will fall back to $25,000. The deduction phase-out threshold will decrease to only $200,000. Software costs will be ineligible, except for software that is bundled with qualifying hardware. Finally, taxpayers will not be allowed to change or revoke Section 179 elections on amended returns.

Minimum Wage Goes Up Under the new law, the hourly minimum wage will increase from $5.15 to $7.25 over the next two years according to this schedule: 1. The first increase to $5.85 will go into effect on July 24, 2007 (60 days after the bill was signed into law). 2. Next, the minimum wage will rise to $6.55 one year later. 3. The final increase will occur two years later in July of 2009, when the minimum wage will rise to $7.25. Congress last raised the minimum wage in 1997. Keep in mind that federal and state laws require employers to display posters with current minimum wage information.

O'Reilly Auto Parts to Leave the Alliance, O'Reilly Announces New Parts City Auto Parts Jobber Program
O'Reilly Auto Parts and Aftermarket Auto Parts Alliance (Alliance) announce with great regret that after almost 30 years of affiliation O'Reilly will be terminating its shareholder status effective Dec. 31, 2007.

David O'Reilly, chairman of O'Reilly Auto Parts, and longtime board member of the Alliance stated, "This is a very tough decision for our company. We have many great memories and relationships in the Alliance. We have benefited in countless ways through our association with some of the very best operators in the business. Our company has reached a point where it has become very difficult for us to maintain product line compliance which is the core driver of the association's effectiveness."

Dick Morgan, president of the Alliance, said "We certainly hate to see the O'Reilly's leave our association. They have been a part of Auto Value, and then the Alliance, for almost 30 years. The separation is on a completely amiable and mutual basis, and it simply represents their need to do what is in the interest of their shareholders, and for the Alliance to continue its strong commitment to our vendors with regard to product conformity by our shareholders."

With regard to the independent jobber marketing programs, which O'Reilly has more than 200 locations affiliated with, O'Reilly CEO Greg Henslee states: "We regret having to move on from the Auto Value/Bumper to Bumper affiliation, but are announcing at this time a new jobber marketing program for all of our independent jobbers. It will be called "Parts City Auto Parts" and will have strong ties to the O'Reilly Auto Parts programs, advertising and appearance. We are very excited to use this change as an opportunity to strengthen our direct relationship with our jobbers, and to offer them a closer tie to the O'Reilly concept of selling auto parts."

COO of O'Reilly, Ted Wise, said that the plans are to introduce the entire program to the jobbers within the next two weeks and "we plan to have the entire system converted by year end. This will include new signage, interior d⊃cor package, installer programs, and the whole gamut. We believe that once our jobber customers hear the full scope and strength of the program that they will also be very excited about the future potential of this new opportunity."

Aftermarket Auto Parts Alliance is one of the largest auto parts distribution and marketing organizations in the world, marketing the Auto Value and Bumper to Bumper brands. With parts store and certified service center locations throughout North America and Europe, they are a source for quality parts and service for over 4,700 parts stores and more than 2,500 certified service centers. Aftermarket Auto Parts Alliance prides itself on responding to the individual automotive needs of each customer and providing proven, quality service.

Joe Gibbs Driven Driver Logano Featured in Sports Illustrated
Joey Logano, driver of the Joe Gibbs Driven Chevrolet and 17-year-old development driver for Joe Gibbs Racing (JGR), is touted as one of "13 Young Stars" in the July 2 issue of Sports Illustrated magazine.

Logano is driver of the No. 20 Chevrolet Monte Carlo campaigned by JGR in NASCAR's Busch East touring series. He scored three race wins in his first four outings this season, including a thrilling battle with NASCAR NEXTEL Cup Series regular Kevin Harvick in a Busch East-West combo series event at Iowa Speedway in May. Harvick and Logano swapped the lead 15 times before the youngster pulled away for a 2.5-second victory.

"We were hoping we had one of the best-kept secrets in the racing world in Logano, who is a tremendous addition to our stable of young development drivers," said J.D. Gibbs, president of Joe Gibbs Racing. "Well, it's safe to say the secret's out. To be recognized by Sports Illustrated as a 17-year-old development driver, that's about the best exposure any present or future star could possibly hope for. Only a select few race car drivers can ever say they made it into Sports Illustrated in their entire careers. Hats off to Logano. He's already excelled on the track for us and we all know his best years are ahead of him."

Not only is Logano a star in the making, his sponsor, Joe Gibbs Driven, is coming into its own as well. Joe Gibbs Driven includes a line of JGR-owned high-performance racing oils and lubricants - products developed by JGR's three-time Nextel Cup championship-winning engine builder Mark Cronquist and used by JGR's Nextel Cup and NASCAR Busch Series teams. Joe Gibbs Driven Racing Oil is sold nationwide to racers at every motorsports level.

"We're strong believers in the ability of Logano and in the quality of Joe Gibbs Driven p rod ucts," Gibbs said. "Joey is young and has proven himself in a very short period of time. But with Joe Gibbs Driven, we've spent many years investing our resources into making Joe Gibbs Driven Racing Oil the best engine lubricant on the market. After not being able to find an oil that met the standards our engines required, we went to work in creating a p rod uct that exceeded our own high standards. In the two years since Joe Gibbs Driven Racing Oil hit the marketplace, we've seen tremendous growth and have built a nationwide distribution system."

To learn more about Joe Gibbs Driven, please visit www.JoeGibbsDriven.com.

Federal-Mogul Bankruptcy Emergence Delayed
Federal-Mogul Corp. was recently in bankruptcy hearings in Pittsburgh but was unable to gain approval of its reorganization plan, reported MEMA Industry News.

The company's bankruptcy confirmation hearings have been adjourned to July 9-10, according to sources.

Federal-Mogul's bankruptcy case is the longest existing case in the auto industry. The company was thought to have its reorganization plan confirmed by a U.S. bankruptcy judge in June after nearly 6 years of court protection.

After the hearing on July 10, those that support or oppose the plan will be allowed to file briefs stating their case through Aug. 31, Shannon said. Final arguments are scheduled for Oct. 1.

Sources say a settlement was reached with one insurer that opposes the plan but said numerous other insurers as well as three automakers continue to oppose some aspects of a trust fund that would settle asbestos claims.