Automotive News - August 11, 2008 - (Page 3) AUGUST 11, 2008 • 3 82nd year — No. 6320 Tight credit hinders lease deals Detroit 3 dealers more likely to embrace 72-month loans; lease business shifts to imports Donna Harris dharris@crain.com Gilman is named CEO of Chrysler Financial DETROIT — Two weeks after Chrysler Financial said it was exiting the auto leasing business, the company’s top two executives have stepped down. Chrysler Financial, the finance arm of Chrysler Holding LLC, appointed Thomas Gilman CEO and vice chairman. Outgoing President and CEO Paul Knauss will retire. Gilman was named executive vice chairman in November 2007. He had been a senior adviser for the company’s private equity owner, Cerberus Capital Management. But he previously spent 27 years of his career with Chrysler — including a stint as CFO of Chrysler Financial. He also has been CFO at dealership group Asbury Automotive Group. Darryl Jackson was appointed COO. He replaces William Jones, who also will retire. Jackson will lead Chrysler Financial sales and marketing. He joins the company from Chrysler LLC, where he was vice president of U.S. sales. — Craig Trudell Greater lessors Cutbacks by Detroit 3 captives likely will reduce their share of the U.S. vehicle leasing market. In the first half of 2008, these were the 12 biggest lessors, based on volume of new- and used-vehicle leases. COMPANY % MARKET SHARE GMAC goal: Turn leases into sales ➤ 32 Dealers and bankers predict that huge losses on sharply depreciated big trucks coming off lease will chase more lease providers from the market or cause them to stiffen their standards. “There are ample lenders in the marketplace, but they have all tightened credit,” says Mike Baker, CEO of Bob Baker Enterprises, a San Diego dealership group that sells import and domestic brands. As automakers and big banks slash their vehicle leasing programs, dealers are finding few options. For customers who want or need low monthly payments, dealers say, financing will get tougher. Since July, the Detroit 3’s captive finance companies and several national banks have placed strict new limits on leasing or exited the business. Industry experts predict the cutbacks will have these effects: New-vehicle purchases financed by loans of six years or longer, once rare, will become more prevalent. Loan maturities of 72 months or more now make up 43.6 percent of loans arranged by dealerships, according to J.D. Power and Associates. Some independent lenders will seek to increase their leasing business, but their programs are likely to be less competitive and more restrictive than the factory-subsidized leases offered by captives. Customers who still want to lease vehicles will shift from Detroit 3 to import brands. “There is a big portfolio of customers who have leased vehicles for a long time,” says Carlos Hoz de 1. GMAC Financial Services 2. American Honda Finance Corp. 3. Ford Motor Credit Co. 4. Toyota Financial Services 5. Chrysler Financial 6. Nissan Motor Acceptance Corp. 7. BMW Financial Services 8. VW Credit Inc. 9. Mercedes-Benz Financial 10. U.S. Bank 11. Chase Auto Finance 12. World Omni Financial Corp. Source: AutoCount, Experian Automotive 13.0 12.6 12.2 10.7 9.0 7.8 6.2 5.7 3.6 1.9 1.8 1.4 New lenders For now, dealers say, some lenders are offering to pick up the slack created by leasing cutbacks. “U.S. Bank is signing up dealers,” said Stewart Garfinkel, business manager of Security DodgeChrysler in Amityville, N.Y. “We didn’t need to do business with them in the past. “When your captive finance company is giving you all kinds of incentives and telling you how much they want your business, you tend not to use other people,” Garfinkel told Automotive News. “Then they pull the rug out from under you.” Tom Wirth, senior vice president of U.S. Bank, says the company remains committed to vehicle leasing but declined further comment. see LEASES, Page 48 Vila, a suburban Philadelphia dealer who operates domestic and import franchises. “There’s going to be a defection to other brands because now Chrysler, General Motors and maybe Ford don’t offer competitive programs.” 2009 F-150 to miss fall NFL advertising Amy Wilson awilson@crain.com GM will pay shareholders DETROIT — General Motors plans to pay $277 million to settle a shareholder lawsuit alleging that the automaker misled investors in its reporting of financial information, artificially inflating its stock price. The settlement also includes a $26 million payment from Deloitte & Touche, the independent auditor of GM’s financial statements. In a filing with the Securities and Exchange Commission, GM said $200 million of the charge likely will be covered by insurance. The charge was booked in the second quarter, while the insurance payment likely will come in the third quarter. Two units of a German bank brought the lawsuit in 2006. They claimed they lost money by purchasing GM stock and debt at prices that were higher than they would have been if GM had followed proper accounting procedures. — Andrew Grossman DETROIT — Ford Motor Co.’s big marketing push for the re-engineered and restyled 2009 Ford F-150 won’t kick off until the beginning of 2009 — after the crucial National Football League advertising season. The pickup truck will begin shipping to dealerships in the second half of October and will be available in large volumes late in the year, a Ford executive says. “It’s a precarious time to launch because that’s the holiday season,” says Mike Crowley, Ford truck and SUV group marketing manager. “So you’ll see us heavy into the January time period with our launch.” In June, Ford said it would delay the introduction of the 2009 model by two months, until “late fall.” At that time, executives did not say what month they would start shipping the revamped truck. Last week, Crowley specified October as the first shipping date. In spring, plummeting pickup sales prompted Ford to delay the on-sale date of the 2009 model. The extra time is needed to sell excess inventory of the 2008 model. Ford finished July with 184,700 units of the F-series pickup in dealership stocks. That is a 107-day supply; about 75 days is considered normal for full-sized pickups. The late arrival date means Ford will miss pitching the 2009 model during NFL fall broadcasts, a prime venue for Ford pickup launches. Crowley says Ford plans to promote the 2008 F series during football season. The delay in the introduc- Delphi Q2 loss: $551M DETROIT — Delphi Corp. continues to lose money as business from its largest customer, General Motors, continues to shrink. Delphi, of Troy, Mich., said on Friday that it lost $551 million on $5.2 billion in revenue in the second quarter. That compares with a loss of $821 million on revenue of $6 billion during the same quarter last year. The 2007 results included one-time charges for restructuring and litigation settlements. The 13.3 percent decline in total revenue in this past quarter stemmed largely from a 28 percent decrease in GM’s North American production, Delphi said. — Andrew Grossman tion hasn’t caused the automaker to trim the marketing budget for the 2009 F-150, Crowley says. In April, Ford marketing chief Jim Farley told Automotive News that Ford would spend as much to launch the 2009 model as it did on the redesigned 2004 F-150. Company executives have said Ford had a $100 millionplus marketing budget for that 2004 intro. Through July, F-series sales this year have dropped 22.4 percent. In May, when sales really started to plunge, Ford saw the F-150 mix shift from crew cabs toward the regular cabs often used as work trucks. In recent weeks, the mix has begun to move back toward crew cabs, Crowley says. Still, Ford expects lower demand from personal-use buyers for highend F-150s than it had planned earlier in the year. Accordingly, Ford has trimmed expectations for the top-of-the-line Platinum series being introduced for the 2009 model year, Crowley says. Planners now expect about 3 percent of the F-150 sales mix will be Platinum, down from the 6 percent previously targeted. c Ford says it won’t launch its big marketing push for the 2009 F-150 until early next year. Suppliers: Apply for 2009 PACE Awards by Sept. 12 Auto suppliers have until Sept. 12 to apply for the 2009 Automotive News PACE Awards. The awards — co-sponsored by Ernst & Young and the Transportation Research Center Inc. — recognize suppliers for innovation. This will be the 15th year for the awards. Independent judges will recognize achievement in these categories: product, product-Europe, information technology and services, and manufacturing process and capital equipment. There also is an open category. Winners will be announced April 20 at a ceremony in Detroit. The Automotive News PACE Awards program is open to all automotive suppliers. PACE is short for premier automotive suppliers’ contribution to excellence. The application fee is $995. To apply online or to download an application, visit www.autonews.com/pace. Questions? Call 313-446-6039. c http://www.autonews.com/pace http://www.autonews.com/pace
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