Automotive News - September 8, 2008 - (Page 3) SEPTEMBER 8, 2008 • 3 83rd year — No. 6324 Document fee suits swamp Missouri dealers Lindsay Chappell lchappell@crain.com Fee fight Highlights of Missouri lawsuits State Supreme Court upheld law that only lawyers can charge for handling documents Dealerships may face milliondollar penalties for charging document-processing fees Possible judgments likely are years away to see these suits filed against every dealership in the state that ever charged a fee,” Richardson says. Interpretations of the law are being worked out, and judgments against dealerships could be years away. Retailers across the United States use — and sometimes abuse — the Ford mulls Lincoln compact LOMMEL, Belgium — Ford Motor Co. is considering a compact vehicle for its Lincoln luxury brand, says product development chief Derrick Kuzak.“We do think that there is room for a smaller car in the Lincoln brand,” Kuzak, group vice president for global product development, told Automotive News last week at a press event here. He would not discuss specifics. Early next decade, Ford is expected to bring out a Lincoln companion when the company replaces the Escape crossover. Suppliers and analysts expect the Ford Kuga compact crossover sold in Europe to be the basis for those vehicles. Kuzak also said Ford has no plans to bring the European Ka microcar to the United States. — Jamie LaReau Auto dealers across America do it every day. But retailers in Missouri who charge customers a “document processing fee” find themselves in the cross hairs of lawsuits that allege they are practicing law without a license. Law firms in St. Louis, Kansas City, Springfield and other Missouri cities are going after dozens of dealers in state and federal courts. One Kansas City plaintiff’s lawyer warns the issue could result in civil penalties of $1 million to $4 million per dealership. More than 50 dealerships already have been named as defendants in the document-fee suits, says Johnny Richardson, legal counsel for the Missouri Automobile Dealers Association. “Eventually, I think we’re going practice of tacking dealer charges of $200 to $500 onto sales contracts under the guise of document handling. Consumers in New Jersey, Tennessee and Arkansas have challenged the practice on a case-by-case basis. But the situation in Missouri is different. Under Missouri law, charging consumers for “document processing” is something only lawyers can do. State law requires that any nonlawyer who collects such a fee effectively is practicing law without a license and, therefore, must refund it at three times the amount collected, say plaintiffs’ lawyers. Keith Lamb, a lawyer whose Kansas City firm is, by itself, representing consumers in lawsuits against as many as 40 dealerships, speculates that the refunding of fees could be made retroactive for five years. “Do the math and you can see that this could get extraordinarily expensive for some of these dealers,” Lamb said. Last year, the state’s Supreme Court upheld the document-processing law in a challenge unrelated to auto dealerships. That decision has triggered a wave of lawsuits around the state in which consumers are now suing mortgage companies, boat dealerships, motorcycle retailers, RV dealers and other big-ticket retailers to refund their document fees. Some of the lawyers now seek to bring the state’s vehicle consumers together in a class action case over the document fees, but that plan is under review. Richardson says there has been no decision in any of the consumer complaints. c Honda’s family squabble Using hints from Honda field reps, a small Rhode Island dealership began taking service contract business away from Honda stores around the country. Guess who got mad. Kathy Jackson kjackson@crain.com Toyota delays RAV4 plan Citing weak market conditions in North America, Toyota Motor Corp. said Friday that it will slow the launch at its RAV4 assembly plant in Woodstock, Ontario, next year. The $1 billion plant will open late this year as planned with about 1,200 workers. But a second shift, originally scheduled to start next spring, has been postponed indefinitely. A second shift would double capacity to 150,000 RAV4s a year. Mike Goss, a Toyota manufacturing spokesman in Erlanger, Ky., said the company still intends to add a second shift eventually, but has set no date. U.S. sales of the crossover dipped almost 19 percent to 12,911 in August. — Lindsay Chappell Used-truck prices rebound Falling gasoline prices helped boost wholesale prices of large used trucks in August, NADA AuctionNet data show. Average August wholesale prices of used full-sized pickups rose 7.7 percent — about $900 — from June, when gasoline prices peaked, according to AuctionNet. From January to August, prices of big used pickups declined 14.5 percent. Similarly, August auction prices of large SUVs rose 8.9 percent — about $1,300— from June, but were down 11.3 percent for the year. By contrast, wholesale prices of intermediate compact cars were up 22.0 percent for the year. AuctionNet data are based on auction sales by Manheim, ADESA Inc. and independent companies. NADA Used Car Guide compiles the data. PROVIDENCE, R.I. — There was something about young, applecheeked Gardiner Reynolds that Honda field reps liked. A couple of them took the energetic, Gen Y computer whiz under their wings. In the process, they helped Reynolds save his grandmother’s small, struggling Rhode Island auto dealership, Saccucci Honda. Reynolds, now 28, oversees one of the nation’s top-selling retail Web sites for Honda parts and accessories. Another site he launched at Saccucci Honda may be the No. 1 retailer of Honda-backed extended warranties. These days, the little dealership can hold its own with much larger stores. It sells a huge number of service contracts at cost and rakes in factory bonus money based on volume. The Honda execs were so impressed with the kid’s online operation — which has only two employees — that they brought executives from Japan to see for themselves. American Honda Finance Corp.’s finance and insurance zone manager once stood up at a dealer meeting and called Saccucci Honda’s Internet business: “American capitalism at its best.” But not everyone was thrilled. When several big Honda dealerships around the country began to complain about losing business to Saccucci’s Web site, Honda got the message. The automaker put a stop to the online sales of Honda-backed warranties. Saccucci sued and now the dispute is in court. “Honda would bring people in from Japan and say, ‘Look what this kid has done,’ ” Barbara Saccucci said during court testimony here last month. “We make very little if any net profit on new and used-car sales. With Gardiner, I felt we were on the right track to enter the new millennium.” Vital to bottom line But after complaints from Honda’s National Dealer Advisory Board, the automaker decided that beginning April 1, it would prohibit Honda and Acura dealers from selling Hondabacked extended service contracts online. On March 28, Saccucci Honda won a temporary restraining order. The dealer council says Saccucci’s low-priced online contracts were undercutting other dealers’ in-house sales of service contracts and damaging the brand image. Barbara Saccucci says the online sales keep her in business. “Honda has a pump-in, pump-out list that shows where we have sold out of market and where others have sold in,” she says. “We lose sales to other markets all of the time, so we have to work hard on the phone and the Internet to bring in sales. “This is an important part of our bottom line,” she adds. “We may have to reconsider keeping the franchise if they take” away the online sales. Saccucci Auto Group was founded in the 1950s by Cora’s husband, Michael Saccucci, who died in 1984. Michael was the general manager of a Lincoln Mercury store in nearby Newport, R.I. He acquired the franchise from the owner and in 1968, bought 5.5 acres in Middletown and moved the Lincoln Mercury store to the site. The Honda franchise was added in 1978. These days, the store sells about 80 to 100 new and used Hondas monthly and has 53 employees in the small, aging dealership. Cora, working alongside her husband, handled jobs in all parts of the dealership and brought in the girls to keep it a family affair. Each of the women owns one-third of the business. “My husband always told me he see SACCUCCI, Page 40 NEAL HAMBERG The answer: The Web Saccucci Honda hasn’t had it easy this decade. Honda is having a good year, but the dealership’s sales and profit margins on sales of new vehicles are dropping. The family-owned dealership has a tiny customer base on the island city of Middletown, R.I., with a population of 16,000. And right down the road, Bostonbased Ernie Boch operates the largest Honda dealership in the country — famous throughout New England for ubiquitous TV commercials urging customers to “come on down” for the deals. Cora Saccucci, center, and her daughters, Barbara, left, and Carol, say online sales of parts, accessories and extended warranties have helped their Middletown, R.I., dealership survive. Saccucci Honda’s owners — 83year-old Cora Saccucci and her two daughters, Barbara, 56, and Carol, 53 — are a conservative bunch. For years, they knew only one way to do business — the old-fashioned way. Then in 2006, Honda executives began applying pressure. In letters to the Saccuccis, they complained about the dealership’s lack of working capital and the store’s outdated facility, which also houses a Lincoln Mercury franchise. The Saccucci women worried and began looking for an answer. It turned out to be right under their noses: Barbara’s son Gardiner, a 2003 computer science graduate from Providence College. The field reps took an immediate liking to Reynolds. They had begun pushing dealers to turn to e-commerce — and the kid seemed to have the right stuff. CORRECTION A story on Page 35 of this issue gives the wrong size for International Automotive Comp
Table of Contents Feed for the Digital Edition of Automotive News - September 8, 2008 Chrysler Financial hikes dealer floorplan fees Back in business? Detroit's best bets for cash: Feds, UAW Document fee suits swamp Missouri dealers Honda's family squabble Used truck prices rebound Ford mulls Lincoln compact Toyota delays RAV4 plan Proposed flex-fuel mandate roils industry Chrysler sues consultant over sourcing Cobalt transaction prices are up $775 since April Nissan looks to Mexico for engineering aid To retain truck buyers, Nissan offers more stuff Press: Chrysler is pushing forward on electric cars Leasing falls to 4-year low GM: Currency shift stalled Astra Dealers say they can sell the Republican ticket Industry loans clash with GOP climate Grand Cherokee will get axles from new plant Makers must resist urge to backslide as gas price dips Times are tough outside the U.S., too Chevrolet does tout its small cars Let natural gas power the fuel cell A crash course in collaboration Dodge wouldn't rush the RamBox Plastics are losing cost advantage Suppliers expect to benefit from tougher CO2 rules 'People just want Ford to go' For now, Honda will skip electric vehicles Toyota, Subaru enter race to market electric vehicles China exports squeezed Study: 15% of wrecked autos got washed titles Mercedes megadealer is bullish on luxury Sheehy: 'We are not in business for nostalgia' Automakers use driving schools as marketing tools Dodge smoothes Ram's rough edges â a little Honda touts leasing while others fall back Alysha Webb Study: Nonprime car loans get longer Dealer CPA group picks leader BMW, Edmunds team up on loan site for consumers Va. Honda dealership loses protest bid Judge throws out deceptive-ads lawsuit against Toyota in Arkansas Mo. dealership's protest gets go-ahead Pa. court throws out suit against Ford, dealership Dealers Ross' interiors company pushes into China, India More than a game Nissan's Tavares: Green conference keynoter Quality group seeks to set consulting standards Personnel Dana to shift HQ by Sept. '09 Tenneco to supply Volvo XC60 BMW gets Siemens conveyors IAC to cut 280 jobs in Sweden Polytec to acquire Peguform Metaldyne to sell Italy operation Federal-Mogul to build India plant Beck, Delphi make pact TRW to supply Chinese sedan Auto profits rise in Russia Black Book expands data Hayes Lemmerz cuts losses Ford: Buyouts are a tough sell GM's party plans include production Volt An ice-cold August for auto sales Big drop in Aug. output Lights, camera . . . Volt? In case the roads get too quiet . . . The Insight rides again Lagonda brand will be back Milwaukee road trip: No old pals, but 1 new lesson Choice of Odell seen as Ford vote of confidence in Volvo Dana sort of wins an award Automotive News - September 8, 2008 Automotive News - September 8, 2008 - (Page Introducti) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 1) Automotive News - September 8, 2008 - Detroit's best bets for cash: Feds, UAW (Page 2) Automotive News - September 8, 2008 - Toyota delays RAV4 plan (Page 3) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 4) Automotive News - September 8, 2008 - Cobalt transaction prices are up $775 since April (Page 5) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 6) Automotive News - September 8, 2008 - GM: Currency shift stalled Astra (Page 7) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 8) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 9) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 10) Automotive News - September 8, 2008 - Grand Cherokee will get axles from new plant (Page 11) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 12) Automotive News - September 8, 2008 - Let natural gas power the fuel cell (Page 13) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 14) Automotive News - September 8, 2008 - Plastics are losing cost advantage (Page 15) Automotive News - September 8, 2008 - Suppliers expect to benefit from tougher CO2 rules (Page 16) Automotive News - September 8, 2008 - 'People just want Ford to go' (Page 16A) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16B) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16C) Automotive News - September 8, 2008 - Toyota, Subaru enter race to market electric vehicles (Page 16D) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 17) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 18) Automotive News - September 8, 2008 - For now, Honda will skip electric vehicles (Page 19) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 20) Automotive News - September 8, 2008 - Study: 15% of wrecked autos got washed titles (Page 21) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 22) Automotive News - September 8, 2008 - Mercedes megadealer is bullish on luxury (Page 23) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 24) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 25) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 26) Automotive News - September 8, 2008 - Sheehy: 'We are not in business for nostalgia' (Page 27) Automotive News - September 8, 2008 - Automakers use driving schools as marketing tools (Page 28) Automotive News - September 8, 2008 - Dodge smoothes Ram's rough edges â a little (Page 29) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 30) Automotive News - September 8, 2008 - BMW, Edmunds team up on loan site for consumers (Page 31) Automotive News - September 8, 2008 - Judge throws out deceptive-ads lawsuit against Toyota in Arkansas (Page 32) Automotive News - September 8, 2008 - Pa. court throws out suit against Ford, dealership (Page 33) Automotive News - September 8, 2008 - Dealers (Page 34) Automotive News - September 8, 2008 - More than a game (Page 35) Automotive News - September 8, 2008 - Personnel (Page 36) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 37) Automotive News - September 8, 2008 - TRW to supply Chinese sedan (Page 38) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 39) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 40) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 41) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 42) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 43) Automotive News - September 8, 2008 - Auto profits rise in Russia (Page 44) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 45) Automotive News - September 8, 2008 - GM's party plans include production Volt (Page 46) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 47) Automotive News - September 8, 2008 - An ice-cold August for auto sales (Page 48) Automotive News - September 8, 2008 - Big drop in Aug. output (Page 49) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 50) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 51) Automotive News - September 8, 2008 - Dana sort of wins an award (Page 52)
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