Automotive News - March 9, 2009 - (Page 3) FEBRUARY 9, 2009 • 3 83rd year — No. 6346 Dealers among alleged Madoff victims Lindsay Chappell lchappell@crain.com Jan. N.A. output plummets North American vehicle production plunged 62.2 percent last month compared with January 2008. Only 442,241 vehicles were built last month, compared with 1,170,816 in January 2008. The previous smallest month took place during a UAW strike at Delphi Automotive Systems Corp. in July 1998. That month, North American automakers produced 667,074 vehicles. Total U.S. vehicle output plunged 65.6 percent; Canada fell 58.0 percent; and Mexico shriveled by 49.8 percent. — Debi Domby Ford slices supply base DETROIT — Ford Motor Co. slashed the number of production suppliers eligible for future work by 26 percent to 1,600 companies in 2008. But Ford purchasing chief Tony Brown said late Friday he still is less than halfway to his goal of 750. Brown won’t say when he expects to meet that goal. But given the economic crisis, it will happen faster than previously planned, he said. The industry hasn’t seen the peak in the level of distressed suppliers and supplier bankruptcies and insolvencies, he said. — Amy Wilson Some well known names in auto retailing have surfaced on a newly published list of victims of alleged New York swindler Bernard Madoff. Among them, according to documents filed in the U.S. Bankruptcy Court in New York: Robert Potamkin of Potamkin Automotive in New York and south Florida; Robert Rosenthal, head of Rosenthal Automotive in the Washington area; and Miami dealer Norman Braman. Madoff is accused of bilking $50 billion from thousands of investors in a Ponzi scheme. The court list of alleged victims does not provide the amounts lost. Among several separate listings for the Potamkin group is the family’s charitable trust fund. Reached by phone on Friday, Feb. 6, Potamkin said that fund may have lost $1 million. But he said his personal accounts, which also lost about $1 million, could recoup most of the loss through insurance. “I lost enough to be aggravated LUCAS JACKSON/REUTERS Bernard Madoff leaves court after a hearing in New York. Several auto dealers were among the victims of Madoff’s alleged Ponzi scheme. about it,” Potamkin said. “Luckily, we believe in diversification.” Separately, a charitable trust set up by the Braman family had en- trusted about $32.7 million of its $38.8 million in total assets to Madoff as of 2007, according to an Internal Revenue Service document. Efforts to reach a Braman spokesperson were unsuccessful. The list of alleged victims also includes Peter Paris, a vice president of Potamkin Cadillac, who could not be reached; the employee profit-sharing plan of Bay Chevrolet in Rockville Centre, N.Y.; and funds from the Minneapolis dealership Metro Motor Imports Inc. In an unexplained discrepancy, a Pontiac dealership operates at the Rockville Centre address listed in the documents, not Bay Chevrolet. Efforts to reach Metro Motor owner Hess Kline, who also is listed individually as a Madoff investor, were unsuccessful. Ted Terp, owner of the Metro Motor Group in Minneapolis, was startled to hear that a similarly named business was on the Madoff list. Terp purchased his Mitsubishi store from Kline and retained the Metro name. “It’s not me,” Terp said by telephone Friday. “Business is bad enough right now without that.” c Isuzu’s exit strategy Depriving dealers of product was brutal, but the troubled Japanese brand may have done other things right while winding down its sales operation Alysha Webb awebb@crain.com Dismal decade As the product pipeline dried up, Isuzu’s U.S. sales dwindled. 120,000 100,000 80,000 U.S. sales Ford van’s sticker: $21,475 DETROIT — Ford Motor Co.’s new Transit Connect small commercial van will go on sale this summer starting at $21,475, including shipping. The van, developed in Europe, also will be the basis of the battery electric commercial vehicle Ford plans to sell in 2010. Ford announced that it is collaborating with Smith Electric Vehicles, a United Kingdom upfitter, to convert the Transit Connect to battery power. The electric Transit Connect will have a range of up to 100 miles, Ford says. Ford will show several versions of the 2010 Transit Connect this week at the Chicago Auto Show. — Amy Wilson LOS ANGELES — How to do away with a damaged brand? One way is the Isuzu way: Starve dealers of product over a long period and dribble out the bad news in small doses. At least it has proved to be a relatively inexpensive way to dismantle a sales network. And in the end dealers didn’t complain too much. So is Isuzu’s M.O. a template for other carmakers with brands on the bubble? On Jan. 31, Isuzu stopped delivering new light-duty vehicles to dealerships in North America — a year after announcing it would do so. The remaining 214 Isuzu dealers offer only Isuzu’s Terry Maloney: “I think we did it right for the consumer, the dealer and the company.” parts, service and warranty repairs. Only about half a dozen dealers have cut ties with the company, said Terry Maloney, president of Isuzu Motors America LLC. Two dealers have brought lawsuits, which are pending. “I think we did it right for the consumer, the dealer, and the compa- ny,” Maloney said. “They thought we were fair. Just the fact that so many dealers signed up for the service agreement shows that.” He said the service business will provide dealers with steady income. As GM ponders what to do with Saturn, Saab and Hummer — after paying $1 billon to shut down Oldsmobile earlier in the decade — the Isuzu approach may offer a few pointers. “I do feel Isuzu has created a good model,” Maloney said. “The majority of the dealers wanted to continue as service dealers. The dealers who terminated did so for good, sound reasons.” Isuzu last year booked a ¥4 billion 60,000 40,000 20,000 0 '99 '02 '05 '08 Source: Company (about $44.5 million at current exchange rates) charge to wrap up its see ISUZU, Page 26 Saturn dealers to get pared-down list of options for brand Jamie LaReau jlareau@crain.com Uncertain Saturn Saturn dealers say questions about the brand’s future are hurting sales. JAN. ’08 JAN. ’09 CHANGE that policy, Saturn’s fate is sealed. CLARIFICATION A story on Page 32 of the Feb. 2 issue cited Volvo’s plans to introduce a hybrid vehicle in 2011. Volvo plans to introduce the vehicle in Europe. CORRECTION The headline on a story on Page 17 of the Feb. 2 issue said rules about smog were criticized. John McEleney, chairman of the National Automobile Dealers Association, was talking about state regulation of fuel economy to reduce carbon dioxide and other greenhouse gases from vehicles. DETROIT — Late this week, Saturn dealers likely will get a narroweddown list of options for the troubled General Motors brand. Last week, GM marketing chief Mark LaNeve said those options include “everything from a new dualing pattern to a spinoff to a partnership to an outright sale.” In a two-day meeting late last week, GM and members of the Saturn Franchise Operations Team narrowed the options. The automaker and franchise team will refine those options and tell Saturn dealers this week, a team member says. “And then individual retailers will be able to start talking about which options make sense to them,” said Todd Ingersoll, a member of the franchise team and owner of Saturn of Danbury and Watertown in Connecticut. Ingersoll spoke with Automotive News during a break from his Customer questions “Everything’s been said; just not everyone has said it,” says Stuart Lasser, owner of Saturn of Denville, about 30 miles northwest of Newark, N.J. Lasser is suing GM and Saturn on several counts including violating state franchise laws. Fernando Somoza, owner of Saturn of Houston and Saturn of Houston Northwest 290, says many customers ask about the brand’s future and worry about warranty service and parts. “It’s affecting our sales nationwide,” he says. “I’m really surprised we’re still selling the cars we’re selling.” Said GM’s LaNeve. “We haven’t seen a dramatic difference in their business. Obviously, the quicker we can clarify our direction with Saturn in line with the viability plan, the better.” c Richard Truett contributed to this report Saturn GM 15,359 250,926 6,172 128,198 –59.8% –48.9% Ingersoll said GM’s decision for Saturn may be disclosed within hours of filing the viability plan. During GM’s sales call Tuesday, Feb. 3, LaNeve said GM hopes to have more clarity for Saturn’s future “very shortly.” The GM vice president of North American vehicle sales, service and marketing said the Saturn solution is not something GM wants to rush. Many Saturn dealers say the longer they wait for GM to decide the brand’s future, the more sales suffer. GM plans to go to market with four core brands — Chevrolet, Cadillac, Buick and GMC — and a drastically reduced Pontiac lineup. Some Saturn dealers say that given meeting with GM on Friday, Feb. 6. Ingersoll declined to list the specific options. When asked whether one would be shuttering the Saturn brand, Ingersoll was fuzzy. “Everything is fluid. You can’t commit to any option,” he said. “I’ll say this: You don’t need four options to kill a brand.” Federal plan due GM is under pressure because it must submit a viability plan to the U.S. Treasury Department on Feb. 17 as part of its federal loans. It is unclear whether GM must give a plan for Saturn and its two other imperiled brands — Hummer and Saab.
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