Automotive News - February 25, 2008 - (Page 31)

FEBRUARY 25, 2008 • 31 VW labor boss gets jail term BRUNSWICK, Germany — The former head of Volkswagen AG’s works council went to jail for 33 months for using his labor post to obtain sex and bribes, Thomson Financial reported. On Friday, Feb. 22, a German court convicted former labor boss Klaus Volkert on numerous counts. It also gave Klaus-Joachim Gebauer, a former Volkswagen personnel executive, a suspended prison term of one year on corruption charges. Prosecutors had sought prison terms of 45 months for Volkert and 20 months for Gebauer. PALS Group 1, Gulf States do battle in court continued from Page 1 A tiff between 2 Gulf giants Group 1 Automotive Inc. CEO: Earl Hesterberg, right Headquarters: Houston 2007 sales: $6.5 billion (est.) Vehicles retailed in 2006: 197,000 Dealerships owned: 104 two highly paid Group 1 managers to venture out on their own to become Group 1 competitors. The heart of the case At the heart of the case are two Toyota/Scion dealerships: Fowler Toyota and Scion of Dallas and Group 1’s Sterling McCall Toyota and Scion of Houston. Group 1 alleges that the general manager of its Sterling McCall store, Ronald Schwartz Jr., and fellow executive Lee Oden made plans to personally acquire the Dallas dealership in March 2006. The complaint charges that Gulf States previously had approached other Group 1 managers with the same plan and finally encouraged Schwartz and Oden to buy the Dallas store. They now operate that dealership as Cowboy Toyota. Although Group 1 does not own a Toyota dealership in Dallas, it does own a Nissan dealership, two DodgeChrysler-Jeep stores and a Ford-Mercury dealership there. The flight by Group 1 insiders to Dallas created a formidable new competitor armed with competitive details about Group 1 pricing and operating policies, according to the suit. In two weeks, the court will begin to decide whether that is worth what Group 1 is seeking from its Toyota distributor: triple damages for Group 1’s trouble and an order not to talk personal business with any more Group 1 managers. c Bank: Autos easier to afford DALLAS — Vehicles were a little easier to afford last quarter than they were a year earlier, according to a Dallas bank. Dana Johnson, chief economist at Comerica Bank, found that an average-priced vehicle cost $28,715 or the equivalent of 24.4 weeks of median family income in the fourth quarter of 2007. The figure includes finance charges. A year earlier, the figure was 26.2 weeks. Johnson said buyers spent about $300 less on average and extended the average loan term by two months, to 63 months. Lower interest rates from finance companies also reduced the cost of vehicle ownership. He estimated incomes rose 4.1 percent. served by Gulf States, which is privately owned by Houston billionaire Thomas Friedkin. Many of the case’s documents have been placed under a protective order by the court. As recently as Feb. 12, attorneys were arguing over which closely guarded financial details would be spilled into public view. Among them: The compensation packages of Gulf States executives. The specifics of how Toyota Motor Corp. judges the financial and operating performance of its independent American distributor. The average profit from vehicles sold by Gulf States and Group 1 stores. The average profit margins on dealer-installed options at Gulf States. Gulf States Toyota Distributors Inc. President: Toby Hynes, right Headquarters: Houston 2007 sales: n/a Vehicles wholesaled in 2006: about 250,000 Dealerships served: 150 in Texas, Oklahoma, Louisiana, Arkansas and Mississippi Awkward for Group 1 The case creates an awkward situation for Group 1 Automotive. Gulf States supplies Toyotas and Scions and their service parts to five of Group 1’s dealerships in the fivestate Gulf States region of Texas, Louisiana, Oklahoma, Mississippi and Arkansas. Nationally, Toyota, Scion and Lexus stores supplied 37 percent of Group 1’s approximately $6.5 billion in sales last year. And while protesting the actions of Toyota’s Gulf area distributor, Group 1 hopes to acquire more Toyota dealerships. At the same time, Group 1 CEO Earl Hesterberg previously was president of Gulf States, and is friendly with many of the executives who now run the company. He and Toby Hynes, who replaced Hesterberg as Gulf States president in 1999, are both former Ford Motor Co. executives who belong to a casual fraternity of exFord people in new careers — wryly known as the “Retreads.” “After two years of discovery, we haven’t found any basis for the suit,” Hynes said when contacted by phone. “We believe the suit is meritless.” He declined further comment. Hesterberg declined to discuss the litigation. In an e-mail response to questions, Group 1 attorney Joseph Letzer stated: “Group 1 did not file this lawsuit lightly since it does normally enjoy a friendly and productive relationship with GST. But it could not in good faith to its shareholders allow GST’s actions to go unchallenged.” Those Gulf States actions, according to the lawsuit, were to encourage CHAMCO Suits by ex-execs contend a ‘consultant’ runs the show continued from Page 1 Ghosn: Autos are in recession SEOUL — Nissan Motor Co. CEO Carlos Ghosn says the U.S. auto industry is in recession, even if the U.S. economy is not. But he said the U.S. auto market “will not stay in recession for a long time,” the Associated Press reported. Ghosn said high costs of materials such as iron ore, precious metals and aluminum are hurting the industry. from Automotive News, Chamco said Michael Daspin “is not an owner, officer, director or employee” and “does not control Chamco.” In their lawsuits, former corporate counsel Philip Berwish and Thomas Cornine, ex-vice president of finance, say they reported to Daspin at Chamco and allege that Daspin is the real power behind the company. Chamco executives say Daspin helped negotiate the deal under which Chamco plans to import trucks built by Chinese automaker Hebei Zhongxing Automobile Co. sippany, N.J., company described Daspin as a consultant with no ownership interest. But Chamco Auto now confirms that its largest shareholder is Joan Daspin and that one of its founders, Ron Stella, is Daspin’s nephew. Joan Daspin sits on the company’s Financial Oversight Committee; Stella runs Capital Corp. Inc., the private merchant bank that launched Chamco Auto. Shoving match In their lawsuits, Cornine and Berwish allege that Daspin hired them last May. They say they reported to him and were fired by Daspin on Sept. 24 after telling Chamco’s board of directors about the proposed stock sale. As part of the dispute, a Parsippany police report details a Sept. 24 shoving match between Daspin and Berwish, but accounts differ about who delivered the first shove. Calls to the attorney for Cornine and Berwish were not returned. In its written responses to Automotive News’ questions, Chamco said it contacted the two executives after they left the company, saying “that if they wished to resume their duties, they were welcome to come back and do so. Neither did.” The lawsuits’ allegations come at a bad time for Chamco, which recently hired a former Fiat executive to resolve nagging problems that could torpedo its launch plans. In October, it recruited Mario Ferla, an experienced manufacturing executive, to help the company sign up dealers, attract more investors and revive a failed plan to build trucks in Mexico. Assuming Ferla can fix these problems, Chamco plans to sell a Chinese-made pickup and SUV through 75 dealers next year. Ferla is Chamco’s CEO, but the lawsuits raise questions about who really controls the company. Bill Pollack, Chamco’s chairman and most public figure, said in an interview that the company didn’t try to conceal Daspin’s past or his involvement with Chamco. “It was 30 years ago; he paid his price,” Pollack said. “All significant partners here — all employees and megadealers — are told about it. It is not fair for everyone else to be caught up in that. It is ancient history and not terribly relevant.” c NHTSA studies window woes WASHINGTON — The National Highway Traffic Safety Administration has opened an investigation to determine whether front-seat side windows are prone to shatter on about 677,000 Toyota Corollas and Matrixes and Pontiac Vibes built in 2003 and 2004. NHTSA has received 503 complaints of shattering glass on those models, including 36 reports of injury. Title is called a ‘facade’ Berwish and Cornine, who claim they were wrongfully terminated by Daspin, allege that Daspin’s title as consultant “was purposely created as a facade to avoid close scrutiny” of his background by potential investors. They also claim that Daspin “was a de facto owner of Chamco Auto and was involved in and/or supervised all Chamco Auto business dealings and decisions.” The two men say Daspin fired them last September after they asked Chamco’s board to stop what they considered an improper sale of $451,500 worth of Chamco stock to new COO Thomas Del Franco. Del Franco was previously COO at Audi of America and spent several years as a Mazda sales executive in North America. Chamco said that Daspin “does not have the authority” to fire anyone and that the two executives left the company “on their own accord.” During a Feb. 10 interview with Automotive News at the NADA convention, Daspin acknowledged problems in his past. He said he served six months in a federal prison in New York after he pleaded guilty in 1977 to concealing the assets of Translease Systems Inc., a bankrupt trucking company he controlled. Daspin and six associates were charged with hiding 26 tractors and trailers. Daspin said he has not run afoul of the law since ALFREDO MILLAN Chamco Chairman Bill Pollack, on the past legal problems of E. Michael Daspin: “It is ancient history and not terribly relevant.” his conviction. He said the former executives who filed the suits “wanted to use (the threat of) going public as a threat for Chamco to settle.” “People

Table of Contents Feed for the Digital Edition of Automotive News - February 25, 2008

Automotive News - February 25, 2008 Chamco's 'consultant' is forced into limelight Group 1, Gulf States clash Dealer profit stuck in neutral Ghosn: Autos are in recession NHTSA investigates Toyota, Pontiac cars' windows The upside of upside down: Better belts Push buttons will alter interiors Schwarzenbauer leaves Porsche for Audi CSM: Cuts in auto output to ease in 2nd quarter Ford's Hispanic ad campaign takes it to the mat Hydrogen slips as a solution for the greening of autos Kia to spend big to upgrade dealerships GMAC: Office cuts won't affect dealers LaSorda: Chrysler's $700 million axle plant is 'going up' Toyota hybrid battery partner boosts output Buick may add a car below the LaCrosse Toyota could add 2 more small vehicles to U.S. lineup Calif. regulators shoot for 40-plus mpg by 2020 Loyalty/conquest: Power's best, worst Chrysler firm on retrieving tools from Plastech Former NUMMI exec applies Toyota ideas to aircraft industry Kozyra's resume reflects volatile supplier climate Obituaries Chrysler, Plastech now have chance to work together Do it the NADA way Hail, Geneva; spring must be near Volt's potential is unlimited The Volt is terrific; give GM a hand Beware of high tech running amok Teach reporters half full/half empty Dealer wants to view Conti exec: Inside, it's about the info Dealers Caddy chief's goals: Build on CTS, prestige, high-tech Geneva looks like another green scene Volvo XC60 system senses impact, hits the brakes Saab 9-1 concept awaits green light GM: Supply of vehicles to certify will stay steady Used-vehicle supplies up, prices down in Jan. Black Book plans daily updates Cars.com rolls out video service Manheim launches search tool Luxury sales channel is high on GM agenda GM seeks dealers' help with 5-point green plan Northwood offers dealer MBA Court rejects Chicago dealer's appeal Taxes distort Jan. sales in Europe Nissan to cut designers NHTSA studies window woes Bank: Autos easier to afford VW labor boss gets jail term Delphi sells 2 units Toyota Tundra had tough Jan. Chrysler's white knight: We're investors, not heroes Ford's 'Knight Rider' is Sync on steroids GMAC parties have lost a bit of their pizazz Global warming? It's a crock - but . . . Nardelli's NASCAR debut is a winner A frosty reception for the TSX

Automotive News - February 25, 2008

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