Automotive News - April 14, 2008 - (Page 12)

12 • APRIL 14, 2008 opinion of service pacts American Honda Motor Co. must rethink its objections to letting its dealers aggressively sell factory service contracts online. Restricting how dealers can sell Honda Care and Acura Care extended warranties may be justifiable under the dealer franchise agreement, but it is only delaying the inevitable. It also puts the factory perilously close to aiding and abetting anticompetitive price gouging by some dealers. Honda had planned to ban online service contract sales after it got complaints from its national dealer advisory board that some dealers were selling the extended warranties well below the suggested retail price. But a dealership that was aggressively selling service contracts online sued Honda, putting the matter on hold. Honda is re-evaluating the issue. A Honda spokesman says the issue is customer satisfaction. Customers who hadn’t planned to buy a service contract were sold one at the dealership when they bought a vehicle. When they got home, they did some research and found they could have bought one for less online. So they felt cheated by their dealerships and complained. Honda insists its concern is protecting the brand. Honda Care and Acura Care are meant to be sold on their benefits and value, not price, the company argues. Depending on the outcome of the lawsuit, online sales likely will be allowed but with restrictions that prevent dealers from selling outside their market area. Honda concedes that customers may pay more as a result but denies that is the intent. Honda Care and Acura Care aren’t the only factory service contracts available online at discounts. Automakers and dealers may not like it, but it comes with the intense competition that’s part of the Internet age. American Honda and its dealers would do well to accept that reality and move on. One of the basic reasons that we don’t have much in the way of oil reserves is that there was no point in searching for oil when you had 10 years of development ahead of you. That may not be the case any longer, but it was very real for many years. The same is true for many automotive innovations. If we hadn’t had the two oil crises in the 1970s plus the emissions laws from Congress, we would still be driving around in polluting vehicles with carburetors, vehicles that get 10 mpg, and we wouldn’t care because fuel would be a quarter a gallon. There would not have been a push to improve mileage and generally make autos safer, cleaner and more fuel efficient. But rising gasoline prices and stricter emissions standards have led to the investment of tens of millions of dollars into engine research that we otherwise DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Honda must revisit The age of fuel innovation is here What didn’t make online dealer sales would not have seen. Well, it’s about to happen again. What didn’t make sense at $2 a gallon all of a sudden makes good sense at $4 a gallon or $100 a barrel for oil. Oilmen are going back to get the oil out of shale because it didn’t make sense at $50 a barrel. And the automobile industry will invest tens of millions of dollars more to find ways to make cars and trucks more fuel efficient. Ideas that were too expensive before are now going to be worth taking a look at. We’ll see all sorts of inventions that will make cars lighter, safer and more economical, whatever kind of fuel they use. Economics will push the envelope as never before. And with the automobile industry getting the biggest blame for sense at $2 a gallon all of a sudden makes good sense at $4 a gallon or $100 a barrel for oil. global warming, whether it’s true or not, there will be a separate push for the reduction of emissions. It’s sort of the 1970s all over again — except this time, we’ll have to include the Third World. Economics will push as well as subsidize the next great period of innovation. There will be a lot of hemming and hawing during the next few years, but the major auto companies know what their tasks are and are already working on solutions. It will be an exciting time to be an engineer in the automobile industry. before consumers will purchase those vehicles. Sorry, but mandates and markets are not the same thing; they’re separated by consumer demand. JULIE C. BECKER Vice President, Environment Alliance of Automobile Manufacturers Washington For Detroit, some things never change To the Editor: Regarding “Downsizing arrives — with a vengeance,” April 7: This is just another glowing example of no matter how much things change, they stay the same. Think back about 30 years ago. The price of gasoline was increasing steadily. Many people wanted to downsize their automobiles but could not find suitable alternatives in the U.S. brands, so they were forced to look to the imports. Detroit had no small cars, so it looked to its Japanese and European partners. In typical Detroit fashion, the cheap Band-Aid was the preferred method of fixing the problem. This situation began with the meteoric rise of the Japanese imports. They were once considered cheap, tinny, throwaway autos. Fast forward to today. Here we are again. The price of gasoline is increasing steadily. American buyers are shunning the big, gas-guzzling vehicles from the old Big 3, and Detroit is again scrambling to find its way. The Detroit 3 complain that they don’t make enough profit on small cars. They are once again forced to look to the European and Japanese manufacturers to bail them out. They were addicted to the profits generated by the big pickups and SUVs and now wonder how they will survive. I have no pity for Detroit. The Detroit 3 have consistently shown arrogance and a lack of commitment to produce vehicles, profitably, that will fill the needs of buyers today and into the future. The Detroit 3 did not learn their lesson see LETTERS, Page 14 Chrysler got it right Chrysler LLC’s decision to reduce the amount of money it requires dealers to spend to upgrade their stores is sensible. This is the wrong time to force dealers to overextend. For an average dealership, Chrysler reduced the size of the footprint by 12 percent in an effort to keep requirements in line with what dealers can afford. Chrysler’s Project Genesis intends to reduce the company’s dealership count and put Dodge, Chrysler and Jeep brands under the same dealership roofs. The future Chrysler will be a smaller Chrysler, and the footprint of its dealerships ought to reflect that change. Mandates, markets and buyer demand THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. 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Table of Contents Feed for the Digital Edition of Automotive News - April 14, 2008

Dealership jobs hit 8-year low GM is the wild card in axle war Service contracts: Hard-sell tactics plague dealers, customers TV auto ads shift to online, mobile venues At seminar, marketing execs to discuss new ways to reach customers Better get to know the Nano — it's set to change the world Veteran Detroit 3 dealer: 'The future is quite bleak' Poll: Dealers scrounge for cuts Locals closer to GM strike Scion xB price rises $100 Valeo CEO: No breakup Tata Nano changes low-cost development Hyundai tailors TV, Web ads for Hispanics Study: Ads focused on vehicle qualities won on Oscar night Post-Celine, Chrysler ad guru seeks right note Chrysler's quest for quality lured Nissan exec Betts Search starts for in-vehicle alcohol detectors After S. Calif. success, Honda may fund ad groups Computer images gain ground in TV ads Web TV offers automakers new ad, sales options BMW: X6 will bring brand new buyers Diana T. Kurylko Chrysler fields 'dream' ads Nissan seeks dealerships for trucks Honda will export Alabama-built Pilots to Russia Toyota, Subaru work on 'affordable' sports car Cadillac's ad agency savors the sweet life Some stores may not sell Chrysler hybrids GM hybrids get off to a slow start in first quarter Lexus adds a personal touch to pamper owners, prospects What they're buying — and what they're not The age of fuel innovation is here Approaches to r&d vary Nano brings credibility to Indian engineering Honda must revisit online dealer sales of service pacts Chrysler got it right Mandates, markets and buyer demand For Detroit, some things never change Buick: As Chicago goes, so goes the nation Auto industry has lost a good man Accentuate the positive Ex-Porsche CEO: Cayenne spiced up sales Green programs shape battle for engineering grads Tata rewards suppliers with ties to India Bill aims to set minimum sound levels for vehicles Industry lobbyists step up emissions fight Seeking wider market, Nissan equips sports car for snow New chief of SAE has D.C. skills China and GM's answer to Nano — sort of $2,500 car is Ratan Tata's personal quest NADA offers training in risky credit Donna Harris Deal's goal: Widen appeal of dent-repair coverage Title committee created Vehicle loan delinquencies rise from 2007 Suppliers to the 2009 Tata Nano Odd China combo: Fuel sippers, SUVs Pontiac Vibe: A sporty hauler with Toyota touches Dealers J.D. Power III named tracking company partner Toyota will buy back rusted Tacomas 100,000 Flex sales a year? Farley: 'Absolutely' Ford wants word-of-mouth campaign Small suppliers feel the pain of axle strike Plastech tries to sell 2 units TRW plant will build Ford gears Toyota plans 2nd India plant Dodge launch goes digital Toyota, GM recall 660,000 vehicles for window flaws Lear announces white-collar layoffs March output drops 23.6% New Ford ads tout quality improvements Tata dealers must be handy with a wrench Can the Greens slow down the autobahn? Racy scandal for race exec Echoes from the grave: Olds still has cachet The Final Say

Automotive News - April 14, 2008

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