Automotive News - June 9, 2008 - (Page 8)

8 • JUNE 9, 2008 advertising OUR DEALERS ARE GROWING Sources: GM poised to buy Cobasys Troubled battery supplier hurt mild hybrid production Andrew Grossman and Robert Sherefkin rsherefkin@crain.com AND SO CAN YOU! “With Zimmerman as a partner we have grown to be the # 1 GM Dealer in Albany, NY.“ Kara DePaula DePaula Chevrolet DETROIT — General Motors is nearing a deal to buy Cobasys LLC, the troubled supplier of batteries for GM’s mild hybrid vehicles, three sources told Automotive News. A source with knowledge of the talks said a deal between GM and Cobasys’ parent companies is imminent. Chevron Corp., of San Ramon, Calif., and Energy Conversion Devices Inc., of suburban Detroit, each owns half of Cobasys. Chevron holds a preferred interest. The two companies have been fighting over who is responsible for the battery maker. Production interrupted Problems at Cobasys limited production of the Saturn Vue and Aura mild hybrids and led to a recall late last year that affected 9,000 vehicles. To solve the problem, Cobasys halted battery production at its plant in Springboro, Ohio, for more than a month late last year. Mild hybrids use electric power to boost a gasoline powertrain. GM called on turnaround and consulting firm BBK Ltd. to conduct a financial audit of Cobasys, said a different industry source familiar with the situation. The BBK assessment is part of GM’s efforts to solve problems ahead of a possible buyout. GM might buy all of Cobasys, then operate it with a partner, said a source. GM plans to sell Cobasysbuilt batteries to BMW, Chrysler and Daimler AG, a source said. In a report to the Securities and Exchange Commission last month, Energy Conversion Devices said Cobasys’ owners were negotiating to sell the company to an unnamed buyer. The filing also said an unnamed customer has been propping up Cobasys since February by loaning it money for equipment and paying higher prices for its batteries. Calls to spokeswomen for Energy Conversion Devices and Chevron were not returned immediately. GM spokesman Tom Wilkinson declined to comment. According to a 2007 Energy Conversion Devices filing with the SEC, Chevron had invested $168.3 million in Cobasys though July 30. But a source said Chevron’s total investment has swelled to as much as $300 million. Energy Conversion Devices’ contribution to the venture was limited to intellectual property. It’s not clear how much of its intellectual property Cobasys owns. Cobasys had licensed some of its technology from Energy Conversion Devices. One source said GM would pay license fees to a unit of Energy Conversion Devices if it buys Cobasys. Royalty income Battery-maker Panasonic EV Energy Co. pays royalties to Cobasys for technology in the batteries used in Toyota Motor Corp.’s hybrids and the Honda Civic Hybrid sold in North America. If Cobasys were to fold — a possibility if it isn’t sold, according to Energy Conversion Devices’ regulatory filings — GM would be left scrambling for a battery supplier for its mild hybrid models. A source told Automotive News last month that GM can’t switch battery suppliers until 2010, when it will release the next generation of mild hybrids. c Richard Truett contributed to this report RESULTS! • KEYES AUTO GROUP • IRA MOTOR GROUP • TOM WOOD AUTOMOTIVE • CHECKERED FLAG • AUTONATION • DIEHL MOTOR COMPANY • CORAL SPRINGS AUTOMALL • RUSTY ECK FORD • AUTOLAND • HENDRICK CARY AUTOMALL • PATRICK AUTO GROUP • HUBLER AUTOMOTIVE • PLEASANTON AUTOMALL • DEPAULA CHEVROLET • WALLACE NISSAN OF KINGSPORT • SUPERIOR CHEVROLET Dealers Prove Our Advertising Gets ■ Mazda updates the RX-8 Mazda has given the 2009 RX-8 an exterior freshening, improved body rigidity and optional R3 sports suspension. Exterior changes include restyled front and rear fascias, headlights and taillights. The interior gets a restyled instrument panel and seat enhancements. Sales begin this month. GM ad chief Betsy Lazar: The job cuts are linked to changes in the dealer ad program. GM dealer program rebounds Ralph Kisiel rkisiel@crain.com Media buyer for GM cuts 25 jobs Mary Connelly mconnelly@crain.com Better days ahead? Why GM, vendors see the Integrated Dealer Management System program gaining momentum ■ GM-Reynolds lawsuits have been settled ■ ADP, AutoSoft have begun selling contracts under the program ■ GM plans to add at least 1 program vendor Source: GM, vendors GET A COMPLETE MARKETING PROGRAM! Guerrilla TV Marketing Radio Print Hispanic Direct Mail Web Design Internet Website Optimization In-Store CALL OR E-MAIL THE AGENCY THAT WILL WORK FOR YOU 24/7 (SERIOUSLY) The Integrated Dealer Management System program at General Motors is slow out of the blocks. But not to worry, say GM and the program’s vendors. When GM launched the program in early 2006, the automaker expected that at least 1,000 dealers would have signed up by 2008 for the hardware and software used to run a dealership. But so far only about half that number are under contract. In the first quarter, Quorum Information Technologies Inc. installed only two systems under the program. But GM and Quorum say the program is alive and accelerating. Quorum’s sales demand was down in the first quarter mainly because of a dispute between Reynolds and Reynolds Co. and GM, says Quorum CEO Maury Marks. Last October, Reynolds sued GM over the program. GM countersued. Under a settlement reached April 3, Reynolds no longer sells the contracts. “The benefits of stable pricing, shorter-term contracts and integration points — those are bleeding over into the non-IDMS contracts,” Raymond says. “Our goal never was to get 100 percent of the dealers on IDMS. It was just to get enough so that it has substantiation and a positive impact in the broader marketplace, which it has.” ADP says “many dealers” have selected the ADP-supplied program option. Raymond says ADP is “cranking it up.” 400 contracts up for grabs der which dealers contract with the automaker. Then the dealers choose Quorum, ADP Dealer Services or AutoSoft International Inc. — or, previously, Reynolds — to install and service the system. GM says it will add an additional vendor. Reynolds has sold 400 program contracts. Quorum, of Calgary, Alberta, has sold more than 100. It expects to install 11 systems during the second quarter and 12 during the third quarter. AutoSoft and ADP only recently began selling IDMS contracts. Dealers were in limbo during the legal dispute with Reynolds, says Marty Raymond, GM director of global retail programs. But now the program is regaining momentum and is having an impact on the dealership management system marketplace, he says. “We haven’t set the woods on fire, but we’ve gained a lot of traction,” says AutoSoft COO Charlie Prophet. AutoSoft has signed more than a dozen program contracts with GM dealers who were using a Reynoldssupplied system, Prophet says. By July 31, the 400 GM dealers with a Reynolds-supplied IDMS contract must decide whether to contract directly with Reynolds for a Reynolds system or remain in the program by changing to Quorum, AutoSoft or ADP. “We’re encouraged by what we’ve seen thus far in GM customers signing with Reynolds,” says Reynolds spokesman Tom Schwartz. GM’s Raymond says only 15 percent of those 400 dealers have made a decision, “but many, many of them are considering the change option.” c Speed bump “The Reynolds-GM lawsuit was a speed bump, and now that we’re over it, you will see IDMS accelerate during the back half of this year,” Marks says. “It ended up sort of pausing the market from a selling point of view.” Reynolds was one of four GM-approved vendors in the program, un- 1-888-878-ZADV zauto@zadv.com or visit www.zadv.com DETROIT — GM Planworks, the agency that handles General Motors’ media buying and planning, has eliminated 25 jobs. Those positions account for 5 percent of Planworks employment, says Lena Petersen, a spokeswoman for Starcom MediaVest Group, Planworks’ parent company. On April 1, GM decentralized its U.S. dealer advertising. The move gave dealer marketing associations more control over local advertising. Betsy Lazar, GM’s executive director of advertising and media operations, linked the Planworks job cuts to changes in the dealer ad program. “It is a reflection of the amount of people we need who are specialists working on that local business,” Lazar told Automotive News. Laura Desmond, CEO of Starcom MediaVest Group/the Americas, said the GM Planworks cuts also reflect “the evolving landscape” of digital marketing. “A streamlined model will allow us to make more strategic investments in the capabilities that are driving growth in the industry, including digital talent and tools, multicultural, consumer intelligence/research and innovative vendor partnership opportunities,” Desmond said in a statement. GM Planworks began operating under a new president, Ken Taylor, on April 1. GM spends about $3 billion a year to advertise in U.S. media. c http://www.zadv.com http://www.zadv.com

Table of Contents Feed for the Digital Edition of Automotive News - June 9, 2008

Automotive News - June 9, 2008 Hummer Bummer: A death sentence? New F-150, Ram in peril as big pickups collapse Japanese can add small cars faster than Detroit 3 Battery shortage hurts hybrid sales 2 key overseas staffers move to Automotive News in the U.S. Toyota may add Camry to Indiana truck plant Mazda extends warranty on RX-8 rotary engine CAW to consider strike against GM Porsche's new 911 GM plans big ad push for its big hybrid SUVs Chrysler cuts fees to outside service firms 5% Toyota considering 'Made in U.S.A.' Prius Congress, Bush square off over rollover suits GM finance whiz changed the industry GM's big SUVs may get lighter Harbour Report: Chrysler, Toyota most efficient Spring intros can be dicey Ford spends big on MKS ad launch Media buyer for GM cuts 25 jobs Sources: GM poised to buy Cobasys GM dealer program rebounds Mazda updates the RX-8 New Maxima is a tad smaller — but more buff Congress must balance safety, mpg concerns Is the gas crisis real or just temporary? What about poor driving? There's no substitute for safe driving Lack of regulation foils safety laws Sticker law cleaned up a pricing mess Lithia to sell outlets, delay used-car stores Nielsen likes to step off the beaten path GM union local strives to pull parts jobs in-house JCI will open Ga. plant to supply Kia Dealers: Be open about credit problems Finance venture has $1 billion Picture this Personnel Dealers BMW purchasing chief 'looking for waste' Nissan Mexicana gets new chief Ford Flex output begins Hyundai Genesis: $33,000 Ford buys more from minorities Audi's U.S. chief: Brand can handle high gas prices May in Detroit: Scary, not merry Infiniti FX starts at $41,765 Lincoln: 8,600 MKS orders Plastics supplier sees growth Jenkins gets Aston Martin post Smith is CEO of Jaguar, Land Rover Kremlin watching, Chrysler style Toyota breathing down GM's neck on monthly U.S. sales PR chief Steve Harris: At GM through '08 Small-car surge is a replay of 1979 Auto execs would benefit from some store experience Mini's mixed results: Sales soar, quality stumbles Nice car — so what's the ppmpg? Volt's good PR got struck by lightning

Automotive News - June 9, 2008

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