Automotive News - September 22, 2008 - (Page 6)

6 • SEPTEMBER 22, 2008 GM store count down 226 so far this year Amy Wilson awilson@crain.com DETROIT — Through August, General Motors trimmed its U.S. dealership count this year by 226 stores, to 6,550. And through year end, GM’s U.S. sales chief expects the closure rate to quicken. The final toll for 2008? It could be 350 to 400 closed stores, said Mark LaNeve, GM’s vice president of North America vehicle sales, service and marketing. That’s what GM expects, not a target, he said. That would compare with a reduction of 260 stores in 2007 and 87 stores in 2006. Given the industry sales downturn this year and the projection for 2009, GM wants consoli- Mark LaNeve: By year end, 350 to 400 GM dealerships could be closed. dation activity to pick up, LaNeve told Automotive News. “We see (sales) recovering, but not immediately,” he said. “In that kind of a market, you’re going to have less dealer throughput, a lot of pressure on profitability.” GM is forecasting 2008 light-vehicle sales in North America in the low-14million range, down more than 3 mil- lion vehicles from the U.S. peak of 17.4 million units in 2000. In a market such as this, more closures occur because dealers are financially stressed. But even without the industry sales downturn, GM executives and many dealers say there are too many dealerships for the automaker’s shrinking sales to support. GM’s dealership network was built when the automaker dominated U.S. sales. In 1962, GM’s market share peaked at 51.1 percent. By 2007, market share had dropped to 23.5 percent. During the past 12 years, GM has reduced its dealership count by 25 percent, LaNeve said. GM chips in money to facilitate some deals and will continue to do so, he said. The dealership count could go down even more than the 400 stores GM expects, said Mike Bowsher, president of Carl Black Automotive Group in Kennesaw, Ga. “It’s no secret the business climate out here is very difficult, and there’s pressure from all sides, particularly the credit side,” he said. Bowsher runs seven dealerships, including three Buick-Pontiac-GMC stores. He said GM is doing a good job so far of staying on top of the consolidation activity. “GM has to get involved with this at some level to ensure the right dealers stay,” Bowsher said. “It’s very difficult, and they just can’t save everybody out here.”c GM dealership count Through August, General Motors trimmed 226 dealerships. Here is a store count as of Sept. 1; GM says stores with multiple franchises are counted under the brand considered to be the controlling franchise. Chevrolet 3,786 Pontiac 1,083 Buick 557 Saturn 404 Cadillac 301 GMC 289 Saab 106 Hummer 24 Total 6,550 Delphi work moves to N.Y. from plant in Mexico David Barkholz dbarkholz@crain.com Steven Landry: Dealers will see Chrysler’s “clear vision for the future.” Delphi Corp.’s engine parts plant in Rochester, N.Y., has scored a rare victory over a Mexican counterpart for a major General Motors contract. The Rochester plant took the fuelmodule business from a Delphi factory in Mexico because of higher shipping costs from Mexico and Rochester’s emphasis on quality, said Dan Maloney, president of UAW Local 1097 in Rochester. The module includes a plastic manifold and stainless steel fuel rails. Labor costs also have fallen for Delphi’s U.S. workers. Rochester hourly workers average about $16 an hour in wages, Maloney said. That compares with about $27 an hour before Delphi restructured its labor agreements as part of Chapter 11 bankruptcy negotiations. Delphi spokesman Lindsey Williams said the supplier wanted to consolidate the parts production in Rochester, which already builds the bulk of those parts. The 10 to 15 Mexican employees affected have been reassigned at the plant in Chihuahua. Rochester also has won a competition with Denso Corp. to supply fuel systems for Chevrolet Cobalt sedans as part of a recently added third production shift at GM’s Lordstown, Ohio, assembly plant. Delphi and Denso are splitting the business of the first two shifts, Maloney said. But don’t expect any big celebration from the 853 UAW hourly workers at Rochester. The plant, which makes fuel injectors and other engine parts, generates about three-quarters of its sales from parts for GM pickups and SUVs. Through August, GM’s U.S. lighttruck sales for the year were down 24.2 percent from the year-earlier period. Rochester already has 150 people on layoff. The newly won parts business merely prevents more layoffs, Maloney said. “We’re treading water.” c Chrysler dealers may see Volt fighter Bradford Wernle The Mazda2, shown, is popular in Europe and in Japan, where it is known as the Demio. Dealers in the United States would like Mazda to bring the car to their showrooms. A Mazda executive says that is “under study.” bwernle@crain.com Would Mazda2 hurt Mazda3? Car could fight Fit, Yaris, but might cannibalize sales Hans Greimel hgreimel@crain.com HIROSHIMA, Japan — Mazda President Hisakazu Imaki says the company is hesitating to add the Mazda2 to its U.S. lineup lest it cannibalize Mazda3 sales. Auto dealers have been clamoring for the Mazda2, a popular small car in Japan and Europe, as North American drivers dump big vehicles in favor of fuel-efficient rides. The Mazda2, known as the Demio in Japan, would be a natural competitor for the Honda Fit and Toyota Yaris. In a glum market, the two cars have buoyed those automakers’ results. “The Mazda2 is a very good product, and we’ve received very strong requests from dealers. But it is still under study,” Imaki said about a possible North American debut. “But I must also say that I don’t regret that we haven’t been able to supply the car thus far. “One of the biggest factors the decision hasn’t been made is that the Mazda3 is still enjoying strong sales,” Imaki said here. Also, demand for the Mazda2 might recede if gasoline prices moderate, he said. The mid-sized Mazda3 is Mazda Motor Corp.’s best-selling car in the United States. Still, through August, sales were down 0.6 percent to 84,227 units compared with the same period of 2007.c Bill Heard shuts Arizona dealership Chrissie Thompson cethompson@crain.com Bill Heard Enterprises Inc. — whose owner calls himself “Mr. Big Volume” — has shut its Chevrolet dealership in Scottsdale, Ariz. A tough Phoenix auto market, the effect of rising gasoline prices on truck purchases, and floorplan financing difficulties contributed to the Sept. 12 closing of the 150-employee store, spokesman Alan Ulman said. On Aug. 21, GMAC Financial Services discontinued the company’s floorplanning credit. Not all Bill Heard Enterprises stores relied on GMAC for floorplanning. GMAC declined to explain its decision to yank floor-plan financing for Heard. Neither company said how many stores the credit cutoff affected. Bill Heard Enterprises is seeking Bill Heard had said he planned to sell some of his dealerships because of slow sales. new sources of floorplanning credit, Ulman said. The dealership group also is seeking to vary product mixes at its remaining 13 Chevrolet dealerships, including one store that also sells Cadillacs and Saabs. Bill Heard Enterprises, of Columbus, Ga., ranks No. 13 on Automotive News’ list of the top 125 U.S. dealership groups, with 2007 group revenue of $2.13 billion. It is the world’s top-selling Chevrolet dealership. But pickups and SUVs aren’t selling well, Ulman said. In July, Bill Heard, 74, told the Columbus Ledger-Enquirer that he planned to sell two or three of his dealerships because of slow sales. Heard’s stores have had several legal run-ins over allegations of misleading marketing. Last month the Georgia Governor’s Office of Consumer Affairs amended a complaint that sought a penalty of up to $5,000 for each of 10,000 deceptive fliers that the agency says Bill Heard sent to consumers in October 2006. The state now says the number of deceptive fliers exceeds 10,000. The Office of Consumer Affairs seeks penalties on the new ones, too. Georgia also will seek thousands of dollars in penalties for alleged instances of signature forgery and other illegal practices.c DETROIT — In mid-August, members of Chrysler LLC’s dealer council got a big surprise when the company let them drive an electric vehicle that could compete with Chevrolet’s Volt hybrid. On Tuesday, Sept. 23, the entire dealer body may get to see that car as part of a national dealer telecast at 100 theaters across the country. Chrysler has invited dealers to participate in a large-scale national telecast — something new for the company. Last year, dealers traveled to a show in Las Vegas. Steven Landry, executive vice president of North America sales, sent a memo Tuesday, Sept. 16, inviting dealers to the meeting and listing movie theaters in their area. In the memo, Landry said dealers will see Chrysler’s “clear vision for the future and share with you some exciting, cutting-edge product!” Chrysler declined to confirm reports in The Wall Street Journal that an electric car would be shown during the telecast. The automaker has put its electric-vehicle development arm, called ENVI, on the fast track. Chrysler showed three electric concept cars at the Detroit show in January. Chrysler has said it will have seven new products in 2010 but has not said what they are, and co-President Jim Press has hinted at plans for an electric vehicle. There are pressing issues on dealers’ minds beyond new vehicles, including the credit crunch, Chrysler Financial’s tough new rules on floorplan loans, aging inventory and consumer loans. c

Table of Contents Feed for the Digital Edition of Automotive News - September 22, 2008

Credit-crunched BMW to cut volume and jobs in U.S. Did dealer pitch have a catch? Henderson will keynote World Congress Suppliers: Chrysler jury a worry Learn how going green can be good for business Hyundai hesitates on i10 Ram launches with incentive Dodge RamBox cost: $1,895 Toyota seeks bids to build A-BAT Volt: A pricey short hauler? A horse of a different, uh, color Delphi work moves to N.Y. from plant in Mexico GM store count down 226 so far this year Bill Heard shuts Arizona dealership Would Mazda2 hurt Mazda3? Chrysler dealers may see Volt fighter GM gets more bucks for its 4-bangers GM's '09 list prices rise 2.7% Suppliers seek piece of loan package Don't attach too many strings to federal loans Cars run on money and credit, not gas The workplace is a democracy? Free Choice Act must be defeated Extreme makeover Logo no go A 4-cylinder Cadillac? Get real A double standard on idle workers? Free Choice Act means no choice Saccucci: Let's hear it for free enterprise Dealers signal support for 35% estate tax rate Dealers Designing for MPG Slippery styling What happened to Volt's racy design? Aerodynamics Belletech will supply Honda in Indiana Practicality will top panache at Paris show Chrysler seeks to build loyalty with service Band buddies Personnel Auction group's new boss sees dip in volumes Wholesale prices of big used trucks rise 8.6% in August Big-truck sales off 22.6% in Aug. August sales in Europe worse than in U.S. Honda will let supplier assemble on-site at Ohio plant Farley: Retool image for era of the small car O'Donnell: No stranger to U.S. Honda to debut camera, airbag American Axle lands contract Ex-Ford dealer prevails in court Dodge plans Web blitz for Ram Federal-Mogul will idle 4,000 Sparks will fly over GM, Toyota plug-ins Negotiations fail; chaos (allegedly) ensues Bo plays defense, helps GM avoid weather woes Critics say the new Volt was jolt Lithium, schmithium-- Will the ladies like it? Small and beautiful-- mutually exclusive? Where Andrea Pininfarina saw design headed Designers think small to make it big Designers can't ignore history Pretty and petite Toyota goes its own way with green designs The elements of style It's difficult to design fuel efficiency into big pickups Specialty-car maker has bright design ideas Form follows fashion Vehicle designers aim to please Chinese Suppliers to the 2009 Dodge Ram Eaton will equip '09 VW Golf IAV to move into new tech center BorgWarner makes Tesla deal Mann plans 4th China plant NovaCast buys into Korean firm Valeo shifts rear-light work Supplier personnel

Automotive News - September 22, 2008

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