Automotive News - July 21, 2008 - (Page 35) JULY 21, 2008 • 35 Denton’s out, Leuliette’s in as Dura CEO DETROIT — In a surprise move, CEO Larry Denton left supplier Dura Automotive Systems Inc. after leading the company through its successful 20-month Chapter 11 reorganization. Denton, 57, was replaced by longtime supplier executive Tim Leuliette, 58, effective Thursday, July 17. Leuliette had been Dura chairman since Denton stepped down from that post in June. Leuliette relinquished the chairman position to Steven Gilbert, who also is chairman of the $1 billion private equity fund Gilbert Global Equity Partners LP. Dura emerged from Chapter 11 protection June 25. At the time, Denton told Automotive News he would remain CEO. ADS Dealers fine-tune advertising budgets continued from Page 4 Ads are up Dealership ad spending per new vehicle sold reached a record annual high of $610 in 2007. $700 dollar figure. “Our sales did not support the amount of money we were spending in advertising,” Fotopoulos says. Other dealers say they hope robust ad spending will create more business. “We don’t think that spending less in advertising is going to help us,” says Scott Wade, general manager of a Ford-Lincoln-Mercury dealership and a Nissan dealership in suburban San Francisco. The dealerships spend $100,000 to $130,000 a month to advertise, he says. “We are trying to get better at spending smarter rather than cutting back our budgets,” Wade adds. PER NEW VEHICLE SOLD 500 400 300 200 100 0 '01 '02 '03 '04 '05 '06 '07 Source: NADA Industry Analysis Division ad spending. “People are using the Web for information gathering,” Broome says. “Our chore is to reach as many of them as we can and get them into the dealership.” By contrast, in the tech-savvy Bay Area, Wade says the two dealerships he manages devote as much as 40 percent of their ad budgets to newspapers and just 10 percent to the Internet. “I know it goes against the grain,” Wade says. “But I found a niche that allows me to be very affordable in the paper.” NADA says dealers typically spend about one-third of their ad budgets on TV and radio. That proportion has not changed greatly over the past decade. But a distinctive TV commercial still can attract plenty of attention. Typically, he says, the dealerships sell about 600 new vehicles a month. He says he has not trimmed ad spending at the Kia stores. Joe Pollaro, owner of the RadioVision ad agency in Denison, Texas, created the commercial. Pollaro, who works with dealerships in Texas, California and Pennsylvania, warns dealers that cutting back on advertising can be a false economy. “The approach is to capture as much as possible of a smaller market,” he says, “and not sit on your hands and wait.” Incentives to spend Last year, NADA says, franchised dealerships spent $7.86 billion on advertising. The average dealership spent 3.4 percent more to advertise than in 2006. Ad costs represented 1.13 percent of the typical dealership’s sales in 2007. For the rest of this year, NADA’s Taylor predicts the decline in dealership ad spending will moderate. For all of 2008, he forecasts that spending will fall about 2 percent from 2007. Initiatives such as Chrysler LLC’s $2.99-a-gallon gasoline promotion and new 0 percent financing on many General Motors models are giving dealers renewed reason to talk to consumers, Taylor says. “With the return of strong incentives,” he says, “we should see additional advertising.” c Flight from print As dealers seek to focus their ad spending on likely buyers, they continue to move from print to the Web. A decade ago, newspapers captured 52 percent of dealership ad spending, NADA says. Today, it’s less than 27 percent. By contrast, dealerships now spend one of every six ad dollars on the Web, NADA says. In 1997, online ads weren’t a separate category. Congress mulls arbitration bill WASHINGTON — Last week, a congressional panel approved a bill that would prohibit auto dealers from forcing customers into binding arbitration to settle disputes. The voice vote by a subcommittee of the House Judiciary Committee appeared to be along party lines, with Democrats in favor and Republicans opposed. The bill is a long way from becoming law, and the partisan split indicates its chances this year are slim. The American International Automobile Dealers Association, which represents the operators of about 11,000 import brand franchises, opposes the arbitration ban. Dealerships can make their advertising more effective even as they cut spending, says Steve Wilhite, president of Jumpstart Automotive Media, a digital auto marketing firm in San Francisco. That requires a “rebalancing” of media budgets to reach in-market shoppers on relevant Web sites, says Wilhite, a former top marketing executive with Hyundai, Nissan and Volkswagen. Paul Broome, a Cadillac dealer in Independence, Mo., says online advertising accounts for one-fourth of his dealership’s $25,000 a month in ‘Yes, We Can’ This spring, Dallas dealer Fotopoulos hired a Barack Obama look- and sound-alike to appear in spots for his three Kia dealerships. The commercial satirized the Democratic presidential candidate’s slogan, “Yes, We Can.” Politically oriented TV shows such as “The Daily Show,” “Hardball” and “The O’Reilly Factor” gave the commercial national exposure. More important, Fotopoulos says, the spot helped boost sales at his Kia dealerships as much as 15 percent in April and May. FRANCHISE Detroit 3 values revert to the past continued from Page 1 Domestic disturbance Industry analysts say several factors are depressing the prices of Detroit 3 dealerships. Falling profits and revenue, which are used to compute dealership values Fewer large buyers, as public groups focus on stock buybacks and purchases of import brand and luxury dealerships Speculation that Detroit 3 companies may kill brands or even declare bankruptcy 2009 Mazda6 price: $19,220 LOS ANGELES — Mazda North American Operations will price the four-cylinder version of the 2009 Mazda6 at $19,220. A V-6 version will start at $24,800. Both prices include shipping. The car will be available to dealers in August, Mazda said. The Mazda6 is the only car the automaker manufactures in the United States. The sedan is made at a plant in Flat Rock, Mich., a joint venture between Mazda and Ford Motor Co. Dealership brokers say typical valuations of domestic franchises have reverted to what they were a dozen years ago, before newly formed public dealership groups began bidding up prices. Mark Johnson, a broker in Seattle, says some buyers of domestic brand stores are leasing rather than buying dealership property. They fear they may be stuck with real estate they can’t sell if a Detroit 3 automaker decides to kill a brand, Johnson says. Such dealers “would rather lose $15,000 a month for the next year or two vs. buying a single-use property for $6 million,” Johnson says. Slim pickings Bert Hanwell, a dealer consultant in Orlando, Fla., says most dealers and dealership groups are more intent on “trying to keep the ones they have got and trying to get them healthy again” than on buying dealerships, especially Detroit 3 stores. Carl Woodward, a dealer accountant in Bloomington, Ill., cites a client who owned a domestic brand dealership that earned more than $1 million a year when it sold within the past year. He declined to identify the brand or the dealership’s location. “Trying to sell it was not easy,” Woodward says. “People who can write checks are just not interested.” The dealership ultimately was sold to a large private dealership group, he says. Detroit 3 dealers who have poured millions of dollars into upgrading Copart files antitrust suit SAN FRANCISCO — Copart Inc., a salvage auction company, filed a federal antitrust lawsuit here against Auto Auction Services Corp., of Atlanta, an information technology company for the wholesale auto auction industry. The suit alleges that Auto Auction Services is conducting an illegal group boycott by denying Copart access to Auto Auction’s AutoIMS electronic vehicle inventory management system. Copart also accuses the technology company of violating federal antitrust laws. Manheim and ADESA Inc. are among the consortium of auction companies that own Auto Auction Services. They are named as coconspirators in the suit. their stores — often to satisfy factory “image” demands — find it tough to recover those investments when they try to sell their dealerships, brokers say. John Pico, a dealer attorney in Dallas, describes the experience of Dodge dealer Carlos Hidalgo and Chrysler-Jeep dealer Gary Hamner, both of suburban Sacramento, Calif. Each spent $10 million on his dealership to meet Chrysler’s image requirements, Pico says. Now, he says, Chrysler LLC wants one of the dealers to sell to the other under the company’s Project Genesis plan, which aims to consolidate Chrysler, Dodge and Jeep franchises under the same roof. “What is an ex-dealer supposed to do with an empty $10 million facility?” Pico asks. “The answer: Lose his tail.” fered. Many of the companies are buying back their stock at bargain prices to increase the value of remaining shares. “Why should we buy deals when we can buy our own stock?” says Scott Smith, president of Sonic Automotive Inc., the No. 3 U.S. dealership group. Sonic’s stock price has ranged from $7.82 to $30.03 a share in the past year. Last week, it traded at about $9. The No. 4 public retailer, Group 1 Automotive Inc., seeks to sell many of its domestic brand dealerships. Detroit 3 domestic brands represent 43 percent of Group 1’s 145 franchises at its 105 U.S. dealerships. But those brands account for just 22 percent of the company’s new-vehicle sales, Group 1 says. VW Plant seeks engine, transmission source continued from Page 3 Ownership worries Randy Callison, Group 1’s senior vice president, says prospective buyers of Chrysler LLC dealerships worry that the automaker’s owner, Cerberus Capital Management LP, could sell the company. Reports that Chrysler is trim http://www.autonews.com/moreonline
Table of Contents Feed for the Digital Edition of Automotive News - July 21, 2008 Automotive News - July 21, 2008 Gray sky, not blue; store values wilt Sour Chery: Bricklin suit claims corruption Germans in U.S. eye VW work S.C. warranty insurer faces shutdown LaNeve: Make do with less marketing money Tesla CAFE: 244 mpg Lincoln's big crossover Schaeffler goes shopping: Can supplier land Continental? Dealers cut, shift their ad spending Truck for the times? Oklahoma pickup gets 37 mpg For Chrysler sensations, glory days are gone Kuzak: Redone Fords must have best fuel economy The Fisher brothers: Quite a body of work Kazamai concept: Mazda's design heard round the world 3 years later, Mitsubishi, UAW resume contract talks Big-pickup production will plunge Nason's NHTSA: More rules, fewer penalties A vote for the Volt Hyundai: Genesis gives brand a new beginning in luxury GM may survive; to thrive, it needs hot products GM just bought some time Green can be cool; it's up to the maker Why don't we drive diesels in the U.S.? Hooray! Joint effort stops airbag deaths All-Stars: Look beyond top brass Leno was right about U.S. cars Toyota recalls Siennas, disputes safety issue This time, the industry embraces connectivity Telematics connects with consumers Telematics gets no respect — the word, that is Tapping mapping for an extra eye on the road Drivers can check CO2 'tire print' Pay As You Drive insurance tracks cars to trim costs Subscribers, sponsors may fund telematics services Big-truck sales fall 14% in June Continental plant to make brakes Lear to shut Mo. seating plant Modine shifts production to Ky. Linamar buys Visteon plant Picture this Lexus revamps 'Taste' marketing extravaganzas Suzuki hires new auto ad agency Fisker turns to Finnish firm to make first hybrids American Suzuki gets new president Canada sales slip 5.6% in June Dealers A big fuel saver: Easy-rolling tires (but watch braking) MPG now! Automakers race to boost efficiency Products — not entire brands — likely to be ditched Pared ad budget is back on the chopping block GM goal: Big small-car profits Congress mulls arbitration bill 2009 Mazda6 price: $19,220 Copart files antitrust suit Denton's out, Leuliette's in as Dura CEO June output falls 13.8% Dodge Challenger: Not quite a sellout Magazine is raided in Renault espionage case Ya gotta believe: Dealers buy GM stock States of the auto industry Will the big guns pull the trigger? Lear a year later: Icahn's offer in hindsight Midcourse correction in Toyota's global sales outlook Chattanooga: A good site better Automotive News - July 21, 2008 Automotive News - July 21, 2008 - (Page Intro) Automotive News - July 21, 2008 - Gray sky, not blue; store values wilt (Page 1) Automotive News - July 21, 2008 - Gray sky, not blue; store values wilt (Page 2) Automotive News - July 21, 2008 - Lincoln's big crossover (Page 3) Automotive News - July 21, 2008 - Truck for the times? Oklahoma pickup gets 37 mpg (Page 4) Automotive News - July 21, 2008 - Truck for the times? Oklahoma pickup gets 37 mpg (Page 5) Automotive News - July 21, 2008 - 3 years later, Mitsubishi, UAW resume contract talks (Page 6) Automotive News - July 21, 2008 - 3 years later, Mitsubishi, UAW resume contract talks (Page 7) Automotive News - July 21, 2008 - A vote for the Volt (Page 8) Automotive News - July 21, 2008 - A vote for the Volt (Page 9) Automotive News - July 21, 2008 - Hyundai: Genesis gives brand a new beginning in luxury (Page 10) Automotive News - July 21, 2008 - Hyundai: Genesis gives brand a new beginning in luxury (Page 11) Automotive News - July 21, 2008 - Why don't we drive diesels in the U.S.? (Page 12) Automotive News - July 21, 2008 - Why don't we drive diesels in the U.S.? (Page 13) Automotive News - July 21, 2008 - Leno was right about U.S. cars (Page 14) Automotive News - July 21, 2008 - Leno was right about U.S. cars (Page 15) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page 16) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page GM1) Automotive News - July 21, 2008 - Toyota recalls Siennas, disputes safety issue (Page GM2) Automotive News - July 21, 2008 - Telematics connects with consumers (Page 17) Automotive News - July 21, 2008 - Telematics connects with consumers (Page 18) Automotive News - July 21, 2008 - Telematics gets no respect — the word, that is (Page 19) Automotive News - July 21, 2008 - Tapping mapping for an extra eye on the road (Page 20) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20A) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20B) Automotive News - July 21, 2008 - Pay As You Drive insurance tracks cars to trim costs (Page 20C) Automotive News - July 21, 2008 - Subscribers, sponsors may fund telematics services (Page 20D) Automotive News - July 21, 2008 - Subscribers, sponsors may fund telematics services (Page 21) Automotive News - July 21, 2008 - Linamar buys Visteon plant (Page 22) Automotive News - July 21, 2008 - Picture this (Page 23) Automotive News - July 21, 2008 - Fisker turns to Finnish firm to make first hybrids (Page 24) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 25) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 26) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 27) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 28) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 29) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 30) Automotive News - July 21, 2008 - Canada sales slip 5.6% in June (Page 31) Automotive News - July 21, 2008 - Dealers (Page 32) Automotive News - July 21, 2008 - MPG now! Automakers race to boost efficiency (Page 33) Automotive News - July 21, 2008 - GM goal: Big small-car profits (Page 34) Automotive News - July 21, 2008 - Denton's out, Leuliette's in as Dura CEO (Page 35) Automotive News - July 21, 2008 - Denton's out, Leuliette's in as Dura CEO (Page 36) Automotive News - July 21, 2008 - June output falls 13.8% (Page 37) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 38) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 39) Automotive News - July 21, 2008 - Chattanooga: A good site better (Page 40)
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