Automotive News - March 17, 2008 - (Page 1)

autonews.com ® MARCH 17, 2008 Entire contents © 2008 Crain Communications Inc. All rights reserved. $155/YEAR; $5/COPY Toyota dealers balk at upgrades Factory says undersized stores can’t cope, but retailers see little incentive to make costly changes Mark Rechtin mrechtin@crain.com LOS ANGELES — Toyota dealers, under pressure to spend millions to renovate their stores, say the automaker is asking too much and offering too little incentive to expand and upgrade. Toyota is threatening not to renew franchise agreements on older stores. In some cases it is giving only token two-month extensions to dealers who are slow to enlarge their dealerships and adopt the company’s Image USA II architectural plan. The pressure has exposed some cracks in the usual solidarity between Toyota and its retailers. “They give you short-term contracts until you are in compliance with what they want you to do,” said a Toyota dealer who spoke on the condition of anonymity. “They are going after everyone with what they want.” Dealers must expand showroom size and add service bays based on planned sales volume and units in operation in their market areas. Architectural upgrades include a “por- tal” that frames the large front doors of the dealership and changes in facility layout, furniture and fixtures. Toyota executives say undersized dealerships can’t cope with the deluge of sales and service customers — the result of increasing market share and the growing number of Toyotas see TOYOTA, Page 34 Suzuki’s Concept Kizashi 3 Big Apple show: Juicy, not very green In contrast to the green focus of most recent auto shows, the New York event pays more attention to horsepower and sheet metal. | PAGE 18 | Leases grow as alternative to long loans Arlena Sawyers asawyers@crain.com VW’s U.S. capacity: 250,000 cars a year Volkswagen says its U.S. assembly plant will build 250,000 cars a year and might start with a $20,000 mid-sized model designed for U.S. tastes. An SUV? Maybe later. | PAGE 4 | As new-vehicle sales slump, dealers and automakers are promoting leases with low monthly payments as an alternative to ever-lengthening consumer loans. “Everybody is looking hard at leasing because of the awareness of this recent disturbing trend of longer purchase contracts,” says Dave Conant, a large multifranchise dealer in Dave Conant: 84- Southern Calimonth loans are fornia. “just unhealthy.” “These 84month loans — the percentage is rising dramatically and it’s just unhealthy,” Conant told Automotive News. “It’s horrible for the buyer and it’s not good for the industry.” Leasing is growing for both massmarket and luxury models. Buyers want to limit monthly payments, dealers say. And lease customers are likely to return to the new-vehicle market sooner than buyers who must pay off extended loans. In 2007, leases represented 19.3 percent of new-vehicle sales contracts — up from 14.3 percent in 2003, according to J.D. Power and Associates’ Power Information Network. In the first two months of 2008, Power says, the lease rate rose to 21.7 percent. Last month, dealer Conant says, leases accounted for 38 percent of new-vehicle sales at his high-volume Honda dealership in the Los Angeles suburb of Cerritos, up from 27 persee FINANCING, Page 35 COREY ROGINSKI/BRENDA PRIDDY & CO. ■ Testing Chevy’s Camaro High-powered Detroit metal is busting out all over. This Chevrolet Camaro was spied during testing on public roads, and Chrysler LLC shows the 2009 Dodge Challenger at the New York auto show this week. General Motors executives have said the Camaro coupe will go on sale in February 2009, and the convertible about nine months later. A Georgia pickup on Kia’s mind Kia may decide soon to build a pickup truck in the United States. Kia Motors America | PAGE 6 | chief Ahn Byung-Mo Up for grabs: China importer Dealers’ millions at stake as 2 sides battle for Chamco Diana T. Kurylko dkurylko@crain.com Who’s in charge at Chamco? ➤ 35 board’s action moot. Plaintiffs and defendants have set up warring Web sites, with each group claiming to be in charge of Chamco. Meanwhile, Chamco’s West Coast distributor has sued and wants his money back. Among those caught in the furor is Steve Saleen, the well known manufacturer of Mustang performance cars who agreed to homologate Chamco trucks for the United States. Saleen is a plaintiff in Ferla’s lawsuit and has allied himself with the other plaintiffs trying to gain control of the company. And the 37 dealers who paid franchise fees of up to $300,000 watch and wait to see if their investment will produce the promised Chinese trucks to sell — or just a painful lesson and a good story for the golf course. Plaintiffs Mario Ferla Former Fiat exec is Chamco Auto CEO. Says he also became chairman after board revolt. Chamco Auto, which has taken investments from dozens of dealers to sell Chinese-built trucks, is slogging through a most uncivil war. CEO Mario Ferla and his allies have sued owners and managers for fraud, alleging they skimmed millions from Chamco through bogus fees and excessive commissions. In simple terms, the multimilliondollar battle comes down to this: Ferla and his forces say Chamco’s board anointed them on March 3 and tossed out their opponents. But the tossees say they have the stock and the legal standing to make the Steve Saleen High-performance carmaker. Homologating Chinese pickup and SUV for Chamco. On the web This week at www.autonews.com: Wednesday, Thursday: Live Defendants E. Michael Daspin Business broker and consultant to Chamco. Suit says he ran the company. coverage of the New York auto show. Go to www.autonews.com/newyork The antagonists The two main antagonists in this drama are Ferla and E. Michael Daspin, a New Jersey business broker who helped launch Chamco two years ago. Ferla, a former Fiat executive, see CHAMCO, Page 35 NEWSPAPER Bill Pollack Says he remains chairman of Chamco despite the claims of execs who say the board fired him. for updates and pictures. Wednesday: Supplier Dana Holding Corp. releases its financial results for the fourth quarter and 2007. All week: Breaking coverage of the UAW strike at American Axle and its impact on GM truck operations. http://autonews.com http://www.autonews.com http://www.autonews.com/newyork

Table of Contents Feed for the Digital Edition of Automotive News - March 17, 2008

Leases grow as alternative to long loans Toyota dealers balk at upgrades Up for grabs: China importer Testing Chevy's Camaro Escalade first vehicle to get full LED headlamps Hoops fans take a shot at China Toyota will cut Tundra, Sequoia production F-150's risk-reward strategy: Ramp up before the revamp As UAW, American Axle talk, CEO Dauch in Fla. Ex-GM purchasing executive indicted Court allows higher Plastech credit line Saab sticker prices rise as sales fall; will U.S.-built 9-7X offset losses? VW plant capacity in U.S.: 250,000 units Bad cruise control switch haunts Ford Continental plans to bring r&d in-house Rieter expects to increase its global footprint Stadler: Audi considers U.S. plant Another General charges into electric cars Toyota sees its first checkered flag as sign NASCAR's paying off A pickup may figure in Kia's future Analysts: Lampert no threat to AutoNation More likely to be spent to keep suppliers alive in '08 2 suppliers plan Alabama plants UAW seeks job guarantees to end American Axle strike Revolving door continues to spin at Nissan GM, top marketers to share research Electric power steering is grabbing the wheel Delphi completes sale of interiors unit to Renco Mercedes again is true-luxury king How electric power steering works It's time for dealer-factory collaboration Ford must close stores but remain open to diversity The small print Here's a question for Obama, Clinton Didn't you ever hear of a halo? Hurray for affordable performance cars Politics can age a car overnight Good for planet, good for GM What 'scientific consensus'? Lutz may be right but said it wrong Lutz had the courage to tell the truth Big Apple isn't very green 23 finalists in running for PACE honors Canada sales up 14.5% in Feb. RV shipments drop 7.1% in Jan. Wagoner: No sure thing on state air rules Conquest sales, Asia growth boost ADP Brockman: Reynolds focuses on service OEConnection links to ADP Geneva goings-on Judge: Dealer suit over transfer of GM franchise can proceed Honda will build Ridgeline in Alabama So who's running the show at Chamco? GM seeks Plastech tooling Federal-Mogul reports gains Chrysler sells plant to Fiat BMW's new sales boss Odell is named COO at Ford of Europe Strike dents GM truck output Tony Stewart blows a gasket Illingworth leaving — and staying with — Toyota A note to eager auto execs: Invaders sometimes get icy reception in Russia Hush, hush: Baby Nason on board For rent: Ford's PAG palace on the West Coast Chrysler cuts Calif. studio

Automotive News - March 17, 2008

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