Automotive News - December 8, 2008 - (Page 3) DECEMBER 8, 2008 • 3 83rd year — No. 6337 High-fliers Toyota, Honda are struggling, too Some dealers wonder if ads, finance deals will be enough Alysha Webb and Kathy Jackson awebb@crain.com Chrysler: Bankruptcy counsel supports its stance DETROIT — Chrysler LLC confirmed Friday that it had hired global law firm Jones Day to assess financial alternatives — and said the firm’s analysis supports Chrysler’s stance that bankruptcy isn’t a viable option. Chrysler said Jones Day was one of several advisers hired. Regarding a Chapter 11 filing, Chrysler said, “The results of this evaluation determined the impact to the overall domestic automotive industry would be devastating.” — Bradford Wernle Dealer Hecker hospitalized Embattled Minneapolis auto dealer Denny Hecker was hospitalized in fair condition last week after the vehicle he was driving went off a road and struck a utility pole. In mid-October, Chrysler Financial Services Americas LLC withdrew floorplanning for several Hecker dealerships and pulled credit for separate leasing and rental-car operations. Hecker closed six dealerships and sold three stores in Minnesota and California. Seven other dealerships remain open. — Jesse Snyder LOS ANGELES — Toyota was supposed to clean up this fall, with its rock-steady finance arm and an ad blitz to promote 0 percent lending. Likewise, Honda, with a lineup of fuel-efficient cars, looked ready to ride out the storm. But Toyota’s promotion has been a disappointment. And while Honda has surpassed 10 percent market share this year, it has staggered since September. Some Honda dealers complain that the company isn’t doing enough to jump-start sales. In the downturn, the two Japanese high-fliers are taking different approaches. Toyota Motor Sales U.S.A. Inc., down 33.9 percent in November compared to last year, will continue to offer 0 percent financing on a dozen Toyota models. Lexus is spending 50 percent more this year on its annual “December to Remember” TV commercials. American Honda, with sales down 31.6 percent in November, is offering special financing and leasing rates on some models. But Honda has not boosted advertising significantly. “I don’t think anything we are going to do in the short term is going to help spur sales,” says Chris Martin, an American Honda spokesman. Martin cites the Happy Honda Days campaign launched Nov. 24. But the ads are light on sales specials. In a statement, Dick Colliver, executive vice president of American Honda said: “ ‘Happy Honda Days’ TV communicates a warm, simple seasonal greeting rather than focusing on an overt sales message.” Dealers want Honda to do more. “I would like Honda to be more aggressive,” says an executive at a group with Honda and Toyota stores. “Will that move the market? No one knows. But by the same token, will that also be planting the seed for when consumers come back into the market?” A finance director at a Honda store in Oklahoma said American Honda Finance Corp. has pulled back on financing. As for advertising, he says Hon- da is doing nothing different from last Christmas. Ed Hartoonian, general manager of Galpin Honda in suburban Los Angeles, said: “Honda finance has changed some of their guidelines on tougher credit customers. For new cars, customers with tougher credit — maybe under 600 credit score — the extended term is harder to get.” Toyota will continue with 0 percent financing, and is rolling out its Venza small sedan, says Bob Carter, head of Toyota Division. Carter says Toyota’s ads this month will focus on vehicles and that dealers will promote incentives regionally. Lexus General Manager Mark Templin says the division is spending 50 percent more on the “December to Remember” TV commercials than it did last year. The campaign promotes getting a new Lexus as a Christmas present. Templin said the dealer ad associations are running the same commercials regionally. He did not reveal how much Lexus is spending on the campaign but said: “It’s heavyweight, a big blast. We still see a need for TV. It’s a good branding tool.” c Summer sizzlers fizzle in fall November was a nightmare for all, including cars that were stars just months ago Jesse Snyder jsnyder@crain.com Too hot not to cool down In May, fuel-efficient small cars were flying off the lot. That was then. This is now. Honda Civic unit sales Dealers back Detroit 3 aid, want spiffs Harry Stoffer hstoffer@crain.com WASHINGTON — Sen. Christopher Dodd is one of Congress’ financial experts. But last week, he conceded that he’s just now learning how auto dealer floorplans work. The admission by Dodd, D-Conn., who heads the Senate Banking Committee, suggests the challenge that faces dealers and dealership groups. While they are lobbying hard for emergency federal loans to the Detroit 3, they worry that Washington is overlooking retailers’ needs. Dealers don’t want mandated reductions in the number of dealerships to be a condition of aid, the National Automobile Dealers Association says. And they don’t want Congress to ignore their requests for incentives to boost showroom traffic. “Dealers are not part of the problem facing the automakers,” said NADA Chairman Annette Sykora, a Texas dealer, as she lobbied on Capitol Hill last week. Nearly 150 dealers and state association executives are due here this week to press lawmakers on aid to the industry, including to retailers. Also making the case last week was Jim Fleming, president of the Connecticut Automotive Retailers Association. Testifying before Dodd’s committee, Fleming warned that talk of overriding state franchise laws to allow the Detroit 3 to shrink their retail networks could undermine the confidence private lenders have in dealerships to which they provide credit. c In a time of tight credit, crashing consumer confidence and now cheap gasoline, those fuel-efficient cars that were scalding hot in May turned ice cold in November. But November was nasty for every make and almost every model. Industrywide sales plunged 36.7 percent to 747,544 — the worst monthly volume since January 1982. The annual selling rate in November dipped to 10.3 million, a level not seen since October 1982. More misery: November With gasoline well under sales report ➤ 21-23 $2 a gallon, small, fuel-efficient cars were no refuge. Each of the seven small and mid-range cars that placed among the industry’s top 10 sellers in May sold less than half their May volumes in November. Sales of the Honda Civic, May’s No. 1 seller (displacing the Ford F-series pickup), plunged to 17,690 in November, down 66.8 percent from 53,299 units in May. Now large pickups are regaining market share, and Ford is boosting production (see story, Page 4). The year’s two sudden and sharp shifts in what sells have made it almost impossible for automakers and dealers to balance inventories. In November, the pain was felt everywhere: Every car and light-truck segment fell from a year earlier. Every auto group lost volume, the same as in September and October. Country of origin made little difference. Sales of vehicles made in North America, Japan, Europe and Korea all fell 32 to 38 percent. In a year of model-mix volatility, light trucks in see SALES, Page 23 May 53,299 November 17,690 Toyota Corolla May 52,826 November 21,807 Ford Focus May 32,579 November 8,194 Ford modifies pricing promo to equalize rebates Amy Wilson awilson@crain.com DETROIT — This month, Ford Motor Co.’s Employee Pricing Plus promotion really will give most customers the same bottom-line price any employee would get. That wasn’t the case when the program began in mid-November. Sure, the invoice vehicle price duplicated the employee price. But that was before additional rebate offers for customers and employees — the “plus” part of the advertising slogan. The hang-up: Company employees and retirees and dealership employees qualified for bigger rebates than regular customers. That made their bottom-line vehicle price $2,000 lower in some cases. Some dealers objected to that setup, saying it makes them and their employees walk an ethical line with customers expecting the same price as any employee. “Where’s the credibility?” said O.C. Welch, owner of O.C. Welch Ford-Lincoln-Mercury near Hilton Head, S.C. “When you have a Ford employee on television saying ‘You get it for what we get it for,’ that’s not real.” By early last week, Ford had modified the program in most regions to offer the same underlying rebates to both employees and customers. Lower rebates for employees are continuing in two regions where that business is strong: Detroit and Pittsburgh. A Ford spokeswoman stressed that the starting price is exactly the same as the employee price. Because added incentives are always variable, particularly across regions, no programs offer the same bottom-line price to everyone, she said. Jack Straub, a Lincoln-Mercury dealer in Keyport, N.J., said his region has resolved the discrepancy by reducing the employee rebate to bring it in line with the retail offer. “Now everybody is equal,” said Straub, who characterized the former setup as an oversight. “I think they did the right thing.” c
Table of Contents Feed for the Digital Edition of Automotive News - December 8, 2008 Saturn: What's next? Feds tighten strings on Detroit 3 Ford stance: A cut above ailing rivals Summer sizzlers fizzle in fall Dealers back Detroit 3 aid, want spiffs Ford modifies pricing promo to equalize rebates High-fliers Toyota, Honda are struggling, too Chrysler: Bankruptcy counsel supports its stance Dealer Hecker hospitalized Ford to add a shift, OT for F-150 Koreatown dealer scrambles to hang on in L.A. Nissan bucks trend, will move to bigger trucks Why GM must stay with Buick Mercedes prices new GLK below $35,000 Diana T. Kurylko Pride of Sweden set to be Detroit castoffs Toyota pushes breakup of seat suppliers to boost competition Panel to discuss innovation, sustainability Capitol quandary: Can Chrysler survive? Steve Miller: Detroit 3 need 'pseudo-bankruptcy' Acura aims to deliver big-league luxury TL campaign is important for Acura's ad shop, too Appeals court upholds franchise termination GM loses bid to relocate Chevy store This is a very big week for America Obama must steer clear of state fuel standards Higher fuel taxes are not the answer A $15,000 rebate, not a blank check Chrysler retirees look for equality Isn't an auto show a place to sell? Are we turning our back on diversity? If only we'd had an energy policy Personnel GM sets Jan. 1 deadline for dealers to adopt Windows-based parts system Ford picks TRW steering system Ford cuts noise with windshields Dealers, factories battle over Fla. warranty law Online systems boost accessories sales Mercedes cuts output in Ala. Ford will kill Sable, Taurus X November sales suffer car wreck Honda, Audi pull out of racing series Saturn: A different kind of franchise agreement Fewer days sink Nov. output Detroit 3 road trip: Quiznos and humble pie LaNeve: Death talk keeps the showrooms empty Toyota cuts bonuses in bid to stay in the black Auto blowout sends Andrettis to the pits Saturn founder Neil DeKoker still believes And then there were . . . 6? Dealers Automotive News - December 8, 2008 Automotive News - December 8, 2008 - (Page Intro) Automotive News - December 8, 2008 - Ford stance: A cut above ailing rivals (Page 1) Automotive News - December 8, 2008 - Ford stance: A cut above ailing rivals (Page 2) Automotive News - December 8, 2008 - Chrysler: Bankruptcy counsel supports its stance Dealer Hecker hospitalized (Page 3) Automotive News - December 8, 2008 - Nissan bucks trend, will move to bigger trucks (Page 4) Automotive News - December 8, 2008 - Nissan bucks trend, will move to bigger trucks (Page 5) Automotive News - December 8, 2008 - Panel to discuss innovation, sustainability (Page 6) Automotive News - December 8, 2008 - Panel to discuss innovation, sustainability (Page 7) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8a) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8b) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8c) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8d) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8e) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8f) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8g) Automotive News - December 8, 2008 - Steve Miller: Detroit 3 need 'pseudo-bankruptcy' (Page 8h) Automotive News - December 8, 2008 - TL campaign is important for Acura's ad shop, too (Page 9) Automotive News - December 8, 2008 - GM loses bid to relocate Chevy store (Page 10) Automotive News - December 8, 2008 - GM loses bid to relocate Chevy store (Page 11) Automotive News - December 8, 2008 - Chrysler retirees look for equality (Page 12) Automotive News - December 8, 2008 - Chrysler retirees look for equality (Page 13) Automotive News - December 8, 2008 - If only we'd had an energy policy (Page 14) Automotive News - December 8, 2008 - If only we'd had an energy policy (Page 15) Automotive News - December 8, 2008 - Ford cuts noise with windshields (Page 16) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 17) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 18) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 19) Automotive News - December 8, 2008 - Online systems boost accessories sales (Page 20) Automotive News - December 8, 2008 - Ford will kill Sable, Taurus X (Page 21) Automotive News - December 8, 2008 - Ford will kill Sable, Taurus X (Page 22) Automotive News - December 8, 2008 - November sales suffer car wreck (Page 23) Automotive News - December 8, 2008 - Saturn: A different kind of franchise agreement (Page 24) Automotive News - December 8, 2008 - Fewer days sink Nov. output (Page 25) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 26) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 27) Automotive News - December 8, 2008 - And then there were . . . 6? (Page 28)
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