Automotive News - October 6, 2008 - (Page 4) 4 • OCTOBER 6, 2008 Lenders move fast to liquidate Heard’s stores April Wortham awortham@crain.com Winding down 14: Number of Bill Heard Enterprises stores for sale 8: Number of stores that must be sold by Oct. 14 $229 million: Heard Enterprises’ debt to floorplan lenders 8,000 to 10,000: Number of creditors 300,000+: Number of customers who may come forward with claims 45: Number of business days allotted for liquidation of Heard Enterprises that led to the closing of the Scottsdale dealership on Sept. 12 and Heard’s 13 remaining stores on Sept. 24. Bill Heard’s empire is headed for a quick breakup. Hours after Bill Heard Enterprises Inc. filed for Chapter 11 protection in an Alabama court last week, the company signed an agreement with GMAC Financial Services to sell eight of its 14 stores by Oct. 14. GMAC isn’t buying the dealerships, but it is a creditor. It is joining another floorplan lender, Alphera Financial Services, a division of BMW Financial Services, in loaning Heard a combined $6.7 million to pay for Heard’s liquidation. An agreement with a third floorplan lender, JPMorgan Chase Bank, is expected any day. The lenders have a keen interest in seeing the dealerships sell quickly. According to court documents, Heard Enterprises owes its floorplan lenders a combined $229 million. The faster the dealerships reopen and sell some vehicles, the better chance the lenders have to recoup those debts. But it’s unclear who will buy those stores. Robert Rubin, an attorney for Bill Heard Enterprises, told Judge Jack Caddell of U.S. Bankruptcy Court in Decatur, Ala., last week that he had received a “substantial number” of phone calls from dealers all over the country expressing interest in buying the dealerships. 10,000 creditors But the sale of the dealerships won’t solve all of Heard’s problems. Besides the three floorplan lenders, Heard Enterprises has from 8,000 to 10,000 creditors, attorneys say. And more creditors may be identified. The bankruptcy case, which Judge Caddell described last week as “huge,” could balloon even larger if some of Heard’s 300,000 customers over the past five years step forward with “chargeback” claims. An example: A customer purchases an extended warranty through the dealership but trades in the vehicle before the warranty expires. That customer may be entitled to a refund for the unused premium. Said Caruso in his court affidavit: “It is impossible at this time to know who may be entitled to a ‘chargeback’ or even who may be eligible for a ‘chargeback.’ ” c Chrissie Thompson contributed to this report NEWSCOM A Bill Heard dealership in Kennesaw, Ga., is one of 14 stores that closed after Heard filed for Chapter 11 protection. bank, Calif., said last week that he has two clients who have signed letters of understanding to buy two Heard dealerships. He declined to identify the clients or the dealerships but said all 14 dealerships more than likely will be snapped up. “They’re almost all in good locations,” Rikess said. “Chevrolet is not going to disappear as a brand. Even if GM disappeared, Chevrolet has a lot of equity.” In charge of selling the stores is Fred Caruso, a consultant who helped liquidate the assets of WorldCom Inc. founder Bernard Ebbers after the latter was convicted of fraud in 2005. Caruso is vice president of Development Specialists Inc., a Chicago corporate finance and turnaround consulting firm. According to documents filed last week in the case, Heard Enterprises hired Caruso on Aug. 25, four days after GMAC froze its floorplanning from Heard, to help with the financial restructuring of the company and its subsidiaries. A couple of weeks after the freeze, Alphera also suspended its floorplanning for the three Heard stores it funded, a former Heard manager told Automotive News. Rubin, Heard’s attorney, said it was Caruso who “discovered the distress” Bidding war? At least three buyers reportedly tried to acquire Heard’s flagship store in Columbus, Ga. Megadealer Rick Hendrick has confirmed that he is pursuing a Heard purchase. Potential buyers also are interested in Heard’s dealership in Scottsdale, Ariz., said General Motors spokeswoman Susan Garontakos. Mark Rikess, a consultant in Bur- Dealers give mixed reactions to Chrysler incentive program Bradford Wernle bwernle@crain.com DETROIT — In a campaign to coax hard-pressed auto dealers to order more vehicles, Chrysler LLC last week introduced a monthly incentive that rewards dealers who meet or exceed the factory’s wholesale purchasing target. Dealers who meet their sales objectives will receive $500 per vehicle. Those who exceed their objective will get $1,000 for each vehicle over the target. But there’s a catch: Chrysler also wants dealers to participate in a second incentive plan, in which the company asks each dealership to order a certain number of vehicles from the factory. If a dealer meets his wholesale purchasing target, Chrysler will double the dealer’s monthly sales bonuses. Thus, a dealer who meets his sales objectives would receive $1,000 per vehicle, and a dealer who exceeds his sales target would receive $2,000 for each vehicle over the target. The sales incentive — dubbed the Q4 Stairstep program — is making some dealers uneasy. Other dealers like it because it gives them an opportunity to earn a generous bonus. Says Bob Shuman, owner of Shuman ChryslerJeep in suburban Detroit: “I’m glad to see Chrysler is staying aggressive and trying to do something. They’ve got to do something. “They can’t sit on their hands. We’ve got an op- portunity to make thousands.” Adds Chuck Eddy, owner of Bob and Chuck Eddy Chrysler-Dodge-Jeep in Austintown, Ohio: “It’s the best program I’ve ever seen them come up with.” But critics say it reminds them of Chrysler’s unpopular volume performance allowance, a monthly bonus plan that was discontinued last year. The critics fear that dealers will be tempted to order too many vehicles, then engage in ruinous price-cutting wars with other Chrysler dealerships. With credit tight, those dealers say they can’t afford to order more cars than they’ve been selling. Kevin Wittrock, general manager of Wittrock Motors, a Chrysler-Dodge-Jeep store in Carroll, Iowa, says his dealership won’t try to meet Chrysler’s wholesale purchasing quota. “We would have to double our inventory to qualify for this program,” Wittrock says. “It would double our floorplan costs.” Troy Allen, owner of Allen Motors Inc., a Chrysler-Dodge-Jeep store in Derry, N.H., says Chrysler allocated him 98 units for the next two months. That’s about 20 more a month than he has been selling. Allen will hit his sales target, but he won’t order the extra cars. Says Allen: “I’d like to be here eating Thanksgiving turkey and not be in the unemployment line.” c Chrysler boosts 2009 vehicle prices Bradford Wernle bwernle@crain.com DETROIT — Chrysler LLC is raising prices on all 2009 model vehicles by an average of $500. Steven Landry, executive vice president for North America sales, broke the news to auto dealers during his monthly sales call Wednesday, Oct. 1. The price increase does not affect 2009 model vehicles that dealers have ordered already or those that are on dealership lots. Chrysler also raised its shipping charge about $50 per vehicle. The news came as Chrysler Financial raised interest rates on floorplan loans that dealers obtain to finance their inventories of new vehicles. The price increases come at an awkward time for Chrysler LLC dealers, who are coping with slumping sales, tight credit and high gasoline prices. Chrysler LLC sales dropped nearly 33 percent in September compared with the year-ago month. Chrysler’s rivals also are boosting Chrysler’s Steven Landry broke the news to dealers during his monthly sales call. prices. This fall, General Motors raised its 2009 sticker prices by an average $790, or 2.7 percent. And if a couple of price increases in April and May are included, GM’s 2009 sticker prices are $1,150 higher than a year earlier. Ford Motor Co. has raised its 2009 sticker prices by an average $712, or 2.6 percent. Chuck Eddy, owner of Bob and Chuck Eddy Chrysler-Dodge-Jeep in Austintown, Ohio, and a member of the national dealer council, said Chrysler has done a good job holding the line on prices. “This is still way less than GM or Ford,” he said. “We’ve hardly had any price increase. I don’t think they’ve increased it enough. So it’s about time.”c
Table of Contents Feed for the Digital Edition of Automotive News - October 6, 2008 Automotive News - October 6, 2008 Many dealers floored by floorplan limits, costs THE GREAT COLLAPSE September was awful, and 2009 looks ugly GMAC is out of leasing — at least for now Versical, Nussel take new Automotive News posts GM to shut Ohio SUV plant 2 years ahead of plan VW commits to minority purchasing goals in Tenn. Chrysler exec to outline EV strategy at green conference Automakers are high on electrics Dealers give mixed reactions to Chrysler incentive program Chrysler boosts 2009 vehicle prices Lenders move fast to liquidate Heard's stores Mazda Kiyora Toyota, Audi mull tiny cars for U.S. Audi to decide next year on U.S. production Volvo plans diesel hybrid by 2012 Coupelike styling is back in a big way Honda Insight target price: Around $19,000 Mercedes plans U.S. sales of hybrids in S, E, C classes BMW is working on 2 small crossovers VW-Porsche feud risks growth plans Let's get clunkers off the road and spur the economy Europe: Still very different from us It could improve Caddy's image Shouldn't Cadillac try something new? A 4-cylinder is just what Cadillac needs Government's a player in Europe, too The Chevy Cruze should be big news Simple steps would revive industry Ford stops buying nonessential factory supplies Chevy, Mazda execs to speak at congress Automakers find India tough market to conquer Mahle CEO: Most engines will be smaller by 2012 GM begins streamlining purchasing TL stretches factory's flexibility Personnel Study: Dealers gain on independent shops Chrysler offers service contracts on certified vehicles No label Flashes of genius, years of turmoil VW seeks excitement with Routan, CC, Rabbit Sales soft, but Europeans plan to expand lineups 2010 redesign planned for Bentley flagship Alfa beyond Competizione Ferrari: Recession-proof and turning ... green? Maserati: Sporty gets even sportier Uncertainty surrounds Volvo's product plan Rolls-Royce goal: Add customers Panamera: Can Porsche defy skeptics again? Audi longs to join luxury big-leaguers in U.S. BMW plans more variants beyond sedans, wagons Under new owner, Aston Martin back in the race Lagonda's forte: Luxurious sedans that go very fast Couped-up? Lamborghini considers a sedan 250-mph Bugatti boosts the excitement Mercedes returns to the luxury suite Mini follows BMW's lead Smart ambitions, like car, remain small Suppliers cut staff, output to cope with downturn Driver monitoring systems differ High-tech mirrors are poised to make big gains IAC will open first India plant Supplier personnel Engineers call for common electric car standards Land Rover aims to boost the fuel economy of its SUVs Maybach adds open-top 62S Landaulet Saab gets a crossover in 2009; everything else is on hold Jaguar regains its focus on low volume, high end Dealers Economic winds batter Sept. sales Jaguar Land Rover joins group Ford aids minority suppliers CarMax plans 600 job cuts Ruling could ease disputes Feds seek more time for roof strength rule Suzuki seeks floorplan credit partner for dealers Toyota battles Detroit 3 with cheap loans $25 billion: How'd they do that? Peapod: Innovator's little big idea FOR SALE: Heard condos, mansion, jet Is film a flash in the pan? Ford hopes so VW: Next New Beetle will be 'more mature' Renault's U.S. ally of choice? Probably not Chrysler Automotive News - October 6, 2008 Automotive News - October 6, 2008 - GMAC is out of leasing — at least for now (Page 1) Automotive News - October 6, 2008 - GMAC is out of leasing — at least for now (Page 2) Automotive News - October 6, 2008 - Automakers are high on electrics (Page 3) Automotive News - October 6, 2008 - Lenders move fast to liquidate Heard's stores (Page 4) Automotive News - October 6, 2008 - Lenders move fast to liquidate Heard's stores (Page 5) Automotive News - October 6, 2008 - Volvo plans diesel hybrid by 2012 (Page 6) Automotive News - October 6, 2008 - Volvo plans diesel hybrid by 2012 (Page 7) Automotive News - October 6, 2008 - BMW is working on 2 small crossovers (Page 8) Automotive News - October 6, 2008 - BMW is working on 2 small crossovers (Page 9) Automotive News - October 6, 2008 - VW-Porsche feud risks growth plans (Page 10) Automotive News - October 6, 2008 - VW-Porsche feud risks growth plans (Page 11) Automotive News - October 6, 2008 - A 4-cylinder is just what Cadillac needs (Page 12) Automotive News - October 6, 2008 - A 4-cylinder is just what Cadillac needs (Page 13) Automotive News - October 6, 2008 - Simple steps would revive industry (Page 14) Automotive News - October 6, 2008 - Simple steps would revive industry (Page 15) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page 16) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-1) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-2) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-3) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-4) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-5) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page S-6) Automotive News - October 6, 2008 - Chevy, Mazda execs to speak at congress (Page 16A) Automotive News - October 6, 2008 - Automakers find India tough market to conquer (Page 16B) Automotive News - October 6, 2008 - Automakers find India tough market to conquer (Page 16C) Automotive News - October 6, 2008 - GM begins streamlining purchasing (Page 16D) Automotive News - October 6, 2008 - Personnel (Page 17) Automotive News - October 6, 2008 - Personnel (Page 18) Automotive News - October 6, 2008 - Personnel (Page 19) Automotive News - October 6, 2008 - Chrysler offers service contracts on certified vehicles (Page 20) Automotive News - October 6, 2008 - Flashes of genius, years of turmoil (Page 21) Automotive News - October 6, 2008 - Sales soft, but Europeans plan to expand lineups (Page 22) Automotive News - October 6, 2008 - Alfa beyond Competizione (Page 23) Automotive News - October 6, 2008 - Alfa beyond Competizione (Page 24) Automotive News - October 6, 2008 - Alfa beyond Competizione (Page 25) Automotive News - October 6, 2008 - Rolls-Royce goal: Add customers (Page 26) Automotive News - October 6, 2008 - Rolls-Royce goal: Add customers (Page 27) Automotive News - October 6, 2008 - Panamera: Can Porsche defy skeptics again? (Page 28) Automotive News - October 6, 2008 - Panamera: Can Porsche defy skeptics again? (Page 29) Automotive News - October 6, 2008 - BMW plans more variants beyond sedans, wagons (Page 30) Automotive News - October 6, 2008 - Couped-up? Lamborghini considers a sedan (Page 31) Automotive News - October 6, 2008 - Smart ambitions, like car, remain small (Page 32) Automotive News - October 6, 2008 - Suppliers cut staff, output to cope with downturn (Page 32A) Automotive News - October 6, 2008 - Driver monitoring systems differ (Page 32B) Automotive News - October 6, 2008 - High-tech mirrors are poised to make big gains (Page 32C) Automotive News - October 6, 2008 - Engineers call for common electric car standards (Page 32D) Automotive News - October 6, 2008 - Jaguar regains its focus on low volume, high end (Page 33) Automotive News - October 6, 2008 - Dealers (Page 34) Automotive News - October 6, 2008 - Dealers (Page 35) Automotive News - October 6, 2008 - Dealers (Page 36) Automotive News - October 6, 2008 - Dealers (Page 37) Automotive News - October 6, 2008 - Dealers (Page 38) Automotive News - October 6, 2008 - Dealers (Page 39) Automotive News - October 6, 2008 - Dealers (Page 40) Automotive News - October 6, 2008 - Economic winds batter Sept. sales (Page 41) Automotive News - October 6, 2008 - Economic winds batter Sept. sales (Page 42) Automotive News - October 6, 2008 - Feds seek more time for roof strength rule (Page 43) Automotive News - October 6, 2008 - Toyota battles Detroit 3 with cheap loans (Page 44) Automotive News - October 6, 2008 - Toyota battles Detroit 3 with cheap loans (Page 45) Automotive News - October 6, 2008 - Renault's U.S. ally of choice? Probably not Chrysler (Page 46) Automotive News - October 6, 2008 - Renault's U.S. ally of choice? Probably not Chrysler (Page 47) Automotive News - October 6, 2008 - Renault's U.S. ally of choice? Probably not Chrysler (Page 48)
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.