Automotive News - October 6, 2008 - (Page 43) OCTOBER 6, 2008 • 43 Feds seek more time for roof strength rule WASHINGTON — The Bush administration says it needs more time to finish a long-awaited rewrite of the government’s vehicle roof strength rule. Transportation Secretary Mary Peters said last week she had notified Congress of the need for additional time. In a 2005 law, Congress set a July 1, 2008, deadline for an updated roof strength standard. In June, a Senate committee told regulators to do it right, even if they had to take more time. In June, the Department of Transportation said it would finish the job by Oct. 1. GMAC For now, GM captive finance unit is no longer leasing continued from Page 1 Lease less Leases as percentage of new-vehicle sales for GM brands BRAND LEASE RATE (%) SEPT. ’08* LEASE RATE (%) SEPT. ‘07 sales last month dropped 15.6 percent from September 2007 — a smaller decline than its largest competitors. LaNeve cited GM’s employee pricing incentive program for the company’s relative sales success. said he expects GM’s lease rate to remain “minimal” throughout the fall. “We’ve really reverted our marketing program to cash,” Henderson said at the Paris auto show. “For the foreseeable future, that’s where we’re going to focus our attention.” Wall Street turmoil GM cannot dictate GMAC’s leasing policy. Last year, GM sold a controlling 51 percent share of GMAC to Cerberus Capital Management. Amid Wall Street’s meltdown, GM and GMAC executives say, the captive finance company has been finding it nearly impossible to raise money by selling securities backed by bundles of auto leases. Financial institutions “are not buying the paper,” said Kim Kosak, Chevrolet’s general director of advertising and sales promotion. “That’s a big concern, particularly with Northeast dealers.” Congress’ $700 billion Wall Street bailout may ease the credit crunch, since it empowers the Treasury Department to purchase auto loans. But until credit markets improve, LaNeve warned, “getting leases is like squeezing blood out of a turnip.” Dealers confirm that GMAC stopped subsidizing leases in August, especially for cars and trucks with low residual values. A residual value is a prediction of what a vehicle will be worth at the end of a lease, usually 36 months. Cadillac Saab Hummer Saturn Pontiac Buick Chevrolet GMC Industry 8.1 7.4 5.3 4.8 2.2 1.8 0.7 0.6 12.3 43.6 50.0 45.3 25.0 26.5 20.1 11.2 13.6 18.0 Dethroned Through mid-2008, GMAC was the largest U.S. lessor of new and used vehicles, with 13.0 percent of the lease market, according to Experian Automotive’s AutoCount. GMAC has fallen to second place among U.S. auto lenders overall, trailing Toyota Financial Services, Experian said. Henderson said GM’s U.S. leasing now “is focused primarily on premium vehicles.” But Cadillac was not immune from the downturn: Last month’s lease rate for Cadillac was 8.1 percent, down from 43.6 percent in September 2007, J.D. Power reported. Chrysler Financial, which is owned by Cerberus, formally stopped U.S. retail leasing Aug. 1. Last month, Chrysler LLC’s lease rate was less than 2 percent. Ilya Shnayder, corporate finance director of International Cars Ltd., a dealership group in Danvers, Mass., that sells Chevrolet and Saturn vehicles, said GMAC has not announced an end of leasing “because it would have adverse dealer reaction. But for all intents and purposes, they are out of leasing.” Many consumers still want to lease vehicles, said John Blair, CEO of Automotive Lease Guide, which estimates residual values for the industry. But profits on leases have fallen so low, Blair said, that lenders such as GMAC “just can’t do it.” c Donna Harris, Amy Wilson and Laura Clark Geist contributed to this report *Sept. 1-28 Source: Power Information Network, J.D. Power and Associates Jaguar Land Rover joins group WASHINGTON — Jaguar Land Rover North America LLC, sold by Ford Motor Co. in June, is joining the Alliance of Automobile Manufacturers, the automakers’ group announced last week. Jaguar Land Rover is owned by Tata Motors Ltd., of India. The addition brings alliance membership to 11. The others are the Detroit 3, Toyota, Volkswagen, BMW, Mercedes-Benz, Mitsubishi, Mazda and Porsche. Together they account for 77 percent of U.S. sales. A vehicle with a low residual value requires the customer to make higher monthly lease payments, unless the automaker subsidizes the lease. That practice, called subventing, has been extraordinarily costly for automakers. Lenders such as GMAC lost huge sums this year when the end-of-lease residual values of many large trucks proved to be much lower than original estimates. John McEleney, who owns two GM dealerships in Iowa, said the virtual elimination of subvented leases has added $70 to $90 a month to the retail cost of leases. “That’s driven people away from leasing,” said McEleney, who will become chairman of the National Automobile Dealers Association next year. Amid the near-freeze on leasing, GM new-vehicle LEND Dealers floored by floorplan limits, costs continued from Page 1 Ford aids minority suppliers DETROIT — Ford Motor Co. unveiled an initiative to help minority- and female-owned suppliers develop technology and technical expertise. Ford will provide access to its intellectual property so designated suppliers can develop future products. Ford launched the program, called the Joint Technology Framework, with six suppliers. CarMax plans 600 job cuts RICHMOND, Va. — CarMax Inc., the nation’s largest used-car retailer, plans to eliminate more than 600 jobs, the company said last week. About one-third of the cuts are being made in response to CarMax’s 78 percent secondquarter profit decline from the same quarter last year, the company said. The rest of the cuts come from attempts to streamline the process of reconditioning used cars for resale. CarMax said most of its 98 stores will see job cuts. sales are at their lowest point in 15 years, so dealership inventories — and thus their carrying costs — are bloated. Mike Kahn owns a group of seven suburban Los Angeles dealerships, with both domestic and import franchises. The group had $500 million in revenue in 2007. It remains profitable overall, but one of his dealerships is losing money, Kahn says. ‘Betrayed’ by bank Bank of America supplied two of Kahn’s dealerships with $60 million in floorplanning, capital loans and mortgages. Last winter, Kahn says, the bank did not want to renew the loans and raised his floorplan interest rate “through the roof.” “I never felt so betrayed,” Kahn told Automotive News. “You sign this agreement and they raise your rate. Or you don’t sign and they put you out of business.” Bank of America spokeswoman Julie Westerman says the bank has not changed its lending policies toward dealers and is not trying to force dealers out of business. Still, Kahn says he has shifted his floorplan accounts to Nissan Motor Acceptance Corp. Bill Adamson, a multifranchise dealer in Rochester, Minn., says Wells Fargo recently raised his floorplan interest rate by 1.7 percentage points. He declined to disclose his current rate. Don Charbonneau, who sells General Motors and Chrysler LLC brands in Dickinson, N.D., says his floorplan rate is now 1.25 percentage points over the prime rate, up from 0.75 points. He finances his inventories through GMAC and Chrysler Financial. Stephen Derby, senior vice president of commercial dealer services at ALYSHA WEBB Suburban Los Angeles dealer Mike Kahn said that last winter Bank of America told him it didn’t want to renew his loans and raised his floorplanning interest rate “through the roof.” Regions Bank, says some lenders are ordering dealers to pay off their floorplan loans. Other banks offer onerous terms to force dealers to look elsewhere for credit. Ruling could ease disputes LANSING, Mich. — A ruling by the Michigan Supreme Court could remove some of the rancor over automaker-supplier contracts. The court ruled last week that supply contracts do not have to include a specific numerical quantity in order to be enforceable. Instead, contracts can use a range to fix the number of parts used in a contract. The case stemmed from a dispute between metal stamping firm Acemco Inc., of Spring Lake, Mich., and supplier Ryerson Tull Coil Processing Co., a Chicago steel wholesaler and the defendant in the case. Main squeeze Dealers say floorplan lenders are Raising interest rates Requiring more collateral for loans Shunning loans to Detroit 3 and second-tier import dealerships Recalling loans to unprofitable dealers tant in Seattle, says some banks will not floorplan dealerships that sell Detroit 3 or minor import brands. “We tried to get a Kia deal done in Florida,” Johnson says. “None of the banks would floorplan the Kia dealer — a good dealer with a lot of money.” Similarly, Suzuki dealers are asking American Suzuki Motor Corp. to Tight fit Derby quickly adds that his bank doesn’t pursue such policies. “There are a lot of dealers looking for a new home,” he says. Even profitable dealers are feeling pressure. Carl Woodward, a dealership accountant in Bloomington, Ill., says independent lenders this year dropped three of his 100 clients. Woodward declined to identify the dealerships, other than to say all are profitable and have found new floorplan lenders. Mark Johnson, a dealership consul- launch a captive finance company to provide them floorplanning. Suzuki’s current finance company, Nuvell, is owned by a GMAC subsidiary and does not finance dealer inventories. Some relief is on the way. Congress’ $700 billion Wall Street rescue plan, passed Friday, is designed to make both commercial and retail automotive credit more available. Last week, key lawmakers said the Federal Reserve also has authority under “extraordinary circumstances” to make special loans for dealers’ inventory costs. But government acquisition of troubled loan-backed securities will take time. Until then, dealers will have to cope with their credit miseries. c Harry Stoffer
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.