Automotive News - August 4, 2008 - (Page 12) 12 • AUGUST 4, 2008 opinion 1 week’s notice: Chrysler dealers deserved better Chrysler LLC dealers were shocked by the July 25 announcement that Chrysler Financial is getting out of the leasing business. And they were stunned by the breathtaking speed with which the change is to take effect. Dealers were given exactly one week’s notice. That’s not good enough. For dealers who rely heavily on leasing, the news was potentially devastating. They had spent the better part of two decades training sales staff and con“We have vincing customers of the advantages of leasing only to see it all tossed six days overboard in the twinkling of an eye. “We have six days to change our to change business model,” complained one dealer. our business When they heard the news, many dealers got right down to business model,” doing two things: getting customers into new leases before the Aug. 1 complained deadline and trying to line up alternate sources of lease financing. one dealer. The latter won’t be easy with most banks keeping a tight leash on credit. Chase Auto Finance followed up last week by announcing that it would stop financing leases for Chrysler cars and trucks. Chase was afraid dealers would flock to it in the wake of Chrysler Financial’s decision. Dealers face a period of uncertainty while waiting to see whether Chrysler can come up with retail incentives that will lure customers who found leasing so attractive. Chrysler co-President Jim Press, who announced the changes to dealers, sought to put a positive spin on the news. “Chrysler’s new incentive strategy will create finance deals with low payments, typically found only on lease deals,” Press said. “With these deals, customers can get low monthly payments with the benefits of ownership.” If he’s right and the market follows Chrysler away from leasing, Press will look like a genius. But the whole premise of Cerberus ownership of Chrysler was that private ownership would transform Chrysler into a new kind of carmaker less vulnerable to short-term market fluctuations. The sudden July 25 leasing pronouncement made it seem that Chrysler is becoming just the opposite — a dog being wagged by the tail of a fickle Wall Street. Cerberus/Chrysler owes dealers better in the future. Just as everyone was getting used to the disaster we call the domestic automobile business — gasoline was way more than $4 a gallon and oil was pushing $150 a barrel — the unexpected happened. The prices of a barrel of oil and a gallon of gasoline started dropping. Where they will stop, nobody knows. But in the meantime, a lot of people are getting nervous about the instability of prices. If you are Honda, you’re not going to do much to adjust your product plan or your marketing. You have lots of high-quality, high-mileage vehicles. Toyota people have to be scratching their heads trying to figure out the next scenario. They have a huge inventory of big trucks, and they’re shutting their Texas plant for a few months. They aren’t planning to send anyone home, but those employees are going to get plenty of training in the next few months. DAILY AUTO NEWS >> You can get the news you need every day. Go to www.autonews.com/signup and sign up for our daily e-mail newsletter. Get used to the roller coaster Nissan has decided it will ditch its full-sized pickup, writing off a substantial investment. It plans to let Chrysler build its big pickups. And General Motors, Ford and Chrysler have to wonder whether the reduction in the price of oil is temporary. Last week, an OPEC official said he wouldn’t be surprised to see the price of crude oil drop as low as $70 a barrel in the future. How good is your crystal ball? If you’ve decided that gasoline is going to stay at about $4 a gallon or go even higher and you’ve adjusted your product plan accordingly, you’re having some sleepless nights. Now the world is finding out just how important flexible manufacturing is and how important it will be in the future. People are getting nervous about the instability of prices. No one can figure out whether the costs of commodities are permanent or will continue to swing wildly. If you decide to hedge by buying futures and there are some wild swings the wrong way, you’re going to be in a very uncompetitive position. It makes no difference whether you are building cars or running an airline. Automobile dealers are going to be very cautious about their inventory. Today, too many dealers have far too high an inventory of pickups and SUVs — that is, unless the price of gasoline drops another half dollar. Then, perhaps — and only perhaps — American consumers will revert to their old buying habits. It’s a billion-dollar poker game these days, and few have a strong hand. Motors CEO Rick Wagoner misread the market, is way off-base. All automakers are in the business to sell the products the public wants. With cheaper gasoline, bigger, less fuel-efficient vehicles were what was selling. Why didn’t Stein comment on the fact that Toyota and Honda sold fewer Yaris and Fit cars when gasoline was cheaper? Didn’t General Motors offer the Chevrolet Aveo and other models with comparable fuel economy at the same time? TOM DELKE President Saturn Clarkston Saturn of Southfield Clarkston, Mich. That 1934 Reo had a clutch pedal To the Editor: The 1934 Reo did not offer a genuine automatic transmission (“The shift to automatic: A transmission transition,” July 14). It was a semi-automatic, with use of its clutch pedal necessary for some operations. The first production fully automatic (no clutch pedal) transmission, as stated, was the GM Hydra-Matic, introduced late in 1939 on the 1940 Oldsmobile. “Hydra-Matic” is how the name was spelled in GM’s contemporary literature. JAMES WOHLMUTHER Mechanicsville, Md. The writer is a member of the Society of Automotive Historians. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Decision makers can’t use hindsight To the Editor: Automotive News Europe Publisher Jason Stein’s July 14 column about General Motors’ “missed opportunity” is 20-20 hindsight. I don’t recall anyone writing editorials in Automotive News four years ago extolling small cars. Likewise, had anyone in the top management of the Detroit 3 turned away from the very profitable pickups/SUVS and built unprofitable small cars, he would have lost his job. Please note that the highly commended (and rightly so) Toyota management is knee-deep in big trucks that don’t sell and plants to build them. Also, the very high fuel prices in Europe were mostly taxes (as are a significant percentage of the somewhat high prices for fuel here in the United States now) and thus not leading indicators of anything. One cannot run a car company with Keith E. Crain, Publisher and Editor-in-Chief Peter Brown, Associate Publisher and Editorial Director David Sedgwick, Editor Edward Lapham, Executive Editor HOW TO REACH US Web site: www.autonews.com Editorial staff autonews@crain.com Phone: 313-446-0361 Fax: 313-446-0383 Circulation Advertising subs@crain.com rgreer@crain.com Phone: 888-446-1422 Phone: 313-446-6050 Fax: 313-446-6777 Fax: 313-446-8030 Editorial data/research To locate information that has been published in Automotive News, call 313-446-1662. Customer service To start or renew a subscription or to report an address change or a delivery problem, e-mail subs@crain.com or call 888-446-1422 (in the U.S. or Canada) or 313-446-1662 (in all other locations). AUTOMOTIVE NEWS (ISSN 0005-1551) is published weekly at 1155 Gratiot Ave., Detroit, MI 48207-2997. Periodicals postage is paid at Detroit, MI and at additional mailing offices. Postmaster: Send address changes to AUTOMOTIVE NEWS, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. Canadian Post International Publications Mail Product (Canadian Distribution) Sales Agreement #40012850, GST#136760444. Canadian return address: 2-7496 Bath Road, Mississauga, ON L4T 1L2 Printed in the U.S.A. maybe five years of lead time from concept to showroom by responding to the morning newspaper’s headlines or someone’s hindsight comments. Clearly, the company to be commended is Honda, which has persevered with a high-fuel-economy car line and stayed away from V-8s and big vehicles even when it was pressured to build them to compete with Toyota. Honda executives knew their core business and stayed with it and are now well-placed in the market. TOM CLARIDGE Santa Clara, Calif. The writer is a former dealer (MercedesBenz, BMW and Porsche). Speaking of ads, don’t overlook VW To the Editor: Judging by Senior Editor John K. Teahen Jr.’s white hair, he has been around long enough to remember Volkswagen’s advertising, yet he says not a word about it in his column about ad slogans (“Best ad slogans have staying power,” July 14). Come on! Remember “It’s ugly, but it gets you there,” “Lemon,” “Think small” see LETTERS, Page 14 We sell what the public wants To the Editor: Jason Stein’s column “A missed opportunity,” which says that General http://www.autonews.com/signup http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - August 4, 2008 Automotive News - August 4, 2008 Losing leases: It hurts already Crisis at Chrysler: Buyers bail GM's really bad news: Its revenue Lincoln reworks bonus plan for dealers Pain spreads beyond Detroit: Nissan offers employee buyouts Mitsubishi changes dealer advisory board GM repeats employee discount program Ford merges brands' sales, marketing After 5 funky years, Toyota's Scion now finds itself in a funk It's a body, er, a bus by Fisher At Tech Center, form follows function Industry nemesis again turns up heat on climate Right products, diverse customers raise suppliers' profits Last-minute leases swamp Chrysler With leases off the table, Chrysler offers new sales incentives GM favors 4 endorsed vendors of dealer management systems GKN to supply F-150 FX4's differential For sale: 2 Metaldyne plants 1 week's notice: Chrysler dealers deserved better Get used to the roller coaster That 1934 Reo had a clutch pedal We sell what the public wants Decision makers can't use hindsight Detroit's truck trauma is self-inflicted Why won't consumers buy Detroit cars? Speaking of ads, don't overlook VW Software helps dealers manage parts Service survey: Customer satisfaction rises Researcher: Vehicles can prevent crashes Personnel Microsoft will offer Live Search Dealers Picture This Nissan offers buyouts to its Tenn. workers Lincoln-Mercury exec joins Kia Kaline out at Ford Penske earnings drop slightly Asbury will move; profits slip S&P downgrades American Axle Best sales news: July is over Now THAT'S resale value ... Sirius-XM satellite radio deal: A mixed bag Don't be misled by Chery's sales; it's a key player McCurdy applies some political (tire) pressure A star is born: The saga of the shrinking sticker Our flag is still there Obama-mobile? Or McCain-carrier? Automotive News - August 4, 2008 Automotive News - August 4, 2008 - (Page Intro) Automotive News - August 4, 2008 - GM's really bad news: Its revenue (Page 1) Automotive News - August 4, 2008 - GM's really bad news: Its revenue (Page 2) Automotive News - August 4, 2008 - Ford merges brands' sales, marketing (Page 3) Automotive News - August 4, 2008 - After 5 funky years, Toyota's Scion now finds itself in a funk (Page 4) Automotive News - August 4, 2008 - After 5 funky years, Toyota's Scion now finds itself in a funk (Page 5) Automotive News - August 4, 2008 - Right products, diverse customers raise suppliers' profits (Page 6) Automotive News - August 4, 2008 - Right products, diverse customers raise suppliers' profits (Page 7) Automotive News - August 4, 2008 - With leases off the table, Chrysler offers new sales incentives (Page 8) Automotive News - August 4, 2008 - With leases off the table, Chrysler offers new sales incentives (Page 9) Automotive News - August 4, 2008 - For sale: 2 Metaldyne plants (Page 10) Automotive News - August 4, 2008 - For sale: 2 Metaldyne plants (Page 11) Automotive News - August 4, 2008 - Decision makers can't use hindsight (Page 12) Automotive News - August 4, 2008 - Decision makers can't use hindsight (Page 13) Automotive News - August 4, 2008 - Speaking of ads, don't overlook VW (Page 14) Automotive News - August 4, 2008 - Service survey: Customer satisfaction rises (Page 15) Automotive News - August 4, 2008 - Personnel (Page 16) Automotive News - August 4, 2008 - Dealers (Page 17) Automotive News - August 4, 2008 - Dealers (Page 18) Automotive News - August 4, 2008 - Picture This (Page 19) Automotive News - August 4, 2008 - Picture This (Page 20) Automotive News - August 4, 2008 - Picture This (Page 21) Automotive News - August 4, 2008 - Picture This (Page 22) Automotive News - August 4, 2008 - Picture This (Page 23) Automotive News - August 4, 2008 - Nissan offers buyouts to its Tenn. workers (Page 24) Automotive News - August 4, 2008 - S&P downgrades American Axle (Page 25) Automotive News - August 4, 2008 - S&P downgrades American Axle (Page 26) Automotive News - August 4, 2008 - Best sales news: July is over (Page 27) Automotive News - August 4, 2008 - Best sales news: July is over (Page 28) Automotive News - August 4, 2008 - Best sales news: July is over (Page 29) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 30) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 31) Automotive News - August 4, 2008 - Obama-mobile? Or McCain-carrier? (Page 32)
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