Automotive News - February 18, 2008 - (Page 46)

46 • FEBRUARY 18, 2008 NADA CONVENTION Report: Detroit 3 cutbacks curb rental-fleet sales Arlena Sawyers asawyers@crain.com SAN FRANCISCO — True to their word, the Detroit 3 are trimming fleet sales. General Motors, Ford Motor Co. and Chrysler LLC accounted for fewer than three out of four new vehicles sold to the U.S. rental industry last year — down from more than four-fifths in 2006 — a new report says. In 2007, they cut sales to rental fleets to 1.4 million cars and trucks, from 1.7 million units the previous year, according to Manheim’s 2008 Used Car Market Report. Manheim, the largest U.S. vehicle auction company, released the report at the NADA convention. Largely because of cuts in fleet sales by the Detroit 3, overall sales by automakers to rental fleets declined 8 percent last year to 1.9 million vehicles, the Manheim report says. A separate report by ADESA Inc., the No. 2 vehicle auction company, notes that the Detroit 3’s reduced sales were only “partially offset by increases from Japanese and Korean manufacturers.” The Manheim report says 49 percent of rental fleet sales last year were program vehicles — cars and trucks that automakers buy back after they leave rental service. The rest were risk units, vehicles that rental companies remarket themselves. Last year was the first time in nearly two decades that program vehicles represented less than half of rental fleet sales, the report says. Nearly 2.5 million vehicles came off lease last year — 145,000 more than in 2006, the Manheim report says. The report projects increases in offlease volumes to almost 2.7 million vehicles this year and 2.8 million vehicles in 2009. Auto leases typically last three years. The increased number of off-lease volumes is unlikely to depress usedvehicle values, Manheim says. “Lease contracts in recent years have been (for the most part) written with more conservative residuals, and all remarketers now have much improved end-of-term processes,” such as certified used-vehicle programs, the report says. Last year U.S. used-vehicle sales totaled 41.4 million units, according to ADESA’s Pulse Latest Economic Indicators report. That figure was down 2.7 percent from 2006 and the lowest in the past decade, ADESA reports. ADESA is scheduled to release its report at the convention tomorrow. c JOE WILSSENS J.D. Power’s Gary Dilts: The industry took a $3,000-per-car hit from interest rate increases in recent years. Dilts: High interest rates hurt industry SAN FRANCISCO — Somebody out there lost $40 billion. But who? That’s the size of the financial hit taken by automakers, dealers and consumers as a result of federal funds rate increases in recent years, says Gary Dilts, senior vice president of J.D. Power and Associates. He estimates that the impact of higher borrowing rates translated into about $3,000 per car at a time when auto sticker prices were barely rising. “You won’t track that money directly back to a car company, but you know it came out of somebody’s pocket,” Dilts said at J.D. Power’s Automotive Roundtable here. “It doesn’t show up anywhere in particular. It’s really coming out of everyone’s bottom line.” He said the federal funds rate, the rate banks charge each other for loans, rose from about 1 percent in 2004 — nearly the lowest rate since the late 1950s — to about 5 percent in 2007. — Lindsay Chappell “I’m not afraid of the factories. They can’t do anything to keep me up nights. The only one who keeps me awake is my 4-year-old daughter when she comes to me for a drink of water.” — Scott Smith President, Sonic Automotive Inc. GM asks for dealer assistance on quality Lindsay Chappell lchappell@crain.com SAN FRANCISCO — General Motors’ vow to boost the quality of its vehicles has a secret weapon: dealers. GM thinks its quality scores will rise if retailers are more attentive to vehicles that already have been built and delivered. That is the message GM’s top quality executive, Jamie Hresko, has been delivering to dealers around the country. Hresko is on a campaign to ask GM retailers to do a thorough pre-delivery inspection of issues that routinely irritate customers and may poison satisfaction reports. Of special importance: memory and personalization features. That includes seat and mirror settings, clocks, radio stations, computer settings and navigation system settings. “I’m asking for your commitment, from all your people,” Hresko appealed to an audience of dealers at the GM Minority Dealers Association dinner during the NADA convention here. He told the audience that 40 percent of the problems that show up on GM quality reports from sources such as J.D. Power and Associates are related to vehicle controls and settings — not manufacturing issues that stem from vehicle design or assembly. Hresko said GM warranty claims have been reduced by 40 percent over five years. GM wants to improve its performance with double-digit gains this year, he added. He said he has been visiting dealerships twice a week to convey the message. “I’d like to ask for your help,” he said. “I’m asking, what kind of problems are you having, in service or product?”c http://www.yourchevyagency.com http://www.mudd.com

Table of Contents Feed for the Digital Edition of Automotive News - February 18, 2008

Ford cuts equipment combinations on '09s Lenders shun subprime market Toyota dealers test satellite service centers Despite cost, more carmakers use laminated glass Merger produces turnaround firm Chrysler would shut to move Plastech work Jeep accessories: Mo' for Mopar Auctions: Repos are rising Automakers face more child safety rules Supplier Personnel Family-owned stores could be tough sell for consolidation What would lineup be with brands under single roof? Mercedes will pay $9.5 million to settle suit Beru revamps strategy to boost profits, growth Jaguar: Dealers take 10,000 customer deposits for XF sedans Chrysler exec: Performance segment will survive Mahindra to offer hybrids in U.S. Mazda ad agency hires VW and Mini creative whiz Icy weather and perhaps boredom chill roadster sales GM, Saturn: What's after Reynolds? Ford: Mid-sized model year for mid-sized cars Kia's new American boss: Let's boost sales Rolls gets sporty Luxury brands push to meet demand in Russia Dealer is makers' best voice in D.C. Get real, Kia, Hyundai Face it, Detroit: Trimming dealers will be expensive GM has confidence in the Chevy Volt It's no wonder auto sales are declining A workable idea: GM dealer buyouts It's deja vu again with reborn 2CV Nothing beats face to face There's a person behind that e-mail Buying cars online makes perfect sense Bush seeks to save 2008-11 CAFE rules Personnel Lear investor: No regrets about blocking buyout GM CFO is mum on more aid to Delphi Dealers Road to tomorrow is paved with plastics Council aims to keep Ford current on environmental issues VW ponders Phaeton's U.S. flop, may try again McGuffie is Covisint's president In hydrogen race, Mazda seeks quicker route Suit seeks to enforce title-washing remedy Suppliers to the 2008 Buick Enclave Mercedes, Audi warn dealers: No sales for export Sykora wants CAFE flexibility Minority dealers see tough times in 2008 Arlena Sawyers Toyota goal: Create stress-free store NADA's Taylor predicts 15.7 million U.S. sales this year Honda widens support for dealer ad groups Jay's jabs Survival 101: Get lean, work harder Microsoft will test dealership system Farley wants market-by-market sales strategy Entertaining the troops Report: Detroit 3 cutbacks curb rental-fleet sales Dilts: High interest rates hurt industry GM asks for dealer assistance on quality On the Record Fisker: We're close to making plug-in car J.D. Power exec: Internet leads are slipping away Minority auto group nears 2 deals Garmin makes navigation technology deal Tenneco wins Ford work B-P-G focuses on new product push Volvo offers cash to thin the herd Cadillac challenges dealers to boost sales Chevrolet can stay No. 1, if it will fight GM will push a green marketing message Saturn is expected to be GM's growth brand Certified used sales help Honda dealer profits Hummer counts on pickup to perk sales Mazda will boost marketing budget, unveil Mazda6 Saab dealers to get new vehicles Toyota wants even better customer loyalty Infiniti stresses profits and customer satisfaction Mitsubishi CEO sets tough U.S. sales goal Nissan exec: New models will boost per-store sales Suzuki dealers cheer return of incentives Ford to boost dealer margins Jag dealers anxiously await the XF Ford executives vague about Mercury future Subaru dealers want diesels, hybrids Acura upscale shift inspires 'great faith in the future' BMW readies national loaner-car program Land Rover: Future upbeat, unclear VW dealers get vehicles on wish list Chrysler dealers OK with consolidation plan Mercedes pushes dealership standards Porsche shrinks as luxury segment lapses Large Hyundai dealers get more room to roam Execs' exit stuns Kia dealers Ford recalls 180,000 trucks over door part, fuel hose GM posts massive loss; eyes N.A. profits by 2011 Big-truck sales fall 33.5% in Jan. WTO rips China's tariffs on imported auto parts Fiesta will rejoin the party in the U.S. UAW's Valentine to Delphi: Hands off our pensions Rx for dealership flux: NFL draft + Mideast bazaar Toyota gets the boot in Mexico Nissan triples female managers Silverado hits a million, rolls on

Automotive News - February 18, 2008

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