Automotive News - March 10, 2008 - (Page 8)

8 • MARCH 10, 2008 advertising OUR DEALERS ARE GROWING Boardroom coup ousts Chamco executives Diana T. Kurylko dkurylko@crain.com AND SO CAN YOU! “With Zimmerman as a partner we have grown to be the # 1 GM Dealer in Albany, NY.“ Kara DePaula DePaula Chevrolet Directors of Chamco Auto, a company formed to sell Chinese vehicles in the United States, have ousted two top executives and a powerful consultant alleged in lawsuits to be the company’s de facto leader. The directors on Monday, March 3, installed a new executive team, and top officers and shareholders immediately filed a civil suit alleging fraud, mismanagement and diversion of corporate funds by the New Jersey company’s former managers. Fired by the board were Chairman Bill Pollack and President Sam Tropello. The board also severed ties with consultant E. Michael Daspin, husband of the privately owned company’s largest shareholder. Two lawsuits by former Chamco employees allege Daspin ran the company but his role was concealed to cover up a past felony fraud conviction that would inhibit the company’s ability to sign up dealers. The shareholders’ suit alleges Daspin and others diverted corporate funds to other companies they owned; issued Chamco stock without authorization to friends, family and associates; and mismanaged the company. The suit was filed in New Jersey Superior Court. No date has been set for a hearing. In an e-mail, Pollack called the E. Michael Daspin: Bill Pollack: He Ties were cut. was fired. board’s actions “illicit attempts to bankrupt our company and expropriate our assets.” Pollack contended he is still in charge of Chamco. The directors say Chamco is headed by Mario Ferla, a former Fiat executive brought in last October as CEO. Ferla now adds the title of chairman. Thomas Del Franco, a former Audi and Mazda executive who had been Chamco’s COO, was named president by the board. Chamco, short for China America Cooperative Automotive Inc., has said it will begin selling a Chinesemade pickup and SUV next year, plus a car and crossover later. The vehicles will be built by Hebei Zhongxing Automobile Co. Chamco says the vehicles will be sold through a network of 75 dealers. The company says it has signed 37 dealers. Ferla said about 30 dealers who took part in a conference call Friday, March 7, expressed support for the new management team. c GM, American Axle: Ties that bind David Barkholz and Robert Sherefkin dbarkholz@crain.com RESULTS! • KEYES AUTO GROUP • IRA MOTOR GROUP • TOM WOOD AUTOMOTIVE • CHECKERED FLAG • AUTONATION • DIEHL MOTOR COMPANY • CORAL SPRINGS AUTOMALL • RUSTY ECK FORD • AUTOLAND • HENDRICK CARY AUTOMALL • PATRICK AUTO GROUP • HUBLER AUTOMOTIVE • PLEASANTON AUTOMALL • DEPAULA CHEVROLET • WALLACE NISSAN OF KINGSPORT • SUPERIOR CHEVROLET Dealers Prove Our Advertising Gets GET A COMPLETE MARKETING PROGRAM! Guerrilla TV Marketing Radio Print Hispanic Direct Mail Web Design Auto parts suppliers live by a simple credo: Don’t cause your customer grief. So a supplier that shuts most of an automaker’s pickup and SUV plants for more than a week will be in hot water and may lose the contract. But not American Axle & Manufacturing Holdings Inc. American Axle, which supplies nearly all of General Motors’ pickup and SUV axles in North America, has the right to match any competitor’s bid for GM’s business, sources have told Automotive News. This effectively has allowed American Axle, of Detroit, to monopolize GM’s North American axle business. The unusual relationship emerged from intense negotiations in 1993 that resulted in the spinoff of five GM axle and forging plants to five investors led by James McLernon and current CEO Richard E. Dauch. Along with the plants, Dauch got full design responsibility for GM axles. GM is feeling the effects today of its dependence on American Axle. A strike that began Feb. 26 by 3,600 American Axle workers represented by the UAW had cascaded into the idling, by Friday, March 7, of seven GM assembly plants. The plants build pickups, SUVs and full-sized vans. REBECCA COOK/REUTERS/NEWSCOM The UAW’s strike against American Axle had led to the idling of seven GM assembly plants by last Friday. GM has plenty of pickup and SUV inventory to weather the walkout in the short term. But the strike could cause GM to run short of the highprofit vehicles within a few weeks if it isn’t settled. In an interview last month, GM purchasing chief Bo Andersson said American Axle has kept GM’s business by virtue of its quality and technical expertise. GM has long declined to comment when asked whether American Axle has the right to match competitors’ bids. The contract is complicated, says American Axle spokeswoman Renee Rogers. “We have to bid for contracts. We have to meet GM criteria,” she said. “We are a long-term strategic partner.” c Ex-Sonic president: Gulf States raided Sonic Lindsay Chappell lchappell@crain.com Internet Website Optimization In-Store CALL OR E-MAIL THE AGENCY THAT WILL WORK FOR YOU 24/7 (SERIOUSLY) 1-888-878-ZADV zauto@zadv.com or visit www.zadv.com A former president of Sonic Automotive claims that Group 1 Automotive is not the only dealership group that had a key manager recruited by Gulf States Toyota. Theo Wright testified in a lawsuit deposition that Gulf States secretly helped one of Sonic’s division vice presidents to obtain an open Toyota point in Texas while he worked for the Charlotte, N.C., dealership group. Wright provided the information in a suit filed by Group 1 against Gulf States and several former Group 1 managers in Harris County Court in Houston. The 2-year-old case is scheduled to go to trial today, March 10, in Houston. Wright, who helped take Sonic public in 1997 and served as its president from 2002 to 2004, said in his testimony that Gulf States helped the executive obtain the open point, even though Sonic itself was applying for the point. Wright stated that Sonic has taken legal action against the former executive and his partner. But it chose not to take legal action against Gulf States for fear that a lawsuit would hurt Sonic’s chances of winning other Toyota franchises it was seeking. Group 1’s suit alleges that Gulf States, the authorized Toyota-Scion distributor in Texas and four other states, violated what Group 1 claims is a standard industry agreement prohibiting automakers from recruiting dealership employees. Group 1 alleges that the distributor encouraged six of Group 1’s top dealership managers to quit Group 1 in 2006 and acquire or manage a struggling Toyota store in Dallas. The dealership now operates as Cowboy Toyota. In a telephone interview with Automotive News on Friday, March 7, J.C. Fassino, Gulf States’ senior vice president of marketing and market representation, said that Gulf States believes it did nothing wrong with either Group 1 or Sonic. Regarding the Sonic manager, Fassino said the conversations “were absolutely appropriate under the circumstances, and we look forward to the facts coming out in court.” Gulf States has maintained that it did nothing wrong and has refused to settle the lawsuit. Group 1 asserts that the secret discussions between its employees and Gulf States created a conflict of interest at the publicly traded retailer. Group 1 says the discussions also violated Gulf States’ dealer agreement to “refrain from conduct which may be detrimental to” Group 1. Court documents allege that one of the Group 1 managers provided $4.5 million in financing for the dealership. The court has placed much of the case under protective seal in response to the companies’ fear that confidential internal financial information will fall into the hands of competing dealers around the region — or into the opposing company’s hands. Group 1 owns 13 Toyota stores nationally, including five in the Gulf States territory of Texas, Louisiana, Oklahoma, Mississippi and Arkansas. c http://www.zadv.com http://www.zadv.com

Table of Contents Feed for the Digital Edition of Automotive News - March 10, 2008

Cheaper small cars are part of VW's U.S. plan Ford offers to buy back 81 stores As dollar dives, automakers juggle global strategies Jaguar-Land Rover deal will be signed within weeks GM Planworks chief leaves Jacoby cites dealer role in VW makeover Slim fast Nissan: Electric car to get here in 2010 Family honor Suddenly, Arkona's a key software player Chrysler may build vehicles in Russia Congress may ban mandated arbitration Volvo signs dealers willing to exit Breeding a hybrid? Prius could be a brand Honda adds benefits for same-sex partners Top China execs to speak at conference Manual for Challenger waits until '09 Ex-Sonic president: Gulf States raided Sonic GM, American Axle: Ties that bind Boardroom coup ousts Chamco executives False data imperil all auto financing Dealers would suffer if Calif. gets its way GM, Ford should bring Euro cars here Fresh ideas are fine, but Chrysler must be wary We need that 10% of useful inventions Safety options: Let consumers decide Tire monitors are full of problems Germany's labor setup just doesn't work Alabama adding auto jobs more slowly Engineer Banks strives to sip fuel, burn rubber Toyota Financial takes risks to aid dealers Honda captive beefs up dealer training in leasing NADA releases 2 subprime guides ADP develops e-sales brochure Credit unions' share of auto loans declines Upgraded auction ID carries a fee Dealers At hard-charging Hyundai, the plan is simple: More — now Genesis sedan's assignment: Boost image of all Hyundais Allied will supply sensing systems to Magna Haldex opens Mexico plant Behr gets Nano pact How Tupelo talked Toyota into building a plant there Infiniti FX showcases new Nissan technology Ford may consider hatchback for U.S. Audi to launch A4 sedan, wagon together BMW M3 convertible Saab hybrid concept has solar roof panels Toyota could bring tiny 4-seater to U.S. Hummer to push H3 pickup's usefulness New look for the SL Tiny Nano makes big waves GM's Opel unveils small hatchback that could become part of Saturn line Who says Americans don't want hatchbacks? 9-3 will dominate Saab marketing Lutz: Green takes greenbacks Leap year added to Feb. misery 9 U.S. Toyota executives will retire Ford gives employees $1,000 bonus Denso picks new N.A. CEO GM extends buyout offers CAW OKs TRW pact Lampert ups AutoNation stake Sagging Chrysler boosts spiffs Feb. output is up slightly Buick offers the Cadillac of caddies GM's board: The royal robe fits Fritz Be it metal or men, Geneva all about style Raising the roof (price) Italian cops bust Fiero-aris Consumer Reports' verdict on Chrysler products: Eeeee-uuw!

Automotive News - March 10, 2008

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