Automotive News - October 27, 2008 - (Page 12) 12 • OCTOBER 27, 2008 opinion A goal for GM: Buy back full control of GMAC After the financial maelstrom clears and General Motors is back on solid footing, the giant automaker must exercise its option and reacquire control of GMAC Financial Services. GMAC was created in 1919 to help GM sell cars by making financing available to customers who didn’t have the cash or access to bank loans. GMAC also helped GM dealers by floorplanning their inventories with wholesale loans. Along the way, GMAC became one of the most solid, highly respected financial companies GMAC’s ingenious in the world, as well as a voice for business model reasonable, restrained borrowing and lending practices. It also became a steady source of ingave GM come for the parent company. a competitive GMAC’s ingenious business model gave GM a competitive advantage. When advantage. When credit dried up in tough times, GMAC was there credit dried up for GM dealers and buyers. in tough times, It was so successful that other automakers wanted their own GMAC was there captive finance arms. Most, including Toyota, patterned their for GM dealers lending operations after the GMAC model. and buyers. This downturn is different. Because of the credit crunch, GMAC has cut back on retail leasing. GM dealers grumble that the finance arm isn’t buying paper deep enough to support their sales operations. By contrast, in a credit-crunched America, Toyota Financial Services has plenty of cash to lend. During the credit crisis and downturn in auto sales, Toyota has managed to be an aggressive marketer because of the strength of its captive finance arm and the automaker’s access to cash. It also helps that Toyota has a full range of vehicles. Toyota’s new “Saved by Zero’’ ad campaign touts a 0 percent financing program for 11 vehicles. It’s the kind of marketing muscle GM used when its financing arm was stronger. In 2002, after GM cranked up its “Keep America Rolling’’ campaign, 84 percent of GMAC’s retail finance and lease contracts in North America included GM-sponsored incentives. It may be a coincidence that this time Cerberus Capital Management LP owns 51 percent of GMAC. But when GMAC is again a wholly owned captive finance arm of General Motors, customers and dealers can be certain that the lender has a strong vested interest in selling cars and keeping GM’s factories running. The U.S. government set an ugly precedent recently when Congress, at the urging of the president and a Cabinet member, bailed out several companies that appeared to be headed for bankruptcy. An often-used phrase was that they — the Wall Street companies and AIG — were simply too big to fail. Our government has decided that it is in the best interest of our nation to protect from failure certain financial institutions that are at risk of going out of business. Now all three of our domestic automakers as well as some significant suppliers fit the definition of too big to fail. My guess is that it’s going to take a long time for Congress to decide whether the manufacturing base of this country — namely, General Motors, Ford and Chrysler — deserves the same sort of financial support that Congress gave to those financial institutions — more than $700 billion, as you’ll recall. 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. Are they too big to fail? The fear is that quite a few conditions would be attached to any auto loan or gift that might come from Congress. With the exception of Wall Street, Congress provides no free lunch. A lame-duck Congress isn’t likely to act, so it would be at least next year before Congress might do anything. It took a long time for Congress to act when Chrysler asked for a loan guarantee of $1.5 billion in 1979. Had it not been for Jim Blanchard, a young congressman who later became governor of Michigan, it might never have happened. But it took a long time, and Congress made Chrysler and CEO Lee Iacocca jump through hoops. Chrysler repaid the loan, with interest, way ahead of time. Whether the nation thinks that having It’s going to take a long time for Congress to decide whether the manufacturing base of this country deserves the same sort of financial support that Congress gave to those financial institutions. three domestic automakers or two is important to the country is probably questionable. It will make for an interesting debate in Washington as we watch the automobile companies founder. Are GM, Ford and Chrysler too big to fail? Stay tuned. It’s going to be an interesting discussion. We need help, and we need it now. Indeed, this is a time for action. This will work. RON B. TONKIN President and CEO Ron Tonkin Dealerships Portland, Ore. GMAC loan bonus is a bad idea To the Editor: I have never been sadder than when I read “GM offers dealer bonuses for nonGMAC loans” (www.autonews.com). How could that decision have been approved by senior managers? Do they really think that is money well-spent? Every dealer in the country is busting his butt to seek loan approvals through any available lender. That is the only way we dealers can sell cars to pay our bills. Does GMAC think dealers would not seek alternate lending sources for customers with Beacon scores below 700? What does General Motors or the customer gain by GM compensating personnel for the task? That money would be so much better spent on further incentives to the customer in the way of cash rebates or price reductions. An investment in new product would also be wise for GM. New, fuel-efficient, top-quality products with upgraded interiors and exciting exteriors are the key to GM’s survival. The beautiful new Chevrolet Malibu exemplifies what GM is able to create. With seven vehicle divisions, GM should introduce 14 new products a year, with all products on a four-year life cycle. Although the Chevrolet Volt is exciting, it will not address the lack of new product for all seven divisions. For GM’s and its dealers’ future, I hope and pray that GM’s managers put more thought into how they invest their money in the future. PAT O’BRIEN O’Brien Automotive Family Indianapolis THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. 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. Tax credit would move domestic cars To the Editor: I sent the following letter to Rick Wagoner at General Motors, Alan Mulally at Ford Motor and Bob Nardelli at Chrysler LLC. Gentlemen: I am a multifranchised automobile dealer — however, not even 20 percent of our dealerships are domestic, so this letter is anything but self-serving. The importance of the domestic side of our industry is paramount to the employment base and health of all America. Much of American employment depends on a successful and healthy industry, which, in turn, filters to employment in allied and supply-side industries, as well as thousands of dealerships and their employees. In short, we need what we don’t have, and it isn’t quality. Our domestic products are as good as or better than anything now produced worldwide. The trouble is, perception lags reality by several years, and we are not getting people into our showrooms to see what we have. Right now, you could spend millions advertising, and I don’t think you would achieve meaningful results. What I am asking is for the three of you to call on President Bush and his advisers immediately and ask for a $2,500 tax credit for anyone purchasing a new GM, Ford or Chrysler product for the rest of the year. That would not be a bailout. Keeping the Detroit 3 profitable and keeping all their people employed would more than make up in taxes what the stimulant package would cost. On the other hand, closing more plants and throwing thousands of people out of work would be disastrous. http://www.autonews.com/signup http://www.autonews.com http://www.autonews.com
Table of Contents Feed for the Digital Edition of Automotive News - October 27, 2008 Chrysler dealers under GM? States would rule Survey: Worried dealers flee GMAC Va. dealers turn to local credit unions Anxiety over Chrysler: Deal or no deal? Ford, GM execs join panels looking at eco-friendly options Big pickups, SUVs gain share Chrysler will cut 4,300 salaried jobs by year end BMW seeks joint vehicle electronics effort Runkle: Give tiny suppliers a chance VW goal: 80% N.A. content for Tenn. plant April Wortham China's BYD plans U.S. hybrids Lucky Icahn lost Lear Mahindra's U.S. launch to get $60 million ad drive Toyota may renew no-interest loans Hesterberg, Thomson will address congress Desperate industry begs feds for help Hyundai dealers want ads to pitch favorable loans Toyota, GM top global r&d spending After Detroit 3 take back design, supplier sitting pretty Germany's Preh supplies F-150 ventilation part Buehler is Volt supplier Freescale: New infotainment chip Are they too big to fail? A goal for GM: Buy back full control of GMAC Tax credit would move domestic cars GMAC loan bonus is a bad idea Take a good look: Toyota is losing its halo What flexibility is and what it isn't Toshiba joins battery battle Personnel Hyundai slows Ala. output of Sonata, Santa Fe Picture this LaNeve: GM marketing budget faces '09 hit Hyundai counts on luxury, hybrid hopes Keogh: Audi belongs with top luxury brands Dealers Court overturns class-action status in Blue Oval suit 2 major lemon-law lawyers lose right to practice in Md. Auctions offer more online for just-in-time dealers Used-truck prices higher in September Lack of used Minis limits certified program Wood trim maker expects to avoid worst of woes VW: U.S. may get Scirocco after all Ford's new F-150 is built for jobs, not jaunts Think of it as GPS for tools Feds look at China-made valves on Ford tires Shareholder value tumbles in 3rd quarter Shareholder value tumbles in 3rd quarter Ford truck marketing exec: Hybrid pickup 'publicity stunt' Survey: Ford Motor reliability improves Chrysler heir: Get back to basics Farley has bright idea to boost auction action Kerkorian speeds away from autos Names familiar? NADA leadership is a family affair Mitsubishi bucks trend on profits New trade debate in the works? Beware the 'vital' deal Automotive News - October 27, 2008 Automotive News - October 27, 2008 - (Page Intro) Automotive News - October 27, 2008 - (Page Bellyband1) Automotive News - October 27, 2008 - (Page Bellyband2) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 1) Automotive News - October 27, 2008 - Va. dealers turn to local credit unions (Page 2) Automotive News - October 27, 2008 - Chrysler will cut 4,300 salaried jobs by year end (Page 3) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 4) Automotive News - October 27, 2008 - VW goal: 80% N.A. content for Tenn. plant April Wortham (Page 5) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 6) Automotive News - October 27, 2008 - Hesterberg, Thomson will address congress (Page 7) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 8) Automotive News - October 27, 2008 - Toyota, GM top global r&d spending (Page 9) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 10) Automotive News - October 27, 2008 - Freescale: New infotainment chip (Page 11) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 12) Automotive News - October 27, 2008 - GMAC loan bonus is a bad idea (Page 13) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 14) Automotive News - October 27, 2008 - What flexibility is and what it isn't (Page 15) Automotive News - October 27, 2008 - Hyundai slows Ala. output of Sonata, Santa Fe (Page 16) Automotive News - October 27, 2008 - Picture this (Page 17) Automotive News - October 27, 2008 - Picture this (Page 18) Automotive News - October 27, 2008 - Picture this (Page 19) Automotive News - October 27, 2008 - LaNeve: GM marketing budget faces '09 hit (Page 20) Automotive News - October 27, 2008 - Hyundai counts on luxury, hybrid hopes (Page 21) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 22) Automotive News - October 27, 2008 - Keogh: Audi belongs with top luxury brands (Page 23) Automotive News - October 27, 2008 - Dealers (Page 24) Automotive News - October 27, 2008 - 2 major lemon-law lawyers lose right to practice in Md. (Page 25) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 26) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 27) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 28) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 29) Automotive News - October 27, 2008 - Lack of used Minis limits certified program (Page 30) Automotive News - October 27, 2008 - VW: U.S. may get Scirocco after all (Page 31) Automotive News - October 27, 2008 - Feds look at China-made valves on Ford tires (Page 32) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 33) Automotive News - October 27, 2008 - Ford truck marketing exec: Hybrid pickup 'publicity stunt' (Page 34) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 35) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 36) Automotive News - October 27, 2008 - Survey: Ford Motor reliability improves (Page 37) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 38) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 39) Automotive News - October 27, 2008 - Beware the 'vital' deal (Page 40)
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