Automotive News - April 21, 2008 - (Page 12)

12 • APRIL 21, 2008 opinion Service contracts: Federal oversight is needed A service contract, sold through a dealership or directly to a vehicle owner, can offer useful extended protection when a factory warranty expires. But when third-party vendors use abusive — or illegal — tactics to market their contracts, both the industry and consumers have a right to expect tougher regulation by government. The Missouri attorney general is suing several independent service contract providers that are headquartered in his state, accusing them of deceptive sales tactics. Among the unscrupulous practices that he says some companies engage in: telling owners their warranties have expired or soon will do so when more than a year of manufacturer coverage remains, falsely stating or implying they represent an automaker or dealership, and violating federal and state “do not call” proscriptions. In some instances, prosecutors say, vendors lean on customers to buy contracts right away, charge credit cards without authorization and ignore ostensible money-back guarantees when customers try to cancel contracts. Dealers say such boiler-room tactics reflect badly on them, even though they aren’t a party to the marketing schemes. Some defendants in the Missouri lawsuit say they are cooperating with the attorney general’s investigation. But voluntary compliance, before or after the fact, evidently isn’t enough. Since third-party providers do business across state lines, federal regulators must set and enforce proper guidelines for marketing service contracts to consumers. If the feds can’t or won’t do that job, it’s up to individual states. Either way, dealers, automakers and consumers all deserve assurance that a potentially valuable product isn’t sullied by high-pressure marketing that becomes a scam. Last week, during the SAE World Congress in Detroit, I had the chance to drive a BMW 7 series — nothing remarkable except it was powered by hydrogen. Actually it was a dual system that allowed me to switch back and forth between hydrogen fuel and gasoline. The most amazing thing about that futuristic vehicle is that there was nothing amazing about it at all. I expect the biggest challenge would be finding a fueling station for hydrogen. There aren’t many in this country. It was completely seamless. Aside from the rather large bold lettering across the side of the car announcing to the world that it is a hydrogen vehicle, you would never have any idea what its power source might be. It was impressive because it was so well done. That hydrogen car uses a BMW piston engine that also runs on gasoline. Now there might be a huge problem in changing the world around to offer 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. Last week, I got a glimpse of the future hydrogen on every street corner, but the automobile companies would continue to use the same manufacturing plants to build engines. It was a great opportunity to get a quick glimpse of tomorrow. We’re not all going to be driving hydrogen vehicles in the next 20 years. But it just might be used first with vehicles that have to come home at night to a central refueling station — say, taxicabs or local delivery vans. Fueling would then disappear as an issue. We’ll see some hydrogen vehicles in the future, and no one knows for sure when or how many. Hydrogen will have to compete with other fuels. Sure, we’ll see lots of gasoline vehicles. Since we have the infrastructure, gasoline has a big head start. But, of course, we’ll add diesel, which We’ll see some hydrogen vehicles in the future, and no one knows for sure when or how many. Hydrogen will have to compete with other fuels. might make a lot of sense if the government gets out of the way. For the zero-emissions folks, we’ll have electric cars, although someone is going to ask where the electricity comes from. And let’s not forget to add biofuels, those fuels that will take food away from hungry folks in the Third World. I’m becoming a fan of shale oil, a product that, I read 25 years ago, wouldn’t be viable until oil was as expensive as perhaps $60 a barrel. We have lots of shale oil reserves in the United States, and now it looks like we can afford to extract them. There will be no single winning fuel in the future. It’s going to take all of them to fuel our world. Delphi mess drags on Delphi was supposed to be liberated from Chapter 11 bankruptcy this month. But because a key investor pulled out, it didn’t happen. Now more months will pass before the supplier emerges from bankruptcy. The only folks rejoicing over that prospect are the bankruptcy lawyers and consultants who are milking Delphi for $150 million a year. “There is very little regard to the fundamental health of the underlying assets,” Delphi Chairman Steve Miller said last week of the process. “While you’re in, it is like a bunch of kids fighting over a melting ice cream cone.” Translation: Too many creditors and lawyers are fighting over too little money. Congress tried to reform the bankruptcy process three years ago but failed. It’s time to try again — or else more Delphis will deteriorate when they are supposed to be rehabilitated. ethanol from corn stocks. As a result, the price of all food products associated with corn has increased. Other biomaterials provide a better yield than corn but are not being advanced because they do not favor a particular special-interest group. This narrow-minded approach to our energy needs has brought the country to its present situation. When Japan, Korea or Germany eventually develops a nonpetroleum energy source for private transportation, the United States will be years behind. For once, can’t we just put America’s interest ahead of the special interests that are destroying our way of life? ROBERT VARIELL Senior Consulting Engineer Kellogg Crankshaft Jackson, Mich. Ryan revolutionized this business To the Editor: Although Pat Ryan is retiring as executive chairman of Aon Corp., his presence will always be felt in the auto industry (“F&I pioneer Pat Ryan to retire from Aon,” March 24). Pat revolutionized the car business by introducing dealers to new sources of income through separate F&I departments handling finance contracts, life and disability coverage and extended warranties. The professional training his companies provided always stressed the highest ethical standards. F&I departments today have the highest gross margins in dealerships and, in many cases, determine whether dealerships are profitable. JOHN J. POHANKA Chairman Pohanka Automotive Group Washington The writer is a former president of the National Automobile Dealers Association. THE WEEKLY NEWSPAPER OF THE INDUSTRY Established in 1925, published every Monday by Crain Communications Inc. Can’t we stop importing oil? To the Editor: Every issue of Automotive News has articles about new technologies for improving fuel economy of gasoline or diesel engines. Every auto company is scrambling to meet future fuel efficiency standards. Keith E. 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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. autonews.com Did you know that you can write a letter to the editor on our Web site? Here’s how. Go to www.autonews.com. At the top of our home page, put your cursor on the tab that says “Opinion & Feedback.” Click on the section below that says “Send us a Letter.” That will bring up a letter form. Follow the directions. Consumers are facing $4-a-gallon gasoline. Raising fuel economy will not solve the problem. If the American consumer uses less gasoline, the cartel just raises the price. Even if we double automotive fuel economy, in a few years there will be twice as many vehicles on the world’s roads. It is a no-win situation. Aside from the environment, the real problem for the U.S. economy and national security is importing foreign oil. The world oil cartel is bankrupting America and the American consumer for economic and political reasons. We need a federal mandate and government support to eliminate the importing of oil. Part of the solution will be all-electric plug-and-drive vehicles. While we are busy fighting a war to protect our foreign oil supplies, other countries are developing new sources of clean energy to power their personal transportation needs. The brilliant minds in the United States have spent millions in pursuit of see LETTERS, Page 14 http://www.autonews.com/signup http://www.autonews.com http://www.autonews.com http://autonews.com http://www.autonews.com

Table of Contents Feed for the Digital Edition of Automotive News - April 21, 2008

Automotive News - April 21, 2008 Reorganization plan gives more muscle to 4 sales-channel execs Hummer plummets, Saturn soars in sales per franchise Chrysler-Nissan: Loads of partnership potential LIFESTYLE PICKUPS Strike averted Friday at GM transmission plant Hyundai to phase out Tiburon Veteran lobbyist looks back on decades-long mpg battle Autonews.com offers news customization GM offers free digital marketing package to dealers Lithia extends vehicle repair warranty to 3 years/50,000 miles With new products, is there life in Saturn? Ford plans $100M-plus F-150 launch Ford broadens its diesel strategy GM pitches its management system to dealers Supplier to help Mahindra offer diesel hybrid Transplants top 40% of N.A. output in March Geely chief: 'We are still an ant' Honda could import cars from China GM redirects efforts to serve emerging markets Beijing showstoppers New Challenger is appetizer for full line in 2009 Last week, I got a glimpse of the future Service contracts: Federal oversight is needed Delphi mess drags on Can't we stop importing oil? Ryan revolutionized this business An editorial glass ceiling? Driving on hydrogen — pros and cons BMW should build even more here Not what New York ordered Magna exec: More suppliers will fail Canada sales off 0.4% in March Bosch pushes crash avoidance Chrysler plans hybrid Dodge Ram Honda engineer is honored by SAE for safety efforts Panel: Diesels may hit 20% of U.S. market by 2020 Automotive News PACE Awards: Night of black ties, trophies, praise PACE Awards honor innovation Truck sales drop 31% in March Honda's new Pilot is bigger, more upscale In China, GM looks to fresh vehicles in 2009 U.S. economic woes hurt shareholder values Judge refuses to toss GMC franchise-award case Dealers Farley: Ford's marketing team is ready to roll Landry: Chrysler's consolidation will spawn service-only stores Profits up at Johnson Controls Hyundai to fix airbag problem GM to build $200 million Brazil plant Convis is CEO of Dana Holding Denso names Katoh CEO Stephen Feinberg speaks! Hogan eyes CEO spot in startup Chrysler reviving its global dreams? How I saved Delphi: A work in progress Tesla Motors' lawsuit: Designer Fisker ripped us off Concert in the key of C-3PO

Automotive News - April 21, 2008

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