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GM Says their New Dealer Agreement Supersedes all State Dealer Franchise Laws
Jun09

GM Says their New Dealer Agreement Supersedes all State Dealer Franchise Laws

By Brendan Moore

06.09.2009

gm-logo-smallThis should be interesting.

As you know, General Motors is in the throes of bankruptcy and therefore can void all the existing agreements it has with suppliers, lenders and dealers, to name a few.

GM has seized this opportunity to draw up a new dealer agreement with new terms that have infuriated many of their dealers. There are over 1300 dealer principals that have already received news of the death sentence GM gave their dealership, and thus are not involved in this fight, but many remaining dealers are screaming bloody murder.

Adding to their anger is the statement by GM executives that any dealer that doesn’t sign the new agreement by June 12 can be terminated at will. GM can legally terminate the dealers under the existing dealer agreement while in federal bankruptcy proceedings.

Automotive News has come into possession of a copy of the new dealer agreement, which they are reporting contains the following GM requirements:

Eliminate non-GM brands in the showroom

Maintain larger inventories

Sell substantially more vehicles

Upgrade dealerships and maintain high customer satisfaction scores

Not protest any store GM locates within six miles of their store for two years

GM’s lawyers have told company executives that any agreement forged in federal court will prevail over existing state franchise laws, a premise that irate dealers and their attorneys vehemently disagree with. They state that the new dealer agreement being offered by GM is overreaching and cannot trump state laws.

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Tata Says Nano will be sold in US within Three Years
Jun05

Tata Says Nano will be sold in US within Three Years

06.05.2009

By Brendan Moore

tata-logo-21Tata CEO Ratan Tata has told attendees at a Cornell University forum that the Nano, the world’s cheapest new car, will be sold in the US within three years. Once word leaked out, a Reuters reporter picked up on it, and the news was confirmed by David Good, Tata’s US representative.

Tata has already forecast deliveries of the Nano in Europe two years from now, although the company has stated repeatedly that the version of the car sold in Europe will be much more expensive than the models to be sold in India, due to added equipment that the European market will demand.

First deliveries of the Nano will happen in India, Tata’s home country, next month.

The company did not say if the cars would be retailed through its own dealer network, or through Tata’s Jaguar and Land Rover dealerships, their $2.3 billion USD acquisition in 2008. It stretches the imagination how the tiny, cheap 65 mpg Nano would be sold alongside expensive large Jaguars and Land Rovers since the buyer demographics would seem to be polar opposites, but who knows?

tata-nano1

Of course, there may be other retail networks available to Tata in the future in the US – the next iteration of Saturn comes to mind immediately.

Mahindra and Mahindra, another large Indian vehicle manufacturer, is planning on selling their diesel-powered small trucks and SUVs through a dedicated dealer network in the US, starting in late 2009, but those plans were made before the massive financial meltdown in the auto sector, when there were not a lot of other attractive options. 

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Toyota Forecasts Rebound, Increases Production
Jun04

Toyota Forecasts Rebound, Increases Production

By Brendan Moore

06.04.2009

toyota-logo-smallToyota sees a rebound in US sales over the next six months and is increasing production accordingly.

Toyota is bumping up production for six of its highest-selling models as a result of sales jumping up in May. May sales for Toyota increased a healthy 21% over April figures, although Toyota’s General Manager, Bob Carter, stated their numbers show a 25% increase over April.

Toyota’s sales figures for May still showed a decrease from last year’s same month, with a considerable drop of 39.5%, worse than every other major manufacturer except Honda.

In some related good news, days supply (inventory on dealers’ lots) for Toyota has dropped from 62 days in April to a current 41 days across the company.

The production increases will occur in the following models:

Tacoma, Tundra, Camry, Corolla, Rav4 and Sienna

The total increase will be approximately 65,000 units spread across the six models. Toyota did not break out the production increases per model.

Meanwhile, an interesting thing happened to Toyota in Japan – the new Prius was the top-selling model for the first time ever in Japan, beating out the Honda Fit (Jazz in the US). It marks the first time the Prius has garnered the sales crown in Japan. Will it presage success for the new Prius in the United States?

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GM Finds Buyer for Hummer – Reportedly in China
Jun02

GM Finds Buyer for Hummer – Reportedly in China

Update 1:30 p.m. EDT:  Bloomberg is reporting that the buyer of Hummer is Sichuan Tengzhong, a privately owned maker of special-use vehicles, structural components for highways and bridges, and construction machinery, according to what Bloomberg found on that company’s website.

By Brendan Moore

06.02.2009

hummer-logoGM has Saab, Saturn and Hummer up for sale as part of their restructuring efforts, and the brand that many people thought would be the last one sold (and many thought it wouldn’t ever sell) apparently has a buyer. GM executives will state this morning as part of its second day of bankruptcy proceedings that they believe they have found a buyer for the Hummer brand. They are so far refusing to identify the next prospective owner of Hummer.

The buyer will reportedly take over Hummer by the end of the third quarter, but GM will continue producing the H2 and H3 trucks, as well as the SUVs under contract for the new owner for at least the first year. The new buyer apparently also intends to develop alternative-energy models for Hummer in the next few years.

GM is also mum on the purchase price, although previous interested parties from China and Russia were thought to be bidding around $500 million USD for the Hummer brand. The Hummer products still enjoy a certain amount of cachet in other regions of the world.

The Saab and Saturn brands are thought to have three serious bidders and one interested buyer respectively. Another GM brand, Pontiac, is not for sale and will simply be shut down, as GM did with Oldsmobile earlier this decade. If sales efforts are not successful with any of the three brands being offered, GM plans to go to Plan B, which is a very basic plan – the company will shut the brands down, along with Pontiac.

2007-hummer-h2-suv

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Fiat-Chrysler Deal to Close Today, Says Nardelli
May29

Fiat-Chrysler Deal to Close Today, Says Nardelli

By Brendan Moore

05.29.2009

fiat-group-logo-small2In surprising news, Bob Nardelli, current CEO of Chrysler, told reporters late yesterday that he expects the sale of most of Chrysler’s assets to Fiat to be consummated today.

According to reporters that were there at the press conference and some of the other participants in the hearing, most of the people that heard Nardelli’s statement were surprised by the news. An attorney from one of the pension funds trying to block the sale immediately asked Nardelli if he meant that the sale would close today with the required federal antitrust approval. Nardelli replied in the affirmative.

People scoffed when the US Treasury Department set a 30-60 day target for Chrysler to emerge from bankruptcy, but if Nardelli is correct, they will make that goal easily. Of course, it’s worth noting that the federal government provided all the early financing, the bankruptcy financing, and, shoved Chrysler towards Fiat, a maker of small, fuel-efficient cars. The Treasury Department, the Obama Administration’s proxy in this matter, has definitely had it their way so far. If the federal bankruptcy court approves the sale of Chrysler assets to Fiat today despite the objections heard so far and the hundreds of objections still scheduled to be heard in the future, that is quite a victory for the government and Fiat-Chrysler.

If the sale looks as if it will actually close tomorrow, you can be certain the hundreds of attorneys on the opposing side will ask the judge to postpone the sale, If that doesn’t work, you can bet there will be many appeals after the sale is completed.

The roster of those opposing the sale includes suppliers, debtholders, retirees, and of course, the almost 800 dealers that Chrysler wishes to shut down, who want the state dealer franchise laws to supersede federal law. The appeals will be filed immediately after any action by the court that gives Chrysler the right to move forward and discharge the bankruptcy.

Chrysler says it needs to go through bankruptcy in order to shed $6.9 billion USD in debt and some very expensive retiree benefits. It will gain small-car technology and a worldwide retail network through its “merger” with Fiat.

The entities objecting to Chrysler’s bankruptcy/sale are not opposed to Chrysler’s bankruptcy, per se. In the case of the debtholders, suppliers and the retirees, they are opposed to Chrysler not paying them. Their point of view is, “do whatever you want, but honor your obligations to us”. The dealers, meanwhile, are all for Chrysler’s bankruptcy as long as they’re invited to the party. Since they’re not, they want the bankruptcy court to prevent Chrysler from dropping them.

However, that’s what bankruptcy is for – casting off debt obligations, unwanted contracts, etc. It’s hard to see at this point how Chrysler (with the US Treasury Department backing them) will not prevail in their efforts to successfully discharge their bankruptcy and merge with Fiat.

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