By Brendan Moore
AutoNation, the largest dealer organization in the United States with 313 new vehicle dealerships in 15 states, has launched a new sales incentive program today that covers up to six months of payments for new and used vehicle loan contracts in the instance that the borrower loses his or her job.
The program is called “Payment Protection,” and will cover the payments as the borrower looks for a new job, said Mike Maroone, president of AutoNation, the country’s largest dealership chain, in an interview with Reuters.
“It is especially timely in this environment,” he said. “There are really two big issues in retailing, availability of credit and consumer confidence. This attacks the consumer confidence issue.”
The main caveats are that there is a 90-day waiting period for eligibility for the program, and, that the borrower must be suffer their job loss from no actions of their own. The incentive costs the borrower nothing.
AutoNation’s new program is very close in terms and conditions to the program Hyundai rolled out months ago, and which has been credited with their good sales performance so far in 2009. This while the rest of the auto industry is at decades-low volumes.
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Odds and Ends about Cars and the Car Business
By Brendan Moore
JAY LENO, host of The Tonight Show, stand-up comedian, and, perhaps the most famous auto aficionado in the world, is going to bring his Las Vegas road act to the Detroit area, and he’s going to do it for free. The tickets are free to the people in the Detroit Metro Area that want to have a night out. Leno says he really feels for Detroit and he wants to do something for the city and its residents. But, of course, since this is Detroit, someone on the City Council is unhappy with the idea. Martha Reeves, the former lead singer of the Motown singing group Martha Reeves and the Vandellas, and now a Detroit councilwoman, was piqued by the fact that the two shows would be at the Palace of Auburn Hills (April 7 and April 8) outside of Detroit. She wanted the shows to be in the city of Detroit at Joe Louis Arena. Ms, Reeves seems to have been mollified by a promise from Leno’s people that a future show could be held in Detroit. Meanwhile, the free tickets have already shown up on eBay, being offered (scalped) for as much as $200 apiece, and this is making Leno himself pretty unhappy. Last night on The Tonight Show, he stated, “Here is something that annoys me. I look on eBay today and I see four tickets to my show for sale. … You’re out of your mind to pay $800 to see me. … I would like to ask the people on eBay to take the tickets down. There is nothing for sale here.” It appears today that the ticket sale offers have been removed from eBay.
MERCEDES-BENZ continues to poach good designers from other manufacturers. In January, they got Joel Piaskowski, Hyundai’s North American design chief, who had been with the company since 2003, and was with GM for 13 years before 2003. Piaskowski was credited with being the design force behind the new Hyundai Genesis sedan and coupe. He is now in charge of advanced design for Mercedes in North America. Now M-B has gained Karim Habib, the guy who designed the exterior of the new BMW 7-Series, from BMW. Habib will oversee the advanced design studio of Mercedes in Stuttgart. Gorden Wagener, the new head of design overall at M-B, is building quite a stable of design stars at his new place of employment.
SAAB is being considered as an acquisition by six to eight very large companies, according to Sweden’s Industry Minister Maud Olofsson. But, as she put it, “There are many who go to apartment viewings, but not everyone is there to buy.” Saab intends to find a new owner in the next 60 days.
By Brendan Moore
When I was at the Detroit Auto Show in January, I was impressed with the organization and focus of the many General Motors executives that I talked to during the show. Despite the reeling auto market, their looming financial insolvency and the tenuous status of government aid, the people at GM seemed to have a plan and seemed intent on executing it; the situation was seen as temporary until the plan started working.
But, now, I just don’t know. Crisis planning seems to have given way to the chaos of little or no planning.
The wind-down of different businesses and the shedding of brands is happening, but in the instance of the brands, GM seems to have decided to just basically cut those brands loose without a lot of effort to make their landing a little easier. This is understandable with Hummer, but the sorry way GM has booted Saab and left them twisting in the wind is unbelievably careless, to say the least.
Pontiac is going to be….what? No one knows, no one seems to have any ideas (that they’re saying out loud, anyway) about what Pontiac might be, and what the future might hold. All that anyone at GM will say is that Pontiac will be a boutique brand, and what a boutique brand is to GM is anyone’s guess.
By Brendan Moore
There’s been a lot of chatter about the auto manufacturers restructuring, the auto suppliers changing their operating models, the vehicle finance companies changing their credit criteria and product mix, and, of course, the government has weighed in with new regulatory hurdles like CAFE and emissions policy.
But the only thing we hear about retail auto dealers is that there are too many of them, particularly in regards to the domestic manufacturers. The plummeting economy seems to be taking care of that issue for the most part, and there is little doubt that many more retail dealerships will succumb in 2009.
But my concern is not less dealers, although that certainly needs to happen in the domestic retail network.
No, my concern is the franchise dealer system. It is time for this retail system to be restructured in a way that will be beneficial to both the consumer and the manufacturer. As it stands now, the franchise new-car dealer system has obvious benefits for only one constituency – the dealer.
Ask any new-car dealer why new cars are sold only at new-car dealerships, and he/she will tell you that only a dealer can comply with all the regulations governing new car sales, only a dealer can be expected to supply warranty work to those customers that need it, only a dealer that is an independent business person is going to muster the necessary incentive to make that dealership a success, and on and on.
Well, that’s true. And it’s true because auto dealers in every state have, through campaign contributions and ceaseless lobbying of state politicians, of both parties, made it impossible for anyone except a dealer to sell new cars. In fact, in many states, it is a criminal act for any manufacturer to sell a new vehicle to anyone other than one of the state’s new-car dealers. And they have also been able to shape the legal language around just what constitutes a dealership and a new-car dealer, thereby ensuring that a “dealer” will look just like what a dealer looks like today. Lastly, they have also been extremely successful in making it very difficult for manufacturers to terminate franchises and brands.
In effect, the dealers have their own monopoly on new-car sales, supported by state statute.
By Brendan Moore
While new-car sales have crashed at car dealerships, the service department is also taking some lumps in this downturn. Not only is the amount of warranty work greatly reduced because new car sales have plummeted, but the other non-warranty work has also dropped because of the struggling economy, despite some predictions of greater service work volume.
In the past two weeks, I have spoken with three service managers from three different dealerships. None of the service managers ran a single-point service shop; that is, they all had at least two makes to look after, and one of them had three makes to service. Among the three service managers, they serviced domestic, German and Japanese manufacturers.
The stories were similar – the shop revenue starting dropping in the third quarter of 2008, dropped a lot more in the fourth quarter of 2008 and is in the pits so far this year. People are waiting longer to get that noise checked out, they’re skipping the scheduled maintenance intervals or stretching them out, they’re asking if the dealership offers payment plans, etc. Two of the service managers commented that the only types of service volume that have increased are complete engine and transmission replacements.