Autoblog

NADA: Dealers most happy with Hyundai, Subaru and Lexus

Jeff Sabatini — Sat, 28 Jan 2012 16:03:00 EST

Filed under: Car Buying, Hyundai, Kia, Lexus, Mercedes-Benz, Subaru

Car dealers have a strange and oftentimes contentious relationship with the carmakers. Stories of automakers shoveling unsaleable models down the pipeline with unreasonable expectations are legion in the car sales world. With the number of family-owned, single-brand dealerships dwindling, dealers often field competing franchises. The concept of loyalty is as quaint as a Lincoln Town Car. So it's worth noting the automotive brands that are actually liked by the guys selling them.

The National Automobile Dealers Association conducts its Dealer Attitude Survey twice each year, and results from the summer survey are in. Hyundai stayed on top for the third time in a row, followed by Subaru, Lexus, Kia, and Mercedes-Benz. The survey measures three factors: "franchise value, automaker policy decisions that affect the dealership and the automaker's field staff who visit dealerships."

Sixth place went to Toyota, while Volkswagen, Porsche, and Audi followed. Cadillac and Honda tied for tenth. NADA received responses from over 14,700 dealerships, representing almost 54 percent of all dealers nationwide.

Click past the jump to read the full press release.

Continue reading NADA: Dealers most happy with Hyundai, Subaru and Lexus

NADA: Dealers most happy with Hyundai, Subaru and Lexus originally appeared on Autoblog on Sat, 28 Jan 2012 16:03:00 EST. Please see our terms for use of feeds.

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TrueCar polishing edges off business model to comply with state regulations

Jeff Sabatini — Thu, 19 Jan 2012 18:21:00 EST

Filed under: Car Buying, Etc., Government/Legal, Marketing/Advertising

TrueCar has attracted much unwanted attention recently, drawing the ire of Honda and torquing off regulators in several states. In response, the company has announced a series of changes to its business model, designed to address the legality of its service, according to a report in Automotive News.

The biggest change is that dealers in some states will now have to subscribe to the lead service rather than paying a per-vehicle fee for sales closed from a TrueCar referral. Consumers will now have to sign up with TrueCar, providing contact information in the process. Additionally, TrueCar will drop the term "invoice" when describing the deals it offers.

While these changes are expected to mitigate TrueCar's biggest problems, the company also says it will be making its service more dealer-friendly, according to AN. One of the contentious aspects of the TrueCar business model for some dealers has been the requirement that TrueCar have access to the dealer's computers, such that the company can mine sales data. TrueCar says it will be limiting this in the future, along with establishing a national dealer council to procure feedback from its partners.

TrueCar polishing edges off business model to comply with state regulations originally appeared on Autoblog on Thu, 19 Jan 2012 18:21:00 EST. Please see our terms for use of feeds.

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Tight used car supply has dealers looking in their own service bays

Jeff Sabatini — Tue, 13 Dec 2011 18:40:00 EST

Filed under: Car Buying

Used vehicle prices have been on a tear for over a year now, as slow new vehicle sales during the financial meltdown of 2009 have created a dearth of available used models today. Yet the sluggish economy means demand for used vehicles is high, so dealers are going to ever-increasing lengths to acquire inventory.

According to Ward's Auto, the latest tactic is buying vehicles from service customers. Dealers are appraising customer cars and trucks before they pay their repair bills, then offering to buy the vehicles rather than charge the owners for the service visit. Dealers are even giving service personnel incentives to bring in trades.

One dealer said his service areas have signs reading, "Before you pay your service bill, you might want to find out the value of your car."

Tight used car supply has dealers looking in their own service bays originally appeared on Autoblog on Tue, 13 Dec 2011 18:40:00 EST. Please see our terms for use of feeds.

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Kevin Youkilis, Herb Chambers and Biz Markie walk into a car commercial...

Jeff Glucker — Fri, 26 Aug 2011 15:00:00 EST

Filed under: Car Buying, Etc., Marketing/Advertising, Humor

Being from the Boston area means you learn handful of facts specific to The Hub. One of them is that Kevin Youkilis (A.K.A. "The Greek God of Walks," "Youk") is a great pro baseball player with a few years left in the tank (despite his 2011 woes). Another fact is that you can't throw a stone in New England without hitting a Herb Chambers dealership. As a former resident of the great state of Massachusetts, your author is an Escalade-sized Red Sox fan and also worked a summer shuttling rental cars between two of Chambers' dealerships.

It seems Chambers and Youk are working together now, but their approach is... unique. Sitting at a piano, the duet attempts to warble out a version of Biz Markie's classic Just A Friend. Predictably, it's not exactly Grammy worthy. Hell, it's not even worthy to make the first round of American Idol auditions. Luckily, Mr. Markie isn't far away and steps in to help the pair get the song just right.

The message? Herb Chambers has got what you need, thanks to his 48 dealerships located around New England. Click past the jump for the clip.

Continue reading Kevin Youkilis, Herb Chambers and Biz Markie walk into a car commercial...

Kevin Youkilis, Herb Chambers and Biz Markie walk into a car commercial... originally appeared on Autoblog on Fri, 26 Aug 2011 15:00:00 EST. Please see our terms for use of feeds.

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Number of U.S. car dealer rises for first time in a decade

Jeff Glucker — Thu, 25 Aug 2011 10:01:00 EST

Filed under: Car Buying

For the first time in a decade, the number of new car dealerships in the United States has risen. Mind you, it wasn't a large increase, but the 66 additional dealerships represent a 0.4 percent increase that brings the U.S. total to 17,725. That's an encouraging economic sign considering we haven't seen any growth in ten years.

According to Detroit-based retail consulting firm Urban Science, that growth is occurring in and around metropolitan areas, which an 0.7 percent increase in the number of new car dealerships. Conversely, however, rural areas fell by 0.5 percent. Still, the overall picture is healthier for U.S. dealerships, with automakers reporting their dealers averaging more sales per lot compared to the year prior, and an increase in overall dealer profitability.

This growth, however minor it may appear, is a strong indicator that the industry is stabilizing after taking a beating the last few years. In 2008, the U.S. had 20,000 dealers, which may sound like a lot, but it's a far cry from the 47,000 dealers in the country at the end of World War II. We probably don't need to return to 47,000 and we probably don't even need to climb back to 20,000, but it's good to see growth in an industry that's faced a few years in decline.

Number of U.S. car dealer rises for first time in a decade originally appeared on Autoblog on Thu, 25 Aug 2011 10:01:00 EST. Please see our terms for use of feeds.

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NADA and banks working to curb new federal oversight efforts

Jeff Glucker — Wed, 25 May 2011 17:32:00 EST

Filed under: Car Buying, Government/Legal

In 2010, the Federal Trade Commission received 1,339,265 complaints. According to the National Automobile Dealer's Association, less than one percent of those complaints were related to new or used auto sales. That relatively low number (compared to the 250,854 people who complained of identity theft) has NADA upset over the government's decision to pursue the creation of an automotive lending consumer advocacy agency.

NADA has given its official support to the congressional Republicans who are looking to put the clamps on this new oversight group.

This agency will be formed as part of legislation that seeks to simplify auto loan disclosure forms, and the entire process of borrowing money to obtain a new set of wheels. On the contrary, NADA believes this advocacy agency could lead to financing abuses related to the level of power granted to those in charge.

NADA and banks working to curb new federal oversight efforts originally appeared on Autoblog on Wed, 25 May 2011 17:32:00 EST. Please see our terms for use of feeds.

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Last domestic car dealership in San Francisco shuts its doors

Zach Bowman — Wed, 11 May 2011 13:59:00 EST

Filed under: Etc., Ford, Earnings/Financials

According to The San Francisco Chronicle, the very last domestic dealership in the greater San Francisco area closed its doors a little over 10 days ago. Previously, San Francisco Ford, Lincoln, Mercury was the only dealership selling new products with an American badge on the grille in all of the 47.6 square miles of the city (the Chrysler-Jeep dealer shown above went bust in 2008). Ford took over operations at that dealer almost three years ago after the original owners walked away. After talks with various other local franchise owners fell through, Ford has finally cut off the lights for good.

But domestic dealers have faced a tough climate in San Francisco for years thanks to a much larger share of import sales compared to the rest of the country. According to one source quoted by the San Francisco Chronicle, import vehicles outsell their domestic counterparts 4:1 in the Bay area.

Those rare San Francisco domestic owners will now have to travel outside of the city for their factory maintenance and repair, which likely won't do anything to help American manufacturers better their outlook in the near future.

Last domestic car dealership in San Francisco shuts its doors originally appeared on Autoblog on Wed, 11 May 2011 13:59:00 EST. Please see our terms for use of feeds.

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Ninja Alert! Beware of car salesmen trained in the art of phone calls

Aaron Richardson — Mon, 25 Apr 2011 17:01:00 EST

Filed under: Car Buying, Etc., Marketing/Advertising, BMW

It may sound obvious to say you should be wary of car salesmen on the phone, just as you should be wary of car salesmen in general. To hammer the point home, though, here are some audio files of Jerry Thibeau training salespeople at car dealerships, in this case a BMW dealership, to schmooze and potentially ensnare customers before they even walk on the lot.

With the Internet stealing large portions of business from car dealerships, there's a real need for dealers to invest in this kind of telephone training. Thibeau answered the call when he started New York-based Phone-Up Ninjas back in late 2009.

Guys like Thibeau charge $2,000 a day plus expenses to visit car dealerships for these training sessions. They can also do the work remotely, dubbing constructive criticism into mystery shopper phone calls to point out where a salesperson's pitch could use some help.

The car salesman on the other end of the line has a job to do: make you buy a car (or how about this nice SUV that's just a little more per month?). Just remember that, next time, you may be talking to a ninja.

Our advice? Hang up. Read the full report at AOL Autos to learn more about how this industry operates.

[Source: AOL Autos | Image: Getty]

Ninja Alert! Beware of car salesmen trained in the art of phone calls originally appeared on Autoblog on Mon, 25 Apr 2011 17:01:00 EST. Please see our terms for use of feeds.

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FTC to probe auto dealer practices

Aaron Richardson — Sun, 13 Mar 2011 12:35:00 EST

Filed under: Car Buying, Government/Legal

The Federal Trade Commission will hold a series of roundtable discussions about car dealers' business practices next month. The talks will be held across the country in an effort by the FTC to get a feel for how car dealers are conducting themselves and whether their practices are fair to the consumer.

The discussions kick off on April 12 at Wayne State University Law School in Detroit and are free and open to the public. The main topic will be dealer financing, which is almost always a confusing, complicated process that can wind up costing car buyers more money than they originally intended.

The FTC is in the process of identifying experts in the field to attend the talks, including auto industry representatives and consumer advocates. More meeting times and discussion schedules will be posted to the FTC website as they're made public.

[Source: FTC via The Truth About Cars]

Continue reading FTC to probe auto dealer practices

FTC to probe auto dealer practices originally appeared on Autoblog on Sun, 13 Mar 2011 12:35:00 EST. Please see our terms for use of feeds.

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Report: Ford now has more dealers than Chevy for first time in many years

Chris Shunk — Tue, 22 Feb 2011 17:33:00 EST

Filed under: Car Buying, Chevrolet, Ford, GM

2010 was a good year for Ford. The Blue Oval outsold long-time rival Chevrolet by 160,000 units, but that's not the only area where Ford managed a lead over the Bowtie. Ward's Automotive reports that the Dearborn automaker ended the year with 47 more U.S. dealerships than its cross-town nemesis. The General lost 372 dealers during 2010, compared to just 61 for Ford.

Both companies shed a lot more dealers when counting all the brands that fall under their respective umbrellas, and both moves have helped helped remaining retail stores increase profits. In fact, Wards claims that sales are up between 38 and 129 percent per store. But given the atrocious 2009 automakers endured, 2010 looked like a dream year despite the fact that sales were still among the lowest in three decades. In all, there are about 17,660 car dealerships in the U.S. spanning all automakers.

[Source: Ward's Automotive | Image: Paul Sakuma/AP]

Report: Ford now has more dealers than Chevy for first time in many years originally appeared on Autoblog on Tue, 22 Feb 2011 17:33:00 EST. Please see our terms for use of feeds.

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Report: 64 axed Chrysler franchisees file suit against U.S. Treasury

Jeff Glucker — Fri, 18 Feb 2011 09:57:00 EST

Filed under: Government/Legal, Chrysler

Back in June of 2009, Chrysler terminated relationships with 789 dealerships in an effort to cut its dealer network down by 25 percent. A few of those dealerships didn't think too highly of the move, which was orchestrated in part by the federal government. As a result, 64 former Chrysler franchisees have reportedly filed a suit against the United States Treasury and are seeking at least $130 million in damages.

Was the move to terminate these dealerships a violation of the U.S. Constitution? According to the lawsuit, the automotive task force violated the Fifth Amendment, which essentially states that property cannot be taken away and used for public purposes without adequate compensation.

[Source: Automotive News - sub. req. | Image: Drew Phillips/AOL]

Report: 64 axed Chrysler franchisees file suit against U.S. Treasury originally appeared on Autoblog on Fri, 18 Feb 2011 09:57:00 EST. Please see our terms for use of feeds.

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Study: How car dealers treat customers is more important than price

Zach Bowman — Tue, 23 Nov 2010 09:59:00 EST

Filed under: Car Buying, Etc.

Today's piece of blatantly obvious news comes courtesy of J.D. Power and Associates. According to a new study, a whopping 52 percent of new car buyers said the main reason behind picking one car dealer over another was how they were treated on the lot. In fact, of those surveyed, only 38 percent pointed toward the vehicle's purchase price as the main reason for laying down their hard-earned cash in one place over another. That means that for all the incentives and bargain specials, it really is customer satisfaction that moves vehicles off the lot.

The J.D. Power study also found that the ease or difficulty of price negotiation had the largest impact on just how satisfied customers were with their purchase at the end of the day. That's likely because agreeing on a price takes the largest amount of time during the car buying process aside from actually choosing a model. J.D. Power says that on average, negotiation takes around 53 minutes.

With all of the options available to car buyers these days, dealers would do well to heed the information in this particular study. Head over to the J.D. Power site for a closer look.

[Source: J.D. Power | Image: Getty]

Study: How car dealers treat customers is more important than price originally appeared on Autoblog on Tue, 23 Nov 2010 09:59:00 EST. Please see our terms for use of feeds.

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Report: Chrysler wins 73 of its dealer arbitration cases, loses 32

Zach Bowman — Wed, 28 Jul 2010 11:01:00 EST

Filed under: Car Buying, Government/Legal, Chrysler

Arbitrators have finished wading through the 105 cases of rejected Chrysler dealerships, determining that Chrysler was right to send the lots packing in 73 instances. According to Automotive News, those who weighed in on the cases typically cited the carmaker's plans to sell all four of its brands through the same dealerships as reason enough for ousting those that couldn't come up with the facilities to do so.

Chrysler offered around 232 dealers the chance to return to the company after kicking 789 sites off of the corporate life boat. The 32 dealerships that won their cases were part of the group that received the Pentastar olive branch, but to date, only 29 of the 232 have signed letters of intent with Chrysler that outline their terms of reinstatement. Few of those that won their arbitration case have accepted the letter of intent, though that number is expected to grow over the next few months.

There is some indication, however, that not every dealer is happy with their final agreements. Some have come forward with complaints that the terms of reinstatement are harder for those that got the boot than for dealerships that managed to survive the company's bankruptcy. Calls for facility upgrades have caused at least two dealers to file lawsuits contesting the letters of intent.

[Source: Automotive News - sub. req.| Image: Jeff Robertson/AP]

Report: Chrysler wins 73 of its dealer arbitration cases, loses 32 originally appeared on Autoblog on Wed, 28 Jul 2010 11:01:00 EST. Please see our terms for use of feeds.

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DetNews: Ford's slow revival of Lincoln taking heat from dealers

Jonny Lieberman — Tue, 16 Feb 2010 17:58:00 EST

Filed under: Car Buying, Lincoln, Luxury

2010 Lincoln MKT - click above for high-res image gallery

In a nutshell, the problem with Lincoln is that on the Taurus SHO launch, Ford brought along an Audi A6 4.2 for comparison's sake. Says one Lincoln dealer, "It's hard to sell a $48,000 MKS when the Ford guy down the street has a Taurus with the same features for $10,000 less." Put another way, despite the polarizing new sheetmetal, it's still obvious to consumers that the MKZ is a Fusion, the MKS is a Taurus, the MKX is an Edge and the MKT is the Flex.

"I have more dedicated Lincoln-Mercury employees than Ford Motor Co. does. They don't have any executives who wake up every day thinking about these brands." Says Lincoln/Mercury dealer owner Chris Lemley to The Detroit News in what might just be the "ouch!" comment of the year.

Part of the problem is without question the not-so-great state of the economy, with luxury sales tanking by nearly 25 percent in 2009. Still, with Lincolns priced lower than the competition, one might think they'd be selling better. For instance, the Lincoln MKT (priced at $49,995 with all the fixins) matches up quite well with the much more expensive Audi Q7 ($61,825). However, "If people were cross-shopping Audi and Lincoln, that would be great," said one analyst. "Audi buyers are shopping for a style statement. They're not even looking at Lincoln. Lincoln still has not gotten back up to first-tier luxury." Hence all that dealer fury.

Gallery: First Drive: 2010 Lincoln MKT EcoBoost

[Source: The Detroit News]

DetNews: Ford's slow revival of Lincoln taking heat from dealers originally appeared on Autoblog on Tue, 16 Feb 2010 17:58:00 EST. Please see our terms for use of feeds.

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It's On Like Donkey Kong: Jilted Hyundai Genesis Coupe buyer jilted again, lawyers up

Jonny Lieberman — Mon, 25 Jan 2010 19:38:00 EST

Filed under: Car Buying, Coupe, Performance, Auctions, Hyundai, South Korea

This ended about how we predicted. You all no doubt remember McFly, the guy that won a legit eBay auction for a slightly used Hyundai Genesis Coupe 2.0T for $16,125. Problem was that the seller - Glenn Hyundai of Lexington, KY - felt the car was worth more ($19,700) and refused to sell it to McFly. They claim they set a reserve price (even though they didn't) and wouldn't budge. End of story, kind of.

See, the internet got a hold of the McFly's tale of woe, and few things excite people (us included) more than tales of bald-faced greed mixed with dishonest car dealers. Not surprisingly, the story took off like wildfire and Glenn Hyundai soon found itself inundated with phone calls, emails, faxes - you name it. The onslaught became so bad that Glenn Hyundai got in touch with McFly and told him that if he would call off his dogs (remove his forum posts, plead with Gencoupe.com forum members to stop harassing the dealership, somehow get Digg.com to do... exactly what we're not sure, etc.) they would presumably sell him a Genesis Coupe for $16,125.

Why do we say presumably? Because we never knew the details of the agreement McFly worked out with Glenn Hyundai. Or, as McFly puts it an updated post, "For the record I have not shared any part of the verbal agreement." Despite this agreement never being finalized, some felt that McFly's saga was over (while some nearly broke their hands patting themselves on the back). We ourselves were reluctant to think or declare anything until McFly had the Genesis Coupe in hand. Guess what?

No Genesis Coupe 2.0T for McFly. He's claiming that Glenn Hyundai has breached the "verbal agreement" he reached with them. He's refusing to give any details of said verbal agreement, but maintains that Glenn Hyundai owes him a Gen Coupe for $16,125. Also, McFly's retained a lawyer. Also-also, he's contacted Hyundai USA but received no response. We'll keep you updated. Thanks to Bora for the heads up!

[Source: Gencoupe.com]

It's On Like Donkey Kong: Jilted Hyundai Genesis Coupe buyer jilted again, lawyers up originally appeared on Autoblog on Mon, 25 Jan 2010 19:38:00 EST. Please see our terms for use of feeds.

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REPORT: Stand-alone Lincoln-Mercury dealers being scaled out of existence

Michael Harley — Mon, 09 Nov 2009 18:59:00 EST

Filed under: Car Buying, Marketing/Advertising, Ford, Lincoln, Mercury

In 2006, Ford began to shrink its dealership network in order to more efficiently align its distribution network. Three years later, it appears that the hardest hit are the company's stand-alone Lincoln-Mercury dealerships. While there were 619 Lincoln-Mercury dealerships nationwide just a few years ago, the number had dwindled down to just 357 at the beginning of 2009.

Automotive News recently spoke with Ford CEO Alan Mulally about the future of the Lincoln brand and its stand-alone Lincoln-Mercury stores. While Ford's current strategy is pushing combo Ford-Lincoln-Mercury retailers, Mulally would not confirm that eliminating the stand-alone Lincoln-Mercury dealerships was the desired end result. When pushed on the question, Mulally reiterated that Ford was focusing on building a distribution network which allowed sales volume, product breadth, and profitability... qualities that are apparently better served by the Ford-Lincoln-Mercury store.

Mulally added that although these combo dealerships will be selling the Lincoln MKS on the same lot as the Ford Taurus (both vehicles share platforms and mechanicals), retailers will learn how to deliver the sales experience that fits the vehicle and differentiates the brand. Whether this concept works or whether car salesmen simply take the easy route and sell the less expensive Ford remains to be seen.

Either way, it has to be asked - is peeling away at the automaker's stand-alone LM dealers part of a larger plan to do away with Mercury altogether? Inquiring minds want to know...

[Source: Automotive News - Sub. Req. | Image: Stephen Brashear/Getty]

REPORT: Stand-alone Lincoln-Mercury dealers being scaled out of existence originally appeared on Autoblog on Mon, 09 Nov 2009 18:59:00 EST. Please see our terms for use of feeds.

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REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO]

Dan Roth — Wed, 30 Sep 2009 10:59:00 EST

Filed under: Car Buying, Etc., Government/Legal, Hirings/Firings/Layoffs, Videos

Holdiman Motor terminated dealer plea - click above image to watch the video

Since government money washed in to pump out General Motors' and Chrysler's swamped and nearly sunken businesses, there's been little mention of the cuts to the dealer base that both automakers have made as part of their rebirth. Tammy Darvish, whose DarCars Automotive Group lost two Chrysler outlets, has started a YouTube channel that encourages terminated dealers to send in videos telling their stories.

Co-chair of the Committee to Restore Dealer Rights, Darvish feels that the dealers' stories have largely been ignored. Many of the videos tell tales of long family histories in the dealership business, and all have an air of incredulity about how their American Dreams could be snatched away. These personal accounts may not return any franchises to operation, but at the very least, the effort is cathartic and airs the plight of the many hardworking employees that found work at the now-closed stores. An example of the numerous videos on the channel posted after the jump.

[Sources: Automotive News - sub req, YouTube]

Continue reading REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO]

REPORT: Rejected GM, Chrysler dealers telling their story on YouTube [w/VIDEO] originally appeared on Autoblog on Wed, 30 Sep 2009 10:59:00 EST. Please see our terms for use of feeds.

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REPORT: Credit lines increasingly hard to come by for auto dealers

Jonny Lieberman — Thu, 03 Sep 2009 10:32:00 EST

Filed under: Car Buying

Like him or loathe him, George W. Bush's clearest, most salient speech came almost a year ago on September 25, 2008 when our Harvard MBA president explained to the nation and the world exactly how bad the economy had gotten and why so much federal money ($700 billion-ish at the time) was being hurled at America's banks. The full speech can be found here, but one little section bears quoting:

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses... Other banks found themselves in severe financial trouble. These banks began holding on to their money, and lending dried up, and the gears of the American financial system began grinding to a halt.

While there have been signs of those gears getting a little bit of oil, certain sectors of the economy remain firmly stuck. Or as CNNMoney puts it, "auto dealers are in their own special financing hell." How so? It's a toxic combination to be sure. A car dealership's inventory is much more expensive than other small businesses (like, say, The Yarn Depot). Additionally, the economy as a whole is still fairly south of the border so despite Cash for Clunkers, millions of people aren't buying expensive things. Then, of course, the banks that lend the money are themselves going belly up, almost 80 so far in 2009 alone.

To address the lose-lose situation, the Small Business Administration (SBA) is trying out several programs designed to help out dealerships. One such initiative sees the SBA backing the auto dealer loans. So far, only one dealership has qualified. The problem is that car dealers require a special type of loan known as a floor plan loan, and the SBA's program doesn't cover floor plan loans. These special loans allow dealers to repay the loan as the inventory sells, instead of on a monthly basis. And as inventory isn't moving like it used to, banks aren't keen on making any floor plan loans.

[Source: CNN Money | Image: Hulton/Getty]

REPORT: Credit lines increasingly hard to come by for auto dealers originally appeared on Autoblog on Thu, 03 Sep 2009 10:32:00 EST. Please see our terms for use of feeds.

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House reportedly approves measure to restore dealerships despite bankruptcy blows

Chris Shunk — Fri, 17 Jul 2009 16:00:00 EST

Filed under: Government/Legal, Chrysler, GM, Earnings/Financials

One of the more controversial parts of the Chrysler bankruptcy was the decision to cut 789 dealerships by June 9. The move made for a quick, painful end to dealerships that in some cases spanned several generations of family ownership. When General Motors entered bankruptcy, it said it would cut about 1,300 retail stores, but the automaker planned on waiting until October, 2010 to pull the plug.

The dealership closings hit small and medium-sized towns particularly hard, putting pressure on lawmakers to do something to rectify the problem. The U.S. House took initial steps towards restoring the doomed dealerships by passing a bill to restore dealer rights. The bill, which has just been approved by the House by a 219-208 margin, would restore dealerships back to their previous state, forcing automakers to work through state courts to close down the stores. Since dealerships are such a big part of the employment picture in most states, GM and Chrysler face an expensive uphill battle to close the stores if the bill is also passed by Congress and then signed into law by President Obama.

Automotive News is reporting that Chrysler says the bill would cost the company $2 billion per year over the next four years. Vice President Peder Grady added on the Chrysler blog that if the bill were passed, " it flies in the face of a U.S. vehicle market that has declined 40 percent since 2007." AN also says that GM estimates the bill would cost them $2.5 billion in support, training and IT costs over a period of time.

The Obama administration is reportedly against the measure, saying that the dealership closings were "a critical part of their overall restructuring to achieve long-term viability." Thus, even if the measure passes muster in the Senate, there's a good chance it will face a veto from President Obama.

[Source: Automotive News - subs req'd | Image: Spencer Platt/Getty]

House reportedly approves measure to restore dealerships despite bankruptcy blows originally appeared on Autoblog on Fri, 17 Jul 2009 16:00:00 EST. Please see our terms for use of feeds.

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BREAKING: Chrysler 'rejects' 789 dealers nationwide, works to pare network by 25% by June 9

Chris Paukert — Thu, 14 May 2009 13:00:00 EST

Filed under: Car Buying, Government/Legal, Hirings/Firings/Layoffs, Chrysler, Earnings/Financials

Chrysler has just announced that it will 'reject' some 789 of its dealerships by June 9 as it works to downsize through Chapter 11 bankruptcy restructuring. That represents a 25% cut in its dealer networks, leaving 2,392 Chrysler, Jeep, and Dodge dealers to carry on if the automaker is able to successfully emerge from bankruptcy with its new partner, Fiat.

Auburn Hills reiterated that it will be "business as usual" with its entire dealership body throughout its bankruptcy proceedings, with plans to honor warranty and incentive payments "during the period that rejected dealers remain active."

According to information obtained by Automotive News, individual dealers will learn whether they are rejected or accepted via UPS letters delivered this morning. At that point, dealer owners will have 23 business days for a 'court review' of their individual cases.

The same memo that disclosed the planned UPS letter disbursement also details that after the 789 dealers are rejected, 80% of its remaining dealers will carry all three of the company's brands (that figure presently stands at 62%). According to that communiqué, Chrysler does not expect for many of those dealers to close just because their franchise contracts are being rejected - about 345 of those rejected operations are paired with other competing brands, and according to Chrysler executive vice president of sales, Steven Landry, fully 83 percent of the disenfranchised dealers currently sell more used vehicles than they do new ones.

Thanks to the protections afforded under bankruptcy, Chrysler will not be legally required to buy back any vehicles, parts, or tooling from rejected dealers, but the automaker says it will work to pair the disenfranchised with remaining dealers who may be willing to buy those assets.

Chrysler vows to contact the more than 3.5 million customers who have purchased cars and trucks through the rejected dealers to give them additional information on how to get their vehicles serviced.

If you're wondering if your local Chrysler dealers are earmarked for closure, a complete PDF list is available by clicking here.

Official press release after the jump.

[Sources: Chrysler; Automotive News - subs. req.| Image: Scott Olson/Getty]

Continue reading BREAKING: Chrysler 'rejects' 789 dealers nationwide, works to pare network by 25% by June 9

BREAKING: Chrysler 'rejects' 789 dealers nationwide, works to pare network by 25% by June 9 originally appeared on Autoblog on Thu, 14 May 2009 13:00:00 EST. Please see our terms for use of feeds.

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