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Top Stories
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November Dealer magazine out in digital format
.jpg?i=110609142320) Read the November issue of Dealer magazine now
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GM to review some dealership shutdowns
General Motors Co. CEO Fritz Henderson told Michigan congressional members that the automaker is willing to re-examine decisions to close a limited number of profitable dealers because of poor scores on other criteria, The Detroit News reports. That could help head off legislation before Congress to reverse or prevent the closing of more than 2,000 GM and Chrysler Group LLC dealerships.
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Brothers who ran dealership to plead in bank fraud
Two brothers who owned a Wisconsin Ford dealership in Tomah have agreed to plead guilty in federal court to loan fraud that authorities say cost two Tomah banks more than $2 million, The LaCrosse Tribune reports. The 57-year-old and 63-year-old dealers were accused of obtaining financing from Farmers and Merchants Bank and First Bank from January 2004 to August 2008 by falsely claiming to purchase certain vehicles for resale. Some of the loans were for vehicles the brothers never had at their dealership, according to documents filed in U.S. District Court in Madison. In other instances, they failed to report to the lenders that vehicles had been sold. The fraud resulted in a $1,767,353 loss for Farmers and Merchants Bank and a $296,861 loss for First Bank, according to a statement Monday by the U.S. attorney in Madison. The banks reported the matter to federal authorities in August 2008, which charged each of the brothers with one count of loan fraud.
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ActivEngage
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U.S. turns screws on bailed-out GMAC
Thanks to a series of cheeky television ads that mocked its rivals -- and some of the highest interest rates on deposits in the nation -- Ally Bank was swimming in new money this spring, The Wall Street Journal reports. The upsurge couldn't have come at a better time for its ailing parent company, GMAC Financial Services, which had just been bailed out by the federal government. But federal bank regulators put an end to the comeback party. Viewing the high-rate strategy as a perilous one, the Federal Deposit Insurance Corp. tightened its leash. It ordered Ally to lower its bank-deposit rates and to restrict its lending to low-end car buyers. For GMAC, getting rescued by the federal government has been no picnic. In the 10 months since the consumer-finance company received its first dose of rescue financing, it has wrangled repeatedly with the FDIC over its turnaround plans. Currently the company is locked in debate with the Federal Reserve about the adequacy of its capital levels, with the Fed pushing GMAC to take billions more in federal aid from the Treasury Department.
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Ford chief sees a bright future
A much smaller Ford Motor Co. -- with 45% fewer workers and more than a dozen fewer factories than in 2005 -- is heading into the last stretch of 2009 with more money, optimism and fuel-efficient passenger cars than it has had for years, the Detroit Free Press reports. "In 2011, we are pretty confident that, with our product line and our cost structure and a gradual recovery around the world, that we will be solidly profitable," Ford Motor Co. President and Chief Executive Officer Alan Mulally told the Free Press on Monday after Ford announced a net profit of nearly $1 billion for the July-September period. Why not sooner? "We just need a little bit more time to see if the economic recovery takes place," Mulally said.
Moody’s raises ford’s rating - WSJ
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Group One says it may buy more Ford dealers
Group One Automotive Inc, the No. 4 U.S. auto dealership, has been looking at possible acquisitions over the past few months and would consider buying more Ford Motor Co . dealerships, the company's president, Earl Hesterberg, said Monday, Reuters reports. The Houston-based retailer has been more of a seller of dealerships than a buyer lately as it aggressively cut costs to adjust to the weak market, but it is now in a position to make some strategic deals, said Hesterberg. "We're pretty bullish on Ford," he said at the Reuters Autos Summit. "We would consider purchasing a Ford dealership if it were in a market where we thought we could grow that business."
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Plan to end auto task force draws doubts
The Government Accountability Office raised concerns Monday about the Obama administration's plan to disband the White House auto team and shift oversight to another Treasury office, The Detroit News reports. Separately, the GAO disclosed in a report released Monday that the Treasury Department, as part of loan agreements with General Motors Co. and Chrysler Group LLC, won guarantees from the automakers to keep significant production in the United States. Chrysler must either "manufacture 40 percent of its U.S. sales volume in the United States or its U.S. production volume must be at least 90 percent of its 2008 U.S. production volume." The 40 percent figure is slightly below what the company produced in the United States last year. A person familiar with the matter said a separate loan agreement with Canada requires Chrysler to maintain a fixed percentage of production there, as part of Canada's loans to Chrysler. GM agreed to use "reasonable efforts" to ensure its U.S. production is "at least 90 percent consistent of the level envisioned in GM's business plan." In any event, the government would have to approve a shift of production overseas.
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NADA: Satisfaction with DMS systems declines
New research from the National Automobile Dealers Association’s Information Technology Committee shows that dealership satisfaction with Dealer System Provider (DSP) vendors declined significantly from the 2007 survey. DSP vendors develop and support dealership computer systems that assist dealers in managing their operations. The 2009 survey, conducted for NADA by the automotive marketing research firm Friedman-Swift Associates in Cincinnati, Ohio, shows that only 72 percent of dealership personnel are satisfied overall with their DSP vendors in 2009 versus 79 percent in 2007. Fifty-three percent of dealership personnel in 2009 would recommend their DSP vendor to another dealership, slightly less than the 55 percent that said they would recommend their DSP vendor in 2007.
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Two Ford Motor senior executives to retire
One day after reporting a surprise profit for its third quarter, Ford Motor Co. says two of its senior executives are retiring, The Associated Press reports. Ford said Tuesday that 62-year-old John Parker will step down at the start of the new year as executive vice president for its Asia Pacific and Africa operations. He has been with the company for 41 years. The automaker also says 55-year-old Phil Spender will step down at the start of 2010 as a Ford vice president and executive vice president of its affiliate Mazda Motor Corp. On Monday, Ford posted a third-quarter profit of $997 million as it cut costs by more than $1 billion and its key North American car and truck division recorded its first quarter in the black since early 2005.
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Honda to launch Crosstour
That light at the end of the tunnel could be Honda's new crossover, The Detroit News reports. After surviving an extremely tough auto sales market in 2009, Honda Motor Co. will end the year with the introduction of the 2010 Honda Accord Crosstour, which will hit dealerships in the coming weeks. Through September, overall automotive sales have dropped 27.4 percent, while Honda's sales have fallen 25.1 percent, according to Autodata Corp. "The worst is behind us," said Honda's John Mendel, vice president of automobile operations of America Honda Motor Co., in October during the media launch of the Crosstour.
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Compliance Corner
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They did it again
by Gil Van Over
They said they weren’t going to do it, but they did. They said they meant it this time but they didn’t. The Federales.jpg?i=110609142320) extended the enforcement period again, this time until June 1, 2010. Do Not accept this latest enforcement delay as an excuse to back off implementing your Red Flags Rule program. Here’s why. First, delaying the enforcement deadline only means the Federales will not be out actively looking for violators. The FTC experts I speak with about the agency tell me that the agency’s enforcement division is understaffed and does not have the capability to be actively looking for violators anyway. So even if the deadline had not been delayed, the likelihood of the FTC knocking on your door wanting to confirm that you have a Red Flags Rule program in place was thin at best.
[FULL STORY]
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Dave Anderson Quote of the Week
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As a leader, you can help people become more than they are but you cannot make them something they are not.-- Dave Anderson, Learn to Lead, Inc.
Order Dave's new book and get a $99 bonus! Click Here!
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In Dealer magazine
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Are mergers and acquisitions on the horizon?
by Erin Prinn Kerrigan
It was not long ago that investors decried the end of auto retail as we knew it. Consumers weren’t buying cars .jpg?i=110609142320) and dealerships were closing left and right. The financial system that supported our industry was in complete disarray. How short memories can be! It is amazing to think how far we have come since the depths of the financial crisis just 12 long months ago. It actually appears that the credit crisis is subsiding and economic green shoots are sprouting, albeit slower than we would all like. Public dealership stocks represent the latest green shoots. Investors have been buying them up, driving prices skyward an average of 400 percent since March (see chart one). As AutoNation’s Chairman and CEO Mike Jackson said during the company’s second quarter earnings call, “I think it’s a new world.” Read more
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Do you know how to measure online success?
by Dale Pollak
I believe there is a “black hole” at many dealerships due to a lack of understanding around the statistics that.jpg?i=110609142320) measure whether or not a store’s online merchandising of used vehicle inventory is hitting the mark. I have dug into the performance of many velocity-minded dealerships in order to come up with some reliable benchmarks that will help answer the “How do we know we’re doing a good job?” question I hear from decision makers who rely on third-party sites like AutoTrader.com and Cars.com to help them retail their used vehicle inventories. I selected a sample of over 100 dealerships across the country that retail around 100 vehicles a month. I limited my analysis to their performance on AutoTrader.com because the investments made on this site are typically larger than those made on Cars.com. I then evaluated the number of Search Results Pages (SRPs) and Vehicle Detail Pages (VDPs) each of these stores achieved over a three-month period. Read more
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