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Top Stories
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GMAC chief ousted by board
Carpenter to become GMAC's next CEO
In a surprise move, the head of GMAC Financial Services -- the giant, taxpayer-supported auto lender -- was ousted Monday,The Wall Street Journal reports. The forced resignation of Alvaro de Molina after only 19 months as chief executive caps a series of clashes with regulators and mounting board frustration over his management of the Detroit company. GMAC, which finances inventory for thousands of car dealerships in the U.S., to date has received $12.5 billion in taxpayer money, giving the U.S. government a 35.4% stake and growing power over the firm's trajectory. Government officials said they made no suggestion to GMAC's board to dump de Molina. "That was 100% GMAC's decision," Treasury spokesman Andrew Williams said.The shakeup comes as GMAC talks to regulators about a third helping of federal aid. The U.S. is likely to inject billions more on top of the money already given. Michael Carpenter, who joined GMAC Financial Services' board of directors in May, will replace de Molina as CEO to accelerate the lender's shift to focus on its core auto finance business and exit its money-losing venture into mortgage lending, the Detroit Free Press reports.
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Florida car mogul duped out of $57 Million
In the post-Madoff world, Ponzi schemes seem to be popping up everywhere. The latest is the alleged scam run by Ft. Lauderdale, Fla., lawyer Scott Rothstein, The Wall Street Journal reports. He is the Ferrari-loving, bling-wearing, Versace mansion co-owner who worked in a sealed “Bat Cave” and who is suspected of stealing hundreds of millions of dollars from investors who bought legal settlements from him since 2005. No one has been charged. But the FBI towed away his Ferrari spider convertible this week and seized his mansion and yachts, along with 44 boxes of documents. They are now seeking information from former Rothstein investors. Meantime, the Jerald reports, Rothstein is staying at an undisclosed location under federal surveillance. The latest intelligence on the scam involves $57 million Rothstein is accused of taking from a Southeast auto magnate. According to the Miami Herald, auto dealer Ed Morse was fighting with his interior decorate over a $2 million bill. He hired Rothstein to fight it. Rothstein told the Morses he won the case and was entitled to a $23 million judgment and all they had to do to get the $23 million money–alleged to be in a Cayman Islands account that a judge had authorized the family to seize–was to post a bond 2 1/2 times larger than the judgment, or $57 million, which could be wired to Rothstein. You've probably already figured out the rest. Click the link for details.
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Retail sales in the U.S. increase more than forecast
Vehicle sales give a boost
October retail sales in the U.S. rebounded more than anticipated as demand for autos climbed, easing concern households will curtail spending after government incentives ended, Bloomberg News reports. The 1.4 percent increase followed a 2.3 percent drop in the prior month that was much larger than previously estimated, making last month’s gain less impressive, Commerce Department figures showed today in Washington. Purchases excluding autos rose less than forecast. Rising demand at retailers from discount chain TJX Cos. to luxury store Saks Inc. may foreshadow a brighter holiday shopping season. Acceleration in consumer spending, which accounts for 70 percent of the economy, will depend on an improvement in the labor market that has yet to unfold. Auto demand is stabilizing after plunging to a three-decade low earlier this year. General Motors Co. and Ford Motor Co. last month had their first combined sales gain in three years, helping the industry rebound from a plunge in September. Overall sales climbed to a 10.5 million annual rate from 9.2 million. Auto Sales Fritz Henderson, GM’s chief executive officer, said in an interview today that November’s sales pace will be about the same as last month’s.
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Dealer already taking deposits on Chevy Volt
.jpg?i=111709113150) General Motors hasn’t yet started production of its highly anticipated Chevy Volt electric car. It hasn’t put a price on the vehicle. It hasn’t announced when the Volt will be available, or what dealers will get the first models. It hasn’t told dealers what colors will be available, or whether the car will come with a sunroof or a navigation system or an options package including fog lamps and heated mirrors for cold-weather states. It hasn’t done anything, in fact, but build a few prototypes and talk with the press a great deal about what the experimental car might be capable of. But you can buy one on eBay, according to a USNews&World Reports item. One enterprising Columbus, Ohio, Chevrolet dealer has started taking deposits. In its listing for the Volt, Jack Maxton Chevrolet explains, “We are now accepting deposits.....reserve yours today BEFORE THEY ARE BUILT because these will go fast!” The listing includes such reassuring specifics as “This vehicle is being offered with the Full Factory Warranty,” and “Although we haven't said exactly when the Chevy Volt will come to market, we've set our internal targets to complete the vehicle by the end of 2010.”
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Canadian dealerships won't get funding boost from Chrysler
A leaner, more profitable retail network on the Canadian side of the border means Chrysler Group LLC's dealerships there will be shut out of about $500 U.S. million the automaker plans to spend on bolstering its stores in the United States, company officials and dealers say, according to the Windsor Star. "The situation in Canada is a lot different," said Bob Clark, president of AutoCanada, which owns 22 dealerships across the country, including 11 Chrysler outlets. "The distribution channel in Canada already has Chrysler, Dodge, Jeep under one roof. So, the Canadian dealer network became that much more efficient years ago." Across the border, Chrysler dealerships are struggling with just 36 per cent of 2,366 stores generating a return on sales greater than 1.5 per cent, according to Peter Grady, vice-president of network development at Chrysler. As well, an initiative dubbed Project Genesis, which seeks to consolidate all Chrysler brands under one dealership roof, is 80 per cent complete. In Canada, 88 per cent of Chrysler's 440 dealers are profitable and are averaging a 25 per cent return on investment, Reid Bigland, Chrysler Canada CEO, said during the automaker's unveiling of its five-year plan earlier this month in Auburn Hills, Mich.
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A look inside GM's numbers
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Kentucky GM Dealers report spike in sales
While national numbers show GM continued to lose money in the first quarter, Eastern Kentucky dealers say business is strong, reports TV station WYMTNEWS. Dealers say GM is back in business when it comes to selling cars in Eastern Kentucky. Officials at the Falls dealership in Corbin are reporting doubling sales figures. Because GM is seeing profits, officials hope this means putting money back in Uncle Sam's pocket. You might call it an early Christmas present. "It shows the progress... they always say we are going to do this.... early predictions can only be done by the public and what is offered as a product, and the advance they make on the product. That's what will pay back the debt," said Barry Deaton with Falls. "I think it shows GM is on the right track. They are going to be around for a long time. They are getting some things in line. Obviously they might not have done good business in the past but now they are back on track and doing the right thing. They are seeing that pay off coming back," said David Barton with Falls. Workers at Falls say they are seeing the come back too. They used to sell about 15-20 GM cars a month. Now, that number is between 35-40.
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Southern dealer featured in November issue of Dealer magazine
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Volkswagen to invest $125M on New York City dealerships
Volkswagen AG said last week that it will invest $125 million on two new dealerships in New York City as part of its wider plan to ramp up the presence in the U.S of its core VW and the Audi brands, Dow Jones Newswires reports. "As Volkswagen and Audi move forward on our aggressive plan to increase sales in the U.S., there is no better place to demonstrate our commitment than in Manhattan--a town synonymous for bold actions and big thinking," Volkswagen's U.S. chief Stefan Jacoby said in a statement. The $125 million investment is for a 265,000 square-foot building, which will house both a VW and Audi dealership."The building is strategically sited in the highest traffic area of 11th Ave., making it a convenient location for ... customers," the company said.Volkswagen plans to begin selling vehicles at the new facilities in early 2010.Growth in the U.S. and returning its North American operations to profitability are cornerstones of Volkswagen's global expansion plan, which includes outpacing Toyota Motor Corp., the world's largest automaker by sales.
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Saab running low on new cars; closing a third of U.S. dealers
More than one-third of Saab dealers in the U.S. will be closed as part of General Motors' sale of the unit to Sweden's Koenigsegg Group, according to the Associated Press. As if that isn't bad enough, USAToday reports, all Saab dealers, whether they're staying business or closing across the nation, have another problem: not enough cars. Dealers in the U.S. are running short of cars because Swedish Saab cut production to conserve cash as it prepares for its first new model in seven years, the 9-5, Bloomberg News reports. "We have about 10 Saabs left, and they won't last long," said Ivan Goodwin, sales manager at Jim Ellis Saab in Atlanta, as quoted by Bloomberg. "It's going to be a big problem, but there is nothing we can do about it." And about those closures: GM has sent letters to 81 of its 218 U.S. Saab dealers telling them that they will lose their dealerships when the sale is expected to go through at the end of this month, a GM spokeswoman confirmed. Those that remain, 137 of them, will carry on. "We selected a network that gives us the best opportunity to achieve that," Mike Mike Colleran, Saab's chief operating officer in North America, is quoted as saying.
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Ford's Non-TALF $1.027 Billion deal backed by auto loans
Ford Motor Co. is in the market with a $1.027 billion deal, backed by auto loans, Dow Jones Newswires reports. The deal, called FORDO 09-E, is not eligible for financing under a Federal Reserve program that offers investors cheap loans to buy newly created consumer loan-backed deals. Ford's deal is expected to price on Wednesday. Joint leads are Barclays Capital, JPMorgan and Morgan Stanley. The deal has four tranches, of which three are rated triple-A. The Fed has supported the securitization market through its Term Asset-Backed Securities Loan Facility, or TALF, launched in March. Total issuance this year stands at $131.41 billion, according to a note from Deutsche Bank. Of this, more than $90 billion has been eligible for TALF funds. Ford was one of four issuers who sold TALF-eligible deals in March, when the program was first launched. In June and July, it sold a total of three auto loan-backed deals that were all TALF-eligible. It returned to the market again in September, selling a $2.074 billion auto loan-backed deal that was also eligible for TALF.
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Dealer Advocate
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Pop goes the weasel
by Jim Ziegler
Cash for Clunkers was an incredible shot in the arm for our entire industry. And, regardless of what detractors may .jpg?i=111709113150) claim it was totally revenue neutral for the government and the taxpayers. In other words, this program paid for itself in sales tax revenues it generated for the states…plus registration fees…a lot of unemployment payment was eliminated and employment was created when the manufacturers and suppliers brought workers back to meet demand, which created additional payroll taxes. Not to mention the additional taxes created by increased sales commissions paid to salespeople. Of course it even extends to the junkyard that scrapped the cars and other vendors up and down the food chain. And, the government’s own claim that cleaner cars with greater fuel economy is one of the greatest economic and green benefits of the program. What I strongly disagree with is the cacophony emanating from industry experts, including my friends at J.D. Power and Associates and other assorted observers and statisticians suggesting that September automobile sales really-really sucked because we pulled so much business ahead. No offense to these pundits and researchers, but I’m saying that is totally wrong. I speak to literally hundreds of dealers and even more managers and salespeople and other dealership employees every month, and on top of that, I am out there in the field actually working in these dealerships all over the country. What I have heard repeatedly, and what I saw first-hand was that the Cash for Clunkers customers were not people that would have been in the market, not now or in the future. For a large part, these were more upscale, mature, and financially secure consumers than we were customarily used to seeing in the showrooms. Read more
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Dave Anderson Quote of the Week
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Average leaders can win when dealt a good hand. Good leaders learn to play a poor hand well.
-- 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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What's next for accepted GM and Chrysler dealers?
by Richard N. Sox, Jr.,
The.jpg?i=111709113150) fight is not over. The next battle for GM and Chrysler dealers is the fight over which of you will receive the franchises being wound-down, in the case of GM, or rejected, in the case of Chrysler, within your market. The attorneys of Myers & Fuller have already begun to work with dealers to prepare formal proposals to obtain the GM and Chrysler franchises they do not currently possess. It would appear that Chrysler is much more likely to provide its dealers with all missing brands in order to make each store a “Genesis” dealership. It appears less certain that a Cadillac dealer, as an example, will receive the Chevrolet dealership being wound-down in his or her market. GM has more franchises to go around than Chrysler. Whether you are a GM or Chrysler dealer, we strongly recommend putting together a formal proposal to your manufacturer touting the strengths of your dealership and the reasons why you are the best candidate to receive the subject franchise(s). Read more
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Read how Dennis Higginbotham built a profitable business by shunning debt and acquiring underperforming stores 
