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Wednesday, December 16, 2009
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Issue 52
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VOLUME 3
ISSUE 52
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News and Industry Trends
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Leasing returns, but bargain rates harder to find
Vehicle leasing is resurging at a slow and measured pace, but wary automakers say it is unlikely to ever return to the madcap days when irresistibly low monthly rates drove up demand, The Detroit News reports. Consumers are still attracted to leasing because it is generally cheaper than buying, and they can always drive a new car. Dealers like it because it keeps customers coming back every few years and ensures a good selection of quality used vehicles. But automakers and lenders are being cautious after the worst recession in decades helped dry up car and truck sales, fueling big financial losses when returned lease vehicles were worth far less than expected. "We spoiled people," said George Fowler, general manager of Superior Pontiac Buick GMC Trucks in Dearborn. "Everyone who walks in wants to lease a car because they were taught in the past that payments are cheaper. People walk in and ask for a $200-a-month lease."
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OPENLANE: Demand will rise for wholesale, used vehicles
As the economy recovers, new car retail sales will increase from 2009 levels, but will still be muted to pre-2009 levels, predicts Nagi Palle, VP of Analytics from online auction company OPENLANE. Headwinds from diminished vehicles per household and a lower pent up demand going into 2010 will create resistance to new car market breaking free. Used car retail sales, however are expected to remain robust in 2010 - much like 2009, Palle said.
[FULL STORY]
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Settlement due in Civic Hybrid mileage class action
Owners of 2003-8 model Honda Civic Hybrids, in a class-action lawsuit filed in the United States District Court for the Central District of California in 2007, contend they are getting only 31 miles per gallon, instead of the stated 49 in the city and 51 on the highway. A settlement proposal is due for final approval next month, The New York Times reports. The suit names two plaintiffs — John True of Ontario, Calif., and Gonzalo Delgado of Chino Hills, Calif. — and includes 120,000 Civic Hybrid owners. They argue that Honda advertising led them to believe the Civic Hybrid would get much better fuel economy than is likely in real-world driving. The suit stresses it is not challenging the methodology used by the Environmental Protection Agency to predict mileage but says Honda deceived consumers by not making it clear that they were unlikely to achieve the agency’s figures. While the suit refers to mileage estimates of 49/51 miles per gallon, the Civic Hybrid estimates have changed. Starting with the 2008 model year, the E.P.A. revised its fuel-economy calculations for all vehicles in an effort to make the estimates more realistic. The 2008-10 Civic Hybrids are rated at 40 miles per gallon in the city and 45 on the highway.
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TransUnion sees auto delinquencies rising in 2010
TransUnion, in its annual auto loan forecast today says national auto loan delinquencies (the ratio of borrowers 60 or more days past due) will increase approximately 7 percent at the end of 2010 to 0.92 percent from an expected 0.86 percent at the conclusion of 2009.
[FULL STORY]
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Chrysler liquidation plan won't repay $4B fed loan
A reorganization plan filed in bankruptcy court in New York today by the former Chrysler LLC, now known as Old Carco LLC, shows the automaker will not repay the $4 billion government loan it received in January, The Detroit News reports. Unsecured creditors also are unlikely to recover any of their claims, unless there is a successful outcome in a lawsuit against former Chrysler owner Daimler AG by the Creditors' Committee. But some secured lenders could be fully compensated for their outstanding $20.6 million, the lengthy court documents show. The $4 billion was Chrysler's first government loan, approved by the Bush administration to come from the Troubled Asset Relief Program. The automaker received additional aid while under bankruptcy protection and a loan to help get the new company, Chrysler Group LLC, which was formed in partnership with Fiat SpA, back on its feet.
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The December Dealer magazine e-zine is here
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LendingTreeAutos.com matches consumers, loans
Tree.com, Inc. has launched LendingTreeAutos.com, a dedicated online portal to help consumers make smart decisions about buying their next car. The new site covers the full scope of car buying information, tools, and services, providing one-stop access to new and used car searches, vehicle history reports, monthly payment calculators, quotes from local dealers, tips and advice, auto insurance and financing, and more.
[FULL STORY]
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Different repayment roads for GM, Chrysler
General Motors Co. and Chrysler L.L.C., took dramatically different stands yesterday on repaying the billions each received over the last year in federal bailout funds, The Associated Press reports. GM plans to pay all of its $6.7 billion in government loans by the end of June, chairman and chief executive officer Ed Whitacre Jr. said. The quarterly installments will begin this month with a $1.2 billion payment, he said. But Chrysler, now known as Old Carco L.L.C., filed a Chapter 11 bankruptcy reorganization plan in which the company said it planned on giving nothing back to the government for its $3.7-billion claim, which comes from loans under the Troubled Asset Relief Program. But the plan, filed in New York, said the company will repay some other lenders in full.
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In Dealer magazine
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You need to know what’s wrong
by Dale Pollak
What would happen at a dealership if a particular used car had many interested shoppers and multiple demo rides, but .jpg?i=122309160546) still didn’t sell? The obvious answer is that someone would go out and carefully inspect the vehicle to determine what the heck was wrong with it. Perhaps it smelled like smoke, needed a wheel alignment or a tune-up. There would likely be something that isn’t right about the vehicle and, most likely, if the problem were corrected, the vehicle would sell.Now, what would happen if a particular vehicle got a lot of online shoppers looking at it, clicking through many times for complete details and photos, yet no one was taking the next step – to print the page, or print a map to the dealership, or clicking to request additional information from the dealership? Would there be something likely wrong with how the vehicle is displayed online? Again, the obvious answer is yes, most likely. The difference between these two scenarios, however, is that it’s highly unlikely that anyone at the dealership is actually aware of how much attention any given vehicle is attracting on the Internet. Unlike your physical display, your virtual display and its associated shoppers are largely “out of the view” of dealership personnel. Read more
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Copyright © 2009 Dealer Communications Inc.. All rights reserved.
Information in this newsletter is provided by both proprietary and public sources.Dealer Communications makes no claims as to the accuracy of information provided by third party providers.
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